Annual report 2020 Every connection counts Content To our stakeholders 3 Chairman’s statement 3 CEO’s review 7 Marel in brief 14 Who we are 14 Business model 19 Strategy 25 Delivering growth 31 Industries 31 Poultry 35 Meat 41 Fish 48 Innova software 56 Innovation 64 Global Markets and Service 70 Global supply chain 78 Investors 83 Shares 83 Financials 89 Investor relations 98 Responsible growth 102 Sustainability 102 Social 107 Environmental 115 Economic 123 ESG data and references 128 Corporate governance 131 Board of Directors 140 Executive Team 144 Risk management 147 Consolidated financial statements 151 Marel Annual Report 2020 To our stakeholders 2 Chairman’s Statement A year like no other We all know 2020 has been a year like no other. Although the world had to shut its doors and shift into a lower gear, consumers everywhere still needed safe and affordable, high quality food on their plates every day. The Board of Directors is rightly proud of the way the Marel team, all over the world, has handled these extraordinary circumstances, recognizing our critical role in the food value chain and making sure we fulfil that role. The progress made during the year is testament to Marel‘s clear purpose, values and resilient business model. The global pandemic understandably impacted Marel’s financial results in 2020, resulting in both earnings and order intake below targets, and we are still navigating its uncertainty and challenges. While we did not reach all the goals set at the beginning of the year, Marel has delivered a robust performance, innovating at pace to create new ways to ensure continuity for customers and redefining how we work. Chairman of the Board Asthildur Otharsdottir Management exhibited clear leadership, prioritizing employee safety and wellbeing while supporting our customers in 140 countries all over the world, whose operations were also affected by the pandemic. At the same time, important actions were taken to ensure business continuity and protect the financial health of the business. Marel performed well relative to peers and significant progress was made on key strategic projects, including innovation, ESG, M&A and continued strengthening of the foundation for future growth. We are proud we did not require subsidies, furloughs or other government support, nor have we entered into lay-offs in response to the pandemic. In cases where government subsidies were provided automatically, Marel returned the amount received or where appropriate donated this to charity. Food systems are One of the greatest challenges of our time is to deliver sustainable, healthy food to the fast-growing population, within the limits of our planet. The global pandemic has only central to the global shed further light on the vulnerability of global food systems and how the failure of these sustainability agenda – systems threaten the health of societies, our planet, and economic progress. awareness heightened by Almost 2 billion people lack access to safe, nutritious and sufficient food, while more than the pandemic 1 billion tons of food – nearly one-third of what is produced globally each year – goes to waste. Food loss and food waste is estimated to cost the global economy over EUR 750 billion annually and account for 8% of greenhouse gas emissions. There is increasing awareness of how global food systems are central to the entire sustainable development agenda, and of the acute need to transform these. Limiting the impact of climate change will require major shifts in how we farm our land, process our food, what we eat and how much we waste. It demands new ideas and multi- stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources. In 2020, we experienced the greatest global public health effort in history, driven by a shared effort of both the public and private sectors working together in new ways across borders and continents. Transforming the world’s food systems will also demand a global and ambitious response, driven by innovation, changes in consumer behavior and creative policy making. The power of innovation Each year, Marel invests around 6% of revenues in innovation, to contribute to transforming the way food is processed. Innovation is at the heart of our strategy, fuelling – lowering emissions and organic growth and securing competitive advantage as the leading global provider of food waste high-tech food processing solutions, software and services. This gives us a competitive advantage across our core poultry, meat and fish industries, and increasingly other foods. Automation, sustainability and digitalisation were the key drivers in the innovations Marel brought to market in 2020. Marel Annual Report 2020 To our stakeholders 3 Innovation aimed at minimizing waste and environmental impact, while maximizing quality, in food processing remains Marel’s most important contribution to global sustainability. Since 2017, our innovations are systematically scored on sustainability throughout the product development process. Sustainability is at the Alongside enabling our customers to drive sustainability, Marel is committed to meeting the highest standards of ESG. During the year, we made good progress on our heart of everything sustainability journey and sharpened the focus in several areas, including our governance we do structure – ensuring that ESG is not a stand-alone topic but ingrained and embedded in Marel‘s strategy and all our operations. Further exemplifying our commitments and prioritisation, the Board added ESG targets to the short-term incentive programs from 2021, including targets on climate, diversity and inclusion, and sustainable innovation, as explained in the Remuneration Report for 2020. We take great pride in having committed to the Science-Based Targets Initiative, designed to increase corporate ambition on climate action by mobilizing companies to set emission reduction targets consistent with the goals of the Paris Agreement. Marel intends to reach carbon neutrality well before 2050 and, once they are validated, we will disclose our emission reduction targets within the next two years. This marks an important next step in Marel’s sustainability journey and our responsibility as a corporate citizen. To improve the disclosure of climate-related risks and opportunities, we have also committed to integrating the recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD) into our climate-risk reporting. Marel continues to be a United Nations Global Compact participant, reporting on our progress in 2020 in accordance with the NASDAQ ESG Guidelines Initiative, the Euronext guidance on ESG reporting and the Sustainability Accounting Standards Board (SASB). This year’s ESG Report shows positive developments on many fronts, including diversity and inclusion, where a major milestone was reached with the gender equality of Marel‘s Executive Team. The UN’s Sustainable Development Goals Zero Hunger, Innovation and Responsible Consumption & Production continue to direct our efforts to make a real difference. We were pleased to be able to partner with the Red Cross last year in donating EUR 1 million to improve food security of the most vulnerable communities in South Sudan. It was heartwarming to see how proud Marel employees were of this gesture of outreach to support those in need. Every meal counts. Marel Annual Report 2020 To our stakeholders 4 Marel operates in a sizeable and attractive EUR 12 billion market with a positive Uniquely outlook, supported by long-term secular growth trends in population, urbanization and the increasing middle class. We continue to expect annual average industry positioned for growth of around 4-6% in the medium and long term. growth Events of recent years, including greater economic uncertainty, the global pandemic and specific factors such as the African Swine Fever, have temporarily constrained industry growth to marginally below that level. Now, the opportunities we see arising following this backdrop give us confidence that a period of above-average growth lies ahead. Investing in future Marel’s global reach and superior technological capabilities give us a great advantage. The speed of digital transformation in our industry is accelerating. We see demand growth growth driven by the rising need for automation, structural changes in consumer behaviour, an increasingly demand-driven food value chain and growing focus on sustainable processing. Marel’s significant investments in its business and infrastructure in the past years have uniquely positioned us to capture the many opportunities ahead. Furthermore, we will accelerate and increase our investments in the digital platform, while expanding our global coverage and extensive local presence with particular focus on China & Oceania and Latin America. Committed to the We remain committed to the ambitious 10-year growth targets we announced in 2017, of an average annual increase in revenues of 12% and earnings per share growing faster than 2017-2026 growth revenues. Growth will be balanced between organic and acquired, achieved by capitalizing strategy on investments in innovation and market reach, complemented by strategic acquisitions and partnerships. There are ample consolidation opportunities in our market. Last year, Marel acquired the German cutting technology provider TREIF, a great strategic fit that strengthens standard equipment sales in Marel Meat and provides technical synergies with other industries. Strong financial position During