TABLE OF CONTENTS Business ..............................................................................................................................................................................................6 HKScan in brief..............................................................................................................................................................................6 Market areas............................................................................................................................................................................7 Operating environment .........................................................................................................................................................9 Key figures ............................................................................................................................................................................ 12 CEO's review .............................................................................................................................................................................. 16 Strategy....................................................................................................................................................................................... 19 Corporate responsibility .............................................................................................................................................................. 23 Corporate responsibility at HKScan ........................................................................................................................................ 23 Highlights and challenges in 2017.................................................................................................................................... 25 Materiality analysis............................................................................................................................................................... 26 Goals and achievements .................................................................................................................................................... 27 Value chain ........................................................................................................................................................................... 30 Circular economy ................................................................................................................................................................ 31 Collaboration with stakeholders........................................................................................................................................ 33 Organisation of the responsibility work............................................................................................................................ 39 Values and operating principles........................................................................................................................................ 41 Economic responsibility............................................................................................................................................................ 43 Social responsibility................................................................................................................................................................... 48 Responsible products ......................................................................................................................................................... 49 Employees............................................................................................................................................................................ 54 Responsible and ethical sourcing...................................................................................................................................... 60 Farming community ............................................................................................................................................................ 63 Animal health and welfare........................................................................................................................................................ 64 Broiler chicken meat production ....................................................................................................................................... 67 Beef production................................................................................................................................................................... 70 Pork meat production.......................................................................................................................................................... 73 Lamb meat production ....................................................................................................................................................... 76 Environmental responsibility.................................................................................................................................................... 78 Energy efficiency.................................................................................................................................................................. 79 This page is generated from HKScan's online annual report 2017. Please visit annualreport2017.hkscan.com for the full report. 2 Greenhouse gas emissions ................................................................................................................................................ 82 Water use and wastewater ................................................................................................................................................. 87 Material efficiency and waste ............................................................................................................................................. 90 Environmental work at farms ............................................................................................................................................. 97 Reporting principles.................................................................................................................................................................. 99 GRI index ............................................................................................................................................................................ 100 Financials ....................................................................................................................................................................................... 107 Report of the Board of Directors............................................................................................................................................ 107 Key figures .......................................................................................................................................................................... 121 Calculation of financial indicators.................................................................................................................................... 123 Financial statements................................................................................................................................................................ 126 Consolidated income statement for 1 January–31 December .................................................................................... 126 Consolidated statement of comprehensive income 1 January–31 December ......................................................... 128 Consolidated balance sheet on 31 December.............................................................................................................. 129 Consolidated cash flow statement .................................................................................................................................. 131 Statement of changes in consolidated equity ............................................................................................................... 133 Notes to the financial statements for 2017..................................................................................................................... 134 Notes to the income statement ................................................................................................................................. 149 1. Business segments............................................................................................................................................ 149 2. Other operating income................................................................................................................................... 152 3. Materials and services....................................................................................................................................... 152 4. Employee benefit expenses............................................................................................................................. 153 5. Depreciation and impairment ......................................................................................................................... 158 6. Other operating expenses ..............................................................................................................................