AGRANA Beteiligungs-AG Integrated Annual Report 2015|16 Integrated Annual Report 2015|16 AnnualReport Integrated Acting together. Acting Sugar Acting together. Smart interlinking of business segments, close working partnerships with suppliers and customers, and perfect integration of our products in a multitude of economic sectors – the common thread is that by putting together winning combinations, we can do more. Starch Fruit Contents 2 AGRANA at a glance 10 Key financials (under IFRS) 12 Letter from the CEO 14 Supervisory Board’s report 16 AGRANA’s Management Board 18 Corporate governance report 28 AGRANA production sites 30 AGRANA’s strategy 32 AGRANA in the capital market 35 Group management report 36 Organisational structure 43 Financial results 50 Sugar segment 58 Starch segment 64 Fruit segment 70 Sustainability 76 Research and development 79 AGRANA’s people 83 Risk management 89 Capital, shares, voting rights and rights of control 90 Outlook 93 Consolidated financial statements 94 Consolidated income statement 95 Consolidated statement of comprehensive income 96 Consolidated cash flow statement 97 Consolidated balance sheet 98 Consolidated statement of changes in equity 100 Notes to the consolidated financial statements 158 List of members of AGRANA’s boards 159 Subsidiaries and business interests 162 Independent auditor’s report 164 Statement by the members of the Management Board 165 Other information 166 Parent company income statement 167 Parent company balance sheet 168 Proposal for the appropriation of profit 169 Glossary of industry and trade terms 174 Contacts 175 Global Reporting Initiative 179 Performance indicators and their meaning f Contents 2015|16 at a glance █ Starch and Fruit segments carry Group EBIT █ Slightly positive EBIT in Sugar segment, but decreased from one year earlier on low prices █ Revenue: € 2,477.6 million (prior year: € 2,493.5 million) █ Exceptional items: net expense of € 3.1 million (prior year: net expense of € 5.7 million) █ Operating profit (EBIT): € 129.0 million (prior year: € 121.7 million) █ EBIT margin: 5.2% (prior year: 4.9%) █ Profit for the period: € 80.9 million (prior year: € 84.6 million) █ Earnings per share: € 5.82 (prior year: € 5.70) █ Equity ratio: 53.5% (prior year: 49.6%) █ Gearing ratio1: 33.8% (prior year: 27.7%) █ Proposed dividend of € 4.00 per share (prior year: € 3.60) █ Number of employees (FTE)2: 8,510 (prior year: 8,550) Quick facts about AGRANA █ The leading sugar manufacturer in Central, Eastern and Southeastern Europe █ Major manufacturer of custom starch products in Europe and largest producer of bioethanol in Austria █ World market leader in the production of fruit preparations █ Largest manufacturer of fruit juice concentrates in Europe █ About 8,500 employees worldwide █ 53 production sites in 24 countries around the world Financial calendar for 2016|17 17 May 2016 Results for full year 2015|16 (annual results press conference) 21 Jun 2016 Record date for Annual General Meeting participation 1 Jul 2016 Annual General Meeting in respect of 2015|16 6 Jul 2016 Ex-dividend date 7 Jul 2016 Results for first quarter of 2016|17 7 Jul 2016 Record date for dividend 8 Jul 2016 Dividend payment date 13 Oct 2016 Results for first half of 2016|17 12 Jan 2017 Results for first three quarters of 2016|17 1 Debt-equity ratio (ratio of net debt to total equity). 2 Average number of full-time equivalents in the reporting period. Stronger together. Sugar, Starch and Fruit: It is thanks to the very diversity of our products’ applications in industry that the combination of these three pillars has proved a solid and stable base for our company. Together, the three business segments not only generate synergies in production and marketing, but also create long-term growth potential independent of segmental market fluctuations. Sugar € 672.6 million Revenue of the Sugar segment declined by 8.0% from the year before, to € 672.6 million. Sugar sales prices, especially for product sold to the sugar-using industry and to food retailers, were significantly lower than in the prior year, but growth was achieved in sales volumes of quota sugar, particularly to the food industry. While exports to countries outside the EU decreased, sales of non-quota sugar to the chemical industry were held almost at the year-earlier level. Fruit € 1,083.4 million The Fruit segment successfully defied the tough market conditions prevailing in its fruit juice concentrates business in the 2015|16 financial year. Sales revenue of the segment grew by 2.0% to € 1,083.4 million. Sales quantities of fruit preparations were up slightly from the previous year and, coupled with an increase in sales prices, led to revenue growth of about 8% in this division of the Fruit segment. The fruit juice concentrates division, on the other hand, saw a revenue reduction of 18% as a result of a sharp decline in selling prices for apple juice concentrate from the 2014 crop. Starch € 721.6 million The Starch segment delivered a robust top- line performance. At € 721.6 million, revenue even slightly exceeded that of the prior financial year.The areas of revenue growth included the bioethanol business, which benefited from higher selling prices, and the sector of wet starch derivatives, where sales volumes rose. By-products generated slightly less revenue than in the prior year as a result of lower raw material prices, and sales reductions in saccharification products reflected the lasting low prices in a difficult European sugar market. Supplying what makes industries run. Our versatile Starch segment impresses with its outstanding product diversity, its high degree of value added and its wide range of applications. We supply a large number of very different industries, and the product portfolio of the Starch segment could not be more varied: Food ingredients, infant formula, cosmetics and pharmaceutical products, feedstuffs and fertilisers, technical applications in the paper, textile and construction materials industries, and climate- friendly bioethanol for blending into petrol. Added to this is our leading position in organic and GMO-free starches. Diversity and unity. We are proud of the vast number of uses our products find in everyday life: The range extends from sugar for foods, to starch for textiles and other non-food applications, to fruit preparations for yoghurts and fruit juice concentrates. Taken together, AGRANA’s products are indispensable both in commercial and in private daily life. Bringing variety to life. Our sugar forms the basis of a wealth of products for industrial customers and also for consumers, who daily Producing ex- use items containing AGRANA sugar: from baked goods and confectionery, cellent quality to non-alcoholic beverages and processed-fruit products, all the way worldwide. to pharmaceuticals. The country- specific “Wiener Zucker” brand In the Fruit segment we serve alone offers more than 30 different customers in 70 countries, and our sugar products, with the organic fruit preparations division, to name range also steadily growing. Addi - just one, has production operations tionally, thanks to the complete at 24 sites around the globe. Our utilisation of raw materials, AGRANA high-quality fruit raw materials fields an extensive product offering are internationally purchased of feedstuffs and fertilisers. and processed for the global food industry. AGRANA fruit products enhance yoghurts, ice-creams, top- pings and cereals, natural and regular juices (apple and berry juices), nectars, syrups, tea beverages and energy and near-water drinks. Succeeding together. With the growing competition in the market- place, collaboration along the whole value chain is an important success factor. Cooperation to us means not only cultivating the team spirit among our approximately 8,600 employees1 Harvesting together. on six continents but also fostering close and constructive relationships with our partners. Together with our approximately 10,000 contract growers of agricultural raw materials, we are able Together with our crop growers and our to achieve remarkable things. Even in difficult customers, it is through an intensive exchange growing conditions, our farmers produce and deliver high-quality crops that we buy on a on matters of substance that we master the guaranteed basis and then process and market challenges of our time. optimally, thus generating value for all members of the entire supply chain. 1 Average number of employees (by headcount) in the 2015|16 financial year. In the field together. Our established global network of agricultural advisors ensures that we remain in personal touch with our contract growers. Discussion forums with top management as well stimulate an active exchange of ideas with suppliers, especially beet and potato growers. This dialogue encourages trust and understanding, ultimately letting us develop solutions together to meet the chal- lenges that may exist. United in thinking of tomorrow. Economic success is what drives us, but our respon- sibility to society as a whole is a constant guiding principle in our work. Through respect for people and the environment at all our sites worldwide, we thus create a shared culture of care that also honours the needs of future generations. Taking sustain- able action. At AGRANA we strive not only to com- pletely utilise all our agricultural raw materials and to ensure all our pro- duction processes are as eco-friendly and energy-saving as we can make them, but also to advance sustainable production conditions in the upstream supply chain. For instance, in the farm sustainability self-assessment using the criteria of the Sustainable Agriculture Initiative (SAI), one-half of our contract-based European beet growers and Austrian potato growers achieved gold status and the other half attained silver standing. Leading energy efficiency. In autumn 2015 at our sugar factory in Kaposvár, Hungary, a plant was installed which upgrades biogas (pro- duced from spent beet pulp and other residues) into biomethane and feeds it into the local natural gas network.