Unlocking long-term value and driving sustainable growth Strategy Report Annual Report 2020 Olam International Limited About Olam Olam International is a leading food and agri-business supplying Image Right: food, ingredients, feed and fibre to 17,300 customers worldwide. Through our Purpose, we seek to achieve three outcomes, one of Our value chain spans over 60 countries and includes farming, a direct which is Prosperous Farmers and and indirect sourcing network of an estimated five million farmers, Food Systems. We source products from over 5 million farmers, many processing, distribution and trading operations. We are organised by of whom we support through our two operating groups – Olam Food Ingredients (OFI) and Olam Global sustainability programmes. Agri (OGA) both held by the parent Olam International Limited (OIL) which provides stewardship and acts as an accelerator, incubating new growth engines. Through our Purpose to ‘Re-imagine Global Agriculture and Food Systems’, Olam aims to address the many challenges involved in meeting the food, feed and fibre needs of a growing global population, while achieving positive impact for farming communities, our planet and all our key stakeholders. Headquartered and listed in Singapore, Olam currently ranks among the top 30 largest primary listed companies in terms of market capitalisation on SGX-ST. Since June 2020, Olam has been included in the FTSE4Good Index Series, a global sustainable investment index series developed by FTSE Russell, following a rigorous assessment of Olam’s supply chain activities, impact on the environment and governance transparency. The FTSE4Good Index Series identifies companies that demonstrate strong Environmental, Social and Governance (ESG) practices and is used by a variety of market participants to create and assess responsible investment funds. About this report Our 2020 report is made up of three chapters: Strategy Report, Governance Report and Financial Report. Strategy Report: This chapter offers narrative about our strategy, our performance and key market factors and trends. It can be read independently as an Executive Summary or as part of the full report. Strategy Report Governance Report Financial Report The full report is available online at olamgroup.com/investors Image disclaimer A number of images used in this report were taken prior to COVID-19. Unlocking long-term value and driving sustainable growth Contents 2-3 Business Model 4-7 Our financial and performance highlights 8-9 Chairman’s letter 10-19 Group CEO’s review 20-27 Group CFO’s review 28-41 Olam Food Ingredients (OFI) 42-53 Olam Global Agri (OGA) 54-63 Olam International Limited (OIL) 64-69 Risk management 70-75 Our Capitals and Material Areas 76-87 Human Capital 88-103 Natural Capital 104-105 Intellectual Capital 106-121 Social Capital 122-125 Manufactured Capital 126-128 Intangible Capital 129-134 Olam Integrated Impact Statement 135-138 General Information olamgroup.com 1 Business Model Unlocking long-term value and driving sustainable growth Our Governing Objective To maximise long-term intrinsic value for our continuing shareholders Our Purpose Re-imagining Global Agriculture and Food Systems Our Vision To be the most differentiated and valuable global food and agri-business How do we unlock value?1 Re-organisation Plan As announced in January 2020 Following a comprehensive strategic One holding company and two operating groups we are undertaking a re-organisation review, the planned IPO of OFI is of our business to create two new expected by H1 2022. The Olam (January 2020 onwards) coherent operating groups, Olam Group is also evaluating a scheme of Food Ingredients (OFI) and Olam arrangement which would see Olam’s Carve-out and separation of Global Agri (OGA), that are well- listing status on the Mainboard of the OFI and OGA is estimated to be positioned for further growth in line Singapore Exchange Securities completed by the end of 2021 with key customer trends and Trading Limited move to a new holding market opportunities. company. It is intended that OFI will be demerged from the Olam Group This aims to unlock and maximise IPO and concurrent demerger by way of a distribution in specie of of OFI by H1 2022, pursue similar Olam’s long-term value via a carve- shares in OFI to Olam shareholders at strategic options for OGA out, IPO and concurrent demerger the point of demerger, in conjunction first of OFI and OGA subsequently. with the IPO. The carve-out and separation of OFI Three separate entities In parallel, we continue to explore and OGA is estimated to be completed similar strategic options for Olam International (OIL), Olam Food by the end of 2021. Ingredients (OFI) and Olam Global Agri maximising the value of OGA (OGA) by end of 2023 within the Olam Group. Olam International Limited (OIL) 1. Interim stewardship 2. Accelerator Holding company for OFI and OGA • Responsible divestment of until carve-out, IPO and demergers de-prioritised assets and are completed: exiting businesses. • Nurturing and partial/full • OFI targeting completion in H1 monetisation of gestating businesses. 2022. • Incubate new platforms for future • OGA targeting completion in 2023. growth (Engine 2). Responsible divestment of de-prioritised assets and exiting businesses Nurturing and partial/full monetisation of gestating businesses (Packaged Foods, Infrastructure and Logistics and Olam Palm Gabon) Incubate new platforms for future growth (Engine 2) Please see page 54 for more information 1. Please read the cautionary statement on the Re-organisation Plan on page 13. 2 Olam International Limited Annual Report 2020 Olam Food Ingredients (OFI) • Industry-leading businesses offering sustainable, natural, value-added food ingredients which are ‘on-trend’ • Comprises five businesses: Nuts, Spices, Dairy, Coffee and Cocoa Integrated sustainable sourcing and value-added ingredient solutions Nuts Spices Dairy Coffee Cocoa Large, attractive and growing key end-use categories Beverages Bakery Confectionery Snacking Culinary Global and diversified blue-chip customer base Please see page 28 for more information Olam Global Agri (OGA) • A market leading and differentiated food, feed and fibre global agri-business with unique focus on high-growth emerging markets, delivering high returns • Comprises five businesses: Grains and Animal Feed & Protein, Edible Oils, Rice, Cotton and Commodity Financial Services (CFS) Food & Feed (Grains and Animal Feed & Protein, Fibre & Ag Services Edible Oils and Rice) Origination & Processing & Cotton & CFS Merchandising Value-added Please see page 42 for more information Delivering value Human Intellectual Manufactured through our capitals Please see page 76 Please see page 104 Please see page 122 for more information for more information for more information Across our footprint, we create value for our stakeholders by investing in human capital, natural Natural Social Intangible capital, social capital, intellectual Please see page 88 Please see page 106 Please see page 126 capital, manufactured capital for more information for more information for more information and intangible capital that build valuable strategic assets, driving long-term value. olamgroup.com 3 Our financial and performance highlights Our financial and performance highlights Volume Revenue (’000 Metric Tonnes) (S$million) 8.5% 2.9% 4.9% 35.0% 44,409.7 35,820.0 +11.7% +8.6% 60.1% 88.6% OFI OFI OGA OGA OIL OIL EBIT Invested Capital (S$million) (S$million) (15.3%) 20.6% 43.2% 1,069.5 72.1% 16,665.7 +1.2% +5.6% 22.7% 56.7% OFI OFI OGA OGA OIL OIL Group Sourcing Volume by Region Group Sales Revenue by Region 16.3% 17.1% 44.3% 16.2% 20.2% 46.1% 23.2% 16.6% Asia, Middle East and Australia Asia, Middle East and Australia Africa Africa Europe Europe Americas Americas 4 Olam International Limited Annual Report 2020 Financial highlights For the 12 Months Ended 31 December (S$million) 2019 2020 Restated % Change Profit and Loss Statement Sales Volume (’000 Metric Tonnes) 44,409.7 39,751.8 11.7 Sales Revenue 35,820.0 32,992.7 8.6 Earnings Before Interest and Tax* 1,069.5 1,057.3 1.2 Profit Before Tax 221.7 335.6 (33.9) Profit After Tax and Minority Interest 245.7 316.1 (22.3) Operational Profit After Tax and Minority Interest* 677.8 498.2 36.0 Per Share Earnings Per Share basic (cents) 5.9 8.2 (28.0) Operational Earnings Per Share basic (cents)* 19.5 13.9 40.3 Net Asset Value Per Share (cents) 182.3 189.1 (3.6) Net Dividend Per Share (cents)^ 7.5 8.0 (6.3) Balance Sheet Total Assets 26,702.6 25,812.0 3.5 Total Invested Capital 16,665.7 15,789.3 5.6 Total Debt 14,159.4 13,079.2 8.3 Cash and Cash Equivalents 3,115.9 3,179.6 (2.0) Shareholders’ Equity 5,962.5 6,185.2 (3.6) Cash Flow Operating Cash Flow Before Interest and Tax 1,697.3 1,455.8 16.6 Net Operating Cash Flow After Changes in Working Capital and Tax 536.4 1,360.2 (60.6) Free Cash Flow to Firm (155.2) 690.7 n.m. Free Cash Flow to Equity (592.2) 134.9 n.m. Ratios Net Debt to Equity (times)** 1.72 1.50 0.22 Net Debt to Equity (times) adjusted for liquid assets** 0.63 0.38 0.25 Return on Beginning-of-period Equity (%)^^ 3.4 4.7 (1.3) Return on Beginning-of-period Equity excluding exceptional items (%)^^ 11.2 7.9 3.3 Return on Average Equity (%)^^ 3.5 4.7 (1.2) Return on Invested Capital (%) 3.7 4.9 (1.2) EBIT on Average Invested Capital (%) 6.6 6.9 (0.3) Interest Coverage (times)# 1.4 1.5 (0.1) Note: The 2019 financials have been restated due to a change in accounting policy SFRS(I) 16 as adopted by the Group and implemented with retrospective effect.