annual report 2005 - fountain · profile 1 president’s message 2 ceo’s message 3 management and...
TRANSCRIPT
ANNUAL REPORT 2005
TABLE OF CONTENTS
Key numbers
Profile 1
President’s Message 2
CEO’S Message 3
Management and Corporate governance 5
Management report 9
Products and services: a total solution 13
Personnel and Distributors:
an effective network 19
FINANCIAL ANNUAL REPORT SECTION
Auditor’s report 23
2005 Consolidated annual accounts 25
Descriptive data and compliance report 32
Appendices to the 2005 consolidated
accounts 32
2005 Corporate annual accounts
(abbreviated version) 54
Fountain S.A.
VAT be 0412.124.393
Tel. +32 2 389 08 10 – Fax +32 2 389 08 14
website: www.fountain-group.com
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
ANNUAL REPORT 2005
TABLE OF CONTENTS
Key numbers
Profile 1
President’s Message 2
CEO’S Message 3
Management and Corporate governance 5
Management report 9
Products and services: a total solution 13
Personnel and Distributors:
an effective network 19
FINANCIAL ANNUAL REPORT SECTION
Auditor’s report 23
2005 Consolidated annual accounts 25
Descriptive data and compliance report 32
Appendices to the 2005 consolidated
accounts 32
2005 Corporate annual accounts
(abbreviated version) 54
Fountain S.A.
VAT be 0412.124.393
Tel. +32 2 389 08 10 – Fax +32 2 389 08 14
website: www.fountain-group.com
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
1
PROFILE
A COMPLETE LINE OF PRODUCTS AND
SERVICES
The Fountain Group is specialized in serving busi-
nesses of five to 15 people: small and medium-sized
businesses, sales offices, professional offices, etc.
Fountain enables them to offer their clients, visitors
and associates delicious hot and cold drinks, thanks
to its full-service business model. Fountain supplies
its customers with everything they need: distribution
machines, drinks, accessories (cups, stirrers, etc.) and
“little bonuses” such as individual portion control cups
for milk, sugar packets, chocolate squares, etc.
A WIDE RANGE OF PRODUCTS
Fountain offers a wide range of drinks to satisfy the
tastes of its customers: numerous kinds of coffee, tea,
hot chocolate, soup, and cold isotonic drinks. These
drinks come in different forms (fresh or freeze-dried
coffee in cartridges, capsules or single-serve portions)
and they are all carefully packaged in containers that
preserve their flavor.
EFFICIENT SERVICE
From the installation of machines to their maintenance,
and including order delivery, Fountain can count on the
efficiency and effectiveness of its network of distributors,
whether they’re subsidiaries of the Fountain Group
or independent, to ensure the satisfaction of its end
clients.
For its part, Fountain mobilizes its employees and
partners around a common business plan, and empha-
sizes professional development.
A PUBLICLY TRADED INTERNATIONAL
GROUP
Founded in 1972, today the Fountain Group has a
presence in 28 countries, counting 26 import companies
and more than 200 exclusive distributors.
In 2005, more than one million cups of Fountain drinks
were consumed every day!
Fountain is listed on the Brussels stock exchange
(Euronext, code FOU).
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CONSOLIDATED NET PROFIT
(in EUR million)
STOCK EXCHANGE CAPITALISATION
(in EUR million)
CONSOLIDATED TURNOVER
(in EUR million)
CONSOLIDATED OPERATING CASH-FLOW
(in EUR million)
Ordinary General Meeting of the Shareholders 2006 29th May 2006 on 10:00Capital reduction available for payment from Degroof, Fortis, ING 1st AugustAnnouncement of half-year results 2005 Mid-September 2006Announcement of annual results 2005 Mid-March 2007Ordinary General Meeting 2006 28 May 2007
FINANCIAL AGENDA
(excluding royalties) 2005 2004 2003 2002 2001France 65.9% 62.2% 58.1% 54.3% 53.1%Benelux 26.8% 28.5% 29.5% 32.8% 29.6%Scandinavia 4.0% 3.8% 5.6% 5.6% 5.9%United Kingdom 1.4% 1.1% 1.3% 1.7% 2.2%Czech Republic 0.5% 1.6% 1.9% 2.3% 2.6%Rest of the World 1.4% 2.7% 3.6% 3.3% 6.6%
SALES TURNOVER BREAKDOWN PER MARKET
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Equity per share 14,843 15,307 12,693 13,468 13,962 14,779Enterprise value per share 23,577 22,491 22,355 17,990 16,898 20,728Operating cash-flow per share 6,204 6,034 6,029 5,250 5,196 4,271Net profit per share 2,176 2,235 0.248 (0.429) (0.432) (1.389)Net cash-flow per share 4,838 4,564 4,057 3,083 3,246 2,639Price earning ratio (PER) x 10.00 x 7.72 x 69.45 x 30.32 x 21.13 x 8.71Capitalisation on Equity 146.5% 112.7% 135.9% 99.9% 65.3% 81.9%Capitalisation on EBITDA x 3.51 x 2.86 x 2.86 x 2.48 x 1.76 x 2.83Enterprise value on EBITDA x 3.80 x 3.73 x 3.71 x 3.43 x 3.25 x 4.85
KEY FIGURES PER SHARE AND FINANCIAL RATIOS
(in EUR) 2005 2004 2003 2002 2001Issued shares 1,615,960 1,615,960 1,615,960 1,615,960 1,615,960
Alloted stock options 134,545 134,545 134,545 90,145 90,145Warrants still available for exercise
69,865 76,625 98,965 55,085 58,205
TOTAL 1,685,825 1,692,585 1,714,925 1,671,045 1,674,165
NUMBER OF SHARES
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Gross dividend 0.00 0.60 0.60 0.44 0.32 0.00Net dividend 0.00 0.45 0.45 0.33 0.24 0.00TOTAL gross dividend 0.00 969,576 969,576 711,022 517,107 0TOTAL gross dividend on EBITDA 0.00% 9.94% 9.95% 8.38% 6.16% 0.00%Capital reduction 2.00
PAYMENT ON CAPITAL
KEY NUMBERS CONSOLIDATED MAIN FIGURES
(in thousands EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001 2000 1999
Sales turnover 52,895 49,975 49,723 48,448 48,222 46,249 43,979 38,266Operating cash-flow (EBITDA)(1) 10,026 9,751 9,742 8,484 8,396 6,901 9,125 8,428Operating profit (EBIT)(2) 5,767 5,994 7,857 6,929 7,061 4,732 8,110 7,299Financial results (0.635) (0.721) (0.821) (0.973) (1,052) (1,115) (1,049) (0.974)Extraordinary results 0.000 0.000 (0.364) (0.311) 0.870 (0.115) (0.107) (0.910)Result before taxes(1) 5,132 5,273 6,672 5,645 6,879 3,502 6,954) 5,415)Taxes (1,573) (1,655) (2,002) (2,218) (2,968) (1,407) (2,613) (1,967)Goodwill depreciation(3) (2,035) (1,660) (4,713) (4,618) (4,608) (4,340) (3,922) (3,555)Profit after taxes 3,516 3,611 0.401 (0.694) (0.697) (2,245) 0.418 (0.107)Net cash-flow 7,818 7,375 6,555 4,982 5,246 4,264 5,356 4,578Capitalisation on 31 December 35,147 27,875 27,875 21,040 14,738 19,553 30,240 52,127Equity 23,985 24,735 20,512 21,052 22,562 23,883 27,107 27,408Net debt 2,953 8,470 8,250 8,031 12,569 13,942 11,119 10,714Enterprise value (EV) 38,100 36,345 36,125 29,071 27,307 33,495 41,359 62,841
(1) Recalculated in the IFRS presentation in order to exclude closing and reorganisation costs
(2) Excluding goodwill depreciation till 2004, included from 2004 IFRS
(3) Inclu
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
43
.98
38
.27 4
6.2
5
48
.22
48
.45
49
.72
49
.97
52
.89
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
8.4
3 9.1
3
6.9
0
8.4
0
8.4
8
9.7
4
9.7
5
10
.03
3.6
1
3.5
2
0.4
0
0.6
9
-2.2
4
0.4
2
-0.1
1
0.7
0
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
27
.87 3
5.1
5
27
.87
21
.04
19
.55
30
.24
52
.13
14
.74
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
(number of shares)
SG Capital Europe Fund I,LP 500,844 31.0%Electra Partner 179,193 11.1%Quaeroq SCRL 200,036 12.4%Public 735,887 45.5%
source: transparency statements received by the company
SHAREHOLDING (in 2005)
SG Capital Europe Fund I, LP is a private equity fund based in London
Electra Partners is an investment fund subject to French law, and a subsidiary of Electra Investment Trust
Quaeroq SCRL is an investment company subject to Belgian law
Euronext Brussels
Primary spot market, double fixing
1.615.960 issued shares
134,545 warrants allocated at the end of 2002, of which 64,680 can no longer be exerciced.
Code: BE 000 375 2665
Euronext code: FOU
Fountain was listed on the Brussels spot primary market in April 1999.
LISTING
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
1
PROFILE
A COMPLETE LINE OF PRODUCTS AND
SERVICES
The Fountain Group is specialized in serving busi-
nesses of five to 15 people: small and medium-sized
businesses, sales offices, professional offices, etc.
Fountain enables them to offer their clients, visitors
and associates delicious hot and cold drinks, thanks
to its full-service business model. Fountain supplies
its customers with everything they need: distribution
machines, drinks, accessories (cups, stirrers, etc.) and
“little bonuses” such as individual portion control cups
for milk, sugar packets, chocolate squares, etc.
A WIDE RANGE OF PRODUCTS
Fountain offers a wide range of drinks to satisfy the
tastes of its customers: numerous kinds of coffee, tea,
hot chocolate, soup, and cold isotonic drinks. These
drinks come in different forms (fresh or freeze-dried
coffee in cartridges, capsules or single-serve portions)
and they are all carefully packaged in containers that
preserve their flavor.
EFFICIENT SERVICE
From the installation of machines to their maintenance,
and including order delivery, Fountain can count on the
efficiency and effectiveness of its network of distributors,
whether they’re subsidiaries of the Fountain Group
or independent, to ensure the satisfaction of its end
clients.
For its part, Fountain mobilizes its employees and
partners around a common business plan, and empha-
sizes professional development.
A PUBLICLY TRADED INTERNATIONAL
GROUP
Founded in 1972, today the Fountain Group has a
presence in 28 countries, counting 26 import companies
and more than 200 exclusive distributors.
In 2005, more than one million cups of Fountain drinks
were consumed every day!
Fountain is listed on the Brussels stock exchange
(Euronext, code FOU).
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CONSOLIDATED NET PROFIT
(in EUR million)
STOCK EXCHANGE CAPITALISATION
(in EUR million)
CONSOLIDATED TURNOVER
(in EUR million)
CONSOLIDATED OPERATING CASH-FLOW
(in EUR million)
Ordinary General Meeting of the Shareholders 2006 29th May 2006 on 10:00Capital reduction available for payment from Degroof, Fortis, ING 1st AugustAnnouncement of half-year results 2005 Mid-September 2006Announcement of annual results 2005 Mid-March 2007Ordinary General Meeting 2006 28 May 2007
FINANCIAL AGENDA
(excluding royalties) 2005 2004 2003 2002 2001France 65.9% 62.2% 58.1% 54.3% 53.1%Benelux 26.8% 28.5% 29.5% 32.8% 29.6%Scandinavia 4.0% 3.8% 5.6% 5.6% 5.9%United Kingdom 1.4% 1.1% 1.3% 1.7% 2.2%Czech Republic 0.5% 1.6% 1.9% 2.3% 2.6%Rest of the World 1.4% 2.7% 3.6% 3.3% 6.6%
SALES TURNOVER BREAKDOWN PER MARKET
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Equity per share 14,843 15,307 12,693 13,468 13,962 14,779Enterprise value per share 23,577 22,491 22,355 17,990 16,898 20,728Operating cash-flow per share 6,204 6,034 6,029 5,250 5,196 4,271Net profit per share 2,176 2,235 0.248 (0.429) (0.432) (1.389)Net cash-flow per share 4,838 4,564 4,057 3,083 3,246 2,639Price earning ratio (PER) x 10.00 x 7.72 x 69.45 x 30.32 x 21.13 x 8.71Capitalisation on Equity 146.5% 112.7% 135.9% 99.9% 65.3% 81.9%Capitalisation on EBITDA x 3.51 x 2.86 x 2.86 x 2.48 x 1.76 x 2.83Enterprise value on EBITDA x 3.80 x 3.73 x 3.71 x 3.43 x 3.25 x 4.85
KEY FIGURES PER SHARE AND FINANCIAL RATIOS
(in EUR) 2005 2004 2003 2002 2001Issued shares 1,615,960 1,615,960 1,615,960 1,615,960 1,615,960
Alloted stock options 134,545 134,545 134,545 90,145 90,145Warrants still available for exercise
69,865 76,625 98,965 55,085 58,205
TOTAL 1,685,825 1,692,585 1,714,925 1,671,045 1,674,165
NUMBER OF SHARES
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Gross dividend 0.00 0.60 0.60 0.44 0.32 0.00Net dividend 0.00 0.45 0.45 0.33 0.24 0.00TOTAL gross dividend 0.00 969,576 969,576 711,022 517,107 0TOTAL gross dividend on EBITDA 0.00% 9.94% 9.95% 8.38% 6.16% 0.00%Capital reduction 2.00
PAYMENT ON CAPITAL
KEY NUMBERS CONSOLIDATED MAIN FIGURES
(in thousands EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001 2000 1999
Sales turnover 52,895 49,975 49,723 48,448 48,222 46,249 43,979 38,266Operating cash-flow (EBITDA)(1) 10,026 9,751 9,742 8,484 8,396 6,901 9,125 8,428Operating profit (EBIT)(2) 5,767 5,994 7,857 6,929 7,061 4,732 8,110 7,299Financial results (0.635) (0.721) (0.821) (0.973) (1,052) (1,115) (1,049) (0.974)Extraordinary results 0.000 0.000 (0.364) (0.311) 0.870 (0.115) (0.107) (0.910)Result before taxes(1) 5,132 5,273 6,672 5,645 6,879 3,502 6,954) 5,415)Taxes (1,573) (1,655) (2,002) (2,218) (2,968) (1,407) (2,613) (1,967)Goodwill depreciation(3) (2,035) (1,660) (4,713) (4,618) (4,608) (4,340) (3,922) (3,555)Profit after taxes 3,516 3,611 0.401 (0.694) (0.697) (2,245) 0.418 (0.107)Net cash-flow 7,818 7,375 6,555 4,982 5,246 4,264 5,356 4,578Capitalisation on 31 December 35,147 27,875 27,875 21,040 14,738 19,553 30,240 52,127Equity 23,985 24,735 20,512 21,052 22,562 23,883 27,107 27,408Net debt 2,953 8,470 8,250 8,031 12,569 13,942 11,119 10,714Enterprise value (EV) 38,100 36,345 36,125 29,071 27,307 33,495 41,359 62,841
(1) Recalculated in the IFRS presentation in order to exclude closing and reorganisation costs
(2) Excluding goodwill depreciation till 2004, included from 2004 IFRS
(3) Inclu
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
43
.98
38
.27 4
6.2
5
48
.22
48
.45
49
.72
49
.97
52
.89
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
8.4
3 9.1
3
6.9
0
8.4
0
8.4
8
9.7
4
9.7
5
10
.03
3.6
1
3.5
2
0.4
0
0.6
9
-2.2
4
0.4
2
-0.1
1
0.7
0
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
27
.87 3
5.1
5
27
.87
21
.04
19
.55
30
.24
52
.13
14
.74
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
(number of shares)
SG Capital Europe Fund I,LP 500,844 31.0%Electra Partner 179,193 11.1%Quaeroq SCRL 200,036 12.4%Public 735,887 45.5%
source: transparency statements received by the company
SHAREHOLDING (in 2005)
SG Capital Europe Fund I, LP is a private equity fund based in London
Electra Partners is an investment fund subject to French law, and a subsidiary of Electra Investment Trust
Quaeroq SCRL is an investment company subject to Belgian law
Euronext Brussels
Primary spot market, double fixing
1.615.960 issued shares
134,545 warrants allocated at the end of 2002, of which 64,680 can no longer be exerciced.
Code: BE 000 375 2665
Euronext code: FOU
Fountain was listed on the Brussels spot primary market in April 1999.
LISTING
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
1
PROFILE
A COMPLETE LINE OF PRODUCTS AND
SERVICES
The Fountain Group is specialized in serving busi-
nesses of five to 15 people: small and medium-sized
businesses, sales offices, professional offices, etc.
Fountain enables them to offer their clients, visitors
and associates delicious hot and cold drinks, thanks
to its full-service business model. Fountain supplies
its customers with everything they need: distribution
machines, drinks, accessories (cups, stirrers, etc.) and
“little bonuses” such as individual portion control cups
for milk, sugar packets, chocolate squares, etc.
A WIDE RANGE OF PRODUCTS
Fountain offers a wide range of drinks to satisfy the
tastes of its customers: numerous kinds of coffee, tea,
hot chocolate, soup, and cold isotonic drinks. These
drinks come in different forms (fresh or freeze-dried
coffee in cartridges, capsules or single-serve portions)
and they are all carefully packaged in containers that
preserve their flavor.
EFFICIENT SERVICE
From the installation of machines to their maintenance,
and including order delivery, Fountain can count on the
efficiency and effectiveness of its network of distributors,
whether they’re subsidiaries of the Fountain Group
or independent, to ensure the satisfaction of its end
clients.
For its part, Fountain mobilizes its employees and
partners around a common business plan, and empha-
sizes professional development.
A PUBLICLY TRADED INTERNATIONAL
GROUP
Founded in 1972, today the Fountain Group has a
presence in 28 countries, counting 26 import companies
and more than 200 exclusive distributors.
In 2005, more than one million cups of Fountain drinks
were consumed every day!
Fountain is listed on the Brussels stock exchange
(Euronext, code FOU).
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20
30
40
50
60
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CONSOLIDATED NET PROFIT
(in EUR million)
STOCK EXCHANGE CAPITALISATION
(in EUR million)
CONSOLIDATED TURNOVER
(in EUR million)
CONSOLIDATED OPERATING CASH-FLOW
(in EUR million)
Ordinary General Meeting of the Shareholders 2006 29th May 2006 on 10:00Capital reduction available for payment from Degroof, Fortis, ING 1st AugustAnnouncement of half-year results 2005 Mid-September 2006Announcement of annual results 2005 Mid-March 2007Ordinary General Meeting 2006 28 May 2007
FINANCIAL AGENDA
(excluding royalties) 2005 2004 2003 2002 2001France 65.9% 62.2% 58.1% 54.3% 53.1%Benelux 26.8% 28.5% 29.5% 32.8% 29.6%Scandinavia 4.0% 3.8% 5.6% 5.6% 5.9%United Kingdom 1.4% 1.1% 1.3% 1.7% 2.2%Czech Republic 0.5% 1.6% 1.9% 2.3% 2.6%Rest of the World 1.4% 2.7% 3.6% 3.3% 6.6%
SALES TURNOVER BREAKDOWN PER MARKET
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Equity per share 14,843 15,307 12,693 13,468 13,962 14,779Enterprise value per share 23,577 22,491 22,355 17,990 16,898 20,728Operating cash-flow per share 6,204 6,034 6,029 5,250 5,196 4,271Net profit per share 2,176 2,235 0.248 (0.429) (0.432) (1.389)Net cash-flow per share 4,838 4,564 4,057 3,083 3,246 2,639Price earning ratio (PER) x 10.00 x 7.72 x 69.45 x 30.32 x 21.13 x 8.71Capitalisation on Equity 146.5% 112.7% 135.9% 99.9% 65.3% 81.9%Capitalisation on EBITDA x 3.51 x 2.86 x 2.86 x 2.48 x 1.76 x 2.83Enterprise value on EBITDA x 3.80 x 3.73 x 3.71 x 3.43 x 3.25 x 4.85
KEY FIGURES PER SHARE AND FINANCIAL RATIOS
(in EUR) 2005 2004 2003 2002 2001Issued shares 1,615,960 1,615,960 1,615,960 1,615,960 1,615,960
Alloted stock options 134,545 134,545 134,545 90,145 90,145Warrants still available for exercise
69,865 76,625 98,965 55,085 58,205
TOTAL 1,685,825 1,692,585 1,714,925 1,671,045 1,674,165
NUMBER OF SHARES
(in EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001
Gross dividend 0.00 0.60 0.60 0.44 0.32 0.00Net dividend 0.00 0.45 0.45 0.33 0.24 0.00TOTAL gross dividend 0.00 969,576 969,576 711,022 517,107 0TOTAL gross dividend on EBITDA 0.00% 9.94% 9.95% 8.38% 6.16% 0.00%Capital reduction 2.00
PAYMENT ON CAPITAL
KEY NUMBERS CONSOLIDATED MAIN FIGURES
(in thousands EUR) 2005 IFRS 2004 IFRS 2004 2003 2002 2001 2000 1999
Sales turnover 52,895 49,975 49,723 48,448 48,222 46,249 43,979 38,266Operating cash-flow (EBITDA)(1) 10,026 9,751 9,742 8,484 8,396 6,901 9,125 8,428Operating profit (EBIT)(2) 5,767 5,994 7,857 6,929 7,061 4,732 8,110 7,299Financial results (0.635) (0.721) (0.821) (0.973) (1,052) (1,115) (1,049) (0.974)Extraordinary results 0.000 0.000 (0.364) (0.311) 0.870 (0.115) (0.107) (0.910)Result before taxes(1) 5,132 5,273 6,672 5,645 6,879 3,502 6,954) 5,415)Taxes (1,573) (1,655) (2,002) (2,218) (2,968) (1,407) (2,613) (1,967)Goodwill depreciation(3) (2,035) (1,660) (4,713) (4,618) (4,608) (4,340) (3,922) (3,555)Profit after taxes 3,516 3,611 0.401 (0.694) (0.697) (2,245) 0.418 (0.107)Net cash-flow 7,818 7,375 6,555 4,982 5,246 4,264 5,356 4,578Capitalisation on 31 December 35,147 27,875 27,875 21,040 14,738 19,553 30,240 52,127Equity 23,985 24,735 20,512 21,052 22,562 23,883 27,107 27,408Net debt 2,953 8,470 8,250 8,031 12,569 13,942 11,119 10,714Enterprise value (EV) 38,100 36,345 36,125 29,071 27,307 33,495 41,359 62,841
(1) Recalculated in the IFRS presentation in order to exclude closing and reorganisation costs
(2) Excluding goodwill depreciation till 2004, included from 2004 IFRS
(3) Inclu
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
43
.98
38
.27 4
6.2
5
48
.22
48
.45
49
.72
49
.97
52
.89
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
8.4
3 9.1
3
6.9
0
8.4
0
8.4
8
9.7
4
9.7
5
10
.03
3.6
1
3.5
2
0.4
0
0.6
9
-2.2
4
0.4
2
-0.1
1
0.7
0
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
27
.87 3
5.1
5
27
.87
21
.04
19
.55
30
.24
52
.13
14
.74
1999
2000
2001
2002
2003
2004
2004 I
FRS
2005 I
FRS
(number of shares)
SG Capital Europe Fund I,LP 500,844 31.0%Electra Partner 179,193 11.1%Quaeroq SCRL 200,036 12.4%Public 735,887 45.5%
source: transparency statements received by the company
SHAREHOLDING (in 2005)
SG Capital Europe Fund I, LP is a private equity fund based in London
Electra Partners is an investment fund subject to French law, and a subsidiary of Electra Investment Trust
Quaeroq SCRL is an investment company subject to Belgian law
Euronext Brussels
Primary spot market, double fixing
1.615.960 issued shares
134,545 warrants allocated at the end of 2002, of which 64,680 can no longer be exerciced.
Code: BE 000 375 2665
Euronext code: FOU
Fountain was listed on the Brussels spot primary market in April 1999.
LISTING
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
2
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
A NEW MEDIUM-TERM GOAL
In accordance with our forecasts, 2005 was a good
year, as evidenced by the increase in our sales turnover,
which increased to 52.9 million Euros, as compared
with 50.0 million in 2004, as well as in our EBITDA of
10.0 million Euros (+ 2.8%). These numbers are all the
more satisfying since they were affected by last Fall’s
discontinuation of the collaboration with Nespresso
France. For reasons of medium-term value creation,
we have chosen not to renew our contract, which was
expiring.
The end of this collaboration, which accounted for
approximately 40% of the Group’s consolidated sales
turnover and operational cash flow, coincided with the
partial transfer of our Nespresso clientele, resulting
in financial compensation. Clearly, our medium-term
objective is to regenerate the income realized in 2005
in the espresso market segment, assisted by our
new partnership with illycaffè, whose products enjoy
an excellent brand image. The Group was awarded
exclusive distribution of illy’s business product line in
France, Belgium and the Netherlands. A new challenge
for Fountain and its distributors!
In 2005, Fountain also implemented the Lippens Code
of Corporate Governance and the new IFRS accounting
standards.
In addition, the Group continued to reduce its debt:
by the end of 2006, Fountain will be completely debt-
free and will at that point be able to undertake new
planning for external growth.
Concerning stock dividends, the Board of Directors,
confident in the Group’s ability to generate substantial
operational cash flows in the future, and taking into
account that the Group will be debt-free in the near
future, proposed the redistribution to shareholders of
the profits from the sale of French business accounts
to Nespresso.
The Board will therefore submit for approval to the
Extraordinary General Meeting of Shareholders, the
repayment of two Euros per share, in the form of a
reduction of the company’s capital in the amount of
3.2 million Euros.
The Board offers its warmest thanks to all of Fountain’s
shareholders and partners for the confidence that you
have placed in us, and for your support in our future
endeavors.
Pierre Vermaut,
President
PRESIDENT’S MESSAGE
3
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
BECOMING A SERVICE-ORIENTED BUSINESS
The market is changing, and so is Fountain! The year
2005 was distinguished by a change in the Group’s
Mission Statement. We are no longer oriented towards
being an industrial manufacturer of machines and
products; instead, we’ll focus on our service offerings
related to the consumption of coffee and other drinks
in small and medium-sized professional settings.
As a result, Fountain has chosen to subcontract all
of its machine production. However, in collaboration
with our industrial partners, we will still select the
machines and products that best meet the specific
needs of our clients. To fully meet their expectations,
we have developed a comprehensive product line,
including a wide variety of drinks and an extensive line
of machines, accessories and «little bonuses» (cream,
sugar, cookies, etc.) bearing the Fountain name. The
common denominator in this product line will be an
innovative new cup, created especially for the Group.
It will be launched during the second half of 2006.
We are very satisfied with the integration of the
companies that joined the group at the end of 2004;
they have already made a positive contribution to
the year’s cash flow. To reinforce team spirit and
the feeling of belonging to the Group, as well as the
effectiveness of our sales network, Fountain Academy’s
training sessions were expanded to include all sales
teams in our primary markets. We also developed new
Web-based tools to optimize our distributors’ ordering
process.
2005 was also a transitional year, following the end
of our exclusive Nespresso Professional distribution
contract in France, and the preparation for launching
an espresso offering in partnership with illycaffè in
France and Benelux.
In addition, in order to assess our strategy, an in-
depth study of the market for hot drinks, and of the
appropriateness of our product and service line and
our organization is in process, in collaboration with the
firm Bain & Co.
The Management Committee joins me in thanking
all of Fountain’s associates and distributors for your
commitment to our business plan.
Pascal Wuillaume,
CEO
CEO’S MESSAGE
4
5
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Pierre Vermaut
President
Director (Independent Director as of September,
2005).
Pierre Vermaut has chaired the Board of Directors of
the Fountain Group since February, 2000. He is also a
corporate officer.
Jean Ducroux
Director
Jean Ducroux is President and CEO of Electra Partners
Europe SA (France) and a corporate officer.
Alain Englebert
Independent director
Alain Englebert is a corporate officer.
Regnier Haegelsteen
Independent director
Regnier Haegelsteen is Managing Director of Banque
Degroof (Belgium) and a corporate officer.
Bruno Lambert
Director
Bruno Lambert is Director of SG Capital Europe, Ltd
(London) and a corporate officer
Paul Lippens
Independent director
Paul Lippens is President of the Groupe Sucrier
(Belgium) and a corporate officer
Philippe Renié
Director
Philippe Renié is Director of SG Capital Europe Advisors
Limited (Paris) and a corporate officer.
Philippe Sevin
Director
Philippe Sevin is Director of SG Capital Europe, Ltd
(London) and a corporate officer.
The ICML S.A. corporation, represented by Mr. Alain
Englebert, functions as the Secretary of the Board of
Directors.
The Board of Directors met six times in 2005.
The start and end dates of terms are listed in the table
on page 41.
Name Sessions of
Board of
Directors
Sessions of
Audit
Committee
Sessions of
Nominating/
Compensation
Committee
P. Vermaut 6 2 2
A. Englebert 6 2
R. Haegelsteen 5
P. Lippens 6 2 2
B. Lambert 5 2 2
P. Renié 5
P. Sevin 5
J. Ducroux 2
MANAGEMENT AND CORPORATE GOVERNANCE
BOARD OF DIRECTORS
6
(1) (2) (3) (4) (5) (6)
THE MANAGEMENT COMMITTEE
The Management Committee is not a management entity
according to Article 524 bis of the Corporate Code.
Pascal Wuillaume (3)
CEO, joined the Group in September, 2002
Michel Malschalck (2)
CFO, joined the Group in September, 2004
Franck Hogie (1)
Distribution network manager for France, joined the
Group in February, 2000
Sorin Mogosan (4)
Consumables purchasing and production manager,
joined the Group in 1985
Michel Tulkens (6)
Machine production manager and distribution network
manager for territories outside France, Belgium and the
Netherlands, joined the Group in the summer of 2003
Jean-François Buysschaert (5)
Distribution network manager for Belgium and the
Netherlands, joined the Group in September, 2004
CORPORATE GOVERNANCE
The Group complies with the provisions of the Lippens
Code, with the exception of divulging individual com-
pensation. In order to respect the privacy of those
concerned, individual compensation for the directors
and the CEO will not be divulged.
Compensation Committee
A Compensation Committee, made up of Mr Pierre
Vermaut, Mr Bruno Lambert and Mr Paul Lippens, directors,
defines the compensation policy for the members of the
Management Committee.
Compensation for the Board of Directors: 157,607 Euros.
Compensation for the Management Committee:
1,088,246 Euros
Nominating Committee
A Nominating Committee is included in the Compensation
Committee. Its task is to formulate recommendations
to the Board of Directors concerning the nomination of
directors and of members of the Management Committee.
The Nomination/Compensation Committee met three
times in 2005.
Audit Committee
The Audit Committee, which brings together Mr Pierre
Vermaut, Mr Bruno Lambert, Mr Paul Lippens and
Mr Alain Englebert, directors, assists the Board of Directors
in carrying out its role of overseeing financial matters,
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
7
conducting internal and external inspections and adhering
to applicable laws and regulations. It meets at least twice
per year to review the semi-annual and annual accounts.
A meeting may be called by any one of its members.
The CEO, CFO, the external auditors and any member
of management or corporate control may be invited
to participate in the Audit Committee’s meetings. The
Committee met twice during the 2005 fiscal year. During
these meetings, the Audit Committee examined the semi-
annual and annual accounts, the application of the new
IFRS accounting standards and the Code of Corporate
Governance.
Internal and External Audit
The Board of Directors’ desire for clarity and transparency
led it, in light of the large number of subsidiaries within
the Group, to implement a two-part external inspection
standard. At the local level, each company within the Group
is subject to an external audit every six months, to satisfy
Belgian legal requirements for a group listed on Euronext.
Likewise, at the Group level, the consolidated accounts are
reviewed by a group auditor, the B.S.T. Corporate Auditors,
an independent local auditing firm. The external inspections
carried out by local auditors is completed directly with the
financial directors for the countries concerned. The existence
of local auditors is also appreciated by the group auditor,
who, for each audit, defines the minimum inspections to
be carried out. The rules of internal control in force within
the Fountain Group require the two-signature rule. These
powers of signature are most often in the hands of local
directors and their financial directors. In accordance with
the Code of Corporate Governance, the need to create an
internal audit position was evaluated during 2005. Given
the size of the company and its risk profile, it was decided
to entrust the task of internal auditing to the Corporate
Finance Department, which, for these specific tasks, will
report directly to the Audit Committee.
Warrants and stock options
The company is committed to reinforcing the motivation
and loyalty of its managers by involving them as closely
as possible in value creation as well as in sharing the risks
and opportunities of its shareholders. Therefore, Fountain
allocated 148,801 warrants to certain staff members
holding management positions within various companies
in the Group. Each of these warrants confers the right to
one share of the Fountain Corporation. Among this total,
44,400 warrants (defined in plan E), were decided upon by
the Annual Meeting of Shareholders on May 26, 2003. The
remaining 104,401 warrants come from the initial B and D
plans. Of the 148,801 warrants allocated, only 69,865 of
them are still exercisable. The others are warrants rendered
null and void by the expiration of their period of vesting
or exercise. Among the exercisable warrants, 3,700 must
be vested during the two upcoming years. These warrants
have different exercisable values depending on their date
of allocation. These values range from 14.00 Euros to
31.14 Euros per warrant. Their first exercise period was
in June, 2004. They are only exercisable for 15 days per
year.
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
8
9
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Ladies and gentlemen,
We have the honor of presenting to you our manage-
ment report, including the consolidated and statutory
accounts for the Group for the fiscal year 2005, as
well as the annual consolidated accounts closed on
December 31, 2005. In addition, we submit for your
approval the proposal for allocation of income as well
as the discharge of our mandate for the completed
fiscal year.
The figures presented are in accordance with the
accounting method and evaluation criteria as set
forth by the IAS/IFRS standards. The fiscal year 2004
has been withdrawn in order to show an effective
comparison.
1. Consolidated income 2005
The Fountain group’s consolidated net income for the
fiscal year 2005 amounts, after taxes, to 3,516 K Euros,
2.6% less than for the previous fiscal year (3,611 K
Euros); this income takes into account tax costs of
1.6 million Euros.
The income for 2005 was notably impacted by the
costs of restructuring the French business entities
(0.5 million Euros), primarily related to the disconti-
nuation of Nespresso business operations, as well
as by considerable commercial costs for launching
the new espresso line in partnership with illycaffè
(0.4 million Euros).
As in 2004, the Group benefited from considerable tax
refunds in Holland (0.3 million Euros).
The consolidated operational cash flow amounted to
10.0 million Euros, or 19% of the overall sales turnover,
as compared with 19.5% for 2004 (9.8 million Euros).
2. The Group’s business operations in 2005
The Group’s consolidated sales turnover for 2005
is 52.90 million Euros, for an increase of 5.8% as
compared with 2004 (49.72 million Euros).
The increase in the sales turnover is primarily the result
of the full-year integration of the companies acquired in
2004 (Fountain Industries Brussels integrated as of the
second half of 2004, Cup Express and Orga Distribution
integrated as of 2005). At the end of April, the Group
sold its distribution subsidiary in the Czech Republic
to a local distributor. This transfer had no significant
impact on the Group’s accounts. The group undertook
merger and restructuring operations with respect to
its investments in order to simplify its organizational
structure and to take advantage of fiscal integration in
France; this had no impact on income.
Belgium, France and the Netherlands represent the
majority of consolidated sales.
During 2005, the Group reached an agreement with
Nestlé concerning the termination of operations related
to Nespresso Professional in France. This agreement,
whose specifics were included in a publication at the
time, will allow the Fountain Group to quickly reposition
MANAGEMENT REPORT
MANAGEMENT REPORT OF THE BOARD OF DIRECTORS
TO THE ANNUAL MEETING OF SHAREHOLDERS, MAY 29, 2006
1010
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
itself in the French espresso market and to reinvest
in internal and external growth initiatives related
to its primary mission of distributing drinks within
businesses.
Simultaneously, during the fourth quarter of 2005,
the Group launched sales of its new espresso product
line in partnership with illycaffè. This offer is clearly
successful.
3. Evaluation rules
For the first time, the Group implemented the IFRS
evaluation rules in 2005.
In accordance with the IFRS rules, the Group carried out
impairment tests on its assets. These did not result in
any asset adjustments.
A legal action opposes the Fountain Distribution Center
and the French fiscal authorities, for a maximum amount
of 0.2 million Euros. Based on the risk assessment
completed by our advisors, this legal action did not result
in any projection.
4. Research and Development
Additional costs incurred during the 2005 fiscal year
amounted to 0.4 million Euros and are related solely to
development costs.
5. Absence of conflict of interest
During the 2005 fiscal year, the Board was not required to
make any resolutions related to the provisions of Articles
523 and 524 of the Corporate Code.
6. Items related to Capital
The total number of securities representing the Fountain
S.A. corporation’s capital was 1,615,960 on December
31, 2005.
The sale of warrants in force on this date confers the right
to the subscription of 69,865 new shares (of the 98,965
warrants allocated, 29,100 are no longer exercisable
owing to the departure of their beneficiaries.)
7. Important events occurring after the closure of
the fiscal year
The Fountain Group announced in January, 2006 that it
intended to subcontract the production of its machines,
and therefore to close its production unit in Great Britain
at the end of 2006.
8. Perspectives on 2006
The launch of the illycafè line in France will not
11
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
compensate, in 2006, for the discontinuation of Nespresso
business activities. The most recent financial projections
confirm a consolidated sales turnover on the order of 38
million Euros for 2006 and an EBITDA of between 5 and
5.5 million Euros.
This income takes into account expenses of almost
2 million Euros related to substantial financial, commercial
and human resources dedicated to the development of the
new espresso product line in partnership with illycaffè,
as well as the strategic study undertaken with Bain.
However, the Board of Directors feels that to its
knowledge, there are no other significant risks and/or
uncertainties related to changes in business, income and
the overall financial situation.
9. Reduction of capital
In light of the financial results under review, the Board of
Directors proposes to the Annual Meeting of Shareholders
to go forward with a reduction of capital with the goal of
distributing a net amount of 2 Euros per share. This
reduction of capital will affect only capital that is paid
up and previously subscribed using cash or in-kind
contributions. Consequently, the Board of Directors will
propose to the Annual Meeting of Shareholders not to
distribute any dividends for the 2005 fiscal year. As a
reminder, for the 2004 fiscal year, a gross dividend of
0.60 Euros per share was distributed.
10. Allocation of statutory income
During the fiscal year, the company’s statutory income
amounted to 5,345,747.34 Euros. The income realized
during the previous fiscal year was 7,921,065.74 Euros,
and income to be allocated as of December 31, 2005 was
13,266,813.08 Euros.
Conditional upon your approval, the Board proposes to
allocate the income as follows:
Dividend: 0 Euro
Contribution to legal reserve: 267,287.37 Euros
Carried forward: 12,999,525.71 Euros
11. Miscellaneous
No additional fees were paid during the 2005 fiscal year
to either the Statutory Auditors (SCPRL Linet & Partners)
or the Auditor assigned to examine the consolidated
accounts (SCPRL B.S.T., Corporate Auditors).
We kindly ask you to familiarize yourselves with the
consolidated annual accounts closed on December 31,
2005, to approve the annual statutory accounts and the
proposed allocation of income, to discharge us of our
mandates for the 2005 fiscal year, and to do the same
for the Auditors.
Board of Directors
March 6, 2006
NB: A complete copy of the text of the statutory management report may be obtained upon request from the company’s headquarters.
12
13
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Thanks to its high-quality products and machines and
attentive service provided by its distributors, Fountain
allows its end clients to offer coffee, and many other
hot and cold drinks, to their own clients and staff.
This occurs under the best possible conditions, since
Fountain supplies everything its clients need related
to beverage service, from drinks to cups, along with
sugar and milk; Fountain also takes care of machine
maintenance.
In 2005, the Group’s mission evolved: now, Fountain
sees itself above all as a service corporation. This is
why Fountain is no longer producing machines. Future
machines will be selected from the international
market, then adapted for Fountain and produced by
fi rst-quality industrial partners. Thus, Fountain will be
better able to follow technological changes and allow
its clients to benefi t from them.
Among the Group’s end clients are small and medium-
sized businesses, banks, networks of franchised stores,
salespeople, medical offi ces, etc. The core target mar-
ket is professional settings with 5 to 15 people.
To satisfy this very diverse clientele, the Group offers
three families of products.
ESPRESSO
Espresso, the top of the line market segment, is
growing. For clients who are seeking the nec plus ultra
in coffee, Fountain offers pre-packaged fresh coffee.
Since the discontinuation of its collaboration with
Nespresso France at the end of 2005, Fountain has
been working exclusively with illycaffè, whose products
are very much enjoyed by coffee lovers.
The machines accomodate three grinds of coffee, from
fi ne to coarse. These are recognizable by the color of
the capsules: black for a very fi ne Italian coffee, red
for robust coffee, blue for a lighter coffee and green
for decaffeinated.
To reinforce the appeal of illy’s products, Fountain has
improved its line of accessories. A “Welcome Kit,” given
to new clients, includes coffee samples, cups, stirrers
PRODUCTS AND SERVICES: A TOTAL SOLUTION
CHOICE AND QUALITY
14
and sugar packets. Small porcelain cups and large
collectable cups with the illy insignia are also given
out.
An accessory display shelf, currently being produced,
will soon be available.
Fountain has also thought of its distributors: they
can access materials for trade shows, as well as
promotional posters and vehicle decorations with
the Fountain and illy logos. And let’s not forget their
training opportunities at “illy Academy” the new arm
of Fountain Academy.
FOUNTAIN’S PRODUCTS
For those who want a combination of high quality and
variety, Fountain offers a large choice of freeze-dried
drinks in cartridges. Easy to use, these cartridges have
the advantage of being extremely hygienic and mess-
free, since the product is never handled. This allows
the consumer to customize his or her drink by adding
more or less water.
Coffees
Coffee consumption accounts for three out of four
Fountain drinks. To satisfy everyone’s tastes, Fountain
has developed a palette of 20 flavors, separated into
four families that are recognizable by the shade of their
cartridge color.
- full-bodied dark roast Espresso coffees (Espresso
Roma, Black Gold, Café do Brazil, etc.),
- medium roast mocha-type coffees (Classic, Orena
and Max Havelaar mochas, Extra Filter and Decaf).
- light, delicately flavored coffees (Colombia, Dessert,
Aroma and Gold) and
- specialty coffees: having anticipated a new trend
toward gourmet coffees, Fountain increased its line
of specialty coffees, which are especially enjoyed by
young consumers (Cappuccino, Mochaccino, Viennese
Coffee and Caffé Latte).
To go along with this growth, two specialty coffees were
introduced in September, 2005: Vanilla Cappuccino and
Caramel Cappuccino. These flavors met with strong
success.
The exquisitely designed “Cube” machine, to enjoy authentic Italian coffee.
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
15
Hot drinks
For variety, four types of hot chocolate (Belgian
superior, Swiss, Dutch, Luxus) and six teas (Plain,
Darjeeling, Lemon, etc.) are available.
For a light bite to eat, consumers can choose between
some 10 soups, such as tomato, vegetable, pea,
chicken, minestrone, etc. In September, the new wild
mushrooms soup was very well received and has been
brought into the product line. Also in September, the
limited edition curry soup was a real success, especially
in Belgium and Holland, where clients are eagerly
awaiting the next installment of this seasonal offering.
This initiative has allowed us to increase sales.
Cold drinks
When the weather is warm and consumption of hot
drinks decreases, cold drinks step in. This is a segment
of the market that allows for a healthy growth
margin.
Introduced in the Spring of 2005, tropical fruit and
grapefruit isotonic drinks quickly found their niche in
the cold drink line: in 2005, they ranked just behind
peach ice tea and iced orange drink. These isotonic
drinks contain four mineral salts and 10 vitamins; they
regulate the body’s hydration and increase stress-
resistance. These help professionals stay at their best.
Ice cappuccino, ice chocolate, ice lemon and ice
blackcurrant round out this product line.
Cartridge machines
Many machines can accommodate Fountain cartridges.
Distributors suggest a certain machine based on the
client’s needs.
The Classic (with 2, 4, or 6 cartridges) and the Premier
(with 4 or 6 cartridges, as well as an electronic water
spigot) use the principal of combining water with the
freeze-dried beverage.
The Creamy is more automated. It offers a choice
between a small or a large cup, and delivers a creamy
coffee that is whipped inside the machine; there is also
space for four cartridges.
The Table Tops, large semi-automatic machines, are
recommended for larger professional settings, with
15 to 50 people. They distribute up to eight different
Flavored coffees and wild mushrooms soup, launched in September, 2005, met with great success.
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
16
drinks packaged in large cartridges and can be hooked
up to a filtered running water supply and equipped with
a coin slot. They are a demonstration of Fountain’s
eagerness to grow with its clients. The Symfony Table
Top is specifically oriented toward the hotel, restaurant
and catering industry as well as on-site cafeterias.
Fresh coffee
Fresh ground coffee, packaged in single servings
(or “pads») was introduced in 2005 to meet the
needs of a Fountain’s customers who use this popular
technology in their homes.
The new Momento machine brings together fresh
coffee in single servings and four selected Fountain
cartridges, while the Ottimo machine handles whipped
coffee, cappuccino and hot chocolate.
THE BASICS
For clients who want simplicity and low cost, Fountain
offers packs of loose freeze-dried drinks to be inserted
into larger vending machines (for 50 people).
Four kinds of coffee (espresso, mocha, premier and
decaf) are available, as well as one hot chocolate and
milk. To round out this product line, new products such
as a second hot chocolate, a soup and a tea are planned
for 2006.
ACCESSORIES AND “LITTLE BONUSES”
No longer do clients have to worry about using different
suppliers to purchase milk, sugar, chocolate or cookies
to go along with their coffee, or to obtain supplies of
cups and stirrers. For the convenience of its end clients
and distributors, Fountain brings together all of these
necessary supplies in its logistical center in Maubeuge,
France.
A new line of individual serving packages of fresh coffee was launched in the second half of 2005.
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
17
In order to strengthen its image, in 2005 Fountain
debuted new packaging for its milk portion control
cups, sugar packets, creamers, sugar cubes, etc. which
are sold under its own brand name.
The chocolate bar product line includes dark chocolate,
milk chocolate, chocolate with crispy puffed rice, and
chocolate with cacao beans.
For those with a sweet tooth, Fountain also offers
cookies, chocolate-covered almonds, puffed rice bars,
etc.
Another “little bonus” is croutons to accompany
Fountain’s soups.
In the accessories department, Fountain has come
out with decorated mugs, a four-cartridge rack for
the Holland market, and has also started design of a
unique bell-shaped cup (see text box). The fi rst step in
enjoying a Fountain drink, this cup will draw attention
to our products.
A unique cup
Always looking for innovations to distinguish
itself from the competition, Fountain called on
an architect-designer to designed a completely
new cup that would be instantly recognizable.
Based on the profi le of the traditional Italian
coffee cup (tapered at the top and bottom), this
cup is made up of a reusable dark grey cup-
holder with the Fountain logo, and a disposable
plastic cup that is clipped into the holder. The
cone-shaped cup can’t stand up on its own,
without its holder. Thus, consumers won’t be
able to do without their Fountain cup holder,
and will immediately identify our products.
The production of this new cup will be launched
during the second half of 2006.
Grégoire Wuillaume, Concept and design
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
New packaging for “little bonuses”
18
19
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
The Cup Express S.A. (France) teams and its Paris-
area distributor Orga Distribution S.A., companies that
were acquired at the end of 2004, have been welcomed
into the Group: the industrial branch joined together
with Braine-l’Alleud, while the cartridge distribution
branch kept its own network. This two-part integration,
completed on May 1, 2005, generated important
synergies.
As the quality of human resources is a determining
factor in the success of a service corporation, Fountain
is committed to recruiting high-value associates.
In particular, this includes young and talented
professionals who are attracted to the Group’s light
and responsive structure, as well as its desire for
growth and innovation.
The position of Supply Chain Manager, established
in 2004, contributed notably this year to optimizing
the production and supply chain for distributors.
Everything possible was done to centralize Fountain’s
products in the Maubeuge logistical center, from which
all shipments originate.
For their part, the directors of marketing and information
technology benefited from new technologies to bring
Fountain closer to its geographically diverse clientele:
websites for each country were finalized; enabling
clients to browse the available product line on the
Web, and new visitors looking for a supplier can easily
find a local distributor. A publicity campaign was also
completed with the Google search engine- Fountain’s
website was highlighted in the search results for the
keyword “coffee machine”.
STRUCTURE AND LOCAL SERVICE
The Fountain network is made up of 200 regional
distributors, whether they are members of the Group
or independent; they span 28 countries.
In accordance with the Fountain concept, the
distributors must have a sales and customer service
team. The sales team is tasked with sales prospecting,
selecting the machine that best meets the client’s
needs, and installing this machine. The customer
service team handles direct contact with clients, and is
responsible for being available to clients and bringing
their comments to the Group’s management team.
In this way, each client has a relationship with an
individual sales and service representative. Regular
visits (every four to five weeks) allow the representative
to advise the client and let them know about new
products and promotions, to refresh supplies and to
check that machines are in good working order. This
personal relationship explains clients’ exceptional
loyalty to the Fountain concept.
PERSONNEL AND DISTRIBUTORS: AN EFFECTIVE NETWORK
INTEGRATION AND OPTIMIZATION
20
A SHARED BUSINESS PLAN
Fountain distributed its updated Mission Statement:
to position itself as a service provider and not as an
industrial group. Excellent service to clients is its
hallmark, as evidenced by its slogan “service first.”
To share its business plan with its distributors, who are
its ambassadors to the end client, Fountain increased its
training sessions. Created in 2004, Fountain Academy
opened its doors to all types of salespeople this year:
machine salespeople, but also product salespeople and
telephone salespeople. Specific sessions concerning
the management of a distributorship also took place. In
addition, illy Academy was also implemented beginning
in January 2006, to accompany the discontinuation of
the Nespresso partnership in France, and to mark the
start of the contract with illycaffè.
In addition, as in past years, a Convention brought
together distributors and Fountain’s teams. This
served as an occasion to explain the Group’s strategy,
to strengthen ties between the two groups, and to
exchange helpful tips (see text box).
TRAINED DISTRIBUTORS
In order to provide the market’s best network, to
reinforce its brand image with end clients and to attract
new clients, Fountain trains its distributors in several
ways:
- Through training sessions to increase the effective-
ness of sales and management;
- Through attractive marketing collateral: such
as decorations for delivery vehicles that convey
Fountain’s visual image, or the modular booth that
attracts visitors during trade shows.
- Through attractive packaging and smart accessories
that meet consumers’ needs.
- Through the development of www.fountaindealers.
com, an extranet tested in 2005 by Fountain First and
Fountain Brussels, which will allow dealers to place
orders on line, thereby optimizing our logistics chain.
On this web portal, dealers will laso find product
information sheets, usage instructions for machines,
information on parts, machine maintenance, an image
bank, new editions of the Fountain News magazine,
etc.
“The modular booth clearly shows what we sell and projects a fresh image that attracts many prospective customers. Thanks to this booth, we sold twice as many machines as last year at the Copenhagen show.»
Morten Haurbach, Fountain Denmark
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
21
Fountain trains its distributors through attractive marketing collateral: such as decorations for delivery vehicles that convey Fountain’s visual image.
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
MOROCCO CONVENTION
The 2005 Convention was held last October
in Morocco. For fi ve days, it brought some 100
participants together. After touring Ouarzazate and
its small market district, a plenary session allowed
management to explain the Group’s mission and
strategy, to present the Group’s fi nancial situation,
to introduce illy’s philosophy and to announce the
upcoming launch of the automated Web-based
ordering tool.
After this came a driving tour of the desert in four-
by-fours decorated in the Fountain colors, and
an overnight in the magnifi cent Flint oasis, which
allowed precious time to strengthen contacts and
reinforce the the participants’ commitment to the
shared business plan.
Next, participants traveled to Marrakesh
where sessions on the “Global Concept”
and Fountain’s product and service line
were held. Finally, the trip concluded
with the awarding of 9 Fountain Trophies
to reward the largest growth in sales,
highest total sales turnover, etc.
22
FINANCIAL ANNUAL REPORT SECTION
Auditor’s report 23
2005 Consolidated annual accounts 25
Descriptive data and compliance report 32
Appendices to the 2005 consolidated accounts 32
2005 Corporate annual accounts
(abbreviated version) 54
23
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Ladies and Gentlemen,
In accordance with the legal and statutory requirements,
we report to you on the performance of the audit
mandate which has been entrusted to us.
This report concerns the consolidated financial
statements of the Group Fountain.
We have audited the consolidated financial statements
for the year ended December 31, 2005, prepared in
accordance with the legal and regulatory requirements
applicable in Belgium, and which show a balance sheet
total of 47.522.189,82 EUR and a profit for the year
of 3.516.294,46 EUR. We have also carried out the
specific additional audit procedures required by law.
The statutory financial statements of the companies
included in the consolidation have been audited either
by their statutory auditors or by external certified
public accountants. We have checked their qualification
and their independence. Our opinion is based on their
reports.
The preparation of the consolidated financial statements
and the assessment of the information to be included in
the consolidated directors’ report, are the responsibility
of the Board of Directors.
Our audit of the consolidated financial statements
was carried out in accordance with the auditing
standards applicable in Belgium, as issued by the
Institut des Reviseurs d’Entreprises / Instituut der
Bedrijfsrevisoren.
Unqualified audit opinion on the consolidated
financial statements
The above mentioned auditing standards require that
we plan and perform our audit to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement.
In accordance with those standards, we considered the
Group’s administrative and accounting organisation,
as well as its internal control procedures. Company
officials have responded clearly to our requests for
explanations and information. We have examined,
on a test basis, the evidence supporting the amounts
included in the consolidated financial statements. We
have assessed the accounting policies, the consolidation
principles, the significant accounting estimates made
by the company and the overall consolidated financial
statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, taking into account the legal and
regulatory requirements applicable in Belgium, the
consolidated financial statements for the year ended
December 31, 2005 give a true and fair view of the
Group’s assets, liabilities, financial position and results
of operations.
F INANCIAL ANNUAL REPORT SECTION
AUDITOR’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005 TO THE SHAREHOLDERS MEETING
OF THE COMPANY TO BE HELD ON MAY 29, 2006
24
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Additional certifications and information
We supplement our report with the following certifi-
cations and information which do not modify our audit
opinion on the consolidated financial statements:
• The consolidated directors’ report includes the
information required by law and is consistent with the
consolidated financial statements. We are, however,
unable to comment on the description of the principal
risks and uncertainties which the Group is facing,
and of its situation, its foreseeable evolution or the
significant influence of certain facts on its future
development. We can nevertheless confirm that
the matters disclosed do not present any obvious
contradictions with the information of which we
became aware during our audit.
Brussels, April 12, 2006.
BST Réviseurs d’entreprises,
S.C.P.R.L. de Réviseurs d’Entreprises,
represented by Pascale TYTGAT,
Statutory Auditor.
25
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
2005 CONSOLIDATED ANNUAL ACCOUNTS
The Fountain Group’s annual accounts are presented alongside those of the previous financial year. They are in Euros.
Balance Sheet (before allocation) note 2005 2004
ASSETS
I. NONCURRENT ASSETS 26,080,816.62 28,744,891.94
1. TANGIBLE FIXED ASSETS 3 2,096,501.76 2,604,918.64
1.1 Tangible fixed assets in progress 15,273.00 166,565.99
1.2. Land and buildings 538,520.51 642,342.94
1.3. Plants, machinery and equipment 469,362.56 688,193.72
1.4. Motorized vehicles 68,080.59 107,890.18
1.5. Fixtures and incidental charges 791,457.78 614,892.70
1.6. Leasehold improvements
1.7. Other tangible fixed assets 213,807.32 385,033.11
2. Investment property
3. Intangible fixed assets 2 22,210,083.94 24,481,629.99
3.1. Goodwills 18,981,341.56 20,250,721.59
3.2. Other intangible fixed assets 3,228,742.38 4,230,908.40
4. Biological assets
5. Investment in affiliated companies
6. Investment in associated companies
7. Investment in joint ventures
8. Investments at equity 142,785.41
9. Deferred tax assets 1,232,144.37 1,013,966.47
10. Other financial fixed assets 346,860.65 468,932.58
10.1. Shares 4,6 138,959.71 139,610.93
10.2. Securities, other than shares
10.3. Loans 4,6 21,253.77 110,319.26
10.4. Other financial assets 6 186,647.17 219,002.39
11. Noncurrent hedging assets
12. Trade and other receivables 195,225.90 32,658.85
II. CURRENT ASSETS 21,441,373.21 19,065,557.97
16. Noncurrent assets and assets held for sale 20 427,197.00 568,864.80
17. Inventory 9 3,988,653.81 4,650,043.94
18. Other financial current assets 6,4 775,744.63 204,754.54
18.1. Shares
18.2. Securities, other than shares 475,455.92 75,377.12
18.3. Loans
18.4. Other financial assets 300,288.71 129,377.42
19. Current hedging assets
20. Current tax receivables 842,055.85 976,727.40
21. Current trade and other receivables 8,830,071.04 6,535,923.42
21.1. Receivables 10 7,994,963.81 6,385,911.50
21.2. Debt resulting from leasing
21.3. Other receivables 835,107.23 150,011.92
22. Current advance payments
23. Cash and cash equivalents 5 6,095,601.09 5,709,662.60
24. Other current assets 482,049.79 419,581.27
TOTAL ASSETS 47,522,189.82 47,810,449.96
26
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
(before allocation) note 2005 2004
CAPITAL AND LIABILITIES
I. TOTAL CAPITAL
A. Capital and reserves
1. Paid-up capital 19 26,191,777.45 26,191,777.45
1.1. Share capital 26,159,819.02 26,159,819.02
1.2. Share premium account 31,958.43 31,958.43
2. Uncalled capital
3. Reserves 1,025,598.57 (1,456,835.67)
3.1. Consolidated reserves 998,130.59 (1,484,998.29)
3.2. Revaluation reserves
3.3. Exchange adjustments 27,467.98 28,162.62
4. Own share (-)
5. Retained earnings (loss carry forward)
TOTAL GROUP CAPITAL 27,217,376.02 24,734,941.78
B. Minority interests within net assets 143,809.27 102,925.07
TOTAL CAPITAL 27,361,185.29 24,837,866.85
II. LIABILITIES
A. Non current liabilities 4,600,848.32 9,441,103.76
6. Noncurrent interest bearing liabilities 15 4,371,359.82 8,994,431.68
7. Noncurrent non-interest bearing liabilities
8. Noncurrent deferred income
9. Noncurrent provisions 14 11,460.00 11,459.90
10. Noncurrent obligations resulting from benefits
12. Noncurrent hedging instruments
12. Deferred tax liabilities 149,658.77 215,168.02
13. Suppliers and other noncurrent creditors 22,156.55 173,221.19
14. Other noncurrent liabilities 46,213.18 46,822.97
B. Current liabilities 15,560,156.21 13,531,479.35
15. Liabilities included in the groups held for sale 54,757.73
16. Current interest bearing liabilities 15 4,977,583.38 5,314,563.53
17. Current non-interest bearing liabilities
18. Current deferred income
19. Current provisions 14 9,300.00 42,300.00
20. Noncurrent obligations resulting from benefits
21. Current hedging instruments
22. Receivable tax liabilities 493,864.01 824,835.32
23. Suppliers and other current creditors 15 9,618,109.84 6,794,953.88
24. Other current liabilities 461,298.98 500,068.89
TOTAL CAPITAL AND LIABILITIES 47,522,189.82 47,810,449.96
27
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
INCOME STATEMENT BY TYPE note 2005 2004
1. INCOME 53,066,682.53 50,076,106.60
1.1. Sales of goods 11 52,895,537.49 49,975,192.32
1.2. Work in progress
1.3. Income from construction contracts
1.4. Income from fees 171,145.04 100,914.28
1.5. Building rental income
1.6. Other income
2. OTHER OPERATING INCOME 1,146,068.15 280,653.27
2.1. Interest 7,898.72 7,805.20
2.2. Dividends
2.3. Public subsidies
2.4. Other operating income 1,138,167.43 272,848.07
3. ACTIVATION OF CAPITALIZED PRODUCTION 122,968.98 199,583.13
4. OPERATING EXPENSES
4.1. Raw materials and consumption (23,285,345.27) (21,921,300.56)
4.2. Change in finished product inventory and work in progress (874,508.36) (469,403.92)
4.3. Personnel expenses 7 (10,830,524.17) (9,629,577.28)
4.4. Depreciation contributions (3,525,092.93) (3,352,778.65)
4.5. Loss in value (255,268.61) (405,977.44)
of which inventory loss in value 3,008.93 (8,182.98)
of which receivables loss in value (184,661.42) (397,556.18)
of which fixed assets loss in value (73,616.12) (238.28)
4.6. Fair value
4.7. Research and Development Costs
4.8. Restructuring costs
4.9. Other operating expenses 8 (9,800,720.19) (8,681,240.73)
5. OPERATING RESULTS 5,764,258.13 6,096,064.36
6. GAIN (LOSS) ON FINANCIAL INSTRUMENTS DESIGNATED AS CASH
FLOW HEDGES
7. GAIN (LOSS) DUE TO THE DERECOGNITION OF FINANCIAL ASSETS
AVAILABLE FOR SALE (20,730.76) (30,388.15)
8. GAIN (LOSS) ON DISPOSAL OF NONCURRENT ASSETS NOT HELD
FOR SALE 3,132.55 (95,662.32)
9. FINANCIAL CHARGES (691,381.19) (735,244.62)
of which financial fees (593,477.53) (663,724.08)
10. GAIN (LOSS) ON FINANCIAL INSTRUMENTS
(OTHER THAN HEDGING INSTRUMENTS) 28,146.44 25,931.63
11. SHARE IN NET RESULT OF INVESTMENTS AT EQUITY (42,176.22) (11,747.61)
12. OTHER NON-OPERATING INCOME 48,418.32 17,939.76
28
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
13. OTHER NON-OPERATING CHARGES
14. RESULTS BEFORE TAX 5,089,667.27 5,266,893.06
15. INCOME TAX EXPENSE 13 (1,573,372.81) (1,655,477.58)
16. RESULTS FROM CONTINUING OPERATIONS AFTER TAX 3,516,294.46 3,611,415.48
17. RESULTS FROM DISCONTINUED OPERATIONS AFTER TAX 0 0
18. FISCAL YEAR RESULTS 3,516,294.46 3,611,415.48
18.1. Attributable to minority interests 63,589.48 55,491.80
18.2. Attributable to equity holders of the parent company 3,452,704.89 3,555,923.68
I. EARNINGS PER SHARE
Number of shares 1,615,960 1,615,960
1. Basic earnings per share
1.1. Basic earnings per share from continuing operations 2.18 2.23
1.2. Basic earnings per share from discontinued operations 0 0
Number of diluted shares 1,685,825 1,692,585
1. Diluted earnings per share
1.1. Diluted earnings per share from continuing operations 2.09 2.13
1.2. Diluted earnings per share from discontinued operations 0 0
II. OTHER DISCLOSURES
1. Exchange differences included in the income statement 31,058.56 (36,709.38)
2. Lease and sub-lease payments recorded in the financial statements 898,566.00 834,805.00
29
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
STATEMENT OF CHANGES IN FINANCIAL POSITION 2005 2004
OPERATING TRANSACTIONS
Fiscal year results 3,558,470.59 3,623,162.97
Depreciation contributions 3,525,092.93 3,352,778.65
Decrease (increase) in write-offs 255,268.61 405,977.44
Increase (decrease) in provisions 55,619,32 10,737.98
Gain (loss) on disposal of assets (-) 55,671.53 126,050.47
Gain (loss) on foreign exchange (-) 9,319.91 132,725.52
Capitalized production (122,968.98) (199,583.13)
Increase (decrease) for deferred items (186,170.23) 291,924.44
Cash flow 7,150,303.68 7,159,925.66
Variation in receivables (782,638.10) (269,568.47)
Variation in inventory 696,749.37 695,414.13
Variation in deferred charges, accrued income 11,481.02 187,719.78
Variation in financial debt (333,520.59) 586,582.57
Variation in trade debt 245,666.70 (465,307.05)
Variation in tax and social security (393,982.00) (1215,461.97)
Variation in other debts 1,417,436.74 117,143.62
Variation in accruals (59,794.78) 45,808.53
Variation in working capital needs (- increase) 801,398.36 (317,668.86)
Operating cash flow 7,951,702.04 6,842,256.80
INVESTMENT TRANSACTIONS
Acquisitions of intangible fixed assets (-) (529,227.53) (619,372.14)
Acquisitions of tangible fixed assets (-) (500,353.78) (417,781.92)
Acquisitions of financial fixed assets (-) (4,636,000.00)
New loans granted (-) (1,046,942.95) (22,908.82)
Transfers of intangible fixed assets (+) 0 23,685.83
Transfers of tangible fixed assets (+) 108,290.44 87,929.56
Transfers of financial fixed assets (+) 28,380.91 99,130.19
Repayment of loans granted (+) 215,461.47 17,696.07
Investment cash flow (1,724,391.44) (5,467,621.23)
FINANCING TRANSACTIONS
Net variations in loans contracted (+ increase) (4,623,670.96) 391,252.69
Dividends paid out (-) (1,019,576.00) (711,022.40)
Financing cash flow (5,643,246.96) (319,769.71)
CASH FLOW VARIATION 584,063.64 1,054,865.86
RECONCILIATION OF CASH ACCOUNTS
Opening balance 5,914,417.14 4,971,171.39
Cash flow variation 584,063.73 1,054,866.07
Exchange adjustments (favorable +) 10,269.42 12,997.98
Transfers to other headings 165,051.22 (308,509.80)
Changes in reporting entity (favorable) 197,544.65 183,891.53
Closing balance 6,871,346.16 5,914,417.17
30
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
EQUITY VARIATION TABLE Share capital Share premium account
Exchange reserves
Other reserves Fountain Shares Minority interests TOTAL CAPITAL
2003 Closing balance 26,159,819.02 31,958.43 (4,329,900.12) 21,861,877.30 47,433.41 21,909,310.71
Dividends (711,021.77) (711,021.77) (711,021.77)
Fiscal year results 3,555,923.66 3,555,923.66 55,491.69 3,611,415.37
Gains not accounted for in results (foreign currency exchange) 28,162.62 28,162.62 28,162.62
Other increases (decreases)
2004 Closing balance 26,159,819.02 31,958.43 28,162.62 (1,484,998.29) 24,734,941.78 102,925.07 24,837,866.85
Dividends (969,576.00) (969,576.00) (13,503.18) (983,079.18)
Fiscal year results 3,452,704.89 3,452,704.89 63,589.48 3,516,294.37
Gains not accounted for in results (foreign currency exchange) 8,331.48 8,331.43 8,331.48
Other increases (decreases) (9,026.12) (9,026.12) (9,202.10) (18,228.22)
2005 Closing balance 26,159,819.02 31,958.43 27,467.98 998,130.60 27,217,376.01 143,809.27 27,361,185.28
The main difference between Belgian standards and IFRS standards is related to do differences in first acquisitions. Under Belgian standards, these are depreciated over 10 years using the straight-line method. Under IFRS standards, they are no longer deprecia-ted and are subject to impairment tests.
Share capital Share premium account
Reserves Dividends Exchange adjustments
Minority interests
TOTAL Capital
Balance as of January 1, 2004 (Belgian standards) 26,159,819.02 31,958.43 (5,042,137.00) 0 (97,590.00) 0 21,052,050.45
Consolidation method change 47,433.41 47,433 .41
Provisions 38,747.00 38,747.00
Tangible fixed assets 133,598.00 133,598.00
Restructuring costs (100,185.00) (100,185.00
Exchange adjustments (97,590.00) 97,590.00 0
Inventory 7,533.00 7,533.00
Dividends 711,022.00 711,022.00
Stock option plan (24,697.00) (24,697.00)
Deferred taxes on acquisition costs 43,810.00 43,810.00
Balance as of January 1, 2004 (according to IFRS standards) 26,159,819.02 31,958.43 5,040,922.00 711,022.00 0 47,433.41 21,909,310.71
Balance as of December 31, 2004 (Belgian standards) 26,159,819.02 31,958.43 (4,640,792.00) 0 894.00 0 21,551,879.00
Consolidation method change 102,925.07 102,925.07
Provisions 35,513.00 35,513.00
Tangible fixed assets 135,595.00 135,595.00
Restructuring costs (5,804.00) (5,804.00)
Exchange adjustments (97,590.0) 27,268.62 (70,321.38)
Inventory 10,002.00 10,002.00
Dividends 0 0
Stock option plan (18,445.00) (18,445.00)
Deferred taxes on acquisition costs 43,810.00 43,810.00
Goodwill depreciation 3,052,714.33 3,052,714.33
Balance as of December 31, 2004 (according to IFRS standards) 26,159,819.02 31,958.43 (1,484,998.29) 0 28,162.62 102,925.07 24,837,866.85
RECONCILIATION OF NET RESULT 2004 (BELGIAN STANDARDS– IFRS)
RESULTS (BELGIAN STANDARDS) 401,345.07
Goodwill depreciation 3,052,714.33
Provision restatement (3,234.58)
Adjustment after restatement of stock option plans 6,252.00
Cancellation of restructuring costs 95,258.26
Impact due to change from graduated depreciation to straight-line depreciation 1,996.83
Valuation of inventory 2,468.97
Consolidation method change 54,614.62
RESULTS (IFRS STANDARDS) 3,611,415.52
Extraordinary General Meeting on May 29, 2006 will address a decrease in capital by a repayment of 2 Euros for each of the
1,615,960 shares, or a total amount of 3,213,920 Euros.
Allocation of 2005 fiscal year results: At the Annual Meeting held to review the 2005 accounts, a proposal will be made that
dividends not be offered.
RECONCILIATION OF CAPITAL AND RESERVES AS OF JANUARY 1, 2004 and DECEMBER 31, 2004 (BELGIAN STANDARDS–IFRS)
31
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
EQUITY VARIATION TABLE Share capital Share premium account
Exchange reserves
Other reserves Fountain Shares Minority interests TOTAL CAPITAL
2003 Closing balance 26,159,819.02 31,958.43 (4,329,900.12) 21,861,877.30 47,433.41 21,909,310.71
Dividends (711,021.77) (711,021.77) (711,021.77)
Fiscal year results 3,555,923.66 3,555,923.66 55,491.69 3,611,415.37
Gains not accounted for in results (foreign currency exchange) 28,162.62 28,162.62 28,162.62
Other increases (decreases)
2004 Closing balance 26,159,819.02 31,958.43 28,162.62 (1,484,998.29) 24,734,941.78 102,925.07 24,837,866.85
Dividends (969,576.00) (969,576.00) (13,503.18) (983,079.18)
Fiscal year results 3,452,704.89 3,452,704.89 63,589.48 3,516,294.37
Gains not accounted for in results (foreign currency exchange) 8,331.48 8,331.43 8,331.48
Other increases (decreases) (9,026.12) (9,026.12) (9,202.10) (18,228.22)
2005 Closing balance 26,159,819.02 31,958.43 27,467.98 998,130.60 27,217,376.01 143,809.27 27,361,185.28
The main difference between Belgian standards and IFRS standards is related to do differences in first acquisitions. Under Belgian standards, these are depreciated over 10 years using the straight-line method. Under IFRS standards, they are no longer deprecia-ted and are subject to impairment tests.
Share capital Share premium account
Reserves Dividends Exchange adjustments
Minority interests
TOTAL Capital
Balance as of January 1, 2004 (Belgian standards) 26,159,819.02 31,958.43 (5,042,137.00) 0 (97,590.00) 0 21,052,050.45
Consolidation method change 47,433.41 47,433 .41
Provisions 38,747.00 38,747.00
Tangible fixed assets 133,598.00 133,598.00
Restructuring costs (100,185.00) (100,185.00
Exchange adjustments (97,590.00) 97,590.00 0
Inventory 7,533.00 7,533.00
Dividends 711,022.00 711,022.00
Stock option plan (24,697.00) (24,697.00)
Deferred taxes on acquisition costs 43,810.00 43,810.00
Balance as of January 1, 2004 (according to IFRS standards) 26,159,819.02 31,958.43 5,040,922.00 711,022.00 0 47,433.41 21,909,310.71
Balance as of December 31, 2004 (Belgian standards) 26,159,819.02 31,958.43 (4,640,792.00) 0 894.00 0 21,551,879.00
Consolidation method change 102,925.07 102,925.07
Provisions 35,513.00 35,513.00
Tangible fixed assets 135,595.00 135,595.00
Restructuring costs (5,804.00) (5,804.00)
Exchange adjustments (97,590.0) 27,268.62 (70,321.38)
Inventory 10,002.00 10,002.00
Dividends 0 0
Stock option plan (18,445.00) (18,445.00)
Deferred taxes on acquisition costs 43,810.00 43,810.00
Goodwill depreciation 3,052,714.33 3,052,714.33
Balance as of December 31, 2004 (according to IFRS standards) 26,159,819.02 31,958.43 (1,484,998.29) 0 28,162.62 102,925.07 24,837,866.85
RECONCILIATION OF NET RESULT 2004 (BELGIAN STANDARDS– IFRS)
RESULTS (BELGIAN STANDARDS) 401,345.07
Goodwill depreciation 3,052,714.33
Provision restatement (3,234.58)
Adjustment after restatement of stock option plans 6,252.00
Cancellation of restructuring costs 95,258.26
Impact due to change from graduated depreciation to straight-line depreciation 1,996.83
Valuation of inventory 2,468.97
Consolidation method change 54,614.62
RESULTS (IFRS STANDARDS) 3,611,415.52
Extraordinary General Meeting on May 29, 2006 will address a decrease in capital by a repayment of 2 Euros for each of the
1,615,960 shares, or a total amount of 3,213,920 Euros.
Allocation of 2005 fiscal year results: At the Annual Meeting held to review the 2005 accounts, a proposal will be made that
dividends not be offered.
RECONCILIATION OF CAPITAL AND RESERVES AS OF JANUARY 1, 2004 and DECEMBER 31, 2004 (BELGIAN STANDARDS–IFRS)
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DESCRIPTIVE DATA AND COMPLIANCE REPORT
Fountain (the “company”) is classified as a société anonyme and its headquarters are in Belgium, at 17 avenue de
l’Artisanat, 1420 Braine-l’Alleud (business registration number 0412.124.393).
The company’s consolidated annual accounts are for the fiscal years ending December 31, 2004 and December 31, 2005.
The consolidated annual accounts group together the company and its subsidiaries (the “Group”), as well the Group’s
interests in joint ventures and associated companies. On March 6, 2006, the Board of Directors approved the publication
of the consolidated accounts.
The consolidated annual accounts are prepared in accordance with International Financial Reporting Standards (IFRS).
The Fountain Group adopted IFRS standards in 2005.
APPENDICES TO THE 2005 CONSOLIDATED ACCOUNTS
SCOPE OF CONSOLIDATION
All companies in which the Group holds a controlling interest are fully consolidated. The Group holds a controlling interest
when it has more than 50% of a company’s capital or has a majority in its governing bodies. Companies in which the
Group holds a significant interest without having a majority interest, are consolidated using the equity method.
Compared with the 2004 fiscal year, the scope of consolidation has been modified by various transactions:
(i) Merger of Fountain International S.A. and AXXOR International S.A.
(ii) Merger of Fountain First N.V. and Davamat Fountain B.V.B.A.
(iii) Transfer of shares from Fountain S.A. to Fountain France S.A.S that Fountain S.A. had held in Cup Express S.A.S.,
Orga Distribution S.A.S, Okole S.A.R.L. and NewCaffé France S.A.S. Transfers were made so as to create tax
integration for the French companies.
(iv) Transfer of Fountain CS s.r.o. in the Czech Republic to a local distributor
(v) The Fountain Group sold 16% of Slodadis SAS securities to its local partner, with the Group keeping 34% of the
capital and de facto control of the company
Companies in which the Group has only a marginally significant shareholding, or whose contribution to the Group is not
material, are not consolidated. In 2005 these were:
(i) Fountain Consumer Appliances Ltd, based in Madras, India, in which the Group has a 17.98% shareholding.
(ii) G.M.S. (Getränke Mit System) GmbH, based in Muggensturm, Germany, in which the Group has taken a 30%
shareholding with an option to sell to the majority shareholders; this option was put forward in the beginning of 2006
by the majority shareholders.
(iii) Fountain Sud SARL, based in southern France, not currently trading and in liquidation. The Group owns 100% of
the shares.
(iv) Fountain Coffee Systems Finland OY, based in Helsinki, Finland, inactive since the end of 2004. The Group owns
100% of the shares.
(v) Covivia, a French legal entity, in liquidation. The Group owns 45% of the shares.
(vi) Fountain USA Inc, created in 2005 and based in Chicago, is 100% owned by the Group.
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CONSOLIDATION CRITERIA
The results are balanced before appropriations and withdrawals.
The inter-company accounts that exist between Group companies are excluded from the consolidated accounts. Any
dividends between Group companies are eliminated from the consolidated financial statement. Charges and income
between Group companies are also eliminated from the consolidated financial statement.
To accelerate the elimination of transactions between companies, Fountain Group companies post their transactions at a
fixed budgetary currency exchange rate. The distortions that this method can create between supply charges (and hence
the gross margin) and financial charges are corrected on consolidation.
VALIDATION RULES APPLIED TO THE ANNUAL CONSOLIDATED ACCOUNTS
Consolidation Principles
The consolidated accounts include the accounts of Fountain S.A. (Fountain Industries Europe S.A. or FIESA) as well as
those of all the companies that it controls directly or indirectly after the elimination of inter-company transactions.
The consolidated accounts are prepared in accordance with IFRS (International Financial Reporting Standards) rules and
the interpretations that are published by the IFRIC (International Financial Reporting Interpretation Committee).
When items related to assets, liabilities or results in the companies’ financial statements included in the consolidation are
not evaluated according to international standards, they are restated as required for consolidation.
Regarding associated companies, these restatements only take place if the information is available.
Subsidiaries:
A subsidiary is a company in which the Group holds a controlling interest. The criteria used to determine whether the
Group holds a controlling interest in a company is the Group’s ability to direct the financial and operational policies of
this company’s business activities for gain.
Associated companies
Associated companies are companies in which the Group has significant influence over financial and operational decisions,
without controlling them.
This is the case when the Group holds between 20 to 50% of voting rights.
When an option to purchase securities is linked to an associated company’s shareholdings, and this option would
potentially and unconditionally allow the Group to hold the majority of voting rights, such an associated company is
considered a subsidiary and is fully consolidated.
Full consolidation
Subsidiaries are fully consolidated.
Companies at equity
Associated companies are consolidated using the equity method.
For each of these investments individually, the book value of these interests is decreased, in certain situations, to reflect
all loss of value, except for temporary loss.
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When the Group’s portion of the associated company’s loss exceeds the book value of these investments, it is listed as
zero, as are long-term receivables belonging to the associated companies. Losses greater than this are not entered into
the accounts, with the exception of the amount of the Group’s commitments to these companies.
Companies excluded from consolidation
A company is excluded from consolidation when a controlling interest is meant to be temporary or when a company is
subject to long-lasting and strict restrictions which significantly limit its ability to transfer funds to the parent company.
Also excluded are companies whose contribution to the Group is immaterial.
The list of the Group’s subsidiaries and associated companies is found in the appendix.
Foreign currencies
At consolidation, all assets and liabilities of the consolidated companies (monetary as well as non-monetary) and their
rights and commitments are converted to Euros at the current exchange rate for each foreign currency.
Income and expenses are converted to Euros using the average exchange rate for the financial year, for each foreign
currency.
Resulting conversion differences, when applicable, are noted under capital and liabilities under the heading “exchange
adjustments.” These accumulated differences are accounted for in the results when the relevant company is
transferred.
Accounting rules
Fixed assets
If there are events or changes in circumstance that put the intrinsic value (value in use or realizable value) of a fixed
asset (tangible or intangible) at risk of being lower than its net book value, the Group systematically applies the
impairment test.
In the case where the impairment test shows that the net book value of a fixed asset is higher than its economic value
and there is nothing to show that this variance is temporary, the net book value is reduced to its economic value by
recording a charge for the period.
Intangible fixed assets
Intangible fixed assets will only be listed in the accounts when two conditions are met: there is the likelihood that there
will be a profitable economic gain for the company as a direct result, and that the cost of the intangible asset can be
reliably determined.
Subsequent expenditures for intangible fixed assets will not be noted in the balance sheet unless they increase future
economic gains for the specific asset to which they are linked. All other expenses are listed as charges.
Formation Expense
In accordance with IFRS rules, formation expenses are no longer capitalized as of January 1, 2004.
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Research costs
Research costs incurred with the goal of acquiring new scientific knowledge or techniques (market studies, for example)
are directly accounted for as expenses for the period.
Development costs
Development costs, for which the research results in an effective application of plans or concepts with the goal of
producing new or noticeably improved products or processes, are only capitalized if all the conditions below are met:
- the products or processes are clearly identifiable as well as their costs isolated and accurately defined
- the technical feasibility of the product or process is demonstrated;
- the product or process will be used internally or sold;
- the product or process brings an economic advantage to the Group;
- the resources (technical or financial, for example) necessary to successfully complete the project are available.
Development costs are subject to straight-line depreciation for the period in which they are likely to represent an
economic gain, going forward from their availability date. They are depreciated over a maximum of five years.
Patents and licenses
When justified, at the introduction or acquisition of a patent, trademark or license, the expenses related to the posting
are applied to the asset using their cost, less cumulative depreciation. They are depreciated using the straight-line
method for the shortest of the following options: either the contractual duration, or the likely period in which the
immaterial asset will represent an economic interest for the Group.
Expenses related to the acquisition of multi-user technology licenses are applied to the asset if the amount justifies it,
and are depreciated over a maximum of three years.
Medium-term assets
Medium-term assets (clientele) acquired from third parties are depreciated according to the straight-line method over
ten years.
Trademarks
Trademarks for which ownership is acquired from third parties are recorded under intangible fixed assets. Their life
expectancy is determined by the customer retention period from which they would benefit, in the absence of any
supporting marketing efforts, and is limited to ten (10) years.
Their acquisition value is depreciated using the straight-line method going forward, over a ten (10) year period.
Trademark registration costs are listed as expenses for the fiscal year.
Goodwill
Goodwill represents the positive difference between the acquisition price of an investment and the fair value of the
subsidiary or associated business’s assets, liabilities and identifiable unrealized liabilities, at the date of its acquisition.
The net book value of goodwill is its value at the date of acquisition, less losses of value that are booked following the
annual impairment tests as well as less cumulative depreciation booked as of December 31, 2003.
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Tangible fixed assets
Adhering to IFRS standards, tangible fixed assets are only recorded as assets if it is likely that the future economic gains
associated with this asset will belong to the company and that the cost of this asset can be reliably assessed.
Tangible fixed assets are recorded at their historic cost less cumulative depreciation and cumulative loss in value. The
historical cost includes the initial purchase price or the manufacturing cost price if capitalized production is involved,
increased by their direct acquisition costs.
These assets are depreciated using the straight-line method based on their estimated life expectancy, until equaling their
residual value.
Land is not depreciated.
The machines marketed by the Group on consignment, on deposit and/or by subscription are removed from inventory
and moved to fixed assets. They are valued at their last inventory value and are depreciated using the straight-line
method for a maximum of three years.
Subsequent expenditures (repairs and maintenance) of goods are generally considered as an expense for the period.
These costs will not be capitalized except in cases where they clearly increase the future economic value of the use of
the good, above that of its initial value.
In this case, these expenses will be depreciated over the duration of the remaining life of the relevant asset.
Historic value of land, as well as that of buildings before depreciation, but to the exclusion of all other tangible fixed
assets, will be, in certain cases, revaluated every three years by recognized, independent experts if the Group is made
aware of factors that could definitively and permanently alter the fair value.
A decrease in value (negative revaluation) will first be charged to the revaluation reserve and, if that is not sufficient,
the revaluation will be immediately taken into account for the period, by balance or fully.
Each year the difference between the calculated depreciation of the revaluation value and that calculated on the historic
value of the good will be transferred from the revaluation reserve to the reported results.
Tangible fixed assets are depreciated as follows:
• buildings: from 5% to 10% per year
• plants, machinery and equipment: from 10% to 33% per year
• vehicles: from 25% to 33% per year
• office supplies and furniture: from 10% to 25%
• other tangible fixed assets: from 10% to 20% per year
Lease financing
When the Group is responsible for almost all the risks and advantages inherent in the ownership of leasing assets, leasing
is recorded in the balance sheet according to the actual reimbursement value at the time the lease financing contract is
entered into, and is listed as a tangible fixed asset. If the opposite is true, leasing expenses are considered operational
and are taken into account for the period.
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Repayments are considered as financial charges in part and in part as repayment of leasing debt; there is, therefore, a
constant interest expense related to the capital to be repaid for the full duration of the contract.
Financial charges are directly recorded as an expense for the period’s results.
Depreciation and expected life rules vary according to the type of asset concerned. However, when the leasing contract
length is shorter than the expected life of the good being leased, and when, considering the circumstances, it is unlikely
that the good will remain a fixed asset of the company until the end of the contract, it will be depreciated over the life
of the contract.
Payments under the operating lease financing scheme are recorded as expenses using the straight-line method, over
the life of the contract.
Inventor
The value of inventory is determined using the weighted average price method. Speedy turnover leads, in practice,
to the use of the last purchase price, which results in a virtually equivalent valuation.
When items in stock have been transferred between different companies within the Group, their inventory value is
brought down to their cost price, as if the transfers had taken place at cost price. The elimination of margin variation on
inventory is corrected in tax charges for the fiscal year, when justified.
The value of inventory held by the distribution companies is increased by a minimum charge for distribution costs.
This minimum charge is validated annually using actual data from the last completed fiscal year.
Raw materials
Raw materials include the entirety of materials and components used in the manufacture of finished goods.
Finished goods
The goods manufactured by the Group can be machines (beverage dispensers) or consumable products.
The cost of finished goods includes the cost of raw materials and direct labor as well as a standard share of direct
production costs. This amount is validated annually using actual data from the last completed fiscal year.
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Goods for resale
Goods for resale are the machines and consumable products purchased by the Group for the purpose of reselling them,
as is, on the market.
Write-offs
So that the value of the items in inventory represents its actual economic value as accurately as possible, these items
are systematically written-off using automatic values according to the relevant product’s type and characteristics:
• for “dispenser” machines, progressive write-offs are applied based on the inventory’s shelf-life.
• 15% after one year,
• 50% after two years,
• 100% after three years.
• for machines used for “testing” that are returned to inventory, progressive write-offs are applied based on the service
life of the machine.
• 15% if the machine has less than one year of service life,
• 50% if the machine has more than one year of service life,
• 100% if the machine has more than two years year of service life.
• for cartridges in consumable products: when their expiration date no longer allows them to be entered into the normal
distribution cycle, they are destroyed and recorded as expenses for the period
• for parts: when their corresponding “dispensing” machines have not been produced for a significant amount of time
and the active inventory of these distributors has been seriously reduced because these machines’ have been replaced
by newer machines, a depreciation of 100% will be applied.
• for promotional material: this item is brought down to a zero value if it is not used within two years of its release.
Work in progress
Work in progress concerns only machines produced by the Group.
Work in progress is valued on the basis of production series and includes:
• actual raw material costs according to a bill of materials adapted to the series’ volume,
• the standard cost for direct labor
• and a standard minimum for indirect production costs.
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Trade debt receivables and other
Trade debt receivables are recorded at their face value and decreased by any write-downs. At the end of the fiscal year,
bad debt is estimated using all overdue payments and all objective information showing that the Group will not be able
to fully recover all recorded debt, or recover it based on the original terms.
Provision rules for trade debt receivables are:
• if payments are more than 6 months late: provision of 50%
• if payments are more than 12 months late: provision of 100%
• in the event of bankruptcy, provision of 100% of the non recoverable amount
Cash at bank and in hand and investments
Cash and short-term deposits held to term are accounted for at their face value.
“Cash at bank” is defined as cash when sight deposits and investments are rapidly convertible to cash and exposed to
an insignificant risk of depreciation.
In the cash flow hedge financial statements, cash at bank is shown net of short-term debt (overdrafts) at the banking
institutions. These same overdrafts are, however, shown as bank debt on the balance sheet.
Own shares
When own shares are repurchased, the repurchased shares are deducted from equity.
Provisions
Provisions are established when the Group must disengage from commitments resulting from previous events, when it
is likely that a use of funds will be necessary to cancel the commitments, and when it is likely that their scope can be
accurately estimated.
They are reviewed at closing and adjusted to reflect the best estimate of the obligation.
When the Group anticipates that a provision will be repaid (through an insurance policy, for example), the ensuing debt
will be recognized when it is virtually certain.
A warranty provision is established for all products under warranty as of the balance sheet’s date.
No “food-related risks” provision has been recorded.
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Benefits
The Group offers a certain number of fixed-contribution retirement plans to its employees. The Group’s contributions to
these retirement plans are noted in the financial statement for the relevant fiscal year.
The Group does not currently foresee any variable-contribution retirement plan and/or for which the face value would
not be fully covered.
The premiums paid to certain employees and managers are based on financial or quantitative objectives and are taken
as an expense, based on an estimate as of the balance sheet’s date.
Stock options
The fair value of the options on shares granted is entered into the financial statement and credited under capital for the
rights acquisition period. It is based on the number of options granted. This estimate is reviewed semi-annually. The fair
value of the options on shares granted is assessed at the granting date using the Black & Scholes model.
Deferred Taxes
Deferred taxes are calculated according to the liability method with regards to all temporary differences between the
assets and liabilities financial base and their book value, as noted in the financial reports. The deferred tax calculation is
made with a standard tax rate of 34%.
Deferred tax assets are not entered into the accounts unless they are likely to produce sufficient future taxable earnings
that offer a tax benefit. Deferred tax assets are reduced to the extent that a related tax benefit is unlikely.
When companies are newly acquired, provisions for deferred taxes are established with regards to the temporary
difference between the asset’s net acquired real value and its tax base.
Financial debt and other
Interest-bearing loans are initially valued at their face value, less related transaction costs. Then they are valued at their
depreciated cost based on real interest. Any difference between the cost and the repayment value that are posted to the
financial statements for the life of the loan is based on the real interest rate.
Trade or other debt is posted at its face value.
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a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n
Subsidies received
Subsidies received are not recorded unless there is a reasonable assurance that the company will adhere to the conditions
attached to the subsidies, and that they will be received.
Subsidies are recorded as income for the fiscal years in which the related costs that they are meant to reimburse
appear.
Income tax
Income tax for the fiscal year is made up of current tax, calculated at the actual tax rate for the consolidated companies,
and deferred tax, calculated at the average consolidated rate for the period.
Revenue
Sales are considered realized when it is likely that the economic gains linked to the transaction will be returned to
the Group and when it is possible to accurately determine the revenue. As far as products and goods for resale are
concerned, sales are considered realized when the sale gains and risks are entirely the buyer’s responsibility.
Warrants and Stock Option Plans
The warrant plans in force at the end of 2005 initially entitled their holders to subscribe to 148,801 shares.
44,400 were allocated under plan B, 45,745 under plan D and 44,400 under plan E. Plan C was cancelled during the
2000 fiscal year.
On December 31, 2005, 14,800 Plan B warrants and 39,765 Plan D warrants had been definitively acquired by the
beneficiaries. The balance of plan B and plan D warrants can no longer be acquired after that date. Finally, 40,700 plan
E warrants were definitively acquired at the end of 2005. Of the remaining plan E warrants, 3,700 should be acquired
during the 2006 fiscal year.
LIST OF DIRECTORS AND STATUTORY AUDITORS
(in alphabetical order) Term start date Term end date
DIRECTORS
Mr. Jean DUCROUX March 24, 1999 May 26, 2009
Mr. Alain ENGLEBERT Independent March 24, 1999 May 26, 2009
Mr. Regnier HAEGELSTEEN Independent March 24, 1999 May 26, 2009
Mr. Bruno LAMBERT March 24, 1999 May 26, 2009
Mr. Paul LIPPENS Independent March 24, 1999 May 26, 2009
Mr. Philippe RENIE March 24, 1999 May 26, 2009
Mr. Philippe SEVIN March 24, 1999 May 26, 2009
Mr. Pierre VERMAUT, President Independent (1) March 24, 1999 May 26, 2009
AUDITORS
Linet & Partners SCPRL (for statutory accounts)represented by Mr. Michel Linet
April 14, 1997 May 29, 2006
B.S.T. Réviseurs d’Entreprises SCPRL (for consolidated accounts) represented by Ms. Pascale Tytgat
April 1, 1998 May 28, 2007
(1) As defined in the Lippens Code, as of September, 2005, Mr Pierre Vermaut is considered independent (three years will have passed since the
end of his executive functions).
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I. LIST OF GROUP’S COMPANIES
1. Companies consolidated globally
Company Address Country
Percentage participation
Change in % of capital compared to
2004Axxor International SAThe company merged with Fountain International SA in 2005
B-1420 Braine-l’AlleudAvenue de l’Artisanat 13,
Belgium 0 % - 100.00%
Cup Express SASAvenue du Plateau 18F-93340 Le Raincy
France 100.00% -
Fountain First NV The company merged with Davamat- Fountain BVBA in 2005
Eeklostraat 81, B-9971 Lembeke
Belgium 100.00% -
FODIS SASRue Joseph Le Brix, ZA de Mescoden, bte 72F-29260 Ploudaniel
France 100.00% -
Fountain SA Avenue de l’Artisanat 17,B-1420 Braine-l’Alleud
Belgique 100.00% -
Fountain CS, s.r.o.Company sold in 2005
Hudcova 78, CR-61200 Brno
Czech Republic 0 % - 100.00%
Fountain Denmark A/SHammerholmen 18E, DK-2650 Hvidovre
Denmark 100.00% -
Fountain Distribution Center GEIE
Boulevard de la Libération 6, F-93200 Saint-Denis (Paris)
France 100.00% -
Fountain Industries Brussels S.A.
Avenue de l’Artisanat 13,B-1420 Braine-l’Alleud
Belgium 100.00% -
Fountain France SAS Boulevard de la Libération 6, F-93200 Saint-Denis (Paris)
France 100.00% -
Fountain Industries U.K. LtdReydon Business Park, IP18 6DH Reydon Southwold, Suffolk
United Kingdom 100.00%
Fountain International SA, the company merged with AXXOR International SA in 2005
Avenue de l’Artisanat 17,B-1420 Braine-l’Alleud
Belgium 100.00% -
Fountain Manufacturing LtdReydon Business Park, IP18 6DH Reydon Southwold, Suffolk
United Kingdom 100.00% -
Fountain Netherlands Holding BV
Baronielaan 139, NL-4818 PD Breda
Netherlands 100.00% -
FountainBrand International NVKaya Richard, J. Beaujon z/n,Curaçao
Netherlands Antilles
100.00% -
Orga Distribution SAS Avenue du Plateau 18F-93340 Le Raincy
France 100.00% -
NewCaffè (France) SASBoulevard de la Libération 6, F-93200 Saint-Denis (Paris)
France 100.00% -
Slodadis SAS (1)Chemin de Saint Marc 51-53, F-06530 Pleymeinade
France 34.00% -16.00%
NewCaffè Importateur SASBoulevard de la Libération 6, F-93200 Saint-Denis (Paris)
France 100.00% -
Sy-Ra International Holding NVKaya Richard, J. Beaujon z/n,Curaçao
Netherlands Antilles
100.00% -
(1) The Fountain Group retains de facto control of the company through a shareholder agreement.
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2. Companies at equity
Company Address Country
Percentage participation
Change in % of capital compared to
2004Davamat-Fountain BVBAThe company merged with Fountain-First NV in 2005
Eeklostraat 81, B-9971Lembeke
Belgium 0% -100.00%
Fountain Soleil SASRoland Garros 165, F-34130 Mauguio
France 50.00% -
Okole SARL Rue Charles de Gaulle 676,F-59840 Premesques
France 50.00% -
For these companies, the balance sheet total for 2005, sales for 2005, and net results for 2005 are as follows:
• Fountain Soleil SAS: 484,000 Euros, 1,029,000 Euros and negative 22,000 Euros
• Okole SARL: 257,000 Euros, 820,000 Euros and negative 41,000 Euros
3. Companies not consolidated (minimally important shareholdings)
Company Address Country
Percentage participation
Change in % of capital compared to
2004Fountain Coffee Systems Fin-land OY (société mise “en sommeil”)
Pakilantie 61, SF-00660 Helsinki
Finland 100.00% -
Fountain Consumer Appliances Ltd
”Belmont” Upasi Road, Coonor 643 101, India
India 17.98% -
Fountain Sud (France) SARL (in liquidation)
ZA les Ferrailles, Route de Caumont, F-84800 Isle sur la Sorgue
France 100.00% -
Covivia SARL (in liquidation)Avenue Gambetta 126, F-75020 Paris
France 45.00% -
Fountain USA, Inc5458 North Magnolia, chicago II, USA-60640
USA 100.00% 100.00%
Getränke Mit System GmbHVogesenstrasse 41, D-76461 Muggensturm
Germany 30.00% -
Of these associated companies (or joint ventures), Fountain Consumer Appliances Ltd in India, of which the Group holds
17.98%, is the only one with significant business activity. This company’s balance sheet shows a total of 2,846,000 Euros
in 2005 (3,121,000 Euros in 2004), the net results being negative 591,000 Euros in 2005 (8,000 Euros in 2004).
NOTE 1: SECTOR INFORMATION
The Fountain Group is principally active in the OCS (Office Coffee System) market. The Group considers, therefore, that
there is only one primary segment.
The secondary segment is based on geographic location. The Fountain Group receives more than 90% of its sales from
the European market; therefore, there is only a single geographic market. When activity outside Europe surpasses 10%,
an additional secondary segment will be created.
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NOTE 2: STATE OF INTANGIBLE FIXED ASSETS
Medium-term assets
Goodwill Development costs
Trademarks Patents and other rights
Software TOTAL
I . INTANGIBLE FIXED ASSET TRANSACTIONS
1. Intangible fixed assets, opening balance 4,936,848.08 15,313,873.51 377,369.28 3,539,988.15 143,159.65 170,391.32 24,481,629.99
1.1. Gross value 7,545,271.92 15,313,873.51 833,483.75 11,483,516.50 187,042.36 934,707.48 36,297,895.52
1.2. Accumulated depreciation (2,608,423.84) (456,114.47) (7,943,528.35) (43,882.71) (764,316.16) (11,816,265.53)
1.3. Accumulated loss in value
2. Internally generated investments
3. Investments 57,740.00 311,087.81 8,075.03 197,622.92 574,525.76
4. Acquisitions through company mergers
5. Transfers
6. Transfers to noncurrent assets and assets to sell (427,197.00) (427,197.00)
7. Transfers through company spin-offs
8. Adjustments resulting from subsequent recognition of deferred tax assets
9. Depreciation (729,876.00) (328,609.07) (1,148,351.64) (15,736.51) (121,012.42) (2,343,585.64)
10. Increase (decrease) resulting from recorded revaluation of equity
12. Loss in value recorded as equity recovery
13. Loss in value recorded in the financial statement (184,892.36) (184,892.36)
14. Increase (decrease) resulting from exchange rate fluctuations (1,818.79) (1,818.79)
15. Other increases (decreases) 16,664.00 105,429.25 (10,124.72) (546.67) (111,421.86)
16. Intangible fixed assets, closing balance 3,794,620.41 15,186,720.91 465,277.27 2,391,636.51 125,373.45 246,455.15 22,210,083.94
16.1. Gross value 6,307,324.92 15,371,613.51 1,064,106.33 11,483,516.50 192,750.73 1,134,697.06 35,554,009.05
16.2. Accumulated depreciation (2,512,704.51) (598,829.06) (9,091,879.99) (67,377.28) (888,241.91) (13,159,032.75)
16.3. Accumulated loss in value (184,892.60) (184,892.60)
II. OTHER INFORMATION
1. Net intangible fixed assets generated internally
2. Loan costs included in asset costs during the fiscal year
3. Mortgage loans and other commitments: Amount of intangible fixed assets used as debt collateral (including mortgages)
Every year, the Group conducts impairment tests. If these tests show that the net book value of a fixed asset is higher than
its economic value and there is nothing to show that this variance is temporary, the net book value is reduced to its economic
value by recording a charge for the period. The impairment tests are based on discounted capital costs of infinite free cash flows
generated by fixed assets. Being industrially integrated, the Fountain Group, tracks each stage of free cash flows generated.
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NOTE 2: STATE OF INTANGIBLE FIXED ASSETS
Medium-term assets
Goodwill Development costs
Trademarks Patents and other rights
Software TOTAL
I . INTANGIBLE FIXED ASSET TRANSACTIONS
1. Intangible fixed assets, opening balance 4,936,848.08 15,313,873.51 377,369.28 3,539,988.15 143,159.65 170,391.32 24,481,629.99
1.1. Gross value 7,545,271.92 15,313,873.51 833,483.75 11,483,516.50 187,042.36 934,707.48 36,297,895.52
1.2. Accumulated depreciation (2,608,423.84) (456,114.47) (7,943,528.35) (43,882.71) (764,316.16) (11,816,265.53)
1.3. Accumulated loss in value
2. Internally generated investments
3. Investments 57,740.00 311,087.81 8,075.03 197,622.92 574,525.76
4. Acquisitions through company mergers
5. Transfers
6. Transfers to noncurrent assets and assets to sell (427,197.00) (427,197.00)
7. Transfers through company spin-offs
8. Adjustments resulting from subsequent recognition of deferred tax assets
9. Depreciation (729,876.00) (328,609.07) (1,148,351.64) (15,736.51) (121,012.42) (2,343,585.64)
10. Increase (decrease) resulting from recorded revaluation of equity
12. Loss in value recorded as equity recovery
13. Loss in value recorded in the financial statement (184,892.36) (184,892.36)
14. Increase (decrease) resulting from exchange rate fluctuations (1,818.79) (1,818.79)
15. Other increases (decreases) 16,664.00 105,429.25 (10,124.72) (546.67) (111,421.86)
16. Intangible fixed assets, closing balance 3,794,620.41 15,186,720.91 465,277.27 2,391,636.51 125,373.45 246,455.15 22,210,083.94
16.1. Gross value 6,307,324.92 15,371,613.51 1,064,106.33 11,483,516.50 192,750.73 1,134,697.06 35,554,009.05
16.2. Accumulated depreciation (2,512,704.51) (598,829.06) (9,091,879.99) (67,377.28) (888,241.91) (13,159,032.75)
16.3. Accumulated loss in value (184,892.60) (184,892.60)
II. OTHER INFORMATION
1. Net intangible fixed assets generated internally
2. Loan costs included in asset costs during the fiscal year
3. Mortgage loans and other commitments: Amount of intangible fixed assets used as debt collateral (including mortgages)
Every year, the Group conducts impairment tests. If these tests show that the net book value of a fixed asset is higher than
its economic value and there is nothing to show that this variance is temporary, the net book value is reduced to its economic
value by recording a charge for the period. The impairment tests are based on discounted capital costs of infinite free cash flows
generated by fixed assets. Being industrially integrated, the Fountain Group, tracks each stage of free cash flows generated.
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NOTE 3: STATE OF TANGIBLE FIXED ASSETS
Work in progress inventory
Land and buildings Plants, machinery and equipment
Motorized vehicles Fixtures and incidental charges
Other tangible fixed assets
TOTAL
I. TANGIBLE FIXED ASSET TRANSACTIONS
1. Tangible fixed assets, opening balance 166,565.99 642,342.94 688,193.72 107,890.18 614,892.70 385,033.11 2,604,918.64
1.1. Gross value 166,565.99 1,206,496.66 5,106,228.46 210,817.10 4,048,530.36 1,179,443.39 11,918,081.96
1.2. Accumulated depreciation (564,153.72) (4,418,034.74) (102,926.92) (3,433,637.66) (794,410.28) (9,313,163.32)
1.3. Accumulated loss in value
2. Investments 15,273.00 94,951.59 32,902.59 353,197.20 126,998.38 623,322.76
3. Acquisitions through company mergers 7,469.18 7,469.18
4. Transfers (7,664.51) (30,379.58) (32,903.20) (18,595.49) (89,542.78)
5. Transfers to noncurrent assets and assets for sale
6. Transfers to other headings (166,565.99) 125,247.81 (1,746.02) 162,264.31 (129,927.43) (10,727.31)
7. Transfers through company spin-offs (9,438.72) (91,616.34) (101,055.06)
8. Depreciation (103,822.44) (438,843.26) (45,070.61) (299,616.99) (53,698.28) (941,051.58)
9. Increase (decrease) resulting from recorded revaluation of equity
10. Loss in value recorded as equity recovery
11. Increase (decrease) resulting from recorded revaluation in the financial statement
12. Loss in value recovery recorded in the financial statement
13. Increase (decrease) resulting from exchange rate fluctuations 7,477.21 (3.04) 901.01 (4,386.63) 3,988.57
14. Other increases (decreases) 4,487.07 (5,307.69) (820.62)
15. Tangible fixed assets, closing balance 15,273.00 538,520.51 469,362.56 68,080.59 791,457.78 213,807.32 2,096,501.76
16.1. Gross value 15,273.00 1,206,496.66 5,318,646.33 194,742.12 4,450,224.54 823,013.50 12,008,396.15
16.2. Accumulated depreciation (667,976.15) (4,849,283.77) (126,661.53) (3,658,766.76) (609,206.18) (9,911,894.39)
16.3. Accumulated loss in value
II. OTHER INFORMATION
1. Leasing 521,984.71 67,280.26 589,264.97
1.1. Net book value
1.2. Tangible fixed assets acquired through leasing
NOTE 4: CURRENT AND NONCURRENT FINANCIAL ASSETS
Other financial assets Shares Securities, other than shares Loans TOTAL
I. FINANCIAL ASSET TRANSFERS
1. Financial assets, opening balance 139,610.93 75,377.12 110,319.26 325,307.31
1.1 Gross value 169,683.38 75,377.12 110,319.26 355,379.76
1.2. Accumulated loss in value (30,072.45) (30,072.45)
2. Investments
3. Acquisitions through company mergers
4. Transfers (1,239.47) (1,239.47)
5. Transfers to other headings
6. Transfers through company spin-offs
7. Goodwill in associated companies
8. Increase (decrease) from fair value variation
9. Share in net result
10. Loss in value recovery (238.28) (238.28)
11. Increase (decrease) resulting from exchange rate fluctuations
12. Other increases (decreases) 826.54 400,078.80 (89,065.49) 311,839.85
13. Financial assets, closing balance 138,959.71 475,455.92 21,253.77 635,669.41
13.1.1. Gross value 162,562.68 475,455.92 110,319.26 748,337.86
13.1.2. Accumulated loss in value (23,602.97) (23,602.97)
13.2.1. Net noncurrent financial assets 138,959.71 21,253.77 160,213.49
13.2.2. Net current financial assets 475,455.92 475,455.92
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NOTE 3: STATE OF TANGIBLE FIXED ASSETS
Work in progress inventory
Land and buildings Plants, machinery and equipment
Motorized vehicles Fixtures and incidental charges
Other tangible fixed assets
TOTAL
I. TANGIBLE FIXED ASSET TRANSACTIONS
1. Tangible fixed assets, opening balance 166,565.99 642,342.94 688,193.72 107,890.18 614,892.70 385,033.11 2,604,918.64
1.1. Gross value 166,565.99 1,206,496.66 5,106,228.46 210,817.10 4,048,530.36 1,179,443.39 11,918,081.96
1.2. Accumulated depreciation (564,153.72) (4,418,034.74) (102,926.92) (3,433,637.66) (794,410.28) (9,313,163.32)
1.3. Accumulated loss in value
2. Investments 15,273.00 94,951.59 32,902.59 353,197.20 126,998.38 623,322.76
3. Acquisitions through company mergers 7,469.18 7,469.18
4. Transfers (7,664.51) (30,379.58) (32,903.20) (18,595.49) (89,542.78)
5. Transfers to noncurrent assets and assets for sale
6. Transfers to other headings (166,565.99) 125,247.81 (1,746.02) 162,264.31 (129,927.43) (10,727.31)
7. Transfers through company spin-offs (9,438.72) (91,616.34) (101,055.06)
8. Depreciation (103,822.44) (438,843.26) (45,070.61) (299,616.99) (53,698.28) (941,051.58)
9. Increase (decrease) resulting from recorded revaluation of equity
10. Loss in value recorded as equity recovery
11. Increase (decrease) resulting from recorded revaluation in the financial statement
12. Loss in value recovery recorded in the financial statement
13. Increase (decrease) resulting from exchange rate fluctuations 7,477.21 (3.04) 901.01 (4,386.63) 3,988.57
14. Other increases (decreases) 4,487.07 (5,307.69) (820.62)
15. Tangible fixed assets, closing balance 15,273.00 538,520.51 469,362.56 68,080.59 791,457.78 213,807.32 2,096,501.76
16.1. Gross value 15,273.00 1,206,496.66 5,318,646.33 194,742.12 4,450,224.54 823,013.50 12,008,396.15
16.2. Accumulated depreciation (667,976.15) (4,849,283.77) (126,661.53) (3,658,766.76) (609,206.18) (9,911,894.39)
16.3. Accumulated loss in value
II. OTHER INFORMATION
1. Leasing 521,984.71 67,280.26 589,264.97
1.1. Net book value
1.2. Tangible fixed assets acquired through leasing
NOTE 4: CURRENT AND NONCURRENT FINANCIAL ASSETS
Other financial assets Shares Securities, other than shares Loans TOTAL
I. FINANCIAL ASSET TRANSFERS
1. Financial assets, opening balance 139,610.93 75,377.12 110,319.26 325,307.31
1.1 Gross value 169,683.38 75,377.12 110,319.26 355,379.76
1.2. Accumulated loss in value (30,072.45) (30,072.45)
2. Investments
3. Acquisitions through company mergers
4. Transfers (1,239.47) (1,239.47)
5. Transfers to other headings
6. Transfers through company spin-offs
7. Goodwill in associated companies
8. Increase (decrease) from fair value variation
9. Share in net result
10. Loss in value recovery (238.28) (238.28)
11. Increase (decrease) resulting from exchange rate fluctuations
12. Other increases (decreases) 826.54 400,078.80 (89,065.49) 311,839.85
13. Financial assets, closing balance 138,959.71 475,455.92 21,253.77 635,669.41
13.1.1. Gross value 162,562.68 475,455.92 110,319.26 748,337.86
13.1.2. Accumulated loss in value (23,602.97) (23,602.97)
13.2.1. Net noncurrent financial assets 138,959.71 21,253.77 160,213.49
13.2.2. Net current financial assets 475,455.92 475,455.92
Lease contract financing under the heading “land and buildings” is related to the Group’s headquarters building (383,000 Euros).
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NOTE 5: CASH AND CASH EQUIVALENTS
2005 2004
Cash on hand 7,183.87 0
Bank balance 6,085,653.47 5,450,562.46
Short-term accounts 2,763.75 259,100.14
Other cash and cash equivalents 0 0
TOTAL 6,095,601.09 5,709,662.60
NOTE 6: CURRENT AND NONCURRENT FINANCIAL ASSETS
Historic cost valuation Fair value valuation
I. OTHER NONCURRENT FINANCIAL ASSETS 31/12/2005 31/12/2004 31/12/2005 31/12/2004
1. Fair value financial assets through financial statement bias
138,959.71 138,610.93
1.1. Shares 138,959.71 138,610.93
1.2. Securities, other than shares
1.3. Other Fixed financial assets
2. Loans and receivables 21,253.77 110,319.26
3. Financial assets available for sale 186,647.17 219,002.39
3.1. Shares
3.2. Securities, other than shares
3.3. Other Fixed financial assets 186,647.17 219,002.39
II. OTHER CURRENT FINANCIAL ASSETS
1. Financial assets available for sale 775,744.63 204,754.54 475,455.92 75,377.12
1.1. Shares
1.2. Securities, other than shares 475,455.92 75,377.12 475,455.92 75,377.12
1.3. Other Fixed financial assets 300,288.71 129,377.42
NOTE 7: PERSONNEL EXPENSES AND POST-EMPLOYMENT BENEFITS
Personnel expenses 2005 2004
TOTAL (10,830,524.17) (9,629,577.28)
The Group offers a certain number of fixed-contribution retirement plans to its employees. The Group’s contributions to
these retirement plans are noted in the financial statement for the relevant fiscal year.
NOTE 8: OTHER OPERATING EXPENSES
2005 2004
Rent 898,566.00 834,805.00
Transport, vehicle, and related costs 2,282,468.00 2,215,253.00
Dues 1,587,707.00 1,597,603.00
Advertising and marketing fees 1,108,039.00 807,335.00
Taxes (other than taxes on results) 403,058.00 337,968.00
Other 3,520,882.19 2,888,276.73
TOTAL 9,800,720.19 8,681,240.73
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NOTE 9: INVENTORY
2005 2004
I. NET INVENTORY AMOUNTS 3,988,653.81 4,650,043.94
1. Gross book value 4,673,555.92 5,370,883.84
1.1. Goods for resale 847,255.37 1,677,879.30
1.2. Production supplies 0 0
1.3. Raw materials 1,042,177.62 1,201,617.59
1.4. Work in progress 137,227.25 127,782.39
1.5. Finished goods 2,646,895.68 2,363,604.56
1.6. Other inventory 0 0
2. Depreciation and other write-offs (684,902.11) (720,839.90)
2.1. Goods for resale (69,280.28) (153,221.65)
2.2. Production supplies 0 0
2.3. Raw materials (212,471.19) (104,555.68)
2.4. Work in progress 0 0
2.5. Finished goods (403,150.64) (463,062.57)
2.6. Other inventory 0 0
NOTE 10: CURRENT NET ACCOUNTS RECEIVABLE
2005 2004
I. CURRENT NET ACCOUNTS RECEIVABLE 7,994,963.81 6,385,911.50
1. Current gross receivables 9,948,116.56 7,898,252.28
2. Accumulated value corrections (1,953,152.75) (1,512,340.78)
NOTE 11: AGGREGATE NET SALES FOR BELGIAN GROUP
(in EUR) 2005 2004
Addition of sales concluded in Belgium 9,489,963.84 8,949,271.51
NOTE 12: PERSONNEL HEAD COUNT
Average head count
(full-time equivalents) 2005 2004
Average staff head count of fully consolidated companies
230 226
Executives 14 14
Employees 171 164
Workmen 45 48
Average staff head count in Belgium 72 69
NOTE 13: INCOME TAX
Tax expense details in result accounts
(in EUR) 2005 2004
Current tax related to the outstanding fiscal year (2,340,328.55) (2,292,173.02)
Current tax related to previous fiscal years (2,493.49) 0
Deferred tax related to the outstanding fiscal year (280,362.21) (54,004.01)
Deferred tax related to previous fiscal years 583,279.00 344,771.00
Transfers to deferred tax 466,532.44 345,928.45
TOTAL (1,573,372.81) (1,655,477.58)
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Deferred tax assets – not accounted for
2005 2004
Fountain Manufacturing UK 0 165,440.65
Fountain Denmark 66,380.34 77,410.00
TOTAL 66,380.34 242,850.65
Deferred tax by category
2005 2004
BALANCE SHEET Assets Liabilities Assets Liabilities
Depreciation other than trademarks 13,689.00 71,318.00 15,819.00 71,275.00
Trademarks 826,203.00 728,739.00
Provisions 11,939.00 16,684.00
Inventory 362,169.00 2,586.00 249,900.00 2,245.00
Unprofitable companies 30,083.00
Statutory 63,815.00 124,964.00
Other 19,538.00
TOTAL 1,232,144.00 149,658.00 1,013,996.00 215,168.00
INCOME STATEMENT Expenses Products Expenses Products
Inventory (250,360.00) 362,235.00 (7,764.00) 93,715.00
Provisions (11,939.00) (316.00) 17,636.00
Unprofitable companies 30,083.00
Statutory 61,149.00 28,656.00
Depreciation and other (18,062.00) 13,381.00 (46,239.00) 205,922.00
TOTAL (280,361.00) 466,532.00 (54,003.00) 345,929.00
Deferred tax assets are not recorded for unprofitable companies in any given year unless the budget for the next year
predicts a return to a net profit result. If this is not the case, no deferred tax asset is posted.
The Group has recoverable tax losses in Fountain Manufacturing UK and Fountain Denmark.
Reconciliation of 2005 tax expenses
Profit before tax for 2005: 5,089,667.27
Parent company tax rate: 33.99%
Possible taxes (1,729,977.91)
UK tax credit 329,109.08
Tax refunds in the Netherlands 326,483.00
Non depreciable medium-term assets (177,469.78)
Unprofitable company without allocation of deferred tax assets (66,360.81)
Unlisted expenditures and other differences (255,156.39)
Taxes accounted for in 2005 results (1,573,372.81)
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NOTE 14: PROVISIONS
Reserve provisions
Restruc-turing
provisions
Litigation provisions
Other provisions
TOTAL
I. PROVISIONS
1. Provisions, opening balance 33,000.00 9,300.00 11,460.00 53,760.00
2. Supplementary provisions
3. Increase (decrease) in existing provisions (33,000.00) (33,000.00)
4. Other increases (decreases)
5. Provisions, closing balance 9,300.00 11,460.00 20,760.00
5.1. Noncurrent provisions, closing balance 11,460.00 11,460.00
5.2. Current provisions, closing balance 9,300.00 9,300.00
There is litigation by Fountain Distribution Center against the French tax authorities, for a maximum amount of
0.2 million Euros. Based on the risk assessment completed by our advisors, this legal action did not result in any
provision.
NOTE 15: LIABILITIES AND CREDITORS
December 2005 Situation December 2004 Situation1 year or less 1 to 5 years + 5
yearsTOTAL 1 year or less 1 to 5 years + 5
yearsTOTAL
I. LIABILITIES WITH INTEREST ACCORDING TO TERM1. Bank loans 4,564,709.15 3,862,980.61 8,427,689.76 5,306,243.60 8,130,492.86 13,436,736.463. Leasing 247,823.01 485,763.67 733,586.67 791,649.55 791,649.554. Other loans 165,051.22 22,615.54 187,666.76 72,289.27 72,289.27TOTAL 4,977,583.38 4,371,359.82 9,348,943.20 5,306,243.60 8,994,431.68 14,300,675.28
II. SUPPLIERS AND OTHER CREDITORS ACCCORDING TO TERM1. Suppliers 5,682,413.32 5,682,413.32 4,807,518.71 4,807,518.712. Advances
received1,912,593.74 1,912,593.74
3. Other creditors 228,612.52 68,369.73 296,982.25 473,505.43 220,044.16 693,549.59TOTAL 7,823,619.58 68,369.73 7,891,989.31 5,281,024.14 220,044.16 5,501,068.30
NOTE 16: RIGHTS AND COMITTMENTS OFF-BALANCE SHEET
(in EUR) 2005 2004
Personnel reserves established or irrevocably promised as debt collateral 9,481,331.00 8,547,917.00
Actual reserves established or irrevocably promised by the Group on its assets for the benefit of consolidated commercial companiesfor the benefit of credit institutions
271,758.00 76,520.0074,041.002,479.00
Property owned by third parties in their name but at the benefit and risk of the Group if off balance sheet
435,205.00 420,294.00
Commitments for sale of fixed assetsCommitments of fixed asset acquisitions
123,870.00 154,500.001.00
Rights resulting from transactions relating to acquisition of companies 4,529,083.00 6,863,935.00
Commitments resulting from Transactions relating to stock option plans
N/R69,865
warrants
N/R76,625
warrants
N/R = non recoverable
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NOTE 17: RELATIONS WITH AFFILIATED COMPANIES
(in EUR) 2005 2004
With affiliated companiesLong-term debtShort-term debt
0.00 0.000.00
0.00 0.000.00
With companies in which the Group owns shares but which are not consolidatedSharesLong-term debtShort-term debt
141,284.36139,959.50
01,324.86
172,178.14139,412.86
0.0032,765.28
NOTE 18: FINANCIAL RELATIONS WITH THE DIRECTORS OF THE CONSOLIDATING COMPANY
(in EUR) 2005 2004
Total compensation for service 157,607.19 130,245.00
Total advances and credits granted by the consolidating company or a subsidiary 0.00 0.00
NOTE 19: CAPITAL AND WARRANT PLANS
(in EUR) 2005 2004
Number of shares issued 1,615,960 1,615,960
Number of allotted warrants 134,545 134,545
Number of warrants exercised as of December 31 69,865 76,625
Number of diluted shares 1,685,825 1,692,585
Details of warrant plan assets as of December 31, 2005
Plan number Plan duration Last fiscal year Number of exercisable
warrants
Average price
D 5 years June 2006 25,465 26.87 €
E 5 years June 2008 44,000 15.83 €
Stock option plan charge for fiscal year 2005 is negative 5,852 Euros
NOTE 20: NONCURRENT ASSETS INTENDED FOR SALE
2005 2004
Medium-term assets 427,197.00 0
of which gross value 1,180,483.00 0
of which cumulative depreciation (753,286.00) 0
Companies to sell 0 568,864.80
Noncurrent assets intended for sale in 2005 have to do with medium-term assets acquired when developing Nespresso
products. In 2004, they have to do with the sale of Fountain CZ, s.r.o.
NOTE 21: EVENTS AFTER THE END OF THE FINANCIAL YEAR
The Fountain Group announced in January 2006 that it intended to subcontract the production of its machines, and
therefore to close its production unit in Great Britain at the end of 2006. The impact of this plan will be taken into account
for fiscal year 2006 and is estimated to be around 1 million Euros.
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NOTE 22: ADDITIONAL INFORMATION REGARDING THE ESPRESSO PRODUCT LINE
During 2005, the Group reached an agreement with Nestlé concerning the termination of operations related to Nespresso
Professional products in France. This agreement will allow the Fountain Group to quickly reposition itself in the French
espresso market and to reinvest in internal and external growth initiatives related to its primary mission of distributing
drinks within businesses.
Simultaneously, during the fourth quarter of 2005, the Group launched sales of its new espresso product line in partnership
with illycaffé.
The Fountain Group only recognizes the OCS as a market segment. The discontinuation of Nespresso product distribution
and Nespresso products being replaced with illycaffé products is a brand change within a product line.
As was announced publicly at the time, the sum transferred from Nespresso back to the Fountain Group is around
5.5 million Euros. In 2005, the Nespresso Professional products represent around 40% of sales for the Fountain Group’s
consolidated EBITDA.
SHAREHOLDER AGENDA date
Publication of the 2005 annual report beginning of May 2006
Annual Meeting of Shareholders May 29, 2006
2005 capital repayment available for payment (Degroof, Fortis, ING) August, 1st
Announcement of 2006 half-yearly results mid September 2006
Announcement of 2006 annual results mid March 2007
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2005 CORPORATE ANNUAL ACCOUNTS (ABBREVIATED VERSION)
In accordance with Article 105 of the Code des Sociétés, the corporate annual accounts for Fountain S.A. (formerly
Fountain Industries Europe SA) for the 2005 financial year are shown in abbreviated form.
In adherence with the Belgian law governing corporate entities, the management report and the company’s statutory
annual accounts, as well as the Auditor’s report, are filed with the National Bank of Belgium and kept on hand at the
company’s headquarters, available for consultation by its shareholders.
The Auditor approved the corporate accounts of Fountain S.A. without reserve.
1. STATUTORY BALANCE SHEET AFTER APPROPRIATION
(in thousands of EUR) 2005 2004
FIXED ASSETS 50,455 59,603
I. Formation expense 0 0
II. Intangible fixed assets 862 777
III. Tangible fixed assets 807 1,163
IV. Financial fixed assets 48,786 57,663
CURRENT ASSETS 8,003 3,754
V. Long-term debt 2,637 0
VI. Stocks and orders in progress 558 613
VII. Short-term debt 4,308 2,921
VIII. Investments 300 0
IX. Cash at bank and in hand 106 144
X. Deferred charges, accrued income 94 76
TOTAL ASSETS 58,458 63,357
(in thousands of EUR 2005 2004
CAPITAL AND RESERVES 44,242 39,015
I. Paid-up Capital 26,160 26,160
II. Share premium account 32 32
III. Revaluation surpluses 0 0
IV. Reserves 5,051 4,902
V. Accumulated profits 12,999 7,921
VI. Investment subsidies 0
PROVISIONS, DEFERRED TAXES 110 187
VII.A. Provisions for liabilities and charges 47 62
VII.B. Deferred Taxes 64 125
CREDITORS 14,106 24,155
VIII. Long-term debt 6,596 11,859
IX. Short-term debt 7,452 12,211
X. Deferred charges, accrued income 58 85
TOTAL LIABILITIES 58,458 63,357
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2. CORPORATE PROFIT AND LOSS ACCOUNT
(in thousands of EUR) after allocation 2005 2004
I. OPERATING INCOME 16,901 15,449
A. Sales 15,350 14,518
B. Increase (+), decrease (-) of goods in progress, finished good inventory and contracts in progress
(42) 8
C. Non performing income 0 0
D. Other operating income 1,593 923
II. OPERATING CHARGES 13,153 11,717
A. Raw materials, consumables and goods for resale 7,409 6,903
B. Services and other goods 2,601 2,250
C. Compensation, social security charges and pensions 1,924 1,717
D. Depreciation and write-offs on fixed assets (+ allowance) 756 644
E. Depreciation and write-offs on inventory and receivables (+ allowance)
143 135
F. Increase (+), decrease (-) in provisions for liabilities and charges (14) (1)
G. Other operating expenses 334 70
III. OPERATING PROFIT (+), LOSS (-) 3,748 3,732
IV. Financial income 3,617 840
V. Financial charges (745) (968)
VI. PROFIT (+), LOSS (-) ON OPERATION 6,621 3,604
VII. Extraordinary income 17 3
VIII. Extraordinary charges (273) (276)
IX. PROFIT (+), LOSS (-) BEFORE TAXES 6,365 3,330
IX.b Transfers to/from deferred taxes 61 29
X. Income tax (1,199) (984)
XI. PROFIT (+), LOSS (+) FOR THE PERIOD 5,227 2,375
XII. Transfers to/from immune reserves 119 55
XIII. PROFIT (+), LOSS (-) FOR THE PERIOD TO BE APPROPRIATED 5,346 2,430
A. Transfer to legal reserve (267) (122)
B. Transfer to other reserves 0 0
C. Dividends 0 (970)
D. Retained earnings (12,999) (7,921)
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3. REVIEW OF CAPITAL
Number of shares
Total number
of shares
Amount of capital
A. PAID-UP CAPITAL
March 23, 1972 Incorporation 600 600 600,000 BEF
September 26, 1980 Inclusion of reserves in capital 0 600 5,000,000 BEF
December 24, 1986 Capital increase 12 612 5,100,000 BEF
Capital reduction (580) 32 266,675 BEF
Inclusion of reserves in capital 0 32 1,250,000 BEF
February 15, 1995Split of shares; 125 new for one old
0 4,000 1,250,000 BEF
December 19, 1997 Capital increase 1,328,000 1,332,000 416,250,000 BEF
March 24, 1999Capital increase (exercise of warrants)
88,730 1,420,730 490,525,883 BEF
April 27, 1999 Capital increase (IPO) 250,000 1,670,730 576,842,176 BEF
Inclusion of share premium amount in capital
0 1,670,730 1,055,284,483 BEF
Capital conversion in Euros 0 1,670,730 26,159,819.01 EUR
December 26, 2001 Cancellation of shares (54,770) 1,615,960 26,159,819.01 EUR
B. UNSUBSCRIBED AUTHORIZED CAPITAL
Extraordinary General Meeting of March 24, 1999confirmed by the Extraordinary General Meeting of May 30, 2001 and of December 14, 2005
7,436,806 EUR
4. SECURITIES PORTFOLIO
Number of share held
Percentage participation
Equity onDecember 31,
2005(*)
2005 Results
2005
Fountain France SAS 6 0.06% 7,573,199 EUR 191,048 EUR
Fountain International SA 1 0.08% (861,053 EUR) (2,823,514) EUR
Fountain First NV 899 99,89% 488,034 EUR 209,233 EUR
Fountain Industries Brussels SA 199 99,50% (81,692 EUR ) (88,103) EUR
Fountain Netherlands Holding BV 60,000 100.00% 21,132,238 EUR (282,158) EUR
NewCaffè Importateur SAS 2,997 99.90% 1,868,628 EUR 852,766 EUR
(*) Any dividends with respect to 2005 are not deducted from the equity of the companies concerned.
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For additional information:
Pascal Wuillaume, Fountain S.A.
Tel +32-2-389 08 10
Fax + 32-2-389 08 14
Responsible editor
Michel Malschalck
Redaction & Production
Comfi & Publishing
Fountain S.A.
VAT be: 412.124.393
Tel: +32 2/389 08 10
Fax: +32 2/389 08 14
website:
http://www.fountain-group.com
Nederlandse versie verkrijgbaar op verzoek
Version française disponible sur demande
FOUNTAIN INTERNATIONAL S.A. Avenue de l’Artisanat 17, B-1420 Braine-l’Alleud, Belgium
FOUNTAIN FRANCE SAS Boulevard de la Libération 6, F-93200 Saint-Denis, France
FOUNTAIN INDUSTRIES UK LTD Reydon Business Park, Reydon Southwold, Suffolk IP18 6DH, United Kingdom
FOUNTAIN IMPORTING COMPANIES
FOUNTAIN PRODUCTION SITE
FOUNTAIN S.A. Avenue de l’Artisanat 17, B-1420 Braine-l’Alleud, Belgium
FOUNTAIN MANUFACTURING LTD Reydon Business Park, Reydon Southwold, Suffolk IP18 6DH, United Kingdom
ANNUAL REPORT 2005
TABLE OF CONTENTS
Key numbers
Profile 1
President’s Message 2
CEO’S Message 3
Management and Corporate governance 5
Management report 9
Products and services: a total solution 13
Personnel and Distributors:
an effective network 19
FINANCIAL ANNUAL REPORT SECTION
Auditor’s report 23
2005 Consolidated annual accounts 25
Descriptive data and compliance report 32
Appendices to the 2005 consolidated
accounts 32
2005 Corporate annual accounts
(abbreviated version) 54
Fountain S.A.
VAT be 0412.124.393
Tel. +32 2 389 08 10 – Fax +32 2 389 08 14
website: www.fountain-group.com
a n n u a l r e p o r t 2 0 0 5 I f o u n t a i n