Group Management Report SYMRISE AG, HOLZMINDEN JANUARY 1 TO DECEMBER 31, 2019 BASIC INFORMATION ON THE GENERAL STATEMENT ON THE SYMRISE GROUP 6 COMPANY’S ECONOMIC SITUATION 51 Structure and business activities 7 Market and competition 12 OUTLOOK 52 Goals and strategy 14 Future general conditions 53 Value-oriented management 15 Future corporate development 54 Research and development 15 General statement on the Employees 19 company’s expected development 54 Sustainability 22 REMUNERATION REPORT 55 ECONOMIC REPORT 24 Remuneration of the Executive Board 55 Global economic and industry- Remuneration of the Supervisory Board 62 related conditions 25 Corporate development 28 DISCLOSURES PURSUANT TO SECTION 315A OF THE GERMAN OPPORTUNITIES AND RISK REPORT 42 COMMERCIAL CODE (HGB) 64 Management of opportunities and risks 43 Approach to evaluating risks 43 CORPORATE GOVERNANCE STATEMENT 67 Opportunities and risks in detail 44 Overall assessment of opportunity and risk situation 49 ESSENTIAL FEATURES OF THE ACCOUNTING-RELATED INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM 49 Main features and objectives 49 Organization and process 50 6 — Group Management Report — BASIC INFORMATION ON THE SYMRISE GROUP Basic information on the Symrise Group Sharing values: Strong roots, new paths SEGMENTS Flavor Nutrition Scent & Care Cosmetic Aroma Flavor Diana ADF/IDF Probi Fragrance Ingredients Molecules DIVISIONS GOALS Financial goals Sales growth EBITDA margin at local currency 19 – 22 % (until 2020) 5 – 7 % p.a. (CAGR) 20 – 23 % (until 2025) > 50 % 1/3 Cross-divisional Share of sales Customer portfolio mix: connection of products from emerging markets global, regional, local and technologies Complementary operative goals Sustainability STRATEGY Vision Growth Efficiency Portfolio • Growth in emerging markets • Specific efficiency programs • Expand competencies outside • Maximization of customer spectrum • Optimization of raw materials the traditional flavor and fragrance • Targeted innovation portfolio industry • Acquisitions Sustainability Values BASIC INFORMATION ON THE SYMRISE GROUP — Group Management Report — 7 STRUCTURE AND BUSINESS ACTIVITIES The Flavor segment is made up of the business units Beverages, COMPANY PROFILE Savory and Sweet. The Nutrition segment consists of the Diana Symrise is a global supplier of fragrances and flavorings, division with the business units Food, Pet Food, Aqua and cosmetic active ingredients and raw materials, functional in­ Probi as well as the US company ADF/IDF, which was acquired gredients and product solutions for food production based in November 2019. The Scent & Care segment breaks down on natural starting materials. Its clients include manufacturers into the Fragrance, Cosmetic Ingredients and Aroma Molecules of perfumes, cosmetics, food and beverages, the pharmaceu­ divisions. tical industry and producers of nutritional supplements and pet food. The activity of the Group is also organized into four regions: Europe, Africa and Middle East (EAME), North America, Asia/ With sales of € 3.4 billion in the 2019 fiscal year and a market Pacific and Latin America. share of around 10 %, Symrise is one of the leading global sup­ pliers in the flavors and fragrances market. Headquartered Additionally, the Group has a Corporate Center where the fol­ in Holzminden, Germany, the Group is represented by more lowing central functions are carried out: Accounting, Control­ than 100 locations in Europe, Africa, the Middle East, Asia, ling, Taxes, Treasury, Corporate Communications, Investor the United States and Latin America. The Symrise Group origi­ Relations, Legal Affairs, Human Resources, Group Compliance, nally resulted from a merger between the German companies Corporate Internal Audit and Information Technology (IT). Haarmann & Reimer and Dragoco in 2003. The roots of Symrise Other supporting functions such as technology, energy, safety, date back to 1874 and 1919, when the two companies were environment and logistics are bundled in independent Group founded. In 2006, Symrise AG entered the stock market with companies. They also maintain business relationships with its initial public offering (IPO). Since then, the Symrise share customers outside the Group. has been listed in the Prime Standard segment of the German stock exchange, and it had a market capitalization of about Symrise AG’s headquarters are located in Holzminden, Ger­ € 12.7 billion at the end of 2019. The Symrise share is listed on many. At this site, the Group’s largest, Symrise employs the MDAX® index. Currently, about 95 % of the shares are in 2,448 people in the areas of research, development, production, free float. marketing and sales as well as in the Corporate Center. The company has regional headquarters in the USA (Teterboro, New Operational business is the responsibility of the Flavor, Jersey), Brazil (São Paulo), Singapore and France (Rennes, Nutrition and the Scent & Care segments. Every segment has Brittany). Important production facilities and development its areas such as research and development, purchasing, centers are located in Germany, France, Brazil, Mexico, Sin­ production, quality control, marketing and sales. This system gapore, China and the USA. Symrise has sales branches in more allows processes to be accelerated. We aim to simplify pro­ than 40 countries. cedures while making them customer­oriented and pragmatic. We place great value on fast and flexible decision­making. 8 — Group Management Report — BASIC INFORMATION ON THE SYMRISE GROUP Symrise sites 2019 | | | | | | | | | | Springfield | | | | | | | | | . | | | | | | | | | | || | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ' | | | | | | | | | | Teterboro | | | | | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ' | | | | | | | | | | | | | | | | | | | | | | | | -- | | | | | | | -| | -- | | | | | | | | | | | | | | Singapore | | | | | | | | | | | | | | | São Paulo | | | | | | | | | | | | | | | | | | | Holzminden | | | | | | | | | | | | | Global headquarters Regional headquarters Symrise sites MANAGEMENT AND OVERSIGHT planning, strategy and risks with the Executive Board. In com­ Symrise is a German stock corporation with a dual manage­ pliance with the German Codetermination Act, Symrise AG’s ment structure consisting of an Executive Board and a Super­ Supervisory Board has an equal number of shareholder and visory Board. The Executive Board is responsible for managing employee representatives. The Supervisory Board has formed the company with the primary aim of sustainably increasing four committees to increase the efficiency of its work. the company’s value. Details on cooperation between the Executive and Supervisory Symrise AG’s Supervisory Board has twelve members. It over­ Boards as well as on corporate governance at Symrise can sees and advises the Executive Board in the management of be found in the Supervisory Board and corporate governance the company and regularly discusses business development, statements. Supervisory Board Chairman: Dr. Winfried Steeger Chief President Chief President President Executive Officer Scent&Care Financial Officer Nutrition Flavor Dr. Heinz-Jürgen Bertram Achim Daub Olaf Klinger Dr. Jean-Yves Parisot Heinrich Schaper BASIC INFORMATION ON THE SYMRISE GROUP — Group Management Report — 9 BUSINESS ACTIVITIES AND PRODUCTS flavorings that enable foodsʼ sugar or salt content to be reduced The value chain of Symrise or a moisturizing cosmetic ingredient that lowers the propor­ Symrise manufactures about 30,000 products from around tion of preservatives in care products. 10,000 – mostly natural – raw materials such as vanilla, citrus products or flower and plant materials. The value chain of On the basis of these products, our customers can differentiate the three segments extends across research and development, themselves from competitors with their tailor­made end purchasing, and production as well as the sale of products products in the rapidly changing consumer goods market. The and solutions. The natural food ingredients, flavors, perfume extensive research and development (R & D) undertaken at the oils and active ingredients are generally central functional company, which is supplemented by a wide­reaching external components in our customers’ end products and often play a network of research institutes and scientific facilities, forms decisive role in consumers’ purchasing decisions. Along the basis of our product development. Given the strong differ­ with the typical product characteristics such as fragrance and ences in sensory preferences from region to region, compre­ taste, our value creation lies in the development of products hensive consumer research is also an important part of our with additional benefits. Examples of how flavors and perfume R & D activities. oils are combined with other innovative components include Probiotics Active Fragrance Ingredients Ingredients Consumer Fragrances Botanicals Colors * Majority shareholder in the Swedish company Probi AB. 10 — Group Management Report — BASIC INFORMATION ON THE SYMRISE GROUP CORPORATE STRUCTURE Our customers include