ANNUAL REPORT 2017
Index Index ................................................................................................................. 02 What we believe in ................................................................................. 04 Summary 2017 ........................................................................................... 06 Our highlights .............................................................................................. 10 Horticulture Entrepreneur Award ................................................... 14 Our services .................................................................................................. 18 Sourcing & Advice ................................................................................... 20 Operations & Supply Chain ............................................................... 26 Other services ............................................................................................ 30 Our people .................................................................................................... 34 Human Resources ................................................................................... 36 Our sustainable mission ...................................................................... 40 Sustainability ............................................................................................... 42 Royal Lemkes Foundation ................................................................. 48 Financial results ........................................................................................ 50 Download the free NeoReader QR & Barcode Scanner app on your mobile. Scan the QR codes or use the shortened urls that are scattered throughout the annual report and discover the world behind Royal Lemkes. 2
“We are proud of the progress we have seen in 2017. There has been viable growth of our people as well as robust developments in our relationships and in the area of sustainability. Indeed, there were many fine moments for which we are very grateful. However, we are far from perfect and need to remain modest. We therefore regard the Horticulture Entrepreneur Award above all as an incentive prize.” Michiel de Haan Managing Director, Royal Lemkes 3
What we believe in IS WHAT WE STAND FOR Royal Lemkes has a green heart. We believe in plants. As they can create a better life, stronger businesses and contribute to a healthier, green world. We strive for sustainable growth. Of our people, of our relationships, of our common business and of the world we live in. Plantify® = Creating a better life, stronger businesses and a healthier, green world with plants. 4
There are three elements to the green heart of Royal Lemkes: our roots as a grower, our knowledge of plants and the sustainable ethos of our shareholders, management and staff. Our belief in – and passion for – plants is grounded in the fact that they can improve people’s lives and our customers’ businesses. Plants also play an important role in making the world greener, which is sorely needed given the trend towards increasing urbanisation and the environmental issues we currently face. Our aim is not to maximise profit but to maximise impact. We need a ‘minimum viable profit’, of course, but that results from and is a condition for a healthy company. Our aim is the sustainable growth of our employees and business associates; if we succeed in that, the company will grow naturally. We also want to contribute to the sustainable growth of the environment in which we operate. Here, too, we want to make a difference and take the lead. We don’t just believe in plants. We also believe in the following. People. It is people who make the difference. That’s why we invest a great deal in our employees and our relationships. The unique aspect of the plant category. Quality and cost-control in the chain are extremely important and this requires strategic partnerships and chain optimisation. Togetherness. Together we can move forward, with both our retail partners and our suppliers. Scale. Size matters, in terms of procurement, supply chain and professionalism. Data. Possessing the right information is indispensable when making the right choices for our customers. Doing better every day. That’s why we work with Lean management and continuously evaluate our processes. Business as a force for good. Companies play an important role in making our world liveable and keeping it that way. EVERYTHING WE DO IS GUIDED BY OUR FIVE CORE VALUES RELIABILITY CUSTOMER ENGAGEMENT CRAFTSMANSHIP PERSONAL LEADERSHIP TOGETHERNESS We are honest, transparent and keep our promises. We want to understand our customers and seek solutions and opportunities together. We know our business and believe in constantly developing our expertise. We want to make a difference, we take the initiative and we continue to innovate. We want to forge connections with each other, with our partners and with the world around us. 5
Summary 2017 SMARTER TOGETHER We are proud of what we have achieved in 2017. Royal Lemkes has made enormous strides in its journey from ‘good to great’. Great for our colleagues and our customers as well as for the world and the sector in which we operate. We continued to improve the quality of our organisation and our processes. We are experiencing sustainable growth, as individual employees, as an organisation and together with many of our business partners. This is a healthy foundation for the future as we step up our efforts to ‘make a difference’, not only for our customers but also for people, the environment and society as a whole. In 2017, we experienced revenue growth with most of our customers. We were also able to improve our bottom line slightly due to reduced low-margin promotional turnover being offset by daily trading turnover. In addition, the higher quality of our services resulted in fewer costs and claims. Moreover, we reinvested in professional development. We are satisfied with our financial results, which were slightly better than in 2016. There were many proud moments for us in 2017, including the following. Recognition as Best Employer ***, awarded by our employees. We achieved a score of 8.5 for employee engagement. This places us in the top 5% of employers in the Netherlands Nomination for the prestigious Horticultural Entrepreneur Award, which we won in January 2018. 6
Memorable milestones in our aim to become more sustainable as a company and as a sector: a. Signing the Accelerating Sustainability and Transparency Together manifesto with peer competitors and holding subsequent grower meetings; b. Taking the next step in making our energy supply more sustainable by having our own ‘battery container’. As an extra bonus, employees can now use the energy generated by the solar panels on the roof of Royal Lemkes in their homes. Successful introduction of the Supply Logistics project, whereby growers’ supply streams are grouped. The result is a triple-win for all parties: reduced costs, reduced CO2 emissions and greater control over operations. Creation of the Plantify Academy along with the commendable personal growth of numerous colleagues. Inauguration of the Royal Lemkes Foundation, which supports several national and international charities. Professional development of our communications, including our first annual report, our first external newsletter, Plantyfacts, and a new intranet. The Supply Chain Finance pilot, a unique digital payment platform for our suppliers. Enjoyable and valuable events, including the Royal Lemkes Family Day, Ride for the Roses, supplier meetings for growers and carriers, internal inspiration meetings (such as Sustainable Thursday) and the internal celebration of two 50th work anniversaries. “In the autumn of 2018, we will be able to look back on 10 years of successful cooperation between Royal Lemkes and IKEA. From the start, this cooperation was built on trust, openness, transparency and – last, but not least – togetherness. TOGETHER, we have implemented important tools and processes in our daily business which has created the base for a very efficient and successful cooperation. Markus Rieke Business Development Manager, Green Plants Category IKEA Purchasing Services (Germany) GmbH “Living Plants are very important for IKEA, as they are a relevant element of home furnishing and home decoration. They bring seasonality and vitality into our stores and, together with the sales of pots and vases, are a successful business in their own right.” 7
We are also proud of our customers, of course. Each and every one a renowned European retailer from various segments with whom we maintain an exclusive or preferred partnership: IKEA (30 countries); OBI (10 countries); Kingfisher (B&Q, Castorama and Brico Depot, 6 countries); Maxeda (Praxis and Brico); Aldi (5 countries); and Systeme U, Jardiland, Truffaut and Dobbies. We fully recognise that retail conditions are changing and are responding to this by making efforts to unburden our customers. At the same time, however, we also feel it was a good decision to part ways with two large retailers whose vision did not match our own. We believe in conscious partnerships focused on sustainably optimising customer value and reducing supply chain costs together. In 2016/2017, the annual theme focused on ‘from a strong foundation to excellent performance’. For 2017/2018, we have opted for ‘smarter together – excellent performance through connection’, not least because we believe in togetherness. Here too, we strive for being ‘better every day’ and are increasingly using dashboards, feedback mechanisms and Lean management tools to achieve continuous improvement. We realise that the world around us is changing rapidly. This is partly due to digitisation, which is why we invested strongly in IT in 2017 and became a shareholder in the Blueroots digital platform. E-commerce is another area that has our full attention. In addition, the ‘local for local’ trend and the need to reduce CO2 emissions call for a ‘homegrown/local hub’ strategy that we are developing in collaboration with our retail partners in various countries. As we expect the demand for plants to keep growing, it is even more important to forge strategic sourcing relationships with our suppliers and retail partners. We can now look back on another exciting year in which we continued to build a bright future based on trailblazing customers, a vibrant organisation and a strong dose of craftsmanship. We expect a healthy increase in revenue in 2018 and shall continue to invest in our people, in sustainability and in IT. But, above all, we shall keep investing in our relationships because we are ‘smarter together’. On behalf of the executive management team, Cees van der Meij Director and Majority Shareholder Michiel de Haan Managing Director Michiel van Veen Director Operations & Supply Chain 8
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Our highlights FEBRUARY Suppliers’ Day A very successful day full of inspiration and interaction with our top 100 suppliers. Scan me Watch the film via youtu.be/ oQXmwoCKtyM or scan this QR code. MANY PROUD MOMENTS JANUARY Open house More than 1,000 family members and friends visited our green workplaces and impressive halls. Watch the film via youtu.be/IBd14omFbvE or scan this QR code. Scan me MARCH Grouped transport Westland Lorries of 70 suppliers collectively started driving from the Westland to Royal Lemkes according to window times. 10
APRIL Top Day The busiest day of the year with a record turnover. Watch the film via youtu.be/xu6mS38CIB0 or scan this QR code. Scan me MAY Inspired entrepreneurship Cees van der Meij and Michiel de Haan inspired 200 directors and business owners from the region with speeches on ‘inspired entrepreneurship’. Manifesto: Accelerating Sustainability and Transparency Together Together with other frontrunners in the sector, we signed a manifesto to accelerate sustainability in our sector. JUNE Royal Lemkes lorry Our new corporate identity was beautifully showcased on the first Wolter Koops lorry with custom signage and stickering. 11
JULY Battery container We installed a sea container full of batteries: the batteries store surplus solar energy generated from the Royal Lemkes rooftop for our own use and for eventual delivery to employees’ homes. Watch the film via youtu.be/lWgp1bKp7gc or scan this QR code. Scan me AUGUST Sprinklr Angel We became a proud angel investor of startup company Sprinklr. SEPTEMBER Ride for the Roses We were honoured to host this impressive event. More than 7,000 cyclists raised money for the KWF Dutch Cancer Society. Watch the film via youtu.be/6YsOV-jkjzU or scan this QR code. Transport Day First transport day held with a selection of our carriers: aimed at working ‘smarter together’ on our sustainable relationship and for a greener future. Watch the film via youtu.be/R4YT1MJiFso or scan this QR code. 12 Scan me Scan me
OCTOBER Best employer in the Netherlands *** With the highest possible number of stars (***) and a top score of 8.5 for employee engagement. Sustainable Thursday Internal awareness event with inspiring speakers Maurits Groen and Renée Scheltema. Watch the film via youtu.be/ZOIleEdvPMI or scan this QR code. Scan me NOVEMBER Nomination for Horticulture Entrepreneur Award Nominated for the Horticulture Entrepreneur Scan me Award! Watch the film via youtu.be/OUkAskTk-GU or scan this QR code. DECEMBER Royal Lemkes Foundation Cheques for selected charities were handed over during the Christmas breakfast. 13
Horticulture Entrepreneur Award INNOVATIVE AND SUSTAINABLE ENTREPRENEURSHIP In November, the jury of the prestigious Horticulture Entrepreneur Award nominated Royal Lemkes as one of the three contenders. While this was a fantastic accolade, we were even prouder to receive the prestigious award itself on 10 January! This encourages us to continue pursuing the course we have set for ourselves and is an additional incentive to keep developing our expertise in the field of plants, supply chain optimisation, business intelligence and trade marketing. We look forward to being ambassadors for the horticultural sector throughout 2018. According to the Horticulture Entrepreneur Award jury: “The jury is of the opinion that the company’s entrepreneurs initiate and take responsibility for many projects which make the business and the chain more sustainable. Royal Lemkes stimulates grouped transport by region and this results in less traffic volume. The company establishes long-lasting relationships with its suppliers and customers. Royal Lemkes also limits its own footprint and supplies its employees with solar energy. A unique aspect is the HR policy, which is based on the principle that employees and their environment are central to the business. From this position, the company – together with its employees – can optimally serve its customers. Royal Lemkes has a well-rounded management team in which each member specialises in a specific area of expertise. With a strong corporate identity and acting as a trailblazer within the industry, Royal Lemkes scores well on all elements of entrepreneurship and is therefore the winner of the 2018 Horticulture Entrepreneur Award.” 14
Scan me Watch the video of the presentation on youtu.be/OUkAskTk-GU or scan this QR code. 15
2017 in figures 249 million revenue 1.34% pre-tax profi t 96,821,276 plants traded 17,568 diff erent products 30 countries across Europe 16 2,639 shops 791 suppliers 248 km of trucks lined up in a row
Top 10 garden plants 1 . LAVANDULA 2. HYDRANGEA 3 . CITRUS 4 . PELARGONIUM 5. VEGETABLE PLANTS 6. CAMPANULA 7. BUXUS 8. VIOLA 9. PICEA 10. OSTEOSPERMUM Top 10 houseplants 1 . PHALAENOPSIS 2. DRACAENA 3 . FICUS 4 . DYPSIS 5 . ARRANGEMENTS 6. SUCCULENTS 7. CACTUS 8. KALANCHOE 9. SPATHIPHYLLUM 10. ROSA Revenue in 2017 + 50 million + 40 million + 30 million + 20 million + 10 million 0 + Top 10 countries 1 . GERMANY 2. FRANCE 3 . THE NETHERLANDS 4 . BRITAIN 5 . AUSTRIA 6. SWEDEN 7. ITALY 8. BELGIUM 9. SWITZERLAND 10. POLAND 17
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Our services 19
Sourcing & Advice THE CUSTOMER IS AT THE HEART OF OUR BUSINESS Our first strategic pillar and key competency, sourcing & advice, focuses on customer intimacy. To be able to respond even more appropriately to customers’ needs and wishes, we focused on getting to know the customer better through our own customer teams, not only in terms of account management but also by way of product and process management. Desiree Olsthoorn Owner, OK Plant “We are proud to have been nominated for the Horticultural Entrepreneur Award alongside Royal Lemkes. We share many values with Royal Lemkes, such as togetherness, leadership, professionalism and sustainability. We want to work with green specialist retailers who like to be distinctive and surprise their customers. Our passion for plants inspires us to constantly seek and develop new, sustainable products. Thanks to our transparent approach, our collaboration with Royal Lemkes is very positive and this allows us to sustain mutual growth.” 20
The aim is to provide optimal advice on the product range and promotions and to keep costs in the supply chain as low as possible. The starting point is to have a unique product range combined with a cost-effective supply chain. This requires increasing the scale and intensification of cooperation between all chain partners. We are also intensifying cooperation with our customers, so we can respond optimally to mounting retail issues in the areas of digitalisation and sustainability and to the demand for safe and healthy production. In 2017, the large-scale European retail sector made strong advances. It is no longer a question of whether things should change: transformation is a prerequisite for maintaining a leading market position. While each retail partner will achieve this in its own unique way, Royal Lemkes aims to provide the desired customised solution. “We are a DIY retailer, which means we focus on home improvement projects, decoration and repair and build. We try to sell a dream and help customers achieve this themselves. We fully stand behind our ‘For the Makers’ proposition and offer what are probably the best product range and best solutions to our customers. “We would like to create an emotional relationship with our customers. To achieve this, it’s crucial in the Benelux countries to have a substantial offer in garden items integrated with a DIY model. A consistent garden offer combined with an excellent offer in plants across the seasons is essential for creating an emotional bridge between customers and Maxeda (Praxis, Brico). Emotional because plants mean colours and flowers and are synonymous with nature. “Plants help us to convey customers’ personalities and emotions to their gardens. Plants are, after all, living beings. “Plants are important for Maxeda because they help us meet our customers’ expectations. It’s important for us to have the right choice in plants, but not too much so the customer is confused. Fresh quality and low maintenance are key to the success of our business. Naturally, we choose Royal Lemkes as our partner because of the company’s comprehensive expertise and its ability to meet our key requirements: a wide selection, fresh products and on-time deliveries.” Jordi Juanos Gardening Category and Visual Merchandising Director, Maxeda DIY (Holland/ Belgium) 21
“The supply market is changing. Demand is increasing, growers are becoming more professional and sustainability requirements are becoming stricter. Our retail partners recognise these changes and this is leading to valuable new forms of commitment between customers, growers and Royal Lemkes. Retailers are more conscious in their choice of growers and growers are more conscious in their choice of retailers.” Huib Kranendonk Royal Lemkes Sourcing Manager STRATEGIC SOURCING A wide, sustainable product range can only be offered when working closely with suppliers. We have therefore intensified collaboration with our top 100 growers and have made long-term agreements. Thanks to the purchasing volume, our customers benefit from a high-quality assortment at competitive prices. Moreover, we believe in the increasing importance of ‘local for local’ and are thus committed to the ongoing localisation of our offer for the international market. “Thanks to its pet department, home decoration department and – above all – its plant department, Truffaut is striving to become the reference brand for indoor and outdoor home styling. To connect our customers with nature, we choose products that are recognised as innovative, inspiring, high-quality, unique and affordable." “This inspired Truffaut to select Royal Lemkes as an export partner for its plant procurement in 2013. Royal Lemkes and Truffaut share a similar philosophy and principles. Our partnership was rapidly established and has continued to grow year after year. Truffaut is proud to work with Royal Lemkes to ‘Plantify the future’.” Emmanuelle Dutremee Chef de produits Plantes Intérieur Bertrand Bourguignon Directeur des achat, Truffaut France 22
“As a supplier, we are happy with Royal Lemkes as a leading customer. This has brought us to the level where we are today. And, hopefully, we shall continue to achieve excel lent results together in the future!” l Paul van der Salm Owner, Van der Salm SUPPLY CHAIN FINANCE In 2017, a successful pilot project in the field of supply chain finance began with various suppliers using the dynamic discounting method. This increases transparency and offers suppliers flexibility, fast payment options and lower financing and insurance costs. The pilot will be rolled out further in 2018. “One tree alone cannot make a forest. With Royal Lemkes, we work together to create a beautiful forest.” Martin Hogenboom Director of Sales, Vireo SUPPLIERS’ DAY In January, we received our 100 top suppliers and updated them on our strategy. 23
Retail segment 24
Retail segment Customer Home IKEA Garden centers OBI Jardiland Truffaut Dobbies DIY B&Q Castorama Brico Depot Praxis Brico Supermarkets ALDI Système U Country 30 countries 10 countries France France United Kingdom United Kingdom France, Poland Romania The Netherlands Belgium 4 countries France 25
Operations & Supply Chain BETTER EVERY DAY Our second strategic pillar, operations & supply chain, focuses on operational excellence. In other words, we strive to be ‘better and more cost-effective’ every day. The costs of plants in the supply chain are very high as are the quality requirements. We are proud of the scale we have achieved alongside the steps taken in 2017 to further improve the quality and efficiency of our operation. Awareness leads to behavioural change and growth. By applying Lean management principles and developing dashboards for selected KPIs, our operational departments have made great strides towards excellence. Our employees already knew that the Royal Lemkes ‘roll up your sleeves’ approach produced results. However, the insights provided by the dashboards and Lean management in 2017 have inspired us to further improve our services. We have also realised that we need to work together with our chain partners by drawing on mutual insights. Effective forecasting results in higher delivery reliability, greater efficiency and fewer ad-hoc processes, which reduces errors. Mark Verstappen Regional Director, Tempo-Team “I would characterise 2017 as the year that brought cooperation to a new level. Getting together at the drawing board at the right time to write the formula for success and consistently maintaining the course set with mutual sharpness has resulted in increased job satisfaction, satisfied customers, productivity above the target level and a flawless peak period. For me, the current level of cooperation between Royal Lemkes and Tempo-Team is the ultimate example of partnership. We look forward to working together in the coming years. Let’s plantify our partnership!” 26
Scan me Watch the film of our first transport day on youtu.be/R4YT1MJiFso or scan this QR code. In September, we organised our first transport day with a selection of our carriers. It was an inspiring day that focused on the theme of working ‘smarter together’ on our sustainable relationship and for a greener future. Scania gave a fascinating presentation on the future of LNG and electric transport. “Looking beyond the horizon together and taking into account market developments and new technologies. This typifies the solid partnership between Royal Lemkes and Breewel Logistiek BV.” Peter Breewel Director, Breewel Logistiek 27
Scan me Watch the film on supply logistics on youtu.be/4Fl-Jq12F4s or scan this QR code. SUPPLY LOGISTICS We are particularly proud of our successful supply logistics project, whereby growers group their supply streams and deliver on time both during the evening and at night. We achieved 70% avoidance of rush hours, resulting in lower costs for everyone in the chain, reduced CO2 emissions and tighter management of our processes. We have so far been able to cancel 600 trips, which equates to 40,000 road kilometres. This project was nominated for the Haaglanden and Rhineland Mobility Award. In 2018, we shall introduce this project in the next two regions: Aalsmeer/Bollenstreek and Boskoop/Bleiswijk. “Our ambition is to put retail outlets at the heart of our business by fulfilling and exceeding the agreements made with customers. This involves taking responsibility, communicating quickly and clearly, having customer-friendly processes and, of course, delivering orders on time, completely and flawlessly. By constantly measuring KPIs, we strive to perform at our best for our partners every day.” Zeger van Asch van Wijck Customer Service Manager, Royal Lemkes In addition, we are proud of the significant reduction in claims as a result of the work of the Customer Service department. We are also thrilled about our warehouse being nominated for Best Warehouse of the Netherlands and the fact that entire operation now works according to Lean management principles, which leads to improved performance. We’re doing better every day! 28
"We plan every day but also look further ahead than tomorrow. How do we deploy the right people, ensure suppliers deliver on time and have carriers depart without waiting? It's a daily puzzle and we need each other to solve it.” Michael van Eijk Operations Manager, Royal Lemkes “Successfully ensuring products are on the trolleys neatly and on time always feels like winning a race. Each day, it’s a new sprint to get such a vast number of items ready and shipped with the help of so many different people. For me, working at Royal Lemkes means winning together!” Patrick de Rijk Working Foreman, Royal Lemkes 29
Other services CUSTOMER INTIMACY LEADS TO CUSTOMISED SOLUTIONS In 2017, our third strategic pillar, hybrid services, continued to gain strength in digital services, trade marketing and advice as well as in the field of quality and sustainability. Sustainability Quality Assurance Business Intelligence Concept & Creation Replenishment Trade Marketing E-commerce 30
“We are proud to serve an interesting, diverse selection of the best retailers in Europe. Each retailer is unique and has different needs. Thanks to our many years’ experience and full focus on large-scale retail, we can translate our customers’ wishes into customised services. As a result, we relieve the retailer of all concerns.” Alice van Veen Commercial Manager, Royal Lemkes IT & BUSINESS INTELLIGENCE The role IT plays within the sector and at Royal Lemkes is becoming increasingly important. Thanks to our own digital solutions, we are rapidly becoming a strategic digital partner for our customers. In 2017, we invested a great deal in reports and dashboards and in training colleagues to manage by numbers. Using data analytics, we are now able to provide our customers with customised advice about their product range and sales expectations. Our own Greensales system is highly flexible, which means that almost any of our customers’ systems can be connected within six weeks. When connecting systems, we take the customer’s IT environment as our starting point. Together with our customers, we use integrated data analyses to reduce process costs, create the right product range, minimise losses and increase conversion. “By using sophisticated algorithms combined with human insight into plants and the weather, we can take care of customers’ replenishments so that availability, stock level and loss are optimally balanced.” Rob van den Berg Business Intelligence Manager, Royal Lemkes 31
In 2017, Royal Lemkes launched a new online store with improved functionality for greater user-friendliness. We also became a shareholder in the Blueroots digital platform. E-COMMERCE E-commerce is a hot topic for all our retailers and therefore also for us. Each retailer wants to strengthen its multi-channel proposition and we are happy to respond with our digital services and by drawing on our supply chain experience. In 2017, we carried out numerous successful pilots. We forged strategic partnerships with international parcel carriers and packaging companies. We also invested in e-commerce experience and became an angel investor in Sprinklr, an Amsterdam-based startup that supplies plants to consumers. In 2018, we expect to roll out our e-commerce proposition for various customers. 32
TRADE MARKETING AND CONCEPT & CREATION We are helping an increasing number of customers to translate their positioning into brands, retail concepts and other trade marketing solutions. At a large garden centre, for instance, we introduced a new successful store concept for house plants. By working with two other customers, we also launched a new method for creating product concepts. In 2018, we shall continue to roll out these concepts with other customers. “As a strategic business partner, we forge active partnerships. Together with our customers, we translate trends into distinctive concepts with high commercial value.” Vinnce Ponet New Business Developer, Royal Lemkes QUALITY ASSURANCE Royal Lemkes has a quality management system that guarantees the safety and quality of products and services throughout the chain. This system is designed to meet customer requirements, legal requirements and the MPS Florimark Trade standard (ISO9001, Traceability, Good Trade Practice). In 2017, we began to prepare for and implement the requirements of the new ISO 9001:2015 standard and performed a context and stakeholder analysis of our company. The new requirements were taken into account during the internal and external audits at the beginning of November 2017, which means we can look forward with pride and confidence to renewing the certification for the new standard in 2018. Process management was further professionalised in the Quality Assurance and Sustainability department. Fresh insight into all processes and associated risks and opportunities is helping us achieve ongoing improvement and efficiency. This includes implementing all new and existing customer requirements and legal requirements as well as applying Lean management to achieve efficiency gains. Furthermore, the introduction of a special coordinator has given product quality an extra dimension. Together with product managers and buyers, the coordinator monitors product quality during the cultivation process to prevent complaints. 33
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Our people 35
Human Resources PEOPLE MAKE THE DI FFERENCE We are a wonderful family business and our people appreciate this. In October 2017, the HR department conducted its first anonymous employee satisfaction survey in collaboration with Effectory. No less than 88% of our employees took part in the survey, which resulted in the highest possible number of stars (***) and a top score of 8.5 for employee engagement. This means that we are one of the best employers in the Netherlands! We are proud of our committed people. “While our HR policy is aimed at enabling people to grow sustainably, the wider ambition is for our employees to connect with each other and with our beautiful company.” Jeannette Jongeleen HR Manager, Royal Lemkes 36
Anonymous quotes about what makes working at Royal Lemkes so enjoyable. “There are various challenges as well as many opportunities for me to develop. The company offers room for entrepreneurship and social projects, while encouraging interpersonal contact and employee involvement. It’s a company with a mission that I support and it dares to explore all possibilities.” “The drive and craftsmanship of my colleagues and the feeling that everyone in the organisation is open and approachable.” “Pleasant colleagues, a healthy and very dynamic company, where no two days are the same, and a positive atmosphere. Plenty of room for ambition and development and there’s also a lot of loyalty and solidarity.” “It’s a joy to work here...” Nevertheless, there are still certain areas where we can do better. We have therefore developed various action plans to address ongoing concerns. We shall conduct the survey again in 2019. 37
Medal awarded for more than 25 years of service. Personal growth: People blossom when they are empowered. We are a learning organisation that not only inspires employees to grow and actively contribute to their own personal development, but we also encourage them to develop their role within the organisation. Plantify Academy: In 2017, we established the Plantify Academy to ensure the sustainable growth of our people. We have now launched the fourth personal leadership programme and held workshops on the seven characteristics of effective leadership according to Stephen Covey. Professional courses were also provided in the areas of account management, Microsoft Office Suite, plants and language training. In addition, we offered opportunities for employees to follow individual study programmes, such as MBA and NEVI. In 2018, we shall continue to provide these programmes and courses at full steam. We shall also initiate new training pathways this year, including the Talent Development Programme, Lean management courses and various master classes and workshops. Vitality: To increase employee vitality and prevent absenteeism, in 2017 we set up absenteeism as a specialism within the HR department to support both managers and employees. Absenteeism fell to 4%. In 2018, we shall encourage our employees to get moving so that they stay fit and motivated. Diversity: We believe in diversity – whether it concerns gender, age, experience or nationality – and feel that differences certainly enhance our company. Among our 195 employees, we have no fewer than 11 nationalities. Moreover, various nationalities are represented in our permanent group of temporary employees. Our company also employs people from sheltered workshops. 38
Sickness absenteeism 4.12% 2.51% 0.52% 40.79 44.26 1.09% (5.48% in 2016) 20% AVERAGE AGE 42.88 (42.94) O.2% decline from 2016 20-24 years 25-34 years 35-44 years 45-54 years 55-59 years >60 years Age distribution 3 5 25 16 23 5 4 8% 8% 8% 8% 8% 8% 19 35 38 17 7 + 78 119 19 outflow EMPLOYEES EMPLOYEES 20 YEARS OF SERVICE <1 1-5 6-10 11-15 16-20 21-25 25+ 70 43 24 19 6 15 Inflow and outflow 21 10 9 11 10 39 Long Moderate Short
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Our sustainable mission 41
Sustainability L I VING WI THIN THE LIM I TS OF THE ENVIRONMENT Royal Lemkes believes in working together to create a sustainable, future-proof horticultural sector. Because, together, we make the world a more beautiful and better place with plants. More beautiful for people, not only for those involved in the production process but also for consumers who get to enjoy the positive qualities of plants. And better for the environment by encouraging the use of integrated pest management in cultivation, for example, and by choosing sustainable varieties and emphasising the power of plants, not least in their ability to absorb CO2 or harmful substances. OUR SIX SUSTAINABILITY THEMES: Biodiversity Climate Well-being, health and society Working Conditions Employees Natural resources 42
“Sustainability is in the DNA of this family business. The driving force at Royal Lemkes is not the maximisation of profit but the desire to make a difference by focusing on themes such as ‘planet and people’.” Cees van der Meij Owner of Royal Lemkes In other words, we want to create a positive impact with our products and services. To help achieve this, Royal Lemkes has introduced six sustainability themes. However, we can only have an impact by working together with all stakeholders and links in the chain, including breeders, plant suppliers, customers, NGOs and the government. The complex horticultural chain requires cooperation at local, national and international levels. Royal Lemkes is therefore a partner in several ventures: “Ensuring good working conditions throughout the entire chain is an important mission. It’s not only retailers that demand this but also the public sector and civil society organisations. Our ultimate goal is achieving transparency throughout the entire chain, so we can then be sure that the products we trade in are produced in a socially responsible manner.” Elise Wieringa Quality Assurance and Sustainability Manager, Royal Lemkes 43
For each sustainability theme, we have defined our ambitions for 2020 and the steps we want to take to achieve these ambitions. The steps we took in 2017, according to the various themes, are set out below. BIODIVERSITY We spent a lot of time and energy on this theme, which is very topical in our sector, including for many retailers too. For example, we took the initiative to actively work towards a sustainable, future-proof horticultural sector where we grow and trade flowers and plants with respect for people and the environment. Together with a number of other major players in the sector, we signed a manifesto with the ambition of getting 90% of the products on the market certified by 2020. Based on this manifesto, we organised five grower meetings with 200 growers and attended five existing growers’ meetings and four trade association meetings. We are seeing a sharp increase in the number of growers who are preparing (or who are taking follow-up steps) for certification (GAP or MPS ABC). In 2017, the percentage of sustainably sourced and traded products* at Royal Lemkes rose from 67 to 73. We have signed a letter of intent with Tuinbranche NL to support the implementation of the manifesto. The focus is on reducing the use of pesticides. * Sustainably sourced and traded products: Good Agricultural Practice (GAP) certified and both GAP and Global Social Compliance Programme (GSCP) certified in high-risk countries. 44
“We all want our children and grandchildren to inherit a beautiful and clean world, don’t we? This is in fact possible, as we already have the technology. It is us, the people, that need to change our economic system. Buying differently, producing differently, transporting differently, consuming energy differently and so on. Change can be a challenge. Change means innovating, creating, working together, daring to make mistakes and learning. Change is extremely inspiring but not always easy. For this to succeed, we need so-called ‘captains’, people who dare to lead the way. Entrepreneurs and enterprising people possess such strength. Like the people at Royal Lemkes, pioneers who can make the plant sector future-proof, climate-neutral, circular and inclusive. This annual report shows that huge strides have been made and that we have great ambitions for the coming years. I find that inspiring. If you set your goals high, you won’t miss them.” m i s p n s p f Maria van der Heijden Managing Director, MVO Nederland Many of our retailers ask us for advice on these complex issues, which is why we work with Koppert Biological Systems and other organisations to build and share expertise in the area of integrated pest management. In 2017, Royal Lemkes also acquired certification to trade in organic products. These products are a fine addition to a sustainable product range. “Sustainable production and trade is rapidJeroen Oudheusden Executive Officer, Floriculture Sustainability Initiative ly becoming the norm and delivers positive business cases when we work together as an industry. And sustainable plants inspire consumers and give hope that the future can be green and colourful! Rooted in its forward-looking objectives, Royal Lemkes plays an important connecting role within the Floriculture Sustainability Initiative (FSI 2020), enabling chain parties to build sustainable growth with confidence.” 45
Development of CO2 emissions 2011 2012 Gas & Light CLIMATE Ever since 2012, when Royal Lemkes built the largest solar panel roof in the Netherlands, climate has been an area where we have made progress year on year. By introducing LED lighting and heat pumps, switching to green electricity, taking energy-saving measures and raising awareness, we have reduced our CO2 emissions by more than 65% compared to 2011 (internal figure). During 2017, in association with Benefits of Nature, we calculated our CO2 footprint for 2015 and 2016. The results will inform our plans to further reduce our footprint. It was a special occasion in 2017 when we installed a sea container with batteries to store our surplus solar energy. As icing on the cake, employees can now take out a contract to receive energy in their homes from our rooftop supply. As growers and carriers are responsible for the biggest CO2 impact in our business chain, sustainability was an important theme at our growers and carriers’ meetings in 2017. We are currently in talks with both parties and intend to analyse and identify the CO2 impact of various plants across the entire chain in 2018. The supply logistics project mentioned previously was very successful in reducing CO2 emissions in the chain. This project has led to a substantial achievement: we were able to cancel 600 trips, which equates to 40,000 road kilometres. 2013 2014 2015 Business vehicle fleet 2016 2017 Business travel Watch the film of the battery container via youtu.be/lWgp1bKp7gc or scan this QR code. Scan me 46 Turnover in € mln. Co2 emissions
NATURAL RESOURCES As well as introducing new waste collection points to encourage separate waste collection, in 2017 we also set about increasing our knowledge of this comprehensive topic. We determined the impact of our packaging materials based on the calculation of our footprint, which led to the Foil Reduction project. We expect to take further concrete steps in 2018 together with a number of retail partners. WELL-BEING, HEALTH AND SOCIETY In 2017, we collected and shared with our retail partners all knowledge and insights into the wonderful role that plants can play in people’s lives. This included increasing our understanding of ‘biology and plants’ in an inspiration session provided by Tom Koenderman* for the entire company. We also launched various new initiatives related to our role in the community and society. For instance, we now deliver leftover plants to local care homes and food banks. We already had ‘great for the home’ for our employees; now we also have ‘great for the care home’. * Tom Koenderman is the director and founder of CloudGarden, a Green PAC iLab company. CloudGarden supplies smart air purification systems in the form of green walls. WORKING CONDITIONS Another topical theme for our retail partners is working conditions. We participated in the Living Wage Lab, which involves cooperating with civil society organisations and other companies to achieve a living wage in the horticultural sector. We attended Amfori BSCI webinars and workshops on modern slavery. We also cooperated with suppliers of value-added products to (indirectly) help make a positive contribution towards improving working conditions in the chain. Furthermore, we are involved in negotiations for a covenant on a sustainable horticultural sector aimed at developing a responsible international policy. We try to inspire others in the chain to operate more sustainably. But, of course, it all starts with us. To inspire our own people, in 2017 we placed sustainability on the agenda four times in our monthly internal business updates. We also invited inspiring speakers like Volkert Engelsman, who ranked first in Trouw’s (a leading Dutch newspaper) Sustainable 100 list. And we organised a Sustainable Thursday, where we played the film Normal is Over and listened to guest speaker Maurits Groen*. * Maurits Groen is a communications adviser, activist and entrepreneur who engages with environmental and development issues. He is co-founder of Waka Waka and Kipster. Royal Lemkes gifted its employees a Waka Waka lamp for Christmas, with which we also gave numerous people in Africa access to light. 47
Royal Lemkes Foundation SHARING I S MULTIPLYING The Royal Lemkes Foundation came into existence in November 2017. The Foundation now has a board and website and recently acquired non-profit tax status. We, as the Royal Lemkes Foundation, regard ourselves as a steward. As befits a good steward, we manage the natural assets of people and our planet on behalf of future generations. We are focused on the long term, not on quick returns. The Royal Lemkes Foundation believes that people can make a difference by working together. We would like to see the economy and society move closer. This would mean the economy again being at the heart of society, whereby a better understanding of different groups and a belief in everyone’s potential is encouraged. In turn, this would lead to an increase in mutual appreciation, empathy and a service-oriented attitude, resulting in better relationships between people, a more sustainable living environment and a stronger economy. The Royal Lemkes Foundation therefore supports projects that focus on ‘green and togetherness’. 48
During the 2017 Christmas breakfast, 20 cheques were handed to employees who had nominated charities as part of the ‘Gesture of Encouragement’ donation project. Recipients included Care for Natural Gambia, NME Mundial Bolivia, Bwandafonds Oeganda and Stichting Woonvorm de Regenboog, a residential care facility (its donation is for a sensory garden). We are also in talks with several organisations that are eligible for structural aid over a threeyear period, such as Stichting Waterpas, a foundation that provides clean drinking water in Mombasa. In 2018, together with the Municipality of Lansingerland, we launched the Het Nieuwe Wij initiative (The New Us). This initiative aims to reintegrate people in Lansingerland who are not active in the labour market. It is rooted in the concepts of daring to think differently, meeting and supporting, connecting and participating and moving forward together. For more information, visit www.royallemkes.nl 49
Financial results SUSTAINABLE GROWTH After spectacular growth in 2016, revenue stabilised at 249 million euros in 2017. Turnover increased with the vast majority of our customers. Moreover, the revenue mix has become healthier due to a reduction of promotional sales with low margins being offset by a sharp increase in daily trading sales. In 2018, we foresee further growth with all our customers, despite the planned departure of two large retail chains whose philosophy on the plant category no longer matches our own. We expect to forge a valuable partnership with a new customer in 2018. Revenue development 270 260 250 240 230 220 210 200 2015 2016 2017 2018 Forecast Net revenue in € mln. 50 260 249 249 222
Our bottom line increased slightly. This was partly due to a better revenue mix and margin, but we also managed costs more effectively and improved the quality of our services. Claims and failure costs were therefore reduced. We expect a similar result in 2018, which will require a great deal of effort in managing cost-price increases effectively on a number of fronts. Result development 1.40% 1.30% 1.20% 1.10% 1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 2014 2015 2016 Pre-tax profit (%) Solvency at the end of 2017 was very healthy and in line with our internal standard (24.4%). Liquidity is more than sufficient to meet our obligations. 2017 1.34% 1.18% 1.09% 0.98% 51
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