‘11 CONTENTS CONTENTS Overview Operations and and strategy 2 business performance 32 OVERVIEW AND STRATEGY OPERATIONAL DEVELOPMENTS Our track record and ambitions 2 Premix and Feed Specialties 34 Statement by the Chief Executive Officer 4 Fish Feed 36 Profile & financial highlights 6 Animal Nutrition Canada 38 Key figures 8 Compound Feed Europe 40 Report of the Executive Board 10 Meat and Other 42 Operating result 13 Strategic agenda 2012 14 Innovation 46 Strategy 17 Sustainability 56 Strategic objectives and highlights 24 Human Resources 60 Information about the Nutreco share 27 OPERATIONS GOVERNANCE OVERVIEW AND AND BUSINESS AND FINANCIAL STRATEGY PERFORMANCE COMPLIANCE STATEMENTS 1 Governance Financial and compliance 64 statements 91 Risk management 64 FINANCIAL STATEMENTS Management review and reporting 73 Corporate governance 74 Consolidated financial statements 92 Remuneration Report 79 Notes to the consolidated financial statements 98 Report of the Supervisory Board 85 Company’s financial statements 182 Notes to the company’s financial statements 183 Other information 185 Independent auditor’s report 186 Ten years of Nutreco 188 ADDENDUM Executive Board 190 Supervisory Board 191 Business Management & corporate staff 193 Participations of Nutreco N.V. 194 2 OUR TRACK RECORD AND AMBITIONS Our track record and ambitions AquaVision and Agri Vision Annual international conference organised by Nutreco since 1996, Sustainability bringing multiple stakeholders together • First Sustainability Report in 2000. at a professional, non-political forum to • Establishment of Innovation and discuss challenges and opportunities Sustainability Committee in in agriculture and aquaculture. About Supervisory Board in 2009 and 5,000 delegates have attended. performance targets on sustainability for top management since 2010. Nutrace • 50% reduction Feed-to-food quality of CO of own 2 strategy with quality operations will sustainability report 2010 standards, tracking and be realised in tracing, monitoring and three instead of ‘10 risk management. 1994 five years. sustainability report Foundation of Nutreco The name Nutreco reflects our activities and concerns: Nutrition, Ecology and since since Economy. since 1997 2000 2002 1996 Public listing Sustainability Nutrace AquaVision and Agri Vision Public listing Nutreco listed on the Amsterdam stock exchange. Total Shareholder Return of 400% since 1997. AEX Nutreco (EUR) 1200,200 60 1100,100 55 1000 ,000 50 900 45 NUTRECO SHARE 800 40 700 35 600 30 AEX 500 25 400 20 300 15 200 10 0 0 06-’9701-’98 01-’99 01-’00 01-’01 01-’02 01-’03 01-’04 01-’05 01-’06 01-’07 01-’0801-’09 01-’10 01-’11 01-’12 OPERATIONS GOVERNANCE OVERVIEW AND AND BUSINESS AND FINANCIAL STRATEGY PERFORMANCE COMPLIANCE STATEMENTS 3 Feeding the Future Publication of our vision on the future. Innovative feed solutions Innovative feed solutions for farmed How can animals and fish, addressing scarcity aquaculture contribute of raw materials, animal health to feeding 9 billion people and economic performance. in 2050 in a sustainable With MicroBalance™ (2010) scarce raw way? materials such as fishmeal are replaced by alternatives, reducing fish feed costs at the same time. 4.00 3.00 2.00 2011 1.00 0.00 Total Shareholder Return 1990 1995 2000 2005 2008 2009 2010 Potential Source: Skretting ARC since 400% since 1997 Double EBITA 2009 Nutreco more than doubles EBITA since from EUR 115 million in 2006 to Feeding the Future 2005- EUR 241 million in 2011, while since 2006 maintaining a strong balance sheet. 2011 Acquisitions and EBITA development since 2006 divestments 2004 Rebalancing 2011 for Growth Innovative feed 2006 Solutions 0 50 100 150 200 250 Sustainability Vision 2020 Integrated strategy for raising the sustainability dimension through to 2020. 12th edition of Acquisitions and divestments Sustainability Acquisitions of feed companies in growth Report economies, divestment of global fish farming and meat processing activities in Agri Vision Rebalancing for Growth the Benelux. 2011 Strategic transformation from an integrated company active in feed, Ambition 2016 – farming and meat processing to driving sustainable growth an animal nutrition and fish feed company. Focus on core activities and Strategy that focuses on higher margin reducing earnings volatility resulting in nutritional solutions. Focus to grow a Beta below 0.7. in Premix, Feed Specialties and Fish Feed and in growth geographies Latin America, Russia, China and Southeast Asia. Ambition to sustainably grow EBITA to EUR 400 million in 2016. 4 STATEMENT BY THE CHIEF EXECUTIVE OFFICER STATEMENT BY THE CHIEF EXECUTIVE OFFICER Excellent progress in 2011 Preparing for sustainable growth The past year was important in the history of Nutreco for several reasons. It was the final year of our Rebalancing for Growth strategy and we achieved targets financially. We made advances in our nutritional solutions – creating value for our customers –, reached sustainability objectives and we made commitments for the future. The excellent result in 2011, with a 241 million EBITA, means this included refurbishing and doubling of capacity of the Nutreco exceeded the long-term target set in 2007, to double the Selko Feed Additives plant in the Netherlands and building 2006 EBITA of EUR 115 million. It gives me particular pride that a premix and feed plant in Russia where Trouw Nutrition we achieved this in a year of continuing financial turbulence. International will begin production in 2012. Commodity prices were volatile and many economies in which we operate were depressed, though not all. In the Southern The Aquaculture division strengthened its marketing Hemisphere and Far East there are regions with strongly capabilities with a global branding strategy for products expanding economies and vibrant optimism. Nutreco now has and concepts, led by the Skretting brand. In October 2011 we bases in these markets and is building on them. confirmed the completion of the Shihai fish and shrimp feed company in southwest China. Also in 2011, we completed When setting the target in 2007, we committed to grow the stage one of expanding the Averøy plant in mid Norway and company and reduce volatility. Nutreco today is significantly announced stage two, which will provide additional capacity larger and stronger and the reduced volatility was objectively to meet the growing demand. The continuing recovery of rated by a reduction of the Beta of Nutreco shares to below aquaculture in Chile, after the setbacks caused by the ISA 0.7 measured against the AEX index. disease outbreak, contributed to the strong performance of our Aquaculture division. All Skretting plants in Chile Strategy update are fully operational again; the Pargua plant reopened in In November the Executive Board presented the strategy September 2011. update ‘Ambition 2016 – driving sustainable growth’ (see pages 17-26). At the same time we announced the intention In both divisions feed specialties were important to divest the Hendrix compound feed business in Belgium, contributors. They include Selko products in Animal Germany and the Netherlands to ForFarmers, where it will be Nutrition and the proactive health feeds of Aquaculture. In a core activity with a leading market position. addition, the Skretting MicroBalance™ concept was extended geographically and in species. It is now used in all major The strategy update puts a greater focus on strategic salmon producing countries and with marine species such as marketing to commercialise our value proposition and sea bass and sea bream. The concept increases flexibility in enhance our ability to execute our strategy towards 2016. feed formulation; especially a reduction of fishmeal content. Several projects in 2011 support this focus. The Animal That enables Skretting companies to lessen the impact on Nutrition division created an Application and Solution Centre their customers of spikes in fishmeal prices and, importantly, (ASC) in Europe, based in the Netherlands and equivalent MicroBalance permits limited supplies of fishmeal to be used to the ASC in Canada. The ASCs provide a bridge between sustainably as aquaculture expands to meet the demand for customers and R&D, linking innovations to customer needs. fish from the growing world population. In 2012 the activities of the European ASC will be rolled out in Europe and those of the ASC in Canada throughout North Feeding the Future America. The main route for growth for Animal Nutrition is Nutreco expresses the challenge of Feeding the Future as the premixes and feed specialties. Capital investments to support need to double food production while halving the footprint. OPERATIONS GOVERNANCE OVERVIEW AND AND BUSINESS AND FINANCIAL STRATEGY PERFORMANCE COMPLIANCE STATEMENTS 5 This concept provided the theme for a highly successful Agri Vision 2011 conference: How to feed nine billion people in 2050 sustainably. We organise these conferences as a neutral forum for all stakeholders to discuss crucial issues in the agriculture and aquaculture industries. They provide delegates with ideas, information and inspiration and are used by Nutreco as input in the process of strategy development. The 2011 conference identified enabling factors and addressed controversial issues such as the relationship of large companies with the loss of biodiversity and how they can reduce their impact and even generate value from environmental responsibility. In particular delegates heard from both sides of the debate on the impact of increasing soya production in Brazil. Soya meal is a