Geschäftsbericht 2011/2012 by Nordzucker AG

Opening up new perspectives. Acting jointly.

2011/2012 Annual Report

NEW HORIZONS. OUR OWN WAY.

Structure figures 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

– – –

5 2 1,694

5 2 1,588

5 2 1,521

Number of employees average for the year

6 2 1 1,433

5 2 1 1,360

5 2 1 1,350

5 2 1 1,357

5 2 1 1,211

Eastern Europe Sugar factories Sugar refineries Number of employees average for the year

9 1 1,852

7 1 1,484

7 1 1,302

3 1 563

3 1 548

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

Northern Europe Sugar factories Sugar refineries Number of employees average for the year Central Europe Sugar factories Liquid sugar factories Bioethanol plants

Operating business Beet farmers

13,636

11,430

16,292

16,091

15,379

226,893

174,225

287,245

254,300

265,947

t/day

116,954

98,681

143,392

133,192

143,520

1.91

1.68

2.87

2.30

2,91

EUR m

1,300

1,192

1,806

1,815

2,018

Total revenues

EUR m

1,377

1,086

1,718

1,699

2,282

EBITDA

EUR m

255

165

166

283

420

EBIT

EUR m

110

188

315

Net income

EUR m

-10

208

Cash flow for/from operating activities

EUR m

-3

167

328

313

222

Investments in property, plant and equipment and intangible assets

EUR m

181

Beet cultivation area Beet processing Sugar production

millions of tonnes

Revenues of which abroad

Contents 2

We are Nordzucker

Letter from the Management Board

Nordzucker treads new ground – an interview with Hartwig Fuchs

Experts meet at Nordzucker. To discuss trends on agricultural markets.

Key figures Yield ratios 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

A healthy diet and exercise. Sugar keeps me going.

Total operating profitability

18.6

15.2

9.7

16.6

18.4

High Potential. Efficiency starts with the cultivation.

Return on revenues

6.2

3.7

-0.7

4.8

10.1

Technological Trends. Changes in sugar production.

Return on equity

10.9

6.1

-1.7

10.6

20.4

Actively seizing market opportunities. Safequarding supplies.

Interest coverage ratio

23.1

10.5

2.8

6.0

12.1

A job well done. Professional financial planning.

Redemption period 5

years

1.4

1.8

4.0

1.1

0.6

Cash flow from operating activities per share

EUR

–

3.46

6.78

6.49

4.59

18 22

Group management report

Earnings (Group) per share

EUR

1.66

0.91

-0.27

1.80

4.22

Nordzucker at a glance

Dividend per share

EUR

0.48

0.22

–

0.46

1.00

Economic environment and market developments

Total dividend

EUR m

23.2

10.6

–

22.2

48.3

Net assets, financial and earnings position

57 Employees 58

Opportunities and risks

Supplementary report

Balance sheet ratios at the end of the financial year

62 Forecast 64

Consolidated financial statements

Consolidated income statement

Consolidated cash flow statement

Consolidated balance sheet

Consolidated statement of changes in shareholders’ equity

Notes to the consolidated financial statements

109 List of investments 111 Auditors‘ report 112 Corporate Governance 114 Report by the Supervisory Board 116 Corporate governance report 117 Statement of compliance with German Corp. Gov. Code 118 Glossary Financial calendar

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

Balance sheet total

EUR m

1,804

1,879

2,456

1,982

2,262

Equity

EUR m

731

718

744

819

999

Debt capital

EUR m

1,072

1,160

1,712

1,163

1,263

Financial liabilities

EUR m

392

497

778

364

256

Cash and cash equivalents

EUR m

201

114

EUR m

363

295

664

314

249

Equity ratio

Net debt 8 EBITDA/total revenues Net income/revenues 3 Net income/equity 4 EBITDA/net interest

7 8

Net debt/EBITDA Net income/number of shares Total dividend/number of shares Cash and cash equivalents – financial liabilities

| Annual Report Nordzucker 2011/2012

20 · 20 · 20 Efficiency begins at the growing stage. The sugar

WE ARE NORDZUCKER

beet is the feedstock on which our success is based. The 20 · 20 · 20 project will increase the profitability of sugar beet and make it even more competitive in comparison with other field crops. Across the

Around 3,300 staff were active on Nordzucker’s behalf in 2011/2012. Together we not only generated a very pleasing

Group, Nordzucker staff are working closely with

financial result, but can also look back on a smooth and efficient campaign. The commitment of all employees enabled

farmers to examine the entire process chain system-

Nordzucker to take and implement a number of key decisions for the future of the company. Steps to increase the efficiency

atically, from sowing and harvest through to storage.

of both beet cultivation and the company were accompanied by active market trading. We have done a good job!

In the year 2020, 20 per cent of all beet farmers in the Nordzucker region should achieve a sugar yield of 20 tonnes per hectare.

Cane sugar

Revenues and earnings

Ensuring product quality and customer satisfaction

Since the reform of the sugar market regime there has

The financial year 2011/2012 was a good one.

is a challenge to which all Nordzucker employees

been a sharp increase in the amount of cane sugar

Stable pricing for sugar, a focus on our core business

rise with particular dedication. Our priority is to

refined in the European market. Around 15 per cent

and steps to improve efficiency, combined with the

ensure dependable supplies of sugar to our estab-

of the EU’s sugar consumption is covered by imported

commitment of all our employees, delivered a very

lished customers, even if this cost us considerable

cane sugar. We play an active role in this market too,

gratifying financial result all round. On revenues of

exertions in 2011/2012 as the import situation was

and the cooperation agreement with Wilmar Sugar,

EUR 2,018.0 million Nordzucker earned an operating

so tight. An active response was required: we made

one of the world’s leading agribusinesses, represents

result (EBIT) of EUR 315.0 million and net income

use of the opportunities created by the European

another step towards improving the security of supply

before minority interests of EUR 208.3 million – the

Commission to stabilise the market and we also

for the European market. With refineries in Sweden,

best result since the company was founded.

optimised sugar flows within the Group in order

Finland and Poland and the expertise of our staff, we

to meet demand.

are well equipped to refine imported raw cane sugar.

Photo: Apelöga

Active on the market

Responsibility

Internal improvements are vital for the continued

Responsibility is a way of life. In order to fulfil our

development of our company. The efficiency pro-

role in society and to ensure the company’s long-

gramme is due to run for five years and will ensure

term success, Nordzucker includes environmental

savings in all areas – especially in production. This

and social aspects in all its business processes. Our

only works if all employees are involved. With the

sustainable way of doing business ranges from

help of many good ideas, two thirds of the targeted

product safety and health and safety at work to

savings have already been achieved by the end of

energy and environmental topics and social respon-

the financial year 2011/2012. The harmonisation and

sibility. In the financial year 2011/2012 we again

optimisation of business processes and the integration

took several measures throughout the Group to

of the IT environment throughout the Group were

position Nordzucker even better for the future in

other vital steps to ensure Nordzucker’s lasting com-

this regard.

petitiveness.

Photo: Apelöga

Profitability

| Annual Report Nordzucker 2011/2012

Daniel Bigalke Industrial mechanic, Schladen plant

At Nordzucker we all pull in the same direction. Especially in the beet campaign it is vital that e veryone can rely on their colleagues.

Dr Niels Pörksen

Hartwig Fuchs

Axel Aumüller Dr Ulf Wegener

Daniel Bigalke

Mats Liljestam

Dr Thordis Möller

Dr Andreas Windt

Ralf Brunkow

WE ARE ALL NORDZUCKER.

Katja Millnat

Denise Ahlgrimm Benjamin Stein

Jennifer Haase-Holz

Anna Marijke Goedeke- Huitema Dr Michael Noth

Anja KirschbaumMarheine

| Annual Report Nordzucker 2011/2012

Dear Shareholders, We can look back on a very successful year. At the same time, we profited in 2011/2012 from a positive

We have therefore initiated a large number of projects in recent years. With their help we intend to

price trend in all of our regions. At the same time, we succeeded in supplying our customers with our

increase the efficiency of the company and of our cultivation operations. We are defining organisations

products despite the tense situation on the market for quota sugar. We actively and systematically

and tapping the opportunities provided by being the second-leading company. To achieve this, we will

exploited the opportunities offered by the market.

make good use of our employees’ expertise and build up new expertise wherever it is needed. In particular, processes need to be streamlined and our organisation adapted to the new challenges we face.

Nordzucker Group revenues increased by 11 per cent compared to the previous year – to now more than EUR 2 billion. More than 50 per cent of this was generated in the Eastern and Northern Europe

We are building up the company with all of our available strength. We want to be comprehensively

regions. Nordzucker has become a European company. We successfully took advantage of both our

prepared for further growth steps and for challenges that may arise in the markets in the future.

market-leading position in Northern Europe and of the opportunities offered by the much more volatile markets in Eastern Europe. We even managed to once more significantly increase our operating result

It has not been possible to guarantee the sugar supply with the beet grown in the EU since the reform

and net income in comparison to 2010/2011, which was already a very good year, with net income in-

of the sugar market regime in 2006. We are able to bridge some of the supply gaps thanks to our raw

creasing more than twofold to approximately EUR 208 million. This corresponds to a return on sales of

sugar refineries and have therefore increased our expertise in the area of procuring raw cane sugar. We

more than 10 per cent. At the same time we also improved our equity ratio, to around 44 per cent

have adopted the right path here with our partnership with Wilmar, a company with a great deal of

(previous year: 41 per cent), which is comfortably above our internal target of 30 per cent. Net debt

experience in international sugar trade.

was reduced year on year by a total of EUR 64.6 million to EUR 248.9 million. Faced with the prospect of changing parameters, it is important that Nordzucker achieves long-term It is a matter of course for us to share this result ap-

success. We will continue to focus on our core line of business, but an increasingly global market calls

propriately with our shareholders and our beet farm-

for a company with an increasingly global strategy. We regard this as a challenge and above all as an

Development of dividend per share

ers alike. We will therefore be proposing a dividend of

opportunity, and we will join our employees in putting all of our efforts into successfully developing

in Euro

EUR 1 per share to this year’s Annual General Meeting of

our company in all of its areas.

Nordzucker AG, up from 46 cents last year. This corre1.20 1.00

1.00

0.49 0.49 0.49

0.48

0.00

lion. We are therefore paying out almost 25 per cent of

work with you, our shareholders, to lead Nordzucker to long-term success. Nordzucker AG

finance future profitable growth.

The Executive Board

These figures clearly show that we were right to

0.22 0.28

proportion of net income is retained in the company to 0.46

0.40 0.20

True to our mission of making Nordzucker more streamlined, quicker and more efficient, we intend to

consolidated net income. At the same time a substantial

0.80 0.60

sponds to a total dividend distribution of EUR 48.3 mil-

2002/ 2005/ 2004/ 2005/ 2006/ 2007/ 2008/ 2009/ 2010/ 2011/ 2003 2006 2005 2006 2007 2008 2009 2010 2011 2012

dispose of unprofitable investments in recent years in order to focus entirely on sugar, which is our core line of business. Our plan for the future is to develop Nordzucker further in this core area. We want to achieve further growth, make the company even more inter-

Axel Aumüller

Hartwig Fuchs

Mats Liljestam

national and, at the same time, press on with integration within the Group. We have been successful over the past two years. But we, the Executive Board of Nordzucker AG, do not consider our task to be short-term profit maximisation. Instead, we aim to achieve lasting and sustainable profitability, as this is the only way to strengthen beet cultivation in Germany and the EU in the long term. The agricultural markets are currently and will continue to be volatile, and we must assume that sugar prices will fall again considerably. In addition, it is uncertain when the sugar market regime will expire. However, we must prepare ourselves for this early on.

Dr Michael Noth

Dr Niels Pörksen

| Annual Report Nordzucker 2011/2012

An interview with Hartwig Fuchs

In future we do intend to keep growing, however, and always in our core business. To do so we need partners, because one thing is certain: international sugar markets still run differently from those in the EU. What sources of growth are you thinking of in particular? The core will initially be to strengthen our market presence in Europe. Here we want to break the three million barrier in the near future. In other words to sell three million tonnes of sugar, of which around 400,000 tonnes will come from imports. We are also convinced that the European market will see further consolidation. We intend to play an active role in this – insofar as the competition authorities allow. Our aim is to develop our position as the clear second-largest player, but of course we also want to generate a profit. The third focal point will increasingly be to safeguard our supplies of raw sugar and to trade in sugar. At the moment only 80 per cent of the EU market is covered by domestic production. This means we have to source supplies of raw materials. Investing directly in production in countries with preference quotas is one possibility, but not the only one. We can also envisage cooperation agreements with international partners active in this area. The main thing for us is to leave all options on the table. Is Nordzucker in a position to manage further growth so soon after the acquisition of Nordic Sugar? Maybe not today, but we are currently in the process of thoroughly preparing the company. We are tightening the organisational structure, rolling out joint European IT platforms and working throughout the company on our cost structure: we want to be leaner, faster and more efficient. At the same time the aim is to create a common corporate culture. A large number of colleagues from every area of the company have met to discuss and work on this, from all countries and all hierarchical levels. The result is our company values – four core values on which we intend to build Nordzucker’s future Hartwig Fuchs, Chief Executive Officer

success. Other important elements are to achieve a good European mix of staff, to build our expertise and to

Nordzucker treads new ground – prospects for sustainable development

develop our human resources, especially at the management level. We want to develop using our own strength, and this is something I want to emphasise, to fill management positions wherever possible from within the company in future. You have called for the company to become “leaner, faster and more efficient”. What does this trenchant trio really mean?

Nordzucker has a very successful consolidation phase behind it and generated very strong earnings

Markets will continue to liberalise, so Nordzucker will also have to open up. We want to complete

in 2011/2012. So what comes next, Mr Fuchs?

our transformation into an international, modern and flexible industrial enterprise in order to survive

Our aim is to lead Nordzucker to lasting, long-term success. There are many challenges ahead of us:

in tomorrow’s markets. A highly competent and committed team is absolutely key in this regard.

the market in which we operate is increasingly volatile. In future we will have to deal with the fact

The recent adjustments and alterations were not always easy, but they form the underlying founda-

that prices will swing sharply at times. We will have to learn how to manage the risks this entails.

tions for the future.

Politics also has an effect on the economic environment in which we operate. This environment is more difficult to predict that it was in the past. Furthermore, the company has become larger and

Above all we want to be less ponderous, more transparent and faster at taking decisions. We intend

more complex – more European you could say. There are considerable changes taking place around

to continue along this path. My hope is that our colleagues not only come along for the ride but also

us, of which we form an important part.

give us their full support. We will have to keep adapting to new realities and focussing on the cost structure, but at the same time we need creativity and a sense of responsibility. Only by increasing

One of the most important strategic decisions we took at Nordzucker was to refocus the company

our efficiency will we be able to stay successful in a much more complex and more dynamic envi-

on our core competence in sugar. We do not intend to diversify into areas or markets we are not

ronment.

familiar with. The corollary is that we have to strengthen our core business, by expanding refining activities for instance, and by cooperating with Wilmar in sugar trading. Increasing the level of investment in our sugar factories complements this strategy.

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| Annual Report Nordzucker 2011/2012

Hartwig Fuchs, Chief Executive Officer

» EXPERTS MEET AT NORDZUCKER. TO DISCUSS TRENDS ON AGRICULTURAL MARKETS.

Agricultural markets are volatile – and that increasingly includes the EU sugar market. Nordzucker is preparing to face possible changes. We have to gradually improve our harvest yields and the profitability of our production processes in order to remain competitive in the future.

| Annual Report Nordzucker 2011/2012

Trends on agricultural markets

Our future: opportunities and risks from developments in the agricultural market Klaus Schumacher: Welcome to Nordzucker. I’m very pleased that we now have this opportunity

hard about the right time to sell wheat, rapeseed or barley

here to discuss the future of the agricultural markets on the whole and specifically the sugar market.

so that we can benefit from the good markets. Errors in

Let’s get straight into the matter by examining the prices for sugar, which continue to be high.

marketing have more severe repercussions today than

What are the main reasons for this?

production costs, which have since been optimised. That’s different with sugar. As farmers, we have no direct influence

Hartwig Fuchs: There’s a quite simple explanation for this – global production was well under global

on the prices; instead, we have a fair partnership with

consumption in 2010 and 2011. Harvests have been low in Brazil, India and Thailand in the past two

Nordzucker. Sugar beet is currently a beacon of planning

years. In the current 2011/2012 sugar marketing year though, global production will exceed con-

security and a reliable source of income for our farms.

sumption by between ten and eleven million tonnes, resulting in a build-up of stocks, thus very likely bringing about a reversal of the price development trends. This confirms once again that price

Dirk Bensmann: I’d like to go back to the global market

developments in the sugar market are very long-wave in nature due to the harvest cycles.

briefly – what influence do general societal and economic developments have on the sugar market? Generally

Philip von dem Bussche: But I’m very curious to see whether significant price drops really are feasible.

speaking, as prosperity grows, more meat is consumed.

I was in Brazil quite recently, and the mood there is very positive, even though production costs have

What is the situation like with sugar?

risen considerably in Brazil as well. I believe that agricultural prices on the whole will rise, particularly due to higher energy prices. I expect that we will continue to observe cyclical developments, but

Hartwig Fuchs: Similar. We’re currently observing global

that the level will remain high in general.

sugar consumption in the range of 160 and 165 million

Dirk Bensmann, Board Member, AGRAVIS Raiffeisen AG

tonnes, and we forecast that this will be 205 million Klaus Schumacher: Mr Bensmann, listening to this analysis, does this apply to other agricultural

tonnes by 2020. So there needs to be 40 million tonnes

products in the same way as well?

more produced somewhere in the world. Dirk Bensmann: As I see it, we are definitely dealing with

Dirk Bensmann: Where’s the consumption rising then? Surely not in Europe, as we’re in a saturated

different markets. We are at a world market level with re-

market like all industrialised countries, aren’t we?

spect to cereals, rapeseed and soya beans. Supply and demand are in force here with very little government in-

Hartwig Fuchs: Yes, there won’t be much in the way of change in Europe. Any increase here can

tervention, subsidies for the use of energy notwithstand-

only come from increased use of sugar for the production of ethanol. We expect that the largest rise

ing. It’s a different story altogether with sugar. Generally,

for human consumption will come from Asia, with significant pro capita increases in sugar consumption

though, our stocks of all major agricultural products, with

also coming from Africa.

the exception of wheat, are relatively small. In addition, there’s what I would describe as the short-term factor,

Hans-Christian Koehler: With beet sugar we are finding ourselves more and more in direct competition

namely that there is a great deal of liquidity available on

with cane sugar and therefore with Brazil. It is true that the cane sugar yields in Brazil are in decline

the whole. This money is increasingly being invested in

and that production costs are rising considerably? I recently read that the mechanised harvesting

agricultural commodities, with the result that we have

methods and the large, heavy machinery used exert considerable pressure on the soil and that the

price spikes and dips that are more pronounced than in

resultant soil compression reduces yields in the long term.

the past. Ultimately, however, it’s supply and demand that determine the price.

Dr Niels Pörksen: Yes, it is true that mechanisation in cane sugar production has grown considerably. But investment has also grown in this area. At the same time, much is being done in the field of sugar

Klaus Schumacher: Mr Koehler, what does this high price

cane to increase yields. Before, cane would be planted and hardly anything would be done during

volatility mean for your daily business as a farmer?

the vegetation period. Today, the seeds are protected and fertilised, and protective agents are used for the plants. So, yes, it may be that the soil has been placed under more strain, but at the same

Philip von dem Bussche, Board Spokesman, KWS Saat AG

Hans-Christian Koehler: During my first years as a farm

time, producers are investing much more in agriculture, thus ensuring that yields increase even in

manager we sold all of our products during the harvest to

sugar cane. On the whole, of course, this increases production costs, which affects prices.

local traders. The market and pricing were thus irrelevant for the rest of the year. Today, though, we really do think

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| Annual Report Nordzucker 2011/2012

short notice and there may be an obligation to make later payments. The role of trading has thus become extremely important. At Agravis, there are almost 20 specialists who mainly take care of hedging price risks. They all sit in a busy, noisy room with lots of flickering screens. Of course, we provide farmers with the benefit of this expertise. Klaus Schumacher: The sugar market in the EU is heavily influenced by the sugar market regime. What does this mean for Nordzucker? Hartwig Fuchs: We currently have the situation where sugar-processing companies in the food industry are complaining again and again that they are not getting enough sugar, and more importantly at low prices. On the other hand, we are producing large quantities of non-quota sugar, which we keep in storage. This costs us a lot of money, because we are not allowed to sell this sugar to the food industry, even though they would gladly buy it. And while the European Commission has reacted and approved the non-quota sugar for the EU food market, the levies demanded by the EU for conversion approval are causing price increases in the EU market. The next problem is that the farmers need to plan their cultivation a year and a half before, even though we have no idea if the non-quota sugar will be converted to quota sugar or not. The framework conditions for conducting business properly are very complex. Klaus Schumacher: So would a situation without quotas be better?

Dr Niels Pörksen, Chief Agricultural Officer, Nordzucker AG: “It is critical that we continuously improve our competitive advantage. That’s why we issued the 20-tonne target.”

Dr Niels Pörksen: No. It’s important though that we acknowledge the political reality and be ready for the possibility that a time without quotas may come, even though such a development may be years away. It is critical that we continuously improve our competitive advantage. That’s why we issued the 20-tonne target. We need to increase yields in order to keep beet competitive, reduce unit costs relative to other arable crops such as wheat and rapeseed, and ultimately be in a position to compete with Brazilian sugar cane. If we manage to cultivate 20 tonnes of sugar per hectare, it

Philip von dem Bussche: There’s another topic I’d like to address, and that’s government policy.

doesn’t mean that we are entirely safe, but it does mean that we will have much greater certainty

Where are these market developments coming from? Why is marketing suddenly playing such a ma-

that even without quotas, we will have a competitive system of beet cultivation.

jor role for farmers? Because these agricultural markets have been liberalised and de-regulated. The word always used to be that intervention by means of minimum prices assured farmers a sufficiently

Philip von dem Bussche: For me it’s a given that sugar beet will remain part of the crop rotation,

high income. In my eyes, though, it served more to protect the low prices for processing business-

even without quotas. What else can you do? It wouldn’t work with maize alone, not least because

es. When intervention was abolished for rye, for example, everyone was saying that rye was going

it would not be accepted socially or politically, as we have seen from the current discussion on

to die out ...

“greening” as part of the upcoming reform of the EU’s Common Agricultural Policy. Beet has plenty of agricultural advantages. Why should they be abandoned?

Dr Niels Pörksen: And yet it’s not dead – precisely the opposite. Rye has gained in competitive power and is trading at higher prices than during the interventionist period. Dirk Bensmann: It was the same with rapeseed. The rapeseed market regime was abolished, and prices began to align themselves with those of the global market accordingly. Everyone said the same thing there too – that rapeseed cultivation in Germany would be dead now. Two years later, you could fly over the countryside and be nothing short of astonished at the number of yellow fields in full bloom. I think it’s been a very positive development for farmers and the agricultural industry on the whole, being able to act largely independently of political influence in our markets. Klaus Schumacher: So how has the de-regulation of the markets changed the role of agricultural commodities trading? Dirk Bensmann: Stringent risk management and continuous price hedging have become indispensable. Hedging prices on stock markets and financial markets is a task that farmers have a hard job of doing themselves. Sufficient liquidity is needed for proper hedging, collateral must often be deposited at

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| Annual Report Nordzucker 2011/2012

Dr Niels Pörksen: It’s also a given for me that part of the additional supply will come from the EU, which brings us back to the “core” topic of competitiveness. How do we further increase our competitiveness so that we can secure ourselves a piece of the pie? Hartwig Fuchs: We mustn’t forget a very important point here, namely that beet and grains or rapeseed differ considerably in one respect. Grains and rapeseed can be sold immediately. Beet, on the other hand, is not the end product; it needs to be processed first. It is a crop that first of all cannot be stored and secondly cannot be transported. So beet cultivation and processing facilities need to be located close to one another. For us, this means that we don’t just need to increase competitiveness on the field but that we also need to improve productivity in the factories, continuously, a little more every year. Klaus Schumacher: Yields from the field can be increased in particular by breeding. Mr von dem Bussche, how do you see the development here? Philip von dem Bussche: In past years we have had annual yield growth of 2.0 to 2.5 per cent with sugar beet just by using new varieties. And this is certain to continue. When you think about securing raw materials, if there were no nematode-tolerant varieties, the factories would have to be closed today. The same applies to the introduction of rhizomania-tolerant varieties 20 years ago. Breeding provides the decisive element for increasing yields.

Hans-Christian Koehler, Chairman of the Supervisory Board, Nordzucker AG: “We currently have a situation in which we earn good money under a prevailing market regime. What would happen without a market regime is something we have to carefully analyse.”

Klaus Schumacher: And finally, from the field back to the market. Nordzucker recently entered into a partnership with Wilmar Sugar. What’s the benefit for us? Hartwig Fuchs: Wilmar’s greatest strength is in trading. Global trading, at that. Wilmar also has outstanding logistical capabilities. They are experts in the physical elements of trading transactions. We don’t have such expertise at our disposal at Nordzucker, so we need a partner. And we have

Hans-Christian Koehler: We do indeed need to ask what will happen if we don’t have quotas any

something to offer too. We have both first-class access to and first-class knowledge of how the

more. I think the present discussion on the market regime is a clear indication that it is less a matter

European market for sugar and for agricultural and food markets in general operates. In these areas

of if and more a matter of when the end of quotas will arrive. I don’t think anyone would be so

we will certainly be able to profit from one another in the future.

presumptuous to claim that we’ll still have the quota in 30 years from now. We currently have a situation in which we earn good money under a prevailing market regime. What would happen

Klaus Schumacher: Gentlemen, many thanks for this insight into our markets and for your insight

without a market regime is something we have to carefully analyse. And we have justifiedly already

into future challenges and opportunities.

begun such an analysis. One of the most important questions is where the beet cultivation would then move to. We ought not to forget that we have a large number of favoured locations for beet. These include of course the Paris Basin, a number of Southern German regions, but also countless regions in Nordzucker’s area. In addition to the low production costs though, you have to take the logistics costs for our typical markets into account. As a result, I am convinced that we will continue to have competitive sugar production in Northern Germany and that we will need considerable arable land for it. Hartwig Fuchs: This is the most important point that we need to keep in mind – of the 40 million tonnes more sugar that we will need to produce globally by 2020, it is expected that just under half will come from Brazil. The remainder will be produced in other countries, which of course provides us with good perspectives.

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| Annual Report Nordzucker 2011/2012

A HEALTHY DIET AND EXERCISE. SUGAR KEEPS ME GOING.

Steffen Blümel Nutritional ambassador, Nordzucker AG

Healthy eating starts in the kitchen, not in the pharmacy. Many employees find it difficult to eat a balanced diet, especially when they are working shifts. As part of a healthy diet, sugar provides energy for your brain and your body.

| Annual Report Nordzucker 2011/2012

| 21

Sugar keeps me going

“Sugar keeps me going” – sharing knowledge of sugar and nutrition

Nordzucker: Regional partner

Growing prosperity has changed the way we live, work

Childhood is the best time to learn about food and nutri-

and feed ourselves. Meals prepared at home from fresh

tion. That’s why Nordzucker supports selected projects

ingredients are no longer a given, especially in smaller

that help children and young people to develop their

households. Everyday work is characterised by sedentary

dietary knowledge.

activity, and Nordzucker is no exception. After school or

Mandy Täger, Nutritional ambassador

“Sugar is part of a balanced diet. It is one of the carbohy-

the office, Facebook or television cooking shows encour-

Hardegsen school farm

age people to stay seated as well. And although the media

Since 2011 Nordzucker has provided support for the school

are always talking about work-life balance and nutritional/

farm in Hardegsen, in the south of Lower Saxony. Every

physiological findings, there are growing gaps in people’s

year nearly 2,500 school children of all ages spend a few

knowledge of the connection between eating, exercise

days here and get a close-up view of where food really

and health.

comes from. The special thing about it is that the children

drates. They all have an energy content of four calories per gram.”

are actively involved. Mornings and evenings they take care As a major food producer but also as an employer,

of the chickens, sheep and pigs. The “curriculum” in Hard-

Nordzucker has a particular social responsibility. We are

egsen also includes processing sugar beet and making

extremely keen that our staff should have the information

cheese. The children cook a lot of their own food in the

and confidence they need to find their own personal equi-

group. They learn what belongs in a healthy and balanced

librium. One of our main interests is that Nordzucker em-

diet almost without noticing. In order to give a realistic pic-

ployees should be very well informed about sugar and its

ture of modern agriculture, the school farm works with agri-

role in nutrition and that they pass on this sugar knowledge

businesses from the region. When children are able to dis-

to their families and others outside the company. In 2011

cover how their food is made, what products come from

Phantoms@School is a highlight for schools in the Braun-

Nordzucker therefore organised action days in all German

which plants and animals and that it is hard work to pro-

schweig region. Since 2007 the professional basketball

sugar factories with the motto “Sugar keeps me going”.

duce them, it boosts their awareness in dealing with food

players from the New Yorker Phantoms have been teach-

The events focused on sugar’s “functionality and energy”,

and their understanding of agriculture. In 2010 the school

ing schoolchildren the basics of this popular US sport. In

its “natural and regional qualities” and the “pleasure” that

farm was selected by the German Unesco Commission as a

their sports bags is the Nordzucker brochure Fit through

comes only from including sugar as an ingredient. Free

project for the UN decade of Education for Sustainable De-

the Day, which also informs spectators at the Phantoms’

“The basic rule is easy: it’s all about the right balance.

fruit in the canteens is a permanent reminder to everyone

velopment, because it provided an impressive demonstra-

home games about a healthy blend of diet and exercise.

If we consume more energy than we use, the surplus

of the importance of a balanced diet.

tion of what sustainability education could look like.

which food we eat too much of.”

Nordzucker nutritional ambassadors

Phantoms@Future

The positive reaction to our action days prompted a number

As a food producer Nordzucker teaches children and young people in the region how important

of employees to act as Nordzucker nutritional ambassadors

exercise and a balanced diet are for a healthy life. Under the name of Phantoms@Future, the premier

in their sugar factories and answer questions on dietary and

league basketball team New Yorker Phantoms Braunschweig has launched a wide-ranging a ction

health matters. We are delighted by their commitment and

programme for children and young people. We found two of the activities particularly compelling

are supporting them with professional training from nutrition

(Phantoms@kitchen and Phantoms@school), as they draw attention to nutrition and exercise and

experts. Additional ideas are also being generated in work-

promote a sense of community and solidarity at the same time. Both represent an e xemplary com-

shops, where dietary and sugar knowledge can be passed

bination of fun and suggestions for a healthy life and are now being put into p ractice with the help

on at our sites.

of Nordzucker.

Patrik Dietrich, Nutritional ambassador

Having fun and paving the way for a healthy life

energy is stored. We put on weight. It doesn’t matter

Durmus Yesilyurt, Nutritional ambassador

Phantoms@Kitchen gets children and young people into the kitchen. There is plenty of fun to be had with informative, practical demonstrations of healthy and balanced eating. The programme is run by the basketball players and their wives and girlfriends. They visit children and young people

“Beet sugar is a regional product from natural crops.

for joint cooking and baking events in youth clubs. Using the dietary pyramid and simple meals,

Even today it is indispensable for preserving food and

the kids practice making healthy meals that are quick and tasty. Equipped with a diet plan, free

enhancing its taste. It often peps up savoury dishes as

tickets for a Phantoms game and the Nordzucker brochure Fit through the Day, that was created

well. Used in baking it gives volume. Everyone knows

especially for them, they are ready to start creating their own delicious and healthy meals.

its preserving properties too; which are used especially in making jams, marmalades and preserves.”

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| Annual Report Nordzucker 2011/2012

HIGH POTENTIAL. EFFICIENCY STARTS with the cultivation.

Dr Niels Pörksen Chief Agricultural Officer

20 tonnes per hectare: our clear target, not a pipe dream. In 2011 we came considerably closer to achieving this.

| Annual Report Nordzucker 2011/2012

| 25

Efficiency starts on the field

Sustainability: the key to the future of beet farming Sustainability is something we hear a lot about at the

What are Nordzucker’s goals for beet farming and how

moment, Dr Windt. What do you understand by sustain-

are they to be achieved?

able beet farming?

Nordzucker wants to systematically increase beet yields.

By sustainability we mean that our farmers are still suc-

The Group-wide efficiency initiative 20 · 20 · 20 gives a

cessfully growing sugar beet for Nordzucker in twenty

precise marker for where we want to be in 2020: in eight

years’ time. However, sustainability also describes the

years 20 per cent of our farmers should have a yield of 20

way we intend to reach this goal: our farmers’ work is

tonnes of sugar per hectare. That is certainly an ambitious

far-sighted and conserves resources. They give prefe-

250

200

25 20

150

target, but we know many of the variables. In the Nordzucker

100

rence to cultivation methods that treat the soil carefully

competence clubs we are working on the ground to find

and only use as much fertiliser and crop protection pro-

practicable solutions that can be communicated to every-

ducts as the beet really needs.

one. The focus is on new approaches to yield optimisation,

such as autumn strip tilling or combined drilling, which is

Dr Andreas Windt, Manager Agricultural Consulting

Changes in nitrogen efficiency

Sustainable progress can be seen clearly in the use of

already successfully used in Scandinavia. One important

nitrogen in beet cultivation: today an average of 110

issue is nematodes, where in some regions the proportion

kilogrammes of nitrogen per hectare are used as fertiliser.

of nematode-tolerant beet varieties still has to be increased.

Thirty years ago the figure was over 200 kilogrammes.

We are therefore pursuing our nematode monitoring to

Yields have almost doubled over the same period. That

raise awareness among farmers. Whereas in Germany we

means the amount of nitrogen needed to produce one

benefit from the experience of our Scandinavian colleagues

tonne of sugar has fallen drastically and shows how

in combined drilling, with nematodes the boot is on the

incredibly nitrogen-efficient the sugar beet is.

other foot.

50 0 1975 1980 1985 1990 1995 2000 2005 2009 2011

Sugar yield (t/ha, left-hand axis) Nitrogen used to grow beet (kg/ha, right-hand axis) Volume of nitrogen per tonne of sugar (kg/t of sugar, left-hand axis)

Nitrogen fertiliser: sugar yield Less is more: since 1975 the use of nitrogen in beet

How compatible are sustainability and yield targets in

cultivation has been reduced by nearly 50 per cent. In

beet farming?

the same period farmers have more than doubled their

Very – I would even say they are mutually reinforcing. For

sugar yields. The sugar beet’s nitrogen efficiency has

our farmers the phrase “less is more” does not just apply

therefore increased sharply.

to fertiliser. With the help of pelleted seed they now use precisely 60 grams of insecticide per hectare when the beet is sown. Previously this required three litres, which were sprayed over the same area. For preparing the soil we also use innovative methods to avoid erosion and to enhance the fertility and water retention of the soil. The widespread use of strip tilling is very much an achievement of sugar beet farmers. In other areas, too, beet farming is a pioneer: we are among the first to have developed environmental guidelines for practical application. We are currently profiting from this head start, because integrated crop protection has been part of the new Crop Protection Act since 14 February 2012. The fact that we all look to the future in our cultivation advisory practice is really paying off. We can do so because

Spot-on fertilising Combined drilling

we are well organised and networked and because in many areas we are already using systems that will be required for other crops in the future. So for years we have carried out monitoring for leaf

With what is known as combined drilling, the fertiliser is

diseases in order to avert lost yield by means of systematic checks and targeted counter-measures.

applied in one operation when the beet seed is sown.

This is another example of how we manage beet cultivation with a view to conserving resources.

This involves placing the fertiliser below the seed and next to the seed row. The process saves fertiliser, time, fuel and carbon dioxide and provides the beet with optimal nourishment. It is supplied evenly with nutrients, which promotes the even development of the beet crop. Combined drilling with multiple fertilisers is a process which has gained in importance as strip tilling methods have been refined. At Nordzucker, two per cent of arable land is currently cultivated with this combined process of sowing and fertilising.

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| Annual Report Nordzucker 2011/2012

Efficiency starts on the field

Learning from the best

Our approach to boosting yields Every beet cultivation area has its own natural character-

Nordzucker is focusing on five areas with its

istics. Soil conditions, climate and weather vary depend-

20 · 20 · 20 initiative:

ing on the country and the region. It gets interesting, however, when some farmers regularly bring in top

Genetics

yields under comparable ground conditions. As part of

Continuous yield increases and improvements in other

the long-term 20 · 20 · 20 project, Nordzucker is system-

important characteristics such as resistance to disease

atically investigating these differences together with

and pests in close cooperation with breeding stations

farmers in seven countries. Cultivation methods “What can we learn from the best and use to improve

Potential for optimisation in all areas of cultivation: time

the yields of all Nordzucker’s beet farmers and where

of sowing, crop spacing, early sowing, soil preparation

can we provide our best with targeted support?” Re-

(mulch seeding, strip tilling, catch crops to provide

gional competence teams that Nordzucker has set up in

humus), combined drilling, Nordzucker leaf monitoring,

all its European growing areas are working on answers

Nordzucker nematode monitoring

to these questions. The teams consist of Nordzucker cul-

Dr Ulf Wegener, Vice President Agricultural Sourcing Strategies „Safeguarding beet’s long-term competitiveness will remain our goal.“

tivation advisers and interested Nordzucker farmers and

Harvest

their meetings are often held in the open air. Their stud-

Minimise harvest losses and damaged beet via Nordzucker

ies and discussions are generally very hands-on and take

competence teams, Nordzucker harvester training,

place in the beet fields of the farmers involved or on trial

Nordzucker damage monitoring and close cooperation

sites. The teams concentrate mainly on complex questions

with manufacturers of harvesting machinery

with a high potential for improvement. They exchange valuable lessons learned in different cultivation techniques,

Storage Reduce storage losses by means of long-term storage

of stock management. Condensed into cultivation notes

trials, storage trials with different beet varieties, tests

and recommendations, the results of the team’s work are

with different covering materials and clamp shapes

circulated to all beet farmers in the region and to the Cultivation structure Expand and aggregate farmland in a given region to optiThe work of the competence teams is an important component of the 20 · 20 · 20 package with

mise work processes via Nordzucker’s offer to farmers of

which Nordzucker aims to achieve lasting improvements in the beet yields of all its growing

joint beet cultivation

regions. There are still eight campaigns to go, and then at least 20 per cent of beet farmers in the entire Nordzucker area should be able to meet the ambitious yield target and produce 20 tonnes of s ugar per hectare. The sugar beet – potential for tomorrow’s high yields To ensure that 20 · 20 · 20 delivers tomorrow’s high and stable yields, Nordzucker is examining the entire process chain from the preparation of the seed bed through to the construction of the beet clamp. Beet farmers, Nordzucker and its network partners in research, consultancy, seed production, agricultural machinery, fertilisers and crop protection are making a concerted effort to raise yields successively by means of numerous measures. In the medium and long term the beet has considerable

Safeguarding harvest quality

potential, especially in terms of high-performance varieties, cultivation methods, harvesting, storage and cultivation structures.

in tonnes of sugar/hectare

20.0 15.9

15.3

16.6

12.9

2009/2010 2010/2011 2011/2012 2017/2018 Target

2020 Target

What have we achieved so far? 20 · 20 · 20 is already bearing fruit. In 2011/2012, the top 20 per cent of farms achieved an average sugar

especially varieties of sugar beet and the latest methods

Nordzucker working groups at national level.

Changes in sugar yields from the top 20 per cent of our growers in Germany

Modern harvesting machinery is extremely complex and anything but easy to use. Nordzucker’s harvester training courses give experts an effective and welcome opportunity to share their experience.

yield of 15.9 tonnes per hectare.

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| Annual Report Nordzucker 2011/2012

Axel Aumüller Chief Operating Officer

Against a backdrop of changing markets, it is crucial for us to constantly increase efficiency.

TECHNOLOGICAL TRENDS. CHANGES IN SUGAR PRODUCTION.

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| Annual Report Nordzucker 2011/2012

Technological trends

Nordzucker enhancing efficiency and profitability Today, new standards of profitability apply in Nordzucker’s

Of course in terms of their physical infrastructure all Nordzucker factories can cope with longer cam-

sugar factories. Until just a few years ago, campaigns

paigns. It is greater flexibility and adjustments to the entire process chain that are required. Altered

lasting 70 to 90 days were very common. Changes in

and new production processes help us to deal better with extreme changes in weather conditions

market conditions mean that that is no longer sufficiently

and beet which has begun to thaw and in some cases to decompose. In the Uelzen factory, for in-

cost-effective nowadays.

stance, we have been using equipment to optimise juice purification since 2009. Depending on the specific properties of the juice we can now improve its filtration qualities considerably, which is key

Since all Nordzucker regions successfully completed the

to processing beet which is severely damaged, by adding calcium carbonate crystals and dextranase.

necessary adjustments to factories’ structures following the 2006 sugar market reform, Nordzucker has focused

In terms of maintenance our work today is also very different to just a few years ago. With longer

consistently on increasing productivity. All the machinery,

campaigns the amount of repair and maintenance work also goes up. Previously some machinery

methods and processes in the factories as well as logistics

only had to be serviced after two campaigns, whereas today the parts most subject to wear and tear

have to demonstrate their capability to carry out 120-day

have to be replaced at shorter intervals, i.e. after one campaign, in order to maintain the high level

campaigns. Furthermore, in 2010 all the Group regions

of availability required. Tolerances that used to be waved through – in the roughly 500 pumps in

launched the joint programme “Profitability plus”. The

the factory for example – are no longer acceptable. If the gap between the race and the pump hou-

ambitious target is to make Nordzucker’s production and

sing increases, it has to be replaced. That is important to reduce the failure risk.

working practices lastingly profitable and fit for the future.

Sven Buhrmann, Director Uelzen, Production Central Europe

Sven Buhrmann, a food technology graduate and director

The timeframe and thus the number of hours in which the staff are available for maintenance work in

of the sugar factory in Uelzen, explains the demands made

the factory is also shorter. That is one reason we have now introduced the four-shift system in all

of the production process.

companies. Previously, our employees worked a 3.5-shift system, made up of eight hours, seven days a week during the campaign – with overtime and time off in lieu once the campaign was over.

Mr Buhrmann, where does a “long campaign” start for

With the four-shift system the normal working week during the campaign is down to 42 hours. Every

you nowadays?

employee is entitled to one free weekend per month and one day off a week during the campaign,

That’s always relative, of course. In the 1990s beet pro-

depending on the shift roster. At the end of the day that gives a better distribution of working hours

cessing over 90 days was considered a “long campaign”. Today we plan for 120 days. So in recent

over the year for everyone. The positive feedback from everyone involved, less sick leave and more

years the Uelzen factory has completed three “long campaigns” of 129 and 131 days.

internal manpower with production experience to carry out maintenance work after the campaign is over all confirm that this was the right thing to do.

What are the biggest challenges for you of campaigns that on average last a month longer than

Our aim is to carry out most of the repair and mainte-

just a few years ago?

nance work with our own workforce.

We are processing a natural product. That means the longer the campaign lasts, the greater the probability of weather conditions having an adverse impact on harvesting, delivery or beet quality, with the

What has been achieved so far, and where do you

Campaign length at the Nordzucker Group

ensuing consequences for processing. In 2011/2012 the factory in Uelzen processed an average of

still see a need for action, Mr Buhrmann?

in days

19,000 tonnes of beet a day. For the first time we unloaded more than 100,000 beet lorries. The condi-

Our job is to optimise the interplay between people,

tions for the 2011/2012 campaign were so good, they were unprecedented. Of course our goal is to

nature and technology. Efficiency and economic suc-

match this outstanding performance in the years ahead as well.

cess come when all these elements mesh together smoothly. That was the case in the 2011/2012 cam-

How has Nordzucker prepared for this leap in productivity and what does that mean for work in

paign. So the bulk of the work has already been

the factory?

completed.

117 103

125 107

We are better prepared for wintry conditions than ever before. Our farmers do their utmost to keep the beet clean and dry, even if there is frost and snow, and to get it to the factory on time. By clea-

There are still adjustments to be made to peripheral

ning the beet once on the field and covering the clamps with fleece, Nordzucker has set new stan-

machinery and especially in optimising sugar logisti-

dards of care. This protects the beet and guarantees high processing quality, whether the winter co-

cs and storage. Here we have a particular responsibi-

mes or not, as in the last campaign. The amount of water used in the beet yard has been reduced to

lity to our customers. The factory in Uelzen, for exa-

a minimum in most Nordzucker factories. Today we unload the beet dry. That also protects the beet

mple, is the site with the largest variety of products

and keeps it manoeuvrable even if it freezes.

and today supplies around 400,000 tonnes of sugar a year in various specifications, of which some 120,000 tonnes go to retailers as packaged goods. We are currently making adjustments to the storage

2008/2009

2009/2010

2010/2011

2011/2012

| Annual Report Nordzucker 2011/2012

Technological trends

Eco-friendly energy generation facilities in Uelzen and at other sites. In future we plan to

Beginning with the upcoming campaign Nordzucker will give a practical demonstration of how en-

successively expand capacities in our own silos, finished

vironmental demands can be linked intelligently with energy generation. As part of a major interna-

goods warehouse and silo truck loading to remove bottle-

tional project the company will be equipping three of its sugar factories in Poland, Lithuania and

necks and keep pace with our increased responsibilities.

Germany with cutting-edge technology in 2012. This will involve the installation of what are known as anaerobic digesters in the waste water treatment plants at the factories in Opalenica, Kèdainiai

How do you manage to counter price increases for

and Klein Wanzleben.

raw materials, energy and wages?

Photo: Nana Reimers

That is indeed the major challenge. In addition to on-

In these digesters the natural biological processes take place under controlled and optimal condi-

going investments, this is where our efficiency pro-

tions, so that process water is treated efficiently and quickly. The organic substances in the waste

gramme “Profitability plus” really comes into play. In

water from the sugar factory – minute particles of beet and residual sugar – are broken down to

pan-regional teams we have developed a package of ad-

form methane with the help of bacteria. The methane produced in the absence of oxygen is used to

ditional investments that all have one thing in common:

generate energy for the factory. This reduces the need for natural gas and improves the environ-

they pay for themselves in just a few years. Of course

mental footprint of the sugar factories. As the organic substances are broken down in the absence of

increasing efficiency still remains the top priority. In Uel-

oxygen, the process considerably reduces unpleasant smells as well.

zen we will soon be installing an extra evaporation dryer

Henrik Hansen, Purchasing Coordinator, Nakskov

from the former Güstrow factory to dry the cossettes.

New standards for water treatment prompted the pan-regional project. The sophisticated planning

Then there are lots of other variables, some larger, some

and implementation in the three Nordzucker factories is being supported by the Nordzucker Corpo-

smaller, which we can adjust in order to keep produc-

rate Innovation and Technology team, led by Dr Dieter Wullbrandt. Nordzucker will continue to in-

“We all share the same goal: to supply

tion profitable over the long term. The current “Profita-

vest in all three factories in the future as well. These investments will always include sustainable

our customers with locally produced

bility plus” projects in Uelzen also include fitting the lar-

measures to protect the environment. The aim is to ensure that high environmental standards con-

sugar reliably and promptly.”

ge motors with energy-saving frequency transformers

tinue to be met in all factories.

and renewing the compressor station. Preliminary planning is also underway on optimisation work to the chipping stations and beet bunkers, in order to ensure high processing throughput even if the weather conditions are not ideal. “Profitability plus” gives Nordzucker the opportunity of putting profitable investments into practice very quickly. If we can provide evidence of good returns, these projects are given the green light. After implementation, the Controlling department and the auditors calculate whether we have actually met the targets for “Profitability plus”. “The longer, the better” – is that still the motto? Do you think that even longer campaigns can enable further productivity improvements in future? At the moment we are concentrating on a campaign of 120 days. The aim is to stabilise that, as best practice requires. In the long run it may also be possible to move sowing or harvesting dates in cooperation with the seed breeders and beet farmers. Then, with further improvements in beet storage methods, it would also be possible to extend the processing period. So from a production perspective, the sugar beet certainly has considerable potential for the future. If the conditions are right, we will adjust the necessary parameters in the factory to realise that potential. As we have always done for 150 years.

Waste water treatment Water treatment and energy generation: two focal issues

| 33

| Annual Report Nordzucker 2011/2012

| 35

Technological trends

Energy and climate targets 2020

A Group network for sugar expertise

Making it better, systematically and sustainably

Making production expertise productive for the whole Group – A glimpse inside the production motor

International customers in particular now ask very specific

How can sugar expertise that is located in 13 sugar factories, three refineries, several liquid sugar sites,

questions on the topic of sustainability. They focus in-

a bioethanol factory in each of eight countries and three Group regions be applied productively?

creasingly on energy use and our climate footprint, ask-

Exciting answers to that question can be found by looking at a Group-wide network that Nordzucker

ing, How does Nordzucker organise its production? How

has been using since 2009 to drive integration and catalyse continuous improvements to the pro-

does it deal with scarce resources? What does Nordzucker

duction process. Pan-regional working groups – Nordzucker’s production working groups – have

do to control and reduce the environmental and climate

been set up to mirror the core functions of the sugar factories. At present ten international production

impact of its production processes?

teams are working continuously on clearly defined assignments. They range from maintenance, investments, technology, information systems and energy to speciality products, sustainability,

Improving energy efficiency and minimising our environ-

occupational health and safety, waste disposal, packaging and logistics. The glue that holds all the

mental impact make a major contribution to Nordzucker’s

teams together as they search for the best available solutions for the whole company is called com-

success. Thanks to continuous optimisation our factories

munication.

have already attained a very high standard. We want to raise this standard even higher. Nordzucker has therefore

Like in a small, focussed think tank, the engineers, process technicians and technology specialists

set concrete energy and climate goals as part of its sus-

with the greatest expertise in the relevant field put their heads together to work on one topic. Four

tainability strategy.

to ten specialists from all three Group regions share their ideas, without regard for hierarchies, in person, online or by means of conference calls. Knowledge, data, experience, requests, questions

Marion Schaefer, Vice President Corporate Sustainable Development

In line with the energy and climate goals of the EU Road-

and news flow through Nordzucker’s internal forums back

map, Nordzucker aims to use 45 per cent less energy in

and forth between colleagues at all sites in North, East

2020 to produce a tonne of sugar than in 1990. Over the

and Central Europe. Step by step the required action is

“Doing business sustainably is one of the greatest chal-

same period we want to reduce carbon dioxide emissions

identified, analysed and backed up with the necessary data.

lenges of our society. For Nordzucker social responsibility

per tonne of sugar in our production process by 65 per cent.

In condensed form the team’s results are incorporated into projects and budgets, reports, guidelines, quality

and the far-sighted, prudent use of resources are a fundamental part of doing business. We openly and proactively

These targets will be broken down for the individual sites.

standards and decision-making proposals. When and how

address our stakeholders’ growing expectations in terms

They then result in concrete targets for every one of our

suggestions for improvements that are consistent with

of transparency and information. We deal with questions

factories for reducing greenhouse gas emissions and

strategy and programmes such as “Profitability plus” are

and demands relating to sustainability everyday; from

power use. The progress we make in sustainability can

implemented is then decided by all Nordzucker produc-

public authorities, banks, politicians, neighbours, employ-

thus be documented for the Group and at a local level by

tion managers in a meeting with the Chief Operating

ees, shareholders, beet farmers and customers. We are

means of key performance indicators. To support these

Officer Axel Aumüller.

perceived as a responsible partner who thinks long term

efforts Nordzucker intends to expand its energy manage-

and has an exemplary and forward-looking approach to

ment and make use of innovative technologies and syner-

What might sound cramped and bureaucratic at first

sustainability.“

gies in its energy mix, in addition to its continuous im-

glance actually creates room for manoeuvre. This is the

provements. Our Danish factories in Nakskov and Nykobing

best way to find best practice solutions and avoid the

already work to a certified energy management system.

duplication of effort.

In 2011 the Schladen factory in Germany was successfully certified according to the ISO 50001 standard. Certification of the energy management systems of all German plants is planned until 2013. The third important point is that Nordzucker is looking at emissions of greenhouse gases throughout

Joachim Rüger, Senior Vice President Production

the entire supply chain. Across the Group we are working with our beet farmers to achieve measurable improvements in the efficiency of beet cultivation and beet transport. Transport to our custom-

“In formal terms the production network members leave

ers is also to be further optimised.

virtually nothing to chance. In a process which is transparent for everyone, it defines who is working on what ques-

Nordzucker has set itself ambitious climate and energy targets for 2020. In the coming eight years

tions for how long, how and where results are to be doc-

we intend to implement them step by step. The groundwork has now been completed.

umented and to whom they are to be distributed; who has which tasks, responsibilities, internal advisory functions and reporting duties.”

| 37

36 | Annual Report Nordzucker 2011/2012

Dr Thomas Mörle-Heynisch, Manager Service Center Central Europe

ACTIVELY SEIZING MARKET OPPORTUNITIES. SAFEGUARDING SUPPLIES.

The customer interface is particularly sensitive. We consider premium product quality to be top priority.

| Annual Report Nordzucker 2011/2012

Actively seizing market opportunities

Clear target for sales: security of supply has top priority Mr Liljestam, Nordzucker closed the financial year

However, the stability of global production in individual countries is very important for price develop-

2011/2012 with a very good result. This was largely

ments. Our assumption is that sugar consumption will rise by around 3.5 million tonnes per year, so

due to the good situation on the markets. How did

somewhere in the world the production capacities must be available to secure this supply too on a

this market situation arise?

permanent basis.

There was a whole range of factors which all came together over the past few months. To start with I should point out

The EU is still involved in a very different debate, namely on the expiry of the current sugar

that since the reform of the sugar market regime in 2006,

market regime. What will a world without an EU sugar market regime look like?

which among other things had the effect of reducing sugar

To start with, the EU sugar market is not solely dependent on the sugar market regime, but also on

quotas, only 80 to 85 per cent of sugar demand in the EU

protection against imports, and this will remain in place as long as no new agreement is reached at the

can be covered by sugar from domestic production. The

WTO. For the period after 2015 the European Commission has proposed to abolish the quota for sugar

rest has to come from the world market. The political goal

and isoglucose as well as the minimum beet price and to allow sugar exports. Cooperation between

of the reform was primarily to give developing countries

beet farmers and sugar producers would then be governed by binding contracts.

access to the EU market and to enhance the cost-effectiveness of the sugar industry in the EU.

Will the sugar market regime remain in place after 2015 in your opinion? We – and the entire industry – are calling for an extension until 2020, in particular with a view to

Mats Liljestam, Chief Marketing Officer

However, as a result of crop failures in some key exporting

guaranteeing the security of supply. Long-term, reliable supply can only be guaranteed via domestic

countries, the sugar price on the world market rose sharply

sugar beet cultivation and local processing with close proximity to our customers, thus avoiding risks

over recent months. At times it was higher than the price in

in the logistics chains and wide price fluctuations.

the EU. This meant there was little incentive for LDC and ACP countries to sell their sugar in the EU. Then there was the comparatively poor harvest in the EU in

Sugar prices inside EU and world market 2006 – 2012

2010/2011. There were times when the supply situation could really be described as tense.

701 €/t

700

In the 2011/2012 campaign the EU harvest was exceptionally good compared to 2010/2011.

650

Stocks are apparently being replenished on the world market too. What does that mean for the

600

future direction of the market? Let’s take the EU first. Yes, we have high levels of sugar stocks at present. This is mostly non-quota sugar,

550

however, which cannot be sold for human consumption in the EU. The European Commission does

500

release some for conversion or enables additional exports, but this is more of a reaction to events and

450

will not have much of an effect on the market in my opinion.

350

estly. So for the current year we are not expecting the situation to change much – either in terms of

300

supply or prices.

250

This marketing year, global sugar production will exceed global demand again for the first time. In the long run we nevertheless have to recognise that some of the major sugar exporters have significant structural problems. Brazil for instance has a problem with ageing sugar cane stocks. A great deal of money has been invested in sugar mills there recently. Now it is the farmers’ turn to catch up. Brazilian

542 €/t

400

Even if the world sugar market continues to slacken, imports of preference sugar will only go up mod-

What do you see as the main challenges of the world sugar market?

632 €/t

404 €/t

200 150 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 EU market price

production is currently stagnant. Where things will go from here is unclear. India, for example, is a sugar producer which experiences wide fluctuations in supply. This year looks very good, but what will happen after that is difficult to say. The same applies to Russia.

474 €/t

Source: EU-price reporting 12/04/2012

EU reference price

World market price, London No. 5

| 39

| 41

| Annual Report Nordzucker 2011/2012

Ralf Brunkow Senior Vice President Corporate Treasury

Good financing lays the foundations for every kind of business activity. The experts from Nordzucker were named „Treasury of the Year“ in 2011.

A JOB WELL DONE. PROFESSIONAL FINANCIAL PLANNING.

| 43

| Annual Report Nordzucker 2011/2012

Financial planning

Solid financial planning is the key to a strong business

Consolidated EBIT in EUR m

Dr Noth, in such a down-to-earth business focused on

the opportunities. And we do this every time we make

sugar beet, production and sales, financial manage-

a decision on behalf of the shareholders. But that’s not

ment is often underestimated. What are its functions?

to say there are no more risks – we can’t achieve success

As in any other company, the finance department at

without risks and business decisions.

315

188

Nordzucker has several functions. In Treasury we secure

Dr Michael Noth, Chief Financial Officer

the financing of the company and raise funds. This involves

The figures show that Nordzucker is on the right

very large sums of money, as does hedging currencies

track. What part has your division played in this?

and commodities. We aren’t speculators, however, but

The figures for the last two financial years demon-

work with our colleagues in purchasing and sales precisely

strate how well the company is doing. In the middle

to limit risks. Here we deal with brokers and bankers – it’s

of last year we extended our syndicated loan on much

a very exciting business. In addition, we provide information

improved terms. That was largely due to the positive

to support the operating business. Our controllers make

credit rating of our company by the banks, which

the business transparent and show where we can earn

acknowledged Nordzucker’s success. And far from

money and what we can do better. They advise their

being attributable to the finance department alone,

Profitability plus

colleagues on operating decisions and use budgets to

this new financing is the success of the company as a

in EUR m

show where Nordzucker is headed. In all this our financial

whole. We work closely with our colleagues in every-

accountants and the accounting department play a major

thing we do.

110 79

2007/2008 2008/2009 2009/2010 2010/2011 2011/2012

65.1

66.9

role. Without them there would be no transparency. In the old days the bookkeepers would carefully enter all the

This also applies to our efficiency improvement pro-

figures into ledgers among dusty files. That is far removed

gramme “Profitability plus”, which has allowed a large

from today’s reality. Nowadays our accounting depart-

number of employees to contribute their ideas to

ment has to organise the systems and processes so that

make the company stronger. Efficiency alone is not

we know where we stand at all times. Today’s accounting

nearly enough to achieve success in the market, but

is sometimes highly complex – a job for real specialists.

nor can we achieve success without efficiency. We will

50.6

32.3

49.9

43.3

26.0

continue to pursue this efficiency course with vigour, To what extent is your job influenced by market developments?

and all the members of the Executive Board have already

To 100 per cent. Not only by current market developments either, but also by medium and long-

contributed a lot in this respect. We are looking for

term market opinions. That applies to my other boardroom colleagues as much as to me. Of course

new ideas in all areas. This is especially difficult when

we are pleased by the current positive developments and sometimes remind our colleagues how

things are going well, but we are not giving up on

well things are going for us. But as Executive Board members we also have to ensure that we are still

this and there are still plenty of untapped ideas and

successful in ten years’ time. Nordzucker has to prepare itself for future developments. We still have

approaches to making the company even better.

Planned savings target

Savings already made

Nordzucker on course for success

many growth opportunities we intend to seize. To do so, we will continue to need funds in future and we want to convince the shareholders to leave some of the money in the company.

2010/2011 2011/2012 2012/2013 2013/2014 2014/2015

The IT department, which is one of my responsibilities, is working on providing better IT support for the com-

We have considerably improved our EBIT and achieved

Are you expecting hard times ahead, or do you just want to stop shareholders and employees

pany. The department is helping to make processes

already two thirds of our savings target.

enjoying the strong earnings?

quicker and more secure and is creating the infrastruc-

No, it’s neither of those. But although our satisfaction at what we have achieved is perfectly justified,

ture needed for us to present ourselves to the market

we mustn’t forget that we operate in a highly volatile market. It is therefore only sensible to prepare

as one single company. We have invested heavily in

for more difficult times. I have spent a long time working for family companies that thought and acted

this area in recent years and a great deal of effort has

in this way. And in my opinion it is an attitude that our shareholders will share as well. We are looking

been put into this together with all the other departments.

for long-term success, not the best quarterly earnings. Are you also thinking about other ways of raising capital, such as issuing bonds or inviting other The company is currently very successful. But are there risks too?

investors to acquire an equity interest in the company?

The markets won’t always be the way they are right now, so we have to prepare ourselves for new

Yes, we are not ruling out any options. In the interests of our shareholders my department has to

situations. We also want to grow in this new environment in order to achieve sustained success. In

support the development of the company. We want to develop Nordzucker sustainably over the

the past, N ordzucker has taken many entrepreneurial steps that have made it stronger and enabled

long term, together with our employees and under an obligation to our shareholders. I’m sure we

it to progress. All of us Executive Board members are responsible for weighing up the risks as well as

still have a long and challenging way to go.

| 45

| Annual Report Nordzucker 2011/2012

ACHIEVING GREAT THINGS TOGETHER. THE 2011/2012 GROUP MANAGEMENT REPORT. Anja Kirschbaum-Marheine Senior Manager Corporate Controlling

Âť

Making the figures transparent and deriving actionable measures from them is one of the main tasks of the Finance and Controlling department.

| 47

| Annual Report Nordzucker 2011/2012

Nordzucker at a glance

Group management report of Nordzucker AG Nordzucker at a glance

Furthermore, Nordzucker produces bioethanol from upstream

Sites in Europe

sugar products (raw juice and thick juice) and molasses at fuel 21 Business activities

GmbH & Co. KG. in Klein Wanzleben.

Headquarters Nordzucker

DThe Nordzucker Group is the second largest sugar producer

1 Braunschweig

in the EU, with a market share of more than 15 per cent. In the

Group structure

reporting year Nordzucker produced around 2.9 million tonnes

The Nordzucker Group is divided into three regions: Central,

of sugar from 17.9 million tonnes of sugar beet at 13 sites in

Northern and Eastern Europe.

Head Office

sugar at three refineries. The company had an average of 3,280

Central Europe

Europe GmbH, Vienna

employees in the reporting year.

With five sugar factories and more than 1,000 staff, Nordzucker

seven countries. Nordzucker also turns raw sugar into white

AG accounts for the major share of business in Central Europe.

2 3

Nordzucker Eastern Nordic Sugar, Køpenhavn

Sugar factories

Our customers include the confectionery industry as well as pro-

In addition to Nordzucker there are three other sugar producers

ducers of dairy products, jams, ice-cream and drinks. Around 20

in Germany. The factories in Lower Saxony and Saxony-Anhalt

per cent of our sugar is sold to individual consumers via r etailers.

produce around one million tonnes of quota sugar a year for in-

Nordzucker distributes most of this sugar under the product

dustrial and retail customers – primarily for the German market.

brands SweetFamily and Dansukker. In addition, Nordzucker sells

Nordzucker AG also sells other products of the sugar-making

other products from sugar production: dried pulp pellets and

process such as animal feed and molasses. Its business accounts

pressed pulp as animal feed, molasses for the yeast and a lcohol

for 41 per cent of Group revenues.

DK 9 Nakskov

The Central Europe region also includes fuel 21. The company

S 11 Örtofta

4 Clauen

5 Nordstemmen

6 Uelzen

7 Klein Wanzleben

8 Schladen

Northern Europe 12

10 Nykøbing

industry, and carbolime for use as fertiliser.

FIN 12 Säkylä

Since 2011 Nordzucker has been distributing products based

has been producing and marketing bioethanol from sugar beet

on the sweetener stevia in a joint venture (NP Sweet) with its

since late 2007. fuel 21 contributes five per cent to consolidated

partner PureCircle. Stevia is a natural, zero-calorie sweetener

revenues.

PL 14 Opalenica

sweeteners. The aim of NP Sweet is to open up this new sales

Furthermore, Nordzucker AG is the sole partner in Norddeutsche

SK 16

Trenčianska Teplá

market by d eveloping stevia products in collaboration with

Flüssigzucker GmbH & Co. KG, which operates two liquid sugar

Liquid sugar factory

customers.

factories, in Nordstemmen and Groß Munzel.

LT 13 Kedainiai

and does not compete directly with sugar but with artificial

15 17

Chełmża

Groß Munzel

Liquid sugar factory

Nordstemmen 9

Refineries S

Corporate structure of Nordzucker Group

Eastern Europe region

non-consolidated

7 4 1 24 8 18

Eastern Europe

minority stake CZ

22 Dobrovice

23 České Meziříčí

Nordic Sugar A/S, Copenhagen/Denmark, 100 %

Nordzucker Eastern Europe GmbH, Vienna/Austria, 100 %

Nordic Sugar AB, Malmö/Sweden, 100 %

Nordzucker Polska S.A., Przeżmierowo/Poland, 99.87 %

Other locations

Suomen Sokeri OY, Kantvik/Finland, 100 %

Považský Cukor a.s., Trenčianska Teplá/Slovakia, 96.80 %

Klein Wanzleben

DK 25

NP Sweet,

Sucros OY, Säkylä/Finland, 80.00 %

Tereos TTD a.s., Dobrovice/Czech Republic, 35.38 %

Køpenhavn

AB Nordic Sugar Kèdainiai, Wilna/Lithuania, 70.60 %

Mátra Cukor Zrt., Hatvan/Hungary, 99.89 %

Nordzucker Ireland Ltd., Dublin/Ireland, 100 %

100 %

fuel 21 GmbH & Co. KG, Klein Wanzleben/Germany, 100 %

Chełmża

Sugar factories –

Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig/Germany,

19 Arlöv

Nordzucker AG Northern Europe region

FIN 20 Porkkala PL

Central Europe region

fuel 21,

Central Europe

16 2

| Annual Report Nordzucker 2011/2012

| 49

Nordzucker at a glance Economic environment and market developments

Northern Europe

Shareholders‘ structure Nordzucker AG

In the Northern Europe region, Copenhagen-based Nordic Sug-

EUR 123.7m share capital

ar produces and processes sugar in five factories and two refin-

World market prices for sugar, 2000 – 2012 900

eries in Denmark, Sweden, Finland and Lithuania. The company

Nordzucker Holding Aktiengesellschaft

markets a broad range of sugar products, above all in the Nordic

76.2 %, EUR 94.3m

countries and also in Ireland and the Baltic states. The Dansukker

Union-Zucker Südhannover GmbH

brand is very popular with retailers in the region. Nordic Sugar

10.8 %, EUR 13.4m

also exports substantial quantities of sugar to non-EU countries.

Nordharzer Zucker AG

The company is the market leader in Northern Europe and its

7.8 %, EUR 9.7m

1,512 employees (plus nine in Ireland) contribute 40 per cent

Direct shareholders‘

to Nordzucker’s consolidated revenues.

5.2 %, EUR 6.3m

NP Sweet is also based in Copenhagen. The joint venture be-

800 700 600 White sugar USD/t FOB 500 400 300

tween PureCircle and Nordzucker develops and distributes products based on stevia, a natural sweetener.

200 White sugar EUR/t FOB 100 Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr 00 00 01 01 02 02 03 04 04 05 05 06 07 07 08 08 09 09 10 11 11 12

Eastern Europe Vienna is the headquarters of the Eastern Europe region, which

opportunities for Nordzucker to distribute the sugar it exports

has a total of 548 employees and includes two sugar factories in

to countries outside the EU via the trading department of Wilmar

Poland, one of which is also used as a sugar refinery, and one in

International.

Source: LIFFE white sugar trading, London No. 5, as of April 2012

Slovakia. Furthermore, Nordzucker has a 35 per cent stake in Tereos TTD a.S., a sugar producer in the Czech Republic. The East-

Nordzucker’s strengths are its high, certified quality standards,

ern Europe sales area also includes other Eastern European states.

logistical proximity to its customers, a high level of flexibility

It accounted for 14 per cent of consolidated revenues in

and dependability, a broad product range with customised

2011/2012.

solutions, customer relations going back many years and a wide

of the Group’s IT environment. These will help Nordzucker to

assortment of specialities.

tackle future market challenges and will deliver a lasting boost

Strategy

Economic environment and market developments

to its competitiveness.

Nordzucker has grown considerably since it was established in

Sustainability is a key concern in all the company’s business

1997. The company first expanded within Northern Germany

processes. It is only possible to ensure long-term entrepreneurial

The company’s overriding aim remains to grow and to expand

The economy slowed over the course of 2011 in the face of the

and later into Eastern Europe. By acquiring Nordic Sugar in

success by including environmental and social aspects in busi-

its market position. These sugar-based operations form the basis

sovereign debt crisis. After positive growth rates in the first three

2009 Nordzucker continued on its growth track.

ness decisions. Nordzucker is particularly active in the fields of

for Nordzucker’s long-term profitable development for the ben-

quarters, EU gross domestic product fell in the fourth quarter of

product safety, health and safety at work, energy, the environ-

efit of its shareholders.

2011. South and South-western European countries were harder

Since the reform of the sugar market regime in 2006, the EU-

Macroeconomic situation

ment and social responsibility.

market has relied partly on sugar imports from LDC and ACP coun-

hit than those in Central, Northern and Eastern Europe. The perCompany management

formance of the European sugar industry was largely unaffected by the macroeconomic situation.

tries. This has resulted in an increasing significance of imported

In addition, Nordzucker works permanently to improve the

The five-person Executive Board of Nordzucker reports to the

world-market sugar. In recent years Nordzucker has successively

efficiency of the entire value chain. This involves exploiting all

21 members of the Supervisory Board, which is made up of 14

expanded its refinery business and with refineries in Scandinavia

opportunities for yield improvement at the cultivation stage as

shareholder representatives and seven employee representa-

Sector developments

and Poland now plays an active role in importing and processing

well as harmonising and optimising business processes through-

tives. The internal management of the company is carried out

World sugar market

raw sugar.

out the Group. The 20·20·20 project is aimed at making sugar

by means of financial indicators. The following targets have

Prices on the world sugar market remained very volatile in the

beet in Nordzucker’s growing areas even more competitive.

been set: a return on sales of 5 per cent, total operating profit-

2011/2012 financial year. The sugar price was subject to extreme

ability of 15 per cent, a return on equity of 10 per cent and an

fluctuations, especially in the first nine months of the year. Market

equity ratio of 30 per cent.

prices on the London Futures Exchange (white sugar No. 5, free-

In future Nordzucker intends to keep focusing on its core business: the production and sale of sugar. The aim is to extend and

Furthermore, the productivity of sugar production has been

strengthen its market position in the sugar business. One impor-

increased considerably in recent years. Modifications to factory

tant step will be to secure supplies of raw cane sugar to the

structures resulted in much-improved capacity utilisation for

Shareholder structure of Nordzucker AG

2011 at USD 582 per tonne before reaching a high for the year

factories.

the plants.

The shares in Nordzucker AG are held by Nordzucker Holding

and an all-time record at USD 876 per tonne in July. Thereafter

AG (76.2 per cent), Union-Zucker Südhannover GmbH (10.8

the price fell back to around USD 600 and closed at the end of February 2012 at USD 662.

on-board, earliest delivery) fell to their low for the year in May

Support in reaching these strategic targets is expected to come

The five-year efficiency improvement programme Profitability

per cent) and Nordharzer Zucker AG (7.8 per cent). A small

from the cooperation agreement with Wilmar International, a

plus has also delivered savings in all areas of the company. Two

portion of capital (5.2 per cent) is held by other shareholders.

global agribusiness. The aim of the cooperation programme is

thirds of the targeted savings have already been realised. Other

The Nordzucker AG share is not traded on the stock exchange.

The sugar market in the EU

to improve access to raw sugar imports from countries which

important activities carried out last year included the harmonisa-

The shareholders are overwhelmingly also active beet suppliers

In the past, the EU sugar market was largely decoupled from the

are allowed to supply preference sugar to the EU. There are also

tion and optimisation of business processes and the integration

of Nordzucker AG.

world market thanks to the European sugar market regime. It was

| 51

| Annual Report Nordzucker 2011/2012

Economic environment and market developments

therefore characterised by very stable volumes and prices; sur-

retailers’ shelves. The market for stevia is expected to grow rapidly

Nordzucker sold 390,000 tonnes of quota sugar in Eastern

conditions during beet transport and the campaign itself meant

pluses were exported to the world market.

once consumers have become familiar with the new sweetener.

Europe. 200,000 tonnes was covered by local production, with

that 2011/2012 was a good beet year overall.

the remainder coming from elsewhere within the Group and All this changed with the reform of the sugar market regime. This

Market for bioethanol

from imports. Due to the high share of spot sales, Nordzucker

In the last sugar beet campaign Nordzucker processed a total of

entailed reducing the quotas required for producing sugar for

Strong demand for sustainably produced bioethanol as defined

benefited from higher prices in Eastern Europe earlier than in

17.9 million tonnes of beet (previous year: 14.3 million tonnes)

human consumption in the EU to around 80 per cent of the to-

in the German Sustainability Bylaw resulted in generally stable

other regions.

in 13 factories. Optimal weather conditions resulted in beet and

tal requirement. Since then it has therefore been necessary to

bioethanol prices in the 2011/2012 financial year. Volumes of

import sugar from ACP countries and LDC to make up for the now

certified bioethanol imports from the surplus market in the United

Beet cultivation and campaign

average beet yield for the Group was 67.3 tonnes per hectare

missing EU production.

States went up towards the end of 2011, however. This had an

Warm weather during the beet’s growth phase and when stock-

(previous year: 56.2 tonnes). The sugar content came to 17.6

adverse effect on pricing.

piling the sugar, dry periods during the harvest and good weather

per cent (previous year: 17.1 per cent), which represented an

sugar yields well above the average of the last five years. The

Strong demand on world markets was met by a comparatively low supply, so that sugar prices remained high. The high world

Market developments in the sugar business

market prices meant that only a small volume of imports found

Market developments: Central Europe region

its way to the EU, which resulted in a tense supply situation and

Sugar was in scarce supply in Germany last year. This situation

an increase in prices.

was largely due to the absence of imports from the world market

Group campaign results

and preference sugar from ACP countries and LDC. The European Commission responded to the tense market situation for quota sugar with various measures. In March 2011 the

Customers again reacted to this supply situation with strong

Commission allowed sugar producers in the EU to bring 500,000

demand for annual contracts. By participating in the European

tonnes of non-quota sugar to the market without paying the

Commission’s market stabilisation measures, obtaining deliveries

Sweden

2011

2010

Finland

2011

2010

surplus charge. In March and June 2011 additional duty-free im-

from other parts of the Group and purchasing small quantities

Beet yield (t/ha)

62.9

52.0

Beet yield (t/ha)

48.0

37.1

ports of 300,000 and 200,000 tonnes of sugar respectively were

of white sugar, Nordzucker was able to supply its customers

Sugar content (%)

16.8

17.1

Sugar content (%)

15.7

16.9

authorised. To further smooth the supply situation the EU opened

with enough sugar over and above quota volumes.

Sugar yield (t/ha)

10.6

8.9

Sugar yield (t/ha)

7.5

6.3

109

Campaign length (d)

Lithuania

2011

2010

Beet yield (t/ha)

51.2

46.2

Sugar content (%)

17.3

16.4

Sugar yield (t/ha)

8.9

7.6

Campaign length (d)

115

103

Campaign length (d)

another import contingent for sugar of 400,000 tonnes in November 2011, on which a bid for import duties had to be tendered.

In total Nordzucker sold some 1.0 million tonnes of quota sugar

Also in November 2011, sugar producers were allowed to offer an

in Germany, which was slightly less than the previous year. Pricing

additional 400,000 tonnes of non-quota sugar for sale, whereby

developed very positively in the reporting year by contrast. .

the normal surplus charge of EUR 500 per tonne was cut to EUR

Sales of non-quota sugar came to 0.1 million tonnes, slightly

Denmark

2011

2010

85 per tonne. Sugar producers took full advantage of all these

down on the previous year, and went mostly to the chemical

Beet yield (t/ha)

73.3

58.0

measures, bringing an extra 1.8 million tonnes of sugar onto the

industry in the EU and for export outside the EU. Here, too,

Sugar content (%)

16.9

17.8

market in the financial year 2011/2012.

prices were much higher than in the previous year.

Sugar yield (t/ha)

12.4

10.3

138

112

Market for animal feed and molasses

Market developments: Northern Europe region

Up to the 2011/2012 campaign the prices for dried pulp pellets

In the reporting year Nordic Sugar sold around 770,000 tonnes

remained high. This was due in particular to short supply as a result

of quota sugar to industrial and retail customers (previous year:

of the previous year’s low-yielding campaign. Prices sank slightly,

760,000 tonnes). As sugar was in short supply in Northern Europe,

however, when it became clear that the 2011/2012 campaign

much larger volumes were imported and refined than the previous

would yield much higher beet volumes than the year before.

year. This enabled Nordic Sugar to meet customer demand. As

Campaign length (d)

Copenhagen

Braunschweig

in Central Europe, prices in Northern Europe also rose over the Despite higher beet volumes in the 2011/2012 campaign, the

129

course of the year.

good beet quality meant that there was no increase in molasses production. Imports of cane molasses to Europe also fell, which

Nordic Sugar also exported or sold to the chemical industry

Germany

2011

2010

meant that altogether, the molasses market experienced high

around 225,000 tonnes of non-quota sugar – a slight decline

Beet yield (t/ha)

71.2

59.4

prices throughout the 2011/2012 financial year.

due to the poorer harvest in 2010/2011.

Sugar content (%)

18.1

17.1

Sugar yield (t/ha)

12.9

10.2

130

115

The market for natural sweeteners (stevia)

Market developments: Eastern Europe region

EU approval for the use of stevia (stevioside) in food and drinks

In Eastern Europe a much larger proportion of sugar is sold on

was given in mid November 2011. Interest from food and drinks

short-term contracts than in other regions. In particular, smaller

manufacturers in developing products sweetened with stevia

local industrial customers and retailers make the most use of these

went up again following the approval. Over the course of 2012

spot purchases. Faced with severe price and volume volatility in

a number of soft drinks and sweeteners will be appearing on

2011/2012, more sugar consumers started asking for annual contracts.

Campaign length (d)

Poland

2011

2010

Beet yield (t/ha)

64.1

57.1

Sugar content (%)

18.1

16.9

Sugar yield (t/ha)

11.6

9.6

102

Slovakia

2011

2010

Beet yield (t/ha)

63.5

61.0

Sugar content (%)

18.7

16.1

Sugar yield (t/ha)

11.9

9.8

111

106

Campaign length (d)

Vienna

Campaign length (d)

| 53

| Annual Report Nordzucker 2011/2012

Economic environment and market developments Net assets, financial and earnings position

Average sugar yield

good weather meant that the factories were able to run more

Bioethanol revenues from its own production at fuel 21 came to

The cost of materials and services came to EUR 1,500.8 million,

tonnes per hectar

evenly and capacity utilisation could be optimised. Beet logis-

EUR 69.3 million, a fall of EUR 6.4 million on the previous year. It

or EUR 459.8 million more than the previous year (EUR 1,041.0

tics also profited from the fine weather conditions.

should be noted that for the previous year, the reporting period

million). The cost of beet went up due to the much higher vol-

for fuel 21 was extended to 14 months, to align it with the financial

umes, and more sugar was also bought in. Prices for beet and

year for Nordzucker AG.

for purchased sugar rose sharply.

At slightly lower sales volumes, revenues from molasses went

Personnel expenses fell from EUR 191.3 million the previous year

Earnings position

up due to higher prices to EUR 49.2 million (EUR 4.8 million up

to EUR 188.7 million, despite higher expenses for the longer

Group earnings again performed very well in 2011/2012 thanks

on the previous year). Reduced sales volumes for animal feed

campaign and higher earnings-related bonuses. The decline was

to much higher price levels for sugar than the previous year. The

(pellets and cossettes) were more than offset by price increases,

due to the fact that personnel expenses for the previous year

positive performance was largely due to the focus on the profitable

which lifted revenue by EUR 41.1 million to EUR 128.8 million.

still included the Hübner Group, which was sold in December

11.9 10.6

10.9

9.5

9.6

Net assets, financial and earnings position

2010.

area of the sugar business achieved by optimising the investment 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

portfolio in prior years and to the steps taken to increase efficiency. In the financial year 2011/2012 Nordzucker reported an operat-

Revenue from other traded goods increased in the reporting year by EUR 29.2 million to EUR 119.3 million. Higher seed trad-

Depreciation, amortisation and impairment (corrected for write-

ing revenue was the main reason for the year-on-year increase.

backs) in the reporting year came to EUR 105.4 million, compared with EUR 94.5 million the previous year. The total in-

ing result (EBIT) of EUR 315.0 million, which was well above EBIT for the previous year of EUR 188.3 million. After deducting

Stocks of finished and unfinished goods went up as of the end

cludes impairment losses of EUR 21.2 million (previous year:

interest and taxes this resulted in net income before minority

of the financial year by EUR 261.8 million (previous year: down

EUR 6.5 million). The non-current assets of fuel 21 were written

Sugar production Nordzucker Group

interests of EUR 208.3 million (previous year: EUR 90.6 million).

by EUR 119.7 million). Compared with the previous year much

off in the reporting year. Current planning shows increasing

in millions of tonnes

After deduction of minority interests this resulted in consolidat-

more sugar was produced and imported in 2011/2012, whereas

costs for raw materials leading to much lower earnings than had

ed net income of EUR 203.9 million, compared with EUR 87.1

sales volumes registered a slight decline. In addition, the cost of

been budgeted in prior years.

million the previous year.

the beet rose sharply year on year.

The return on sales, calculated as net income (after minority

The aggregate of higher revenues, higher stocks and own

214.2 million. The previous year still included restructuring ex-

interests) divided by annual revenue, came to 10.1 per cent

work capitalised resulted in total output of EUR 2,281.6 million,

penses for the Hungarian investment company and for Hübner.

in the reporting year compared with 4.8 per cent the previous

which was well above the previous year’s figure of EUR 1,698.8

year. This was well above the target of 5 per cent for the report-

million.

Other operating expenses fell from EUR 224.5 million to EUR

2.91

2.87 2.30 1.91 1.68

In total, Nordzucker reported an operating result (EBIT) of EUR 315.0 million for the financial year 2011/2012, as against EUR

ing year.

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

Other operating income came to EUR 42.5 million and was thus

188.3 million the previous year. The operating result before de-

To calculate total operating profitability EBITDA (earnings before

slightly above last year’s figure of EUR 40.8 million. As in the

preciation, amortisation and impairment (EBITDA) came to EUR

interest, taxes, depreciation and amortisation) is divided by total

previous year, there were no non-recurring factors to report.

420.4 million (previous year: EUR 282.7 million).

output (revenues plus own work capitalised and changes in finished goods and work in progress). This year the figure was 18.4 per cent (previous year: 16.6 per cent), which was also well above the target of 15 per cent. Revenues came to EUR 2,018.0 million, an increase of EUR 202.7

Consolidated revenues

Total revenues

million on the previous year’s figure of EUR 1,815.3 million. The

in EUR m

average sugar yield of 11.9 tonnes per hectare (previous year:

rise was due primarily to higher prices for quota and non-quota

9.6 tonnes).

sugar.

2,018 1,806

During the campaign Nordzucker produced 2.9 million tonnes

Revenue from quota sugar (including purchased sugar) amount-

of sugar from beet (previous year: 2.3 million tonnes). Such large

ed to EUR 1,459.0 million, or EUR 137.6 million more than the

processing volumes meant the campaign lasted for an average

previous year’s EUR 1,321.4 million. Price increases here more

of 125 days (previous year: 107 days). The factories were well

than made up for slight declines in sales volumes.

1,300

2,282

1,815 1,718

1,699

2009/2010

2010/2011

1,377

1,192

1,086

prepared for the challenges of long campaigns thanks to focused investments and maintenance work. Close cooperation between

Higher prices for non-quota sugar also more than offset the low-

beet deliveries, production and sugar logistics also ensured that

er volumes. Revenues came to EUR 162.6 million, after EUR

the campaign went off very smoothly all round. Finally, the

146.0 million the previous year. 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2007/2008

2008/2009

2011/2012

| 55

| Annual Report Nordzucker 2011/2012

Net assets, financial and earnings position

Consolidated EBITDA

Consolidated EBIT

Intangible assets of EUR 174.1 million (previous year: EUR 179.9

in EUR m

million) include the goodwill on the acquisition of Nordic Sugar as well as capitalised sugar quotas and software/licences.

420

Breakdown of the assets and liabilities making up the 2011/2012 balance sheet total in EUR m

315

Property, plant and equipment came to EUR 861.1 million (previous year: EUR 906.1 million). Nordzucker invested less in property,

283

255

188 165

166

2,262

44 %

depreciation. Impairment charges of EUR 20.0 million were also

48%

recognised on items of property, plant and equipment at fuel 21.

110 79

19% 40%

Financial investments were the same as the previous year at EUR

2008/2009

2009/2010

2010/2011

2011/2012

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

37 %

12%

24.0 million. There were no significant transactions to report in 2007/2008

2,262

plant and equipment in the reporting year than it recognised in

this area. Deferred tax assets went up from EUR 5.4 million to

Assets

Equity & liabilities

EUR 11.9 million. Non-current assets

Equity

in inventories.

Inventories

Non-current liabilities

Inventories rose sharply from EUR 592.0 million to EUR 898.2

Other current assets

Current liabilities

Current assets came to EUR 1,181 million, after EUR 855.9 million the previous year. The change is principally due to the increase Net interest amounted to EUR -34.7 million as against EUR -47.1

(previous year: EUR -11.3 million). Overall, the net financial result

million the previous year. This improvement is largely due to

came to EUR -28.7 million compared with EUR -58.5 million the

the further repayment of loans taken out for the acquisition of

previous year.

million. The good harvest, higher imports and increased pro-

Nordic Sugar. Nordzucker arranged new financing with its banks in 2011/2012. The refinancing reduces current interest expense,

Tax expenses on pre-tax earnings of EUR 286.3 million (previous

duction costs drove up the value of sugar stocks considerably

but the amortisation of one-off fees for the former financing

year: EUR 129.9 million) totalled EUR 78.0 million (previous

year on year.

package increased interest expense in the reporting year.

year: EUR 39.2 million). This resulted in a tax rate of 27.2 per

The net financial result was also increased by net income from

cent for the Group in the reporting year (previous year: 30.2

Current receivables and other assets were EUR 274.9 million

Current provisions and liabilities rose to EUR 834.2 million (pre-

investments of EUR 3.5 million (previous year: 0) and slightly

per cent).

compared with EUR 212.8 million the previous year. As reve-

vious year: EUR 542.9 million). This is largely because of the in-

nues rose, so did trade receivables.

crease of EUR 239.9 million in trade payables to EUR 455.1 mil-

reduced by the net other financial result of EUR -2.4 million

lion. Current financial liabilities went up from EUR 87.9 million

In total, Nordzucker reported net income before minority interests of EUR 208.3 million, as against EUR 90.6 million the previous

Nordzuckerâ&#x20AC;&#x2122;s equity went up to EUR 999.2 million compared

to EUR 167.9 million, whereas other current financial liabilities

year. After deducting minority interests of EUR 4.3 million this

with EUR 818.7 million the previous year. The change is mainly

declined by EUR 73.7 million to EUR 15.9 million, mostly follow-

Consolidated net income

resulted in net income of EUR 203.9 million (previous year: EUR

due to net income for the year (up EUR 208.3 million) and the

in EUR m

87.1 million). This means that net income more than doubled

dividend payment to shareholders of Nordzucker AG and minority

compared with the previous year.

shareholders (EUR 24.9 million). Although total assets increased,

Consolidated net debt

the equity ratio went up from 41.4 per cent the previous year to

in EUR m

208

Net assets position

44.2 per cent. This figure was well above the Group target of

Total assets for the Nordzucker Group amounted to EUR 2,261.6

30 per cent.

million at the end of the reporting year, an increase of EUR 280.0 91

80 44

million on the previous yearâ&#x20AC;&#x2122;s figure of EUR 1,981.6 million. In-

Non-current provisions and liabilities fell to EUR 428.2 million

ventories rose sharply, largely due to the good harvest, and on

(previous year: EUR 620.0 million). The total includes non-cur-

the other hand trade payables also went up because of much

rent provisions of EUR 158.1 million (previous year: EUR 153.3

higher payment obligations for the beet deliveries. Equity also

million), mostly for pension obligations.

rose thanks to the profit for the year. Net debt was reduced substantially at the same time.

2008/2009

2009/2010

2010/2011

2011/2012

-314

-249

Non-current liabilities mainly consist of financial liabilities and deferred tax liabilities. Financial liabilities fell year on year from

-10 2007/2008

-363

-295

Non-current assets accounted for EUR 1,079.2 million, roughly

EUR 187.4 million to EUR 88.5 million. Deferred tax liabilities stood

the same as in the previous year (EUR 1,125.7 million).

at EUR 153.9 million as against EUR 160.0 million the previous year.

-664 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

| 57

| Annual Report Nordzucker 2011/2012

Net assets, financial and earnings position Employees

Cash flow from/for operating activities

Capital expenditure in property, plant and equipment and intangible assets

in EUR m

Dividend

last year (EUR 50.3 million).

A proposal will be put forward at the Annual General Meeting of Nordzucker AG to distribute a dividend of EUR 1.00 per share

181

328

At EUR 7.4 million, cash and cash equivalents were down on

313

Investment

of share capital for the reporting year. This corresponds to a to-

Nordzucker invested EUR 64.0 million in property, plant and

tal dividend distribution of EUR 48.3 million. A total of EUR 22.2

equipment and intangible assets (previous year: EUR 56.2 mil-

million (EUR 0.46 per share) was paid out the previous year.

lion). Important investments were the first construction phase 222 167 67

for the installation of a second evaporation dryer in Uelzen, the

The much higher dividend enables shareholders to participate in

replacement of an extraction tower in Clauen and the installation

the company’s strong performance. At the same time a substantial

of new pulp press units to reduce drying costs in Nyköbing.

proportion of net income is retained in the company to finance

Capital expenditure was also made for replacement machinery

future profitable growth.

and investments to comply with regulatory conditions. -3 2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

Responsibilities and objectives of financial management

Employees

The main responsibilities of Nordzucker’s financial management

The average number of employees in the Nordzucker Group

are to manage and control flows of funds for the entire Group

fell over the year from 3,508 to 3,280. Of the total, 1,211 were

ing the payment of the final purchase price instalment for Nordic

Net debt (financial liabilities less cash and cash equivalents) was

on the basis of clearly defined criteria. The most important ob-

employed in Central Europe, 548 in Eastern Europe and 1,521

Sugar.

reduced year on year by a total of EUR 64.6 million to EUR 248.9

jective is to maintain liquidity. This is followed by the optimisation

in Northern Europe (including Ireland).

million. The increase in stocks and the payment of the last pur-

of net interest expense and the management of interest rate

Overall, non-current and current financial liabilities were reduced

chase price instalment for Nordic Sugar meant that net debt did

and foreign exchange risks.

to EUR 256.3 million (previous year: EUR 363.8 million).

not fall faster despite very strong earnings.

As of the reporting date, EUR 231.6 million of the new syndicated

Financial position

and executing financing strategies. It also maintains close contact

loan arranged in June 2011 had been drawn down.

Cash flow from operating activities of EUR 221.8 million was much

with the banks.

Cash and cash equivalents totalled EUR 7.4 million as of 29 Feb-

lower than in the previous year (EUR 313.2 million). Although

ruary 2012, compared with EUR 50.3 million the previous year.

earnings were much higher, cash flow sank as stocks of unfinished

Covenants

and finished goods moved in the opposite direction. The reduction

A number of financial covenants were agreed between the

in inventories released cash flow of EUR 119.7 million the previous

banking consortium and Nordzucker AG as part of the syndicated

year, whereas in the reporting year an additional EUR 261.8 million

loan arranged in June 2011. These consist of obligations to

was tied up in higher stocks.

maintain certain financial ratios over the entire term of the loan.

Cash flow from investing activities of EUR -129.6 million stemmed

The covenants are an essential component of the loan agreement.

mainly from the payment of the final purchase price instalment for

Banks use them as a tool to identify and avoid risks at an early

Nordic Sugar (EUR -73.7 million including interest) and investments

stage by drawing conclusions from the figures about the com-

in intangible assets and property, plant and equipment (together:

pany’s financial position. The covenants have been defined for

EUR 64.0 million; previous year: EUR 56.2 million). The sale of the

the whole Group and not solely for Nordzucker AG.

The financial management function is also responsible for defining

Total dividends, Nordzucker AG in EUR m

investments in Serbia and in the seed business generated positive 23

cash flow from investing a ctivities of EUR 37.7 million the previ-

Nordzucker AG is obliged to demonstrate that it meets the

ous year.

covenants in the syndicated loan agreement on certain dates in

the reporting year. In the reporting year all the financial criteria 0

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

Cash flow from financing activities of EUR -134.7 million is mainly

were met on all test dates. On the basis of the planning currently

the result of inflows and outflows in connection with the syndicated

available for the Group, the Nordzucker Executive Board assumes

loan and the dividend payment for the financial year 2010/2011.

that the agreed limits will also be adhered to in future.

Average number of employees in the Nordzucker Group for the year by region

2011/2012

1,211

2010/2011

1,357

2009/2010

1,350

1,302

2008/2009

1,360

1,484

2007/2008

1,433

548

1,521

563

Central Europe Region

3,280

1,588

3,508 1,694

4,346

2,844

1,852

Eastern Europe Region

3,285

Northern Europe Region

| Annual Report Nordzucker 2011/2012

| 59

Opportunities and risks

the end not only of the quota regime but also of the minimum

tackle future market challenges and will deliver a lasting boost

Additional costs of CO2 certificates

beet price and the production levy. The WTO export limit, cur-

to its competitiveness.

As an industrial company that emits carbon dioxide (CO2) from

Risk management

rently set at 1.374 million tonnes, would also be abolished. The

Nordzucker has a integrated system in place throughout the

Commission plans the introduction of a private storage system

WTO negotiations

corresponding certificates for its emissions. Some of these certifi-

company for the early identification and management of risk. The

to support the market. The European Commission also suggests

The Doha round of WTO negotiations made no progress in the

cates are allocated to the company free of charge; others have

main risks affecting Nordzucker are identified and evaluated at

maintaining special rules in the form of national subsidies that

reporting year. The demands of the USA on one side and of the

to be bought by Nordzucker in CO2 certificate trading.

regular intervals. Steps are discussed and determined to avoid,

Finland pays its beet farmers (EUR 350 per hectare).

growing economies Brazil, China and India on the other are proving very difficult to reconcile. Presidential elections in the

The third phase of the CO2 emissions trading scheme that has

A final decision on CAP reform will only be taken when the finan-

USA in November 2012 make reaching any agreement in the

been in place in the EU since 2005 begins in 2013. This will entail

limit or transfer exposure to each risk. The progress made in implementing these steps is assessed at every interval.

generating its own electricity and heat, Nordzucker requires

cial framework for the European Union has been defined for the

short-term very unlikely. Negotiations may possibly be resumed

harmonising the application of the directive throughout the EU.

Some risks are transferred to insurance companies. The scope

years 2014 to 2019. A decision on the budget may still drag on

in early 2013.

All certificates for electricity generation will be auctioned. Certifi-

and amount of insurance coverage is reviewed regularly and

into the second half of 2012. This means a decision should not

adjusted as necessary.

be expected before year-end 2012.

cates for heat generation will initially be allocated free of charge If the negotiations are ever brought to a conclusion, this could

on the basis of natural gas. Auctions for these emission permits

mean that the EU would be able to import more duty-free sugar

will be introduced successively. The proportion sold by auction will rise from 20 per cent in 2013 to 70 per cent in 2020.

All operating and strategic decision-making always takes risk

Nordzucker supports the call by national and European sugar

from the world market than hitherto or that the applicable tariffs

aspects into account. Scenario planning is used for example to

industry associations to prolong the sugar market regime until

would be reduced.

examine the effects different market situations would have on

2020. This is also the position of the European Parliament. Security

the company’s business. Over the course of the year the Group

of supply for the European market and the avoidance of extreme

By expanding its refining business and taking wide-ranging steps

list, however. In the industries on this list the additional costs of

reporting and controlling system provides all the responsible

price fluctuations can be achieved by means of a production

to improve efficiency Nordzucker is also preparing for the possible

CO2 certificates could result in production being outsourced to

decision-makers with continuous information on the actual busi-

quota. Quotas and a minimum beet price also give beet farmers

effects of the WTO negotiations.

non-EU countries. Until 2015 these sectors therefore receive all

ness performance.

a sufficient degree of certainty for their planning. This is necessary,

The EU has included the sugar industry in the carbon leakage

certificates for heat generation free of charge.

because price fluctuations on world agricultural markets have a

EU free trade agreements

Internal auditing

strong influence on crop rotation plans. The long-term preserva-

In view of the delays to WTO negotiations, the EU has begun

Emissions trading will represent an increasing financial burden

The internal audit function is a vital part of the internal control

tion of beet cultivation nevertheless remains the basic condition

and in some cases already completed talks with a number of

for the company in future. A major focus of investment is there-

system at Nordzucker AG. Internal auditing examines and evalu-

for competitive sugar production.

countries on free trade agreements. Some of these treaties also

fore on measures to reduce energy consumption and CO2 emis-

provide for import quotas for sugar. The agreements with the

sions at the same time. Furthermore, Nordzucker monitors the

ates the business processes, risk management and internal control systems to ensure they are carried out correctly, are effective

The abolition of the EU sugar market regime could have consid-

Central American and Andean states are to take effect shortly.

market for certificates in order to purchase the necessary allow-

and offer value for money. Once the individual audits have been

erable effects on price structures within the EU sugar market. The

Around 200,000 tonnes of sugar can then be imported into the

ances in good time.

completed, the implementation of the agreed activities is system-

substitution of sugar by isoglucose represents another risk. If quotas

EU from these countries free of customs duties. Free-trade ne-

atically monitored.

are suspended in the market for isoglucose as well, the result could

gotiations with India, Pakistan, Moldavia and Georgia are still

Legal risks

be ruinous competition with sugar. At present it is impossible to

underway. The result of the talks is still open, however.

As reported in prior years, competition authorities are carrying

As well as audits carried out on the basis of annual risk planning

estimate with any degree of accuracy what the effects on market

the internal audit department also carries out ad hoc checks.

supply and competitive structures in the EU market will be.

out investigations into possible breaches of competition law in Negotiations are also taking place with the South American

the sugar industry. Generally speaking, breaches of competition

members of the Mercosur customs union. Bioethanol and sugar

law can give rise to risks for companies in the sugar industry in

In order to prepare as well as possible for any changes in the

volumes of 200,000 tonnes have been under discussion since

the form of fines or claims for compensation by third parties.

legal framework, Nordzucker continues to improve its produc-

2006. The talks have come to a standstill, however, due to stark-

Nordzucker nevertheless still assumes that no adverse effects on

It answers directly to the Chief Executive Officer and reports

tivity and efficiency and is working to secure sources of sugar

ly contrasting positions on imports of goods and services,

the company are to be expected from the proceedings.

regularly to the Executive Board and to the Supervisory Board’s

from non-EU countries. Nordzucker also benefits from alterna-

above all to Brazil.

Audit and Finance Committee.

tive supply channels thanks to its increasing imports and refining

The internal audit department is responsible for the entire Nordzucker Group.

Nordzucker is also subject to various statutory regulations, which

of raw cane sugar. In its core business of sugar from beet,

South Africa is also demanding a duty-free volume of 300,000

can give rise to liability risks. They include in particular the sugar

Political and legal risks

Nordzucker is working with beet farmers to make the sugar

tonnes of sugar in negotiations about an economic partnership

market regime in connection with the relevant provisions of cus-

Sugar market regime

beet even more competitive, for example in the 20 · 20 · 20

agreement to succeed the ACP treaty. To date the EU has ex-

toms and licensing law as well as food and animal feed law. Further

The current sugar market regime forms the operating framework

project. The five-year efficiency improvement programme

cluded sugar from negotiations with South Africa as it is not a

risks can also arise from tax regulations in different countries.

for the sugar industry in the EU up to the end of the marketing

Profitability plus has also delivered savings in all areas of the

developing country.

year 2014/2015 on 30 September 2015. As part of its proposals

company. It focuses on production, purchasing and administra-

to reform the Common Agricultural Policy (CAP), the European

tion. Other important internal activities include the harmonisa-

Depending on the form these free-trade agreements and WTO

Sugar

Commission has suggested ending the quota regime for sugar.

tion and optimisation of business processes and the integration

rules finally take, considerable quantities of sugar may in some cases

Changes in consumers’ eating habits can reduce demand for

It is planned to expire on 30 September 2015. This would mean

of the Group’s IT environment. These will help Nordzucker to

qualify for import to the EU with no or very low customs duties.

sugar. Consumers’ dietary patterns are the subject of intense

Market risks

| Annual Report Nordzucker 2011/2012

| 61

Opportunities and risks

public debate. Consumption in Europa has so far been very sta-

In order to secure raw sugar for refining, Nordzucker has signed

machinery in a factory is examined closely and serviced or re-

business is seasonal, Nordzucker’s liquidity requirement varies

ble, however. Analysts are not expecting global sugar consump-

a letter of intent with Wilmar Sugar Pte. Ltd. for the purchase

placed as necessary in the phase between two campaigns. Nor-

considerably over the course of the year; the volume of the harvest

tion to fall, but rather to increase.

of raw cane sugar. This cooperation agreement will enable

dzucker has also taken out production downtime insurance to

has a substantial effect on the capital required.

Nordzucker to use Wilmar’s global trading network to ensure

reduce its exposure further.

Since the reform of the sugar market regime in 2006, fluctuations

The finance department regularly estimates the short and medium-

its customers’ long-term supplies.

in the world market price have impacted markets in the EU. To

Environment

term liquidity requirement on the basis of current expectations.

cover its supply, the EU is dependent on imports from world

Energy prices

The production of sugar has an impact on the environment. It in-

This is then covered mainly from the syndicated loan which 14

markets. If world market prices are high, the incentive for ACP

The tense situation on raw materials markets poses considerable

cludes emissions, waste, wastewater and smells. The Nordzucker

banks have made available to the company until 2016.

countries and LDCs to export their sugar to the EU is low. If world

challenges for Nordzucker. Fuel oil in particular has become much

factories have also been certified in terms of their environmental

market prices fall, on the other hand, imports could increase,

more expensive as a result of higher crude oil prices and the

impact according to applicable national regulations.

which could lead to EU market prices also coming under pressure.

weak euro. The uncertainty in the Middle East and the market

This could diminish Nordzucker’s profitability considerably.

speculation make it very difficult to forecast future price

This includes certification in line with the environmental man-

The necessary funds were raised by arranging a new syndicated

developments.

agement system DIN EN ISO 14001, EU Environmental Audit reg-

loan of EUR 715.5 million on much more favourable terms. Part

ulation (EC) 761/2001 (EMAS II).

of this loan is available as a repayment loan, part as a working

The steps described above to import raw cane sugar and increase

The original syndicated loan of EUR 1.360 billion taken out for the Nordic Sugar acquisition was repaid in full on 17 June 2011.

capital line and the rest as a guarantee line. As of the reporting

the company’s efficiency also contribute to making it more resilient

One focus of our investing activities is therefore the reduction

in situations such as these. Revenue in the EU is also much more

of our energy consumption. The use of modern, energy-saving

Product safety

date of 29 February 2012, EUR 410.0 million of the loan was un-

stable than on world markets, as annual contracts and sometimes

technologies to dry animal feed is an important step, for instance.

For Nordzucker as a food producer, product safety is absolutely

used. The loan agreement runs until 17 June 2016.

even multi-year contracts are signed.

In addition, the company hedges some of its exposure to energy

central. In the opinion of management, the syndicated loan and the

and currency prices in order to limit the influence of short-term Securing raw materials

volatility on its business results.

Regular audits and certifications are carried out in order to satisfy

existing cash balances cover the company’s capital requirement.

internal standards and all statutory requirements and norms. All sites

From a current perspective, its cash reserves and unused lines of

decision whether to plant sugar beet or other crops depends to

Operating risks

comply with DIN EN ISO 9001 and the product safety standards

credit enable Nordzucker to meet its payment obligations at all

a large extent on relative price levels for different crops and on

Longer campaigns

DIN EN ISO 22000 in conjunction with PAS 220 (FSSC 22000). As a

times. The guarantee line provided by the syndicate banks allows

the yield that can be obtained regionally. If other arable crops

The length of the campaign has been increased gradually in our

result of different local requirements some sites are also certified

the company to carry on its day-to-day business.

are very attractive, this also puts considerable price pressure on

factories to raise productivity. A campaign now lasts for an aver-

under the following standards and norms: occupational health and

beet deliveries.

age of 120 days. This means that the production phase generally

safety management system OHSAS 18001, energy management

As part of the syndicated loan Nordzucker has undertaken to

continues into January. Longer campaigns entail two risks. One

system DIN EN ISO 16001/DIN EN ISO 50001, e nvironmental

adhere to the agreed covenants (financial ratios). The banks are

To secure its beet volumes, Nordzucker has already signed sup-

is that the onset of winter weather can severely hamper harvest-

management system DIN EN ISO 14001, EU e co-management

entitled to terminate the lending agreement if the covenants

ply contracts with beet farmers for the financial year 2012/2013.

ing, logistics and processing. The other is that longer campaigns

and audit scheme (EC) 761/2001 (EMAS II), German biofuels sus-

are breached.

The company buys some of its industrial beet on one-year con-

make production downtime more likely.

tainability bylaw (Biokraft-NachV – the transposition of Directive

For farmers, sugar beet competes with other arable crops. The

2009/28/EC to promote the use of energy from renewable sources),

On the basis of existing corporate planning for the Group, the

Nordzucker has therefore taken wide-ranging precautions both

IFS standards (International Food Standard for food retailing),

company assumes that the terms of the loan agreement will be met in subsequent years as well.

tracts and some on multi-year contracts. All contracts offer attractive terms compared with alternative crops.

in the field and in the factory to minimise these risks. They include

Council Regulation (EC) No. 834/2007 on organic production

For the existing multi-year industrial beet contracts the company

covering beet clamps with a sheet of fleece to protect the beet

and labelling of organic products, Commission Regulation (EC)

has agreed on a number of different pricing models. Farmers

from frost. Unloading in the beet yard now uses almost no water,

No. 889/2008 on the implementation of the aforementioned

The Group is not directly dependent on individual lenders.

can choose between fixed beet prices and indexing the price

which makes it easier to process damaged beet.

Regulation (EC) No. 834/2007, and the standards GMP B2 and

Nordzucker has a conservative investment policy regarding

Q&S for quality control in raw materials for animal feed.

the investment of its cash reserves. Cash is primarily invested

for industrial beet to prices for wheat and rapeseed.

in money market products from first-class European banks.

New production processes help us to deal better with extreme One vital element of securing raw materials in the years ahead

changes in weather conditions and beet which has begun to thaw

Former sites

is the 20 · 20 · 20 programme to increase yields. Nordzucker has

or decompose. One example is the optimisation of juice purification,

Risks can come to light when former sites are sold. This relates

Increasing interest rate and exchange rate volatility gives rise to

set itself the Group-wide target of achieving a sugar yield of

which is vital for processing even badly damaged beet.

to regulatory or environmental restrictions on use which may

operating risks for Nordzucker. Higher interest rates could result in

reduce sales proceeds. Nordzucker AG reviews these risks on

considerable expenses for the company. Nordzucker purchases stand-

a regular basis.

ard financial instruments on the banking market to limit these risks.

20 tonnes per hectare with 20 per cent of farmers in 2020. This programme is very important for safeguarding the relative at-

Longer campaigns increase the risk of production downtime. In

tractiveness of sugar beet compared with other arable crops,

some regions the beet flows can be diverted to alternative sites,

especially given the volatility of agricultural markets. To reach

but this also leads to longer campaigns and much greater logis-

Financial risks

Financial derivatives are principally used to hedge interest rate

this target Nordzucker is working closely with farmers, agricul-

tical expense. Risk-oriented maintenance has been introduced

The main risk in this area is the liquidity risk. A shortage of cash

and exchange rate risks for existing transactions. As of 29 February

tural associations and other companies in the value chain.

to reduce the risk of production downtime. All the essential

represents a direct danger to the company’s existence. As its

2012 Nordzucker had currency hedges with a total volume of

| Annual Report Nordzucker 2011/2012

| 63

Opportunities and risks Supplementary report Forecast

EUR 55.9 million. The existing currency hedges generally run for

Forecast

less than one year and match the maturity profile of the hedged

Interest expenses will decline as debt is paid down quickly. This

net income will be higher than in the reporting year. The com-

financial scope will be necessary in order to seize future oppor-

pany’s earnings and profitability in subsequent years depend to

transactions. As of the end of the financial year interest rate hedges

The financial year 2011/2012 was exceptional in many respects:

tunities for profitable growth. Capital expenditure will remain

a great extent on developments in the market environment. If

for financial liabilities were in place for EUR 196.6 million. They

crop failures in major exporting countries such as Brazil and India

below depreciation and amortisation but still be higher than in

prices stabilised at current levels, the Group would again earn

served solely as protection against a rise in interest rates on money

led to a reduced supply of sugar and subsequently to much higher

prior years due to additional rationalisation projects.

a profit at least on par with the reporting year in 2013/2014.

markets (EURIBOR).

world market prices. After a slight delay this was followed by a

Nordzucker is in a good position to emerge strengthened from

steep rise in sugar prices in the EU as well. Nordzucker reaped

Altogether the last two years’ strong earnings performance is

IT risks

the profit of these high prices in all regions. Supplies of sugar are

expected to continue in 2012/2013, and we are assuming that

Unauthorised access to the IT systems can cause considerable

now rising again on the world market, and in the EU, too, more

damage. Regular reviews of access rights and a comprehensive

sugar than the previous year was produced in the 2011/2012

new access concept introduced with the new version of SAP have

campaign. In the sugar marketing year 2011/2012 and probably

Braunschweig, Germany 20 April 2012

limited these risks.

2012/2013 as well, stock levels are therefore likely to rise.

The Executive Board

Technical failures in the SAP system or local servers could severely

From a current perspective the assumption for 2012/2013 is that

hinder or shut down current operations at Nordzucker. The com-

prices will initially stabilise at around their current high level. If

pany prepares for this kind of disruption by making regular data

prices remain so volatile, the risks increase sharply thereafter and

backups and maintaining redundant systems as well as with emer-

forecasting becomes very difficult.

future developments on sugar markets.

gency plans for restarting the systems. Continual internal IT security checks at the individual sites combined with the centralised

Last year’s good harvest means that revenues for the current

activities ensure an acceptable level of security.

financial year are expected to exceed those for 2011/2012.

Axel Aumüller

Hartwig Fuchs

Mats Liljestam

However, in the medium term, revenue depends on uncertain developments in supplies and pricing. The aim for the years

Supplementary report

ahead is to stabilise and boost sales volumes following the particularly good harvest in 2011/2012. This will entail the

In view of the rise in average prices tracked by the EU price re-

successive expansion of the import business. Dr Michael Noth

porting system to over EUR 700 per tonne, the European Commission decided on 12 April 2012 to approve another 250,000

Another vital factor behind the exceptionally strong earnings

tonnes of non-quota sugar and 13,000 tonnes of non-quota

in 2011/2012 was the profitable and polished last campaign,

isoglucose for the European market. A reduced surplus levy of

which incurred virtually no additional expenses, despite the

EUR 211 per tonne of sugar was set for these volumes. The first

record quantities of beet processed. We expect campaigns to

deadline for applications is 2 May 2012; applications may be

return to a normal level in the years ahead.

made for up to 50,000 tonnes per company and application date. If the volume is not taken up in full at the first deadline,

The programme launched in early 2010 to boost efficiency has

further application dates are 23 May, 6 June and 20 June 2012.

already resulted in substantial cost savings in the last two years.

Three tenders were also opened for imports of world market

By systematically implementing these steps Nordzucker is also

sugar. On 2 May, 23 May and 6 June 2012 all qualifying parties

preparing for more difficult market conditions. In future, it will only

can enter a bid for the customs duty to be paid on import sugar.

be possible to make up for some of the higher costs for e nergy,

The maximum amount that each applicant can apply for in each

raw materials and personnel by means of savings, however.

tender is 45,000 tonnes.

Dr Niels Pörksen

| 65

| Annual Report Nordzucker 2011/2012

Consolidated income statement Statement of comprehensive income Consolidated cash flow statement

Consolidated financial statements Nordzucker AG Consolidated income statement

Consolidated cash flow statement

Nordzucker AG, Braunschweig, Germany, for the period from March 1, 2011 to February 29, 2012

Revenues

Further details in Note

1/3/2011 - 29/2/2012 TEUR

1/3/2010 - 28/2/2011â&#x20AC;&#x201A;â&#x20AC;&#x201A; TEUR

2,018,017

1,815,340

261,834

119,718

Increase (previous year decrease) in finished goods and work in progress Own work capitalised Total revenues

1,816

3,132

2,281,667

1,698,754

Other operating income

42,477

40,816

Cost of materials and services

1,500,803

1,040,979

Personnel expenses

188,682

191,301

Depreciation of property, plant and equipment, amortisation and impairment of intangible assets

106,945 1,538

405

214,232

224,495

315,020

188,335

Appreciation of intangible assets and property, plant and equipment Other operating expenses Operating result (EBIT) Net interest a) Interest income and similar income

b) Interest expenses and similar expenses Net income/loss from investments a) Net income/loss from associated companies and joint ventures accounted for under the equity method

b) Other net income from investments Other net financial income/loss a) Other financial income

b) Other financial expenses Net financial income/loss Earnings before taxes Income taxes Result shutdown/sale of operations Consolidated net income Consolidated net income attributable to minority interests Consolidated net income attributable to shareholders of the parent company

3,806

94,865

2,992

38,472

50,099

-34,666

-47,107

-2,000

3,471

1,981

3,547

-19

12,342

19,978

9,955

31,326

2,387

-11,348

-28,732

-58,474

286,288

129,861

77,997

39,247

208,291

90,614

4,348

3,532

203,943

87,082

208,291

90,614

Currency conversion for foreign operations

-1,484

32,232

Net result of cash flow hedges

-2,587

4,830

Income taxes Other net income/loss after taxes Total net income/loss after taxes Attributable to: Shareholders of the parent company Minority shareholders

Earnings before taxes

770

-1,605

-1,817

3,225

204,990

126,071

200,642

122,544

4,348

3,527

1/3/2010 - 28/2/2011

EUR m

286.3

129.9

Interest and similar income

-3.8

-2.9

Interest and similar expenses

38.5

50.1

Net depreciation, amortisation and impairment on non-current assets

105.4

94.5

Changes in non-current provisions

4.8

-17.9

Other non-cash expenses

3.5

2.0

Net loss/income from associated companies

0.0

-2.0

-261.8

119.7

Changes in current provisions

15.0

18.8

Proceeds on disposal of non-current assets

-1.8

-1.0

Changes in inventories, trade receivables and other assets not attributable to investing or financing activities

-96.9

21.6

Changes in trade payables and other liabilities not attributable to investing or financing activities

215.7

-43.8

Changes in finished goods and work in progress

Interest received in the financial year Interest paid in the financial year Taxes paid in the financial year Cash flow from operating activities Proceeds on disposal of property, plant and equipment Payments for investments in property, plant and equipment Proceeds on disposal of intangible assets

3.8

2.9

-23.8

-43.9

-63.1

-14.7

221.8

313.3

7.1

5.0

-56.4

-52.6

0.1

0.2

-7.6

-3.6

Proceeds on disposal of financial assets

0.0

4.6

Payments for investments in financial assets

0.0

Proceeds from the sale of consolidated companies and other business units

0.9

84.1

Payments for investments in intangible assets

Payments for the acquisition of consolidated companies and other business units Cash flow for investing activities Payments to shareholders (dividends) Proceeds from borrowing Loan repayments Cash flow from financing activities Changes in cash and cash equivalents

Statement of comprehensive income Consolidated net income

1/3/2011 - 29/2/2012

-73.7

0.0

-129.6

37.7

-24.9

-1.4

88.3

140.6

-198.1

-554.1

-134.7

-414.9

-42.5

-63.9

Cash and cash equivalents at the beginning of the period

50.3

113.9

Additions through mergers/other changes

-0.4

0.3

Cash and cash equivalents at the end of the period

7.4

50.3

| 67

| Annual Report Nordzucker 2011/2012

Consolidated balance sheet

Consolidated balance sheet as of February 29, 2012, Nordzucker AG, Braunschweig, Germany Assets

Further details in Note

29/2/2012 TEUR

28/2/2011 TEUR

Non-current assets

Shareholders’ equity and liabilities Shareholders’ equity

Further details in Note

29/2/2012 TEUR

28/2/2011 TEUR

Fixed assets Intangible assets

174,066

179,897

Subscribed capital

26.1

123,651

Property, plant and equipment

861,059

906,056

Capital reserves

26.2

127,035

Investment property

6,785

8,516

Retained earnings

26.3

653,603

471,569

Other comprehensive income

26.4

51,682

54,983

955,971

777,238

Financial investments Shares in associated companies and joint ventures accounted for under the equity method

19.1

3,593

3,838

19.2

20,428

20,477

Other financial investments

24,021

24,315

1,065,931

1,118,784

Receivables and other assets Financial assets

Other assets

1,369

1,530

1,376

1,562

Deferred taxes

11,883

5,383

1,079,190

1,125,729

Current assets Inventories

Equity attributable to shareholders of the parent company Minority interests

26.5

44,451

40,836

Work in progress

43,373

17,981

810,414

533,205

898,238

592,022

Finished goods and merchandise

Receivables and other assets

41,497 818,735

134,117

Non-current provisions and liabilities Provisions for pensions and similar obligations

134,727

Other provisions

23,415

19,218

Financial liabilities

88,473

275,892

Liabilities towards related parties

5,500

Other financial liabilities

1,181

1,447

Other liabilities

20,985

23,763

Deferred taxes

Raw materials, consumables and supplies

43,260 999,231

153,917

160,015

428,198

619,952

5,281

5,277

Current provisions and liabilities Provisions for pensions and similar obligations

Other provisions

68,059

53,051

Financial liabilities

167,852

87,880

Current income tax liabilities

60,000

27,444

Trade receivables from external companies

194,423

155,897

Receivables from related parties

233

Trade payables

455,122

215,187

Forderungen aus laufenden Steuern vom Einkommen und vom Ertrag

5,084

Liabilities towards related parties

11,498

12,313

Finanzielle Vermögenswerte

13,185

21,061

Other financial liabilities

15,900

87,457

Other current assets

61,971

35,730

Other liabilities

50,456

54,325

274,896

212,755

834,168

542,934

2,261,597

1,981,621

Cash and cash equivalents Assets held for sale

7,406

50,289

1,180,540

855,066

1,867

826

1,182,407

855,892

2,261,597

1,981,621

Liabilities from discontinued operations

| Annual Report Nordzucker 2011/2012

Notes to the consolidated financial statements for the financial year 2011/2012 for Nordzucker AG, Braunschweig, Germany

Consolidated statement of changes in shareholders’ equity Nordzucker AG, Braunschweig, Germany

As of 1/3/2010

Subscribed capital

Capital reserves

TEUR

123,651

127,035

Consolidated net income

Equity attributable to Other shareholders Retained comprehensive of the parent earnings income company TEUR

384,294

TEUR

19,521

TEUR

654,501

General remarks Minority interests

Total equity

TEUR

89,498

743,999

87,082

3,532

90,614

35,462

-5

35,457

Total net income / loss after taxes

87,082

35,462

122,544

3,527

126,071

-1,367

193

-50,161

-49,968

777,238

41,497

818,735

Others As of 28/2/2011 As of 1/3/2011

193 123,651 123,651

127,035 127,035

471,569 471,569

54,983 54,983

777,238

41,497

1. Accounting principles

ends once the parent company no longer exercises control.

The consolidated financial statements as of 29 February 2012

same reporting period as the financial statements for the parent

for Nordzucker AG (Küchenstrasse 9, 38100 Braunschweig) have

company using uniform accounting methods. All intra-Group

been prepared in accordance with Sec. 315a HGB (German

balances, transactions, unrealised gains and losses from intra-

Commercial Code) in accordance with the International Financial

Group transactions and dividends are eliminated in full.

Other net income/loss Total net income / loss after taxes

0 0

Dividend payment Others As of 29/2/2012

national Financial Standards Board (IASB) as applicable in the

Losses from a subsidiary are attributed to non-controlling inter-

European Union and with supplementary provisions of German

ests even if this results in a negative net carrying amount. A

commercial law. The financial statements comply fully with IFRS

change in the equity interest in a subsidiary that does not result

and give a true and fair view of the net assets, financial and earn-

in a loss of control is accounted for as an equity transaction.

ings position of Nordzucker AG and its consolidated subsidiaries, associated companies and joint ventures (hereinafter known as

Principles of consolidation up to 1 January 2010

“Nordzucker Group” or “Group”).

Some of the standards mentioned above were applied prospectively. The following items were dealt with on the basis of the

818,735

127,035

previous principles of consolidation:

203,943

4,348

208,291

pared using the historic cost convention. This does not apply

-3,301

to the derivative financial instruments or the available-for-sale

The purchase of non-controlling interests was accounted for be-

financial instruments, which are measured at fair value.

fore 1 January 2010 using the parent-entity extension method. This

203,943

-3,301

200,642

4,348

204,990

-22,219

-2,691

-24,910

311 123,651

The financial statements of the subsidiaries are prepared for the

Reporting Standards (IFRS) adopted and published by the Inter

The consolidated financial statements have generally been preConsolidated net income

Subsidiaries are fully consolidated from the acquisition date, i.e. the date on which the Group obtains control. Consolidation

Other net income/loss

Dividend payment

| 69

653,604

51,682

311

106

416

955,972

43,260

999,231

entails the recognition as goodwill of the difference between the Individual line items of the income statement and the balance

purchase price and the carrying amount of the pro rata interest in

sheet have been aggregated to improve readability. These items

the net assets.

are listed in the notes. The income statement has been classified according to the total cost method.

Losses were attributed to non-controlling interests until their carrying amount was reduced to zero. Additional losses were

The consolidated financial statements have been prepared in

attributed to the parent company except in cases in which the

Euros. Unless otherwise stated all amounts are given in thousands

non-controlling interests had undertaken to make good the

of Euros (EUR ‘000).

losses. The attribution of losses incurred before 1 January 2010 between the non-controlling interests and the shareholders of

The consolidated financial statements will be approved by the

the parent company was not revoked.

Executive Board of Nordzucker AG on 24 May 2012 for presentation to the Supervisory Board.

In the event of a loss of control, the Group recognised the remaining interest at the amount of the corresponding share of net assets at the time control was lost. The carrying amount of these

2. Consolidation

investments was not adjusted as of 1 January 2010.

2.1. Principles of consolidation

2.2. Business combinations and goodwill

Principles of consolidation from 1 January 2010

Business combinations from 1 March 2010

The consolidated financial statements of the Nordzucker Group

Business combinations are presented using the purchase

include the domestic and foreign subsidiaries in which Nordzucker

method. The acquisition costs of a business combination are

AG has direct or indirect control of financial and operating

defined as the total consideration paid, measured at fair value as

policy.

of the acquisition date and the non-controlling interests in the acquired entity. For every business combination the purchaser measures the non-controlling interests in the acquired entity either at fair value or at their pro rata share of the identified net

| 71

| Annual Report Nordzucker 2011/2012

assets of the acquired entity. Costs incurred in the course of

the difference between the sale price and the net assets plus

The list of investments is filed electronically with the operator of

companies are not recognised unless there is an obligation to

the business combination are recognised in profit and loss and

accumulated foreign exchange differences and goodwill without

the electronic German Federal Gazette (Elektronischer Bunde-

provide further capital.

shown under administrative expenses.

impairment is recognised in profit and loss.

sanzeiger). 2.4. Conversion of financial statements

If the Group acquires an entity it determines the appropriate

Business combinations before 1 March 2010

All the companies included in the consolidated financial state-

classification and designation of the financial assets and liabilities

The method used previously for accounting for business com-

ments have the 29 February 2012 as their reporting date.

assumed in accordance with the terms of the contract, economic

binations applied the following principles instead of those de-

circumstances and the conditions at the acquisition date. This also

scribed above:

in foreign currencies Assets and liabilities of subsidiaries whose functional currency is not the Euro are converted at the exchange rate applicable

Associated companies and joint ventures are accounted for in the

on the balance sheet date. Items in the income statement

consolidated financial statements under the equity method. Associ-

are converted at the weighted average rate for the relevant

Business combinations were presented using the purchase meth-

ated companies are defined as companies in which the Nordzucker

year. Equity components of subsidiaries are converted at the

For business combinations in stages the fair value of the equity

od. Transaction costs directly attributable to the business combi-

Group can exercise a significant influence over financial and oper-

historical rate for the date first recognised. Exchange differenc-

interest held by the purchaser in the acquired entity is measured

nation were part of the acquisition costs. Non-controlling interests

ating policy. A company is defined as a joint venture if an agree-

es arising from the conversion are recognised as equalisation

as of each acquisition date and the resulting gain or loss is recog-

(previously known as minority interests) were measured at their

ment exists between the partners on joint management of the

amounts within other comprehensive income or in non-con-

nised in the income statement.

pro rata share in the identifiable net assets of the acquired entity.

economic activities of the company. In applying the equity meth-

trolling interests.

includes separating embedded derivatives from their host contract.

od, the IFRS financial statements of these companies are used. The agreed contingent consideration is recognised at fair value as

For business combinations achieved in stages the individual ac-

Losses from associated companies which exceed the carrying

The rates for the conversion of key financial statements in for-

of the acquisition date. Subsequent changes in the fair value of a

quisitions were accounted for separately. The acquisition of an

amount or other non-current receivables from financing these

eign currencies into Euros have changed as follows:

contingent consideration that constitutes an asset or a liability are

additional interest did not affect the goodwill from a previous

recognised either in the income statement or in other compre-

acquisition. Foreign currency

hensive income in accordance with IAS 39. Contingent consideration that is classified as equity is not revalued and its subsequent

If the Group acquired an entity, the embedded derivatives ac-

settlement is accounted for within equity.

counted for separately from the host contract by the acquired

for EUR 1.00

entity were only revalued at the acquisition date if the business

Polish Zloty (PLN)

Goodwill is initially recognised at cost, which is defined as the

combination led to a change in the terms of the contract result-

Hungarian Forint (HUF)

excess of total consideration transferred and the amount of any

ing in significantly different cash flows to those that would other-

Danish Crown (DKK)

wise have resulted from the contract.

Swedish Crown (SEK)

non-controlling interest over the identifiable assets acquired and the liabilities assumed. If this consideration is below the fair value of the net assets of the subsidiary the difference is recognised in

A contingent consideration was only recognised if the Group had

the income statement.

a current obligation, if an outflow of resources embodying eco-

Average rate

2011/2012

2010/2011

Spot rate

29/2/2012

28/2/2011

4.18113

3.9909

4.12120

3.9647

283.62660

275.7080

288.7100

270.6600

7.44754

7.4495

7.43560

7.4562

9.02575

9.3433

8.80880

8.8459

Norwegian Crown (NOK)

7.75952

7.9529

7.44050

7.7651

Lithuanian Litas (LTL)

3.45280

3.4528

3.45280

3.4552

nomic benefits was more likely than not and if a reliable estimate Following initial recognition goodwill is measured at cost less any

was possible. Subsequent adjustments to the contingent consid-

accumulated impairment losses. For the purposes of impairment

eration were recognised as part of goodwill.

testing, the goodwill acquired in a business combination is allo-

3. Explanation of accounting methods

cated to the cash-generating units or groups of cash-generating

2.3. Group of consolidated companies

units which benefit from the synergies of the business combina-

The consolidated companies in the Nordzucker Group are as

tion as of the acquisition date. This applies irrespective of whether

follows:

Dividends are recognised in profit and loss when the legal entitlement is vested.

3.1. Recognition of income and expense

other assets or liabilities of the acquiring company are assigned

Revenues are recognised when the goods or services are deliv-

3.2. Intangible assets

to those units or groups of units. Each unit or group of units to

ered if the amount of revenue can be estimated reliably and the

Internally generated intangible assets are recognised at the

flow of economic benefit is probable. Revenues are reduced by

costs arising in the development phase after technical and eco-

sales discounts.

nomic feasibility has been determined and up to completion.

which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal man-

Group of consolidated companies 29/2/2012

agement purposes. If goodwill has been allocated to a cash-generating unit (group of cash-generating units) and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of shall be included in the carrying amount of the operation when determining the gain or loss on disposal. The value of the goodwill disposed of is measured on the basis of the relative values of the operation disposed of and the portion of the cashgenerating unit retained. If a cash-generating unit is disposed of,

Fully consolidated companies Domestic Foreign

28/2/2011

Foreign

utable to the development phase.

as of the date they arise. Separately acquired intangible assets are recognised at cost. Interest is recognised as an expense or as income in the period in

Companies accounted for under the equity method Domestic

Capitalised production costs consist of the costs directly attribOperating expenses are recognised when the service is used or

2 2

which it arises. The Group only capitalises interest expense aris-

Internally generated and separately acquired intangible assets

ing in connection with the purchase or production of certain as-

which have a finite useful life are amortised from the time the as-

sets if they are qualifying assets.

set is available for use on a straight-line basis over the expected useful life of the asset as follows:

| Annual Report Nordzucker 2011/2012

Intangible assets Useful life

in years

Production quotas acquired against payment

As a rule, depreciation begins when the asset is made ready for

3.6. Investment subsidies and grants

revaluation surplus is corrected for the amount of the impairment

operation. Production-related technical plant and machinery only

Claims for investment subsidies and grants are recognised from

and the resulting amount recognised in profit and loss.

used during the campaign are depreciated for the full year.

the time the Nordzucker Group is sufficiently certain that they

ERP licences

Other software

3–15

| 73

will be granted and that the conditions for receiving them will

If the fair value of financial instruments cannot be measured or

For assets under finance leases where the transfer of title to Group

be met. Grants and subsidies for purchasing assets are carried as

derived using appropriate valuation methods, they are carried at

companies at the end of the lease term is sufficiently certain, sched-

liabilities and reversed through profit and loss over the useful

amortised cost. For cash and other current primary financial in-

uled depreciation takes place over the useful life of the assets.

life of the subsidised assets.

struments, fair value is equivalent to the carrying amount on each balance date.

Useful lives are reviewed regularly to ensure they are appropriate.

Investment subsidies and public grants for the purchase or pro-

If necessary they are adjusted accordingly.

duction of items of property, plant and equipment are accounted

The Nordzucker Group does not recognise emissions rights

Assets held to maturity are carried at amortised cost using the

for by recognising an item of deferred income under other liabili-

received free of charge. The Nordzucker Group recognises the

effective interest method. An impairment loss is recognised on

ties. The deferred income item is then reversed through profit

corresponding obligations at cost if the emissions rights held

these assets if the recoverable amount using the effective interest

and loss over the useful life of the subsidised asset.

by the Group are not sufficient.

originally determined is below the carrying amount.

3.4. Investment property

3.8. Financial instruments

In the financial year, no financial assets were reclassified from

Properties classified by the Nordzucker Group as available for let

The Nordzucker Group accounts for financial instruments in

being available for sale to being held to maturity. Available-for-sale

3.3. Property, plant and equipment

to third parties are carried at historical cost in accordance with

accordance with IAS 39. All purchases or disposals of financial

financial instruments carried at fair value were also not reclassified

Items of property, plant and equipment are recognised at cost

the classification option defined in IAS 40. These properties are

assets within the Group are recognised on acquisition, i.e. as

as being held at amortised cost. Reclassifications in the opposite

and depreciated on a straight-line basis over their expected

depreciated on a straight-line basis over a useful life of 20–60

of the settlement date, irrespective of their classification.

direction were also not applicable for Nordzucker Group.

useful lives. The costs of internally generated items of property,

years. Financial assets and financial liabilities are initially recognised at

Nordzucker Group also made no disposals of financial assets

fair value. The transaction costs directly attributable to the acqui-

without derecognising them, either in the reporting period or

sition are also recognised and amortised over the duration for

in the previous year.

Goodwill is not subject to amortisation (see Note 2.2 above).

3.7. Emissions rights

Gains or losses on the disposal of intangible non-current assets are recognised under other operating income or expenses.

plant and equipment include all direct costs as well as all indirect costs incurred in connection with the production process. Borrowing costs are capitalised when the internally generated

3.5. Impairment of intangible assets and property, plant and equipment

items of property, plant and equipment constitute qualifying

The Group assesses at each reporting date whether there is any

all financial liabilities which are not subsequently measured at fair

assets. Gains or losses on the disposal of non-current assets are

indication that non-financial assets may be impaired. If any such

value through profit and loss. The fair values carried in the bal-

Nordzucker Group carries out regular impairment tests on financial

recognised in other operating income or expenses.

indication exists or if an annual impairment test is required for

ance sheet are normally equivalent to the market prices of the

assets held in the balance sheet in the categories loans and recei-

an asset, the Group estimates the recoverable amount for the

financial instruments. If these are not directly available from an

vables, available for sale and held to maturity. These are based on

respective asset (“impairment test”).

active market, measurement is made using the discounted cash

past experience and individual risk assessments. The risk assess-

Rented or leased assets which are economically owned by Group

flow method (DCF method), i.e. based on expected future cash

ments include criteria such as severe financial difficulties of the

sent value of the rental or lease payments and fair value of the

Impairment losses are recognised for intangible assets and items

flows using the reference interest rates applicable at the balance

issuer or debtor, breach of contract, concessions made to debt-

leased asset. They are depreciated on a straight-line basis. The

of property, plant and equipment if due to particular events the

sheet date.

ors for economic or legal reasons in connection with the debtor’s

present value of payment obligations for future rental and lease

carrying amount of the asset is no longer covered by the antici-

payments is recognised as a liability.

pated proceeds of disposal or the discounted net cash flows

IAS 39 stipulates that financial instruments are to be classified as

insolvency. Other criteria are the disappearance of an active market

from its continued use. If the recoverable amount cannot be

loans and receivables (L&R), available for sale (AFS), held to maturity

for the asset in question or observable data which indicates a

Depreciation takes place on a uniform basis for the Group over

measured for individual assets because the cash flows depend

(HTM), held for trading (HFT), fair value option (FVO) or financial

measurable reduction in expected future cash flows from a group

the following useful lives:

on other assets, the cash flow is determined for the next higher

liabilities measured at amortised cost (FLAC).

of financial assets since their initial recognition.

such a cash flow can be determined. The cash flows of the report-

Nordzucker Group has not used the option of designating finan-

Further information on financial instruments is given in Note 36.

ing units are discounted at a rate which reflects current market

cial assets or financial liabilities upon initial recognition as at fair value through profit and loss (FVO).

companies (finance leases) are capitalised at the lower of the pre-

financial difficulties and an increased probability of the debtor’s

group of assets (reporting unit, cash-generating unit) for which Property, plant and equipment Useful life Buildings Technical plant and machinery Railway track Vehicles

in years

assessments of the time value of money and the specific risks of

20 –60

the asset. An impairment loss is recognised when the present

4 – 60

value of the cash flows is less than the carrying amount of the

The Group measures financial assets and liabilities classified as

with IAS 39 according to type and purpose and classified either

non-current and net current assets of the reporting unit.

held for trading at fair value. Changes in fair value are recognised

as available for sale or as held to maturity.

70 4– 15

3.9. Financial investments and securities Other financial investments and securities are categorised in line

in profit and loss. 3.10. Assets held for sale

An assessment is made as of each reporting date whether there

3–25

is any indication that an impairment recognised in prior periods

Available for sale financial instruments are initially recognised at

Non-current assets are classified as held for sale if the disposal

may no longer exist or may have decreased. Impairment losses

fair value. The result of subsequent measurement at fair value is

of the asset within the next 12 months is highly probable. This

are reversed if the value in use has increased in subsequent peri-

recognised without effect on profit and loss in other comprehen-

classification is only made when the asset is available for sale in

Useful lives are reviewed regularly to ensure they are appropriate.

ods. The increased carrying amount of an asset attributable to

sive income, having accounted for the effects of tax. When the

its present condition and the marketing of the asset has already

If necessary they are adjusted accordingly.

a reversal of an impairment loss shall not exceed the carrying

financial asset is sold, the accumulated results of measurement

begun. Assets held for sale are carried at the lower of amortised

amount that would have been determined (net of amortisation

changes recognised in equity are reversed and the realised gain

cost and fair value less costs to sell. No further depreciation or

or depreciation) had no impairment loss been recognised for

or loss is recognised in profit and loss. If the asset is impaired, the

amortisation is recognised for assets from the time they are clas-

Trailers and rolling stock Other operating and office equipment

the asset in prior years.

| Annual Report Nordzucker 2011/2012

| 75

sified as held for sale. If no sale has taken place within twelve

3.13. Cash and cash equivalents

the IFRS financial statements, and for tax loss carry-forwards.

When closing hedging transactions, Nordzucker Group classifies

months, the assets concerned are reclassified to the relevant

Cash and cash equivalents include bank balances and cash in

Deferred taxes are measured on the basis of the fiscal legislation

interest rate derivatives solely as cash flow hedges for hedge ac-

balance sheet items and the necessary depreciation or amortisa-

hand. Carrying amounts are equal to fair value.

enacted at the end of each financial year for the financial years

counting purposes. Furthermore, the Group uses derivatives not

in which the differences are expected to reverse or in which it

designated exclusively as such to hedge exchange rate and market risks.

tion is made good. 3.14. Pension provisions

is likely that tax loss carry-forwards will be used. Deferred tax

3.11. Inventories

Provisions for pension obligations are determined in line with

assets for tax loss carry-forwards are only recognised if it is suffi-

Inventories are recognised at cost.

IAS 19 using the projected unit credit method and taking future

ciently likely that they will be realised in the near future.

3.19. Foreign currency transactions Purchases and sales in foreign currencies are converted at the

developments in salaries and pensions into account. The measCosts are determined using weighted averages. Costs include all

urement of the pension obligations is made on the basis of

Deferred tax assets and liabilities are netted out if the conditions

exchange rate applicable at the time of the transaction. Assets

direct costs attributable to producing the asset as well as indirect

actuarial opinions and includes the assets available to cover

for doing so are met.

and liabilities in foreign currencies are translated into the func-

costs attributable to production.

these obligations (plan assets). The present value of defined benefit obligations is determined by discounting the estimated

tional currency at the exchange rate on the reporting date. For3.18. Derivative financial instruments and hedge accounting

eign currency gains and losses resulting from the conversion are recognised in profit and loss.

Measurement of inventories at the reporting date is made at the

future cash outflows. The discount rate is based on the rate paid

lower of cost and net realisable value. Net realisable value is the

by high-quality corporate bonds which match the underlying

Due to the nature of its business, the Nordzucker Group is ex-

estimated selling price less estimated costs to sell.

pension obligations in terms of currency and maturity.

posed to interest rate, exchange rate and other market risks.

3.20. Use of estimates

Derivative financial instruments are used as a means of manag-

Preparing the consolidated financial statements in line with IFRS

ing these risks.

requires the use of estimates and assumptions which affect the

The net realisable value of work in progress is inferred from the

If the actuarial gains and losses resulting from changes in the ac-

net realisable value of finished goods and services less the out-

tuarial parameters exceed 10 per cent of the greater of the pen-

standing costs of completion.

sion obligations and plan assets at the beginning of the financial

As a rule, derivative financial instruments are recognised at fair

gent liabilities as of the reporting date and the recognition of in-

year, the amount exceeding the 10 per cent threshold is recog-

value. The fair value of derivatives can be both positive and nega-

come and expenses. In particular, key estimates and assumptions

Semi-finished goods from production processes are measured us-

nised through profit and loss for the remaining term of service

tive. If a market value is not available, fair value is determined

have been made in defining uniform periods of depreciation and

ing their respective full cost approach. Indirect costs are allocated

of the entitled staff (corridor method).

using net present value and option pricing models. The input

amortisation for the Group, the amount of write-downs on receiv-

parameters for these models are the relevant market prices and

ables and the actuarial parameters for measuring pension provisions.

according to production volume and the amount of production

carrying amounts of assets and liabilities, the disclosure of contin-

work carried out in-house. If the recognised amounts for finished

Service cost and realised actuarial gains and losses are recognised

interest rates observed on the balance sheet date as derived from

For deferred tax assets, the main estimates relate to the taxable

products and goods are higher than fair value as of the reporting

in personnel expenses. The interest component of pension ex-

recognised sources.

profits that will be generated in future. Other significant estimates

date, the inventories are written down to net realisable value.

penses and the expected income from plan assets is disclosed as part of net financial income/loss.

Sugar stocks from internal production disclosed under finished

have been made in performing the impairment test in accordance Changes in the fair value of derivative financial instruments are

with IAS 36 concerning the determination of cash flows in the

recognised in equity without effect on profit or loss (for cash flow

forecast period and the selection of a suitable capitalisation rate.

products are recognised at cost, unless they are recognised at

3.15. Other provisions

hedges) or with effect on profit or loss (for fair value hedges) if they

The actual amounts may vary from the amounts derived from the

lower net realisable value in view of sales opportunities. Costs in-

Other provisions include all identifiable legal and constructive

form part of an effective hedging relationship (hedge accounting).

estimates and assumptions. We refer to the corresponding notes

clude production costs, indirect costs attributable to the produc-

obligations of the Group towards third parties if their settlement

The principles of hedge accounting are intended to capture as

to the consolidated balance sheet for the carrying amounts of

tion department and straight-line depreciation for wear and tear.

is probable and the amount can be reliably estimated. Provi-

much as possible the offsetting effects on profit or loss of changes

balance sheet items affected by significant estimates.

The production costs of quota sugar also include the factory por-

sions are recognised in line with IAS 37 as the best estimate of

in the fair values of the hedging instrument and the hedged item.

tion of the production levy of EUR 6.00 per tonne.

the amount required to settle the obligation. Non-current provi-

In addition to documentation on the hedging relationship IAS 39

sions are recognised as the present value of the amount re-

requires that the hedge be shown to be highly effective in order

Borrowing costs are not included in costs as the Group’s prod-

quired to settle the obligation, discounted using appropriate

for hedge accounting to be applied. The effectiveness of the hedge

ucts are not qualifying assets.

market interest rates.

is demonstrated by its ability to achieve offsetting changes to alterations in the hedged item’s fair value in the case of fair value

The present financial statements for the financial year 2011/2012

An impairment loss for inventories is reversed if the reasons for

Provisions for restructuring are only recognised if the planned

hedges or to cash flows attributable to the hedged risk in the case

have been prepared on the basis of the uniform application of

recognising the loss no longer exist.

measures have been developed in sufficient detail as of the re-

of cash flow hedges.

and in compliance with all International Financial Reporting Stan-

porting date and if the measures have been announced. 3.12. Receivables and other assets

4. Recently published IASB accounting regulations

dards (IFRS) applicable in the European Union as of the reporting Changes in the fair value of derivatives used to hedge future cash

date 29 February 2012. Nordzucker does not apply standards al-

Trade receivables and other assets are initially recognised at fair

3.16. Liabilities

flows (cash flow hedges) and which are considered effective are

ready published and interpretations by the International Financial

value plus transaction costs. Subsequent recognition is at amor-

Liabilities are recognised initially at fair value including transac-

recognised directly in other comprehensive income after ac-

Reporting Interpretations Committee (IFRIC) for which application

tised cost. For current financial assets in the loans and receivables

tion costs and any premiums and discounts. Subsequent recog-

counting for tax effects. The amounts recognised in other com-

is not yet mandatory for the reporting year.

category, fair value is approximately equal to the carrying

nition is at amortised cost using the effective interest method.

prehensive income are derecognised when the hedged item is recognised in the balance sheet or in profit and loss.

amount. 3.17. Deferred taxes

The accounting methods applied are the same as those applied the previous year, with the exception of the following new and

Default risks are recognised by appropriate write-downs based

Deferred taxes are recognised for future tax assets and liabilities

Derivatives which despite their effect as economic hedges do not

on past experience and individual assessments of risk.

resulting from temporary differences between the value of as-

fulfil the criteria of IAS 39 for recognition as hedging instruments

sets and liabilities for tax purposes and their carrying amount in

are classified as held for trading and carried at fair value through profit and loss.

revised standards and interpretations.

| Annual Report Nordzucker 2011/2012

4.1 Mandatory application of new and amended

4.2 IFRS endorsed by the EU as of 29 February 2012 but

standards in the reporting year:

not mandatorily applicable in the reporting year:

| 77

IFRS 10 Consolidated Financial Statements: IFRS 10 was pub-

to simplify the standard. It introduces the (rebuttable) presump-

lished in May 2011 and is applicable for the first time in the finan-

tion that for the purpose of measuring deferred tax on investment

Amendment to IAS 24 – Related Party Disclosures: The revised

The following new and amended standards and interpretations

cial year beginning on or after 1 January 2013. The new standard

property measured at fair value, the recovery of the carrying

standard IAS 24 was published in November 2009 and is appli-

have already been endorsed by the EU but were not applied in

replaces the provisions of IAS 27 Consolidated and Separate Finan-

amount will normally be through sale. A sale should always be

cable for the first time in the financial year 2011/2012. This al-

the reporting year as their application was not mandatory:

cial Statements on consolidated accounting and the interpretation

assumed for items of property, plant and equipment not subject

SIC-12 Consolidation – Special Purpose Entities. IFRS 10 defines a

to wear and tear that are measured using the revaluation model.

ters the definition of related parties and also releases state-controlled entities from the obligation to disclose transactions with

Amendment to IFRS 7 – Disclosures on the Transfer of Financial

uniform concept of control, which is applied to all companies

the state and with other entities controlled by this same state.

Assets: The amendment to IAS 7 was published in October 2010

including special purpose entities.

The standard is to be applied retrospectively.

and is applicable for the first time in the financial year beginning

IAS 19 Employee Benefits (revised 2011): The revised standard IAS 19 was published in June 2011 and is applicable for the first

on or after 1 July 2011. The amendment defines extensive new

IFRS 11 Joint Arrangements: IFRS 11 was published in May 2011

time in the financial year beginning on or after 1 January 2013.

Amendment to IFRIC 14 – Prepayments of Minimum Funding

qualitative and quantitative disclosures on transfers of financial as-

and is applicable for the first time in the financial year beginning

The alterations range from fundamental changes such as to the

Requirements: The amendment to IFRIC 14 was published in

sets that have not been derecognised and on the continuing in-

on or after 1 January 2013. The standard replaces IAS 31 Interests

calculation of forecast returns on plan assets and the elimination

November 2009 and is applicable for the first time in the financial

volvement in transferred financial assets as of the reporting date.

in Joint Ventures and the interpretation SIC-13 Jointly Controlled

of the corridor method, which served to smooth volatility result-

Entities – Non-monetary Contributions by Venturers. IFRS 11 abolish-

ing from pension obligations over time, to simple clarifications and rewording.

year 2011/2012. The application of IFRIC Interpretation 14 published in July 2007 that was intended to limit a defined benefit

The early application of the amendment would have had no

es the previous option of accounting for joint ventures using the

asset to its realisable value had unintended consequences for

significant effect on the presentation of the Group’s net assets,

proportional consolidation method. In future they are only to be

companies in some countries. The amendment is intended to

financial and earnings position, as the circumstances referred to

consolidated using the equity method.

allow companies to recognise prepayments of a minimum fund-

do not exist.

ing requirement as an asset.

Nordzucker had previously used the corridor method in the course of accounting for pension provisions. The elimination of

IFRS 12 Disclosure of Interests in Other Entities: IFRS 12 was

this accounting option means that in future pension obligations

4.3 IFRS still to be endorsed by the EU:

published in May 2011 and is applicable for the first time in the

will be recognised at their present value less the value of plan

IFRIC 19 – Extinguishing Financial Liabilities with Equity Instru-

The following new and amended standards and interpretations

financial year beginning on or after 1 January 2013. The standard

assets at the end of the financial year.

ments: The IFRIC Interpretation 19 was published in November

are still to be endorsed by the EU and have not been applied in

defines uniform rules for mandatory disclosures in the area of

2009 and is applicable for the first time in the financial year

advance:

consolidated accounting and consolidates the disclosures on sub-

IAS 27 Separate Financial Statements (revised 2011): The revised

sidiaries that were previously governed by IAS 27, the disclosures

standard IAS 27 was published in May 2011 and is applicable for

2011/2012. This interpretation makes it clear that if equity instruments are issued to a creditor for the purpose of extinguishing

IFRS 9 Financial Instruments: Classification and Measurement:

on joint ventures and associated companies previously defined in

the first time in the financial year beginning on or after 1 January

a financial liability, the equity instrument is to be treated as con-

The first part of Phase I for the preparation of IFRS 9 Financial Inst-

IAS 31 and IAS 28 respectively and those for structured entities.

2013. Following the adoption of IFRS 10 and IFRS 12, the scope of

sideration paid for the liability. The equity instruments are meas-

ruments was published in November 2009. The standard includes

ured either at fair value or at the fair value of the liability extin-

new rules on classifying and measuring financial assets. It pro-

IFRS 13 Fair Value Measurement: IFRS 13 was published in May

guished, depending on which can be determined more reliably.

vides for debt instruments to be accounted for either at amor-

2011 and is applicable for the first time in the financial year

Any difference between the carrying amount of the financial lia-

tised cost or at fair value through profit or loss, depending on

beginning on or after 1 January 2013. The standard provides

IAS 28 Investments in Associates and Joint Ventures (revised

bility extinguished and the fair value of the equity instruments

their characteristics and the business model. Equity instruments

guidelines for fair value measurement and defines comprehensive

2011): The revised standard IAS 28 was published in May 2011

issued is recognised in the profit or loss for the period.

must always be carried at fair value. Fluctuations in the value of

quantitative and qualitative disclosures for fair value measure-

and is applicable for the first time in the financial year beginning

IAS 27 is limited to accounting for subsidiaries, joint ventures and associated companies in separate financial statements.

equity instruments may be recognised in other comprehensive

ment. However, the standard does not cover the question of

on or after 1 January 2013. Following the adoption of IFRS 11

Improvements to IFRS 2010: On 19 February 2011 the IASB pub-

income, however, subject to an option specific to the individual

when assets or liabilities may or must be measured at fair value.

and IFRS 12, the scope of IAS 28 has been extended to cover the

lished a collection of improvements to amend various IFRS. The

instruments that can be exercised when the financial instrument

IFRS 13 defines fair value as the price that would be received to

application of the equity method to joint ventures as well as to

amendments are applicable for the first time in the financial year

is recognised. In this case, only certain dividend income from the

sell an asset or paid to transfer a liability in an orderly transaction

associated companies.

2011/2012. They concern the following standards:

equity instruments is recognised in profit or loss. An exception is

between market participants at the measurement date. Amendment to IAS 32 and IFRS 7 – Offsetting Financial Assets

made for financial assets held for trading, which must be measIFRS 1 First-time Adoption of IFRS

ured at fair value through profit or loss. The IASB completed the

Amendment to IAS 1 – Presentation of Components of Other

and Financial Liabilities: The amendment to IAS 32 and IFRS 7

●

IFRS 3 Business Combinations

second part of phase 1 of the project in October 2010. This add-

Comprehensive Income: The amendment to IAS 1 was published

was published in December 2011 and is applicable for the first

●

IFRS 7 Financial Instruments: Disclosures

ed provisions on financial liabilities to the standard and retains

in June 2011 and is applicable for the first time in the financial

time in the financial year beginning on or after 1 January 2013.

●

IAS 1

the existing rules on classification and measurement of financial li-

year beginning on or after 1 July 2012. The amendment to IAS 1

The amendment is intended to remove existing inconsistencies

●

IAS 27 Consolidated and Separate Financial Statements

abilities with the following exceptions: effects of changes in the

relates to the presentation of components of other comprehen-

by extending the application guidelines. The existing basic rules

●

IAS 34 Interim Financial Reporting

entity’s own credit rating on financial liabilities classified as at fair

sive income. Components which are intended to be reclassified

on offsetting financial instruments are maintained, however. The

●

IFRIC 13 Customer Loyalty Programmes

value through profit or loss must be recognised without effect on

into profit or loss in future (“recycled”) must be presented sepa-

amendment also defines additional disclosures.

profit or loss and derivative liabilities on unquoted equity instru-

rately from those components that will remain in equity.

●

Presentation of Financial Statements

Apart from the effects caused by the revision of IAS 19 and de-

The application of the new and amended standards described in

ments may no longer be held at cost. IFRS 9 is applicable for the

this section had no significant effect on the presentation of the

first time in the financial year beginning on or after 1 January

Amendment to IAS 12 – Deferred Tax: Recovery of Underlying As-

scribed above, the application of the amendments in this section

Group’s net assets, financial and earnings position, as the circum-

2015.

sets: The amendment to IAS 12 was published in December 2010

is not expected to have any significant effect on the presentation

and is applicable for the first time in the financial year beginning

of the Group’s net assets, financial and earnings position.

stances referred to did not exist.

on or after 1 January 2012. The amendment to IAS 12 is intended

Notes to the consolidated income statement

7. Cost of materials and services

The change in the number of employees in Central Europe is due end of the previous financial year. The workforce in Northern and

The cost of materials and services is made up as follows:

ganisational structure of the Group.

Cost of materials and services TEUR

Revenues 1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

1,392,187

1,282,964

625,830

532,376

2,018,017

1,815,340

Other

Cost of raw materials, consumables and supplies and of purchased merchandise

1/3/2011 -29/2/2012

1,417,629

971,014

83,174

69,966

1,500,803

1,040,980

Cost of purchased services Cost of materials and services

1/3/2010 -28/2/2011

Central Europe

940,840

864,896

Northern Europe

800,762

715,086

Northern Europe

276,415

235,358

2,018,017

8. Personnel expenses

Depreciation, amortisation and impairment are made up as follows:

11,755

6. Other operating income

Expenses for defined benefit plans

1,845

1,779

Other operating income is made up as follows:

Expenses for defined contribution plans Personnel expenses

5,737

5,369

188,682

191,300

Other operating income

Proceeds from disposal of non-current assets Reversals of write-downs (or write-backs) on receivables Income from the reversal of provisions Insurance and other compensation for damages

1/3/2010 -28/2/2011

6,212

8,948

8,939

38,472

50,099

-34,666

-47,106

3,806

1,043

467

13,597

7,062

3,455

8,173

1,032

1,317

Rental and leasing income

1,598

1,708

Other interest and similar expenses mainly consists of accrued

with IAS 36 if the recoverable amount for an asset is lower than

interest on non-current liabilities.

the carrying amount, whereby the recoverable amount is defined as the higher of net realisable value and value in use.

bioethanol activities.

2,167

3,917

Miscellaneous operating income

16,820

17,129

Other operating income

42,477

40,816

10. Other operating expenses

Other operating expenses

1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

Central Europe

1,211

1,357

Northern Europe (including Ireland)

1,521

1,588

548

563

Eastern Europe Average number of employees

3,280

3,508

Research and development expenses Expenses for leasing, rent, land leases and other hire costs Administrative expenses Other taxes

1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

-2,000

Net income/loss from other investments

3,471

1,981

Net income/loss from investments

3,547

-19

Net income/loss from associated companies

In 2011/2012 and in the previous year the average number of

TEUR

Net income/loss from investments is made up as follows:

TEUR

Other operating expenses are made up as follows:

Cost of sales

12. Net income/loss from investments

Net income/loss from investments

nised in net financial income/loss.

Average number of employees

financial instruments not held at fair value through profit and loss.

and intangible assets with finite useful lives are recognised in line

late to Group expenses for defined benefit and defined contribu-

employees in the Group was as follows:

Net interest includes interest income and interest expense from

Impairment losses on items of property, plant and equipment

write-downs on non-current assets for the Nordzucker Groupâ&#x20AC;&#x2122;s

defined benefit obligations relating to pension expenses is recog-

Net interest

Further details can be found in Note 36.

tion pension plans and similar obligations. The interest portion of

Income from the reversal of investment subsidies, grants and other receivables Foreign exchange gains

Depreciation, amortisation and impairment

The impairment losses in the reporting year stem primarily from Expenses for defined benefit and defined contribution plans re-

2,993

5,972

1/3/2010 -28/2/2011

94,865

11,037

3,806

Other interest and similar expenses

1/3/2011 -29/2/2012

106,945

Social security contributions and other social expenses

1,759

TEUR

6,465

172,397

156

2,637

34,948

21,236

170,063

Other interest and similar income

23,552

Personnel expenses

Wages and salaries

1,078

Interest expense on pension provisions (net)

88,400

1/3/2010 -28/2/2011

1,166

Income from securities and loans

Interest and similar expenses Interest expense on bank balances

85,709

1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

epreciation, amortisation D and impairment

Impairment of intangible assets and property, plant and equipment

TEUR

1/3/2011 -29/2/2012

Interest and similar income Interest income on bank balances

Personnel expenses are made up as follows:

Miscellaneous revenues include sales of merchandise, bioethanol

1/3/2011 -29/2/2012

TEUR

Depreciation and amortisation of intangible assets and property, plant and equipment

1,815,340

and other products such as animal feed.

Net interest

9. Depreciation, amortisation and impairmen t

Regions

TEUR

Net interest is made up as follows:

Eastern Europe was reduced in the course of optimising the or-

Revenues are made up as follows:

Sugar revenues from own production

11. Net interest

in particular to the deconsolidation of the HĂźbner Group at the

5. Revenues

TEUR

| 79

| Annual Report Nordzucker 2011/2012

1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

112,888

107,664

3,340

4,006

5,161

9,252

53,965

55,254

3,799

3,860

Foreign currency gains and the foreign currency losses disclosed

Foreign exchange losses

6,467

3,973

under other operating expenses are mainly due to the movement

Miscellaneous expenses

28,612

40,486

of the relevant national currencies against the Euro.

Other operating expenses

214,232

224,495

Additional information on the earnings contributions of financial instruments can be found in Note 36.

13. Other net financial income/expense

payable if the tax rate for the parent company Nordzucker AG of 29.00 per cent (previous year: 29,00per cent) were applied

fects from financing arrangements and net gains/losses on futures

to the consolidated net income under IFRS before taxes and

transactions and derivatives.

minority interests can be reconciled with the income taxes in

14. Income taxes

trade tax, corporation tax, solidarity surcharge and the equiva-

Group tax rate in %

lent foreign income taxes.

Expected tax expense

Income tax expense is made up by origin as follows:

Differences due to different foreign and domestic tax rates Change in Group tax rate

TEUR

45,333

18,553

Non-capitalised deferred tax assets on tax loss carry-forwards

1/3/2010 -28/2/2011

286,288

129,861

29.00

83,024

37,660

-10,649

-3,464

-738

167

12,366

8,423

134,532

3,708

137,203

323

Inventories

3,593

9,631

1,650

8,518

Receivables and other assets

2,438

1,082

748

-379

Pension provisions

4,784

-508

5,948

-960

Other provisions

7,188

-2,569

6,080

-1,586

Liabilities to banks

264

524

Trade payables

Other liabilities

5,056

21,313

3,628

26,124

Leasing Deferred taxes on temporary differences

738

Deferred tax assets on tax loss carry-forwards

Current taxes for prior years

2,835

408

Gross amount

Deferred taxes for prior years

2,222

1,320

Tax loss carry-forwards used

-611

-27

-1,743

-871

3,220

2,652

44,027

15,811

Tax-free income

34,364

Deferred taxes Deferred domestic taxes

Non-deductible operating expenses for tax purposes

-5,988

1,257

Non-offsettable income tax

301

Deferred foreign taxes

-5,375

3,626

Additions/deductions for trade tax

497

435

-11,363

4,883

Other effects

-361

369

77,997

39,247

Tax expense

77,997

39,247

Income taxes

12,067

Other property, plant and equipment

89,360

Current foreign taxes

Intangible assets

Financial investments

IFRS net profit before income taxes

1/3/2010 -28/2/2011

Deferred tax liabilities

Tax reconciliation

dividual countries and deferred taxes. Income taxes consist of

1/3/2011 -29/2/2012

Deferred tax assets

the income statement as follows:

TEUR

Income taxes

Deferred tax liabilities

TEUR

1/3/2011 -29/2/2012

Current domestic taxes include tax expenses from other periods

28/2/2011

Deferred tax assets

Investment property

Income taxes includes taxes on income paid or owed in the in-

29/2/2012

Deferred taxes

The expected income tax expense which would have been

Other net financial income/expense consists largely of price ef-

Current taxes Current domestic taxes

| 81

| Annual Report Nordzucker 2011/2012

201

-84

31,617

176,367

22,462

181,257

2,716

4,163

34,333

176,367

26,625

181,257

Netting

-22,450

-21,242

Carrying amount

11,883

153,917

5,383

160,015

Of the total change in deferred taxes recognised in the consoli-

vate partnerships, netting out only takes place at the level

dated balance sheet as of the reporting date, EUR 11,362,000

of Nordzucker AG for corporation tax purposes. Deferred trade

was recognised in profit or loss and EUR 769,000 in equity with-

taxes are netted out at the level of the individual private partner-

out effect on profit or loss.

ships.

Deferred tax assets and liabilities are netted out for each company

The recognition of deferred taxes resulted in the following re-

or taxable entity. To the extent that deferred taxes relate to pri-

statements of balance sheet items with effect on profit and loss:

of EUR 2,946,000 (previous year: EUR 9,000). Abroad, current tax income from other periods came to EUR 111,000 (previous

The corporation tax rate for stock corporations based in Germany

year: tax expense from other periods of EUR 399,000).

is 15 per cent plus 5.5 per cent solidarity surcharge on the corpo-

Deferred taxes

ration tax liability. Deferred domestic taxes include tax expenses from other periods of EUR 1,891,000 (previous year: EUR 2,166,000). For the foreign

Companies based in Germany are also liable for trade tax at a rate

TEUR

companies there was deferred expense from other periods of

determined by multipliers set by the local council.

Intangible assets Investment property

EUR 331,000 (previous year: tax income from other periods of

1/3/2011 â&#x20AC;&#x201C; 29/2/2012

Deferred tax assets

1/3/2010 â&#x20AC;&#x201C; 28/2/2011

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

-39

-698

103

-1

1,046

-8,123

2,466

1,901

210

608

The effects of differences between foreign tax rates and the

Other property, plant and equipment

Group tax rate for Nordzucker AG (29.00 per cent) are shown in

Financial investments

As of the balance sheet date the reimbursement of a corporation

the reconciliation statement under tax rate differences between

Inventories

-2,399

1,655

1,886

-1,505

tax credit gave rise to a non-current tax receivable of EUR

Germany and abroad.

Receivables and other assets

-1,719

1,924

1,603

-1,233

1,089

537

333

-206

-1,223

-865

153

-310

509

270

-1,910

EUR 846,000).

Pension provisions

1,153,000 (previous year: EUR 1,318,000) for Nordzucker AG. Deferred tax assets and liabilities result from the capitalisation

Other provisions

203,000) also exists towards the German tax authorities resulting

of tax loss carry-forwards and primarily from temporary valuation

Liabilities to banks

from the obligation to pay taxes on the remaining EK 02 capital

differences between the IFRS financial statements and the financial

Trade payables

-147

-3

reserves. The distribution of potential dividends to the sharehold-

statements of the individual Group companies for local tax pur-

Other liabilities

-1,470

-4,413

-1,757

-4,955

ers of Nordzucker does not have any income tax consequences

poses for the following items:

Leasing

A non-current tax liability of EUR 194,000 (previous year: EUR

at the level of Nordzucker.

Deferred taxes on temporary differences Deferred tax assets on tax loss carry-forwards Total

201

-84

-4,124

-8,687

3,414

-7,050

-8,687

11,933

1,448 -2,676

8,519 -7,050

| Annual Report Nordzucker 2011/2012

The deferred tax liabilities include EUR 366,000 (previous year: EUR 1,135,000) for temporary differences from derivatives in cash flow hedges. As these items are not recognised in profit and loss,

Notes to the consolidated

17. Impairment test for intangible assets and items of property, plant and equipment

balance sheet

the corresponding deferred taxes are also recognised directly in

| 83

The fair value of the property is EUR 10,991,000 as of 29 February 2012 (previous year: EUR 13,187,000). Fair value was determined on the basis of internal estimates of market values using comparable properties.

other comprehensive income.

15. Intangible assets

Impairment tests for intangible assets and items of property, plant and equipment are mainly performed on the basis of the values in

No acquisition costs were capitalised retroactively in the financial

With regard to the surplus of deferred tax assets over deferred tax

Changes in the individual items of intangible assets are shown in the

use for cash-generating units. The cash-generating units have been

year 2011/2012 or in the previous year.

liabilities in the balance sheet and the capitalised tax loss carry-

statement of changes in non-current assets.

determined according to the business activities of the Nordzucker

forwards at the level of individual Group companies, the value

Group and taking regional aspects into account.

of the deferred tax assets is considered to be sufficiently certain,

With the exception of goodwill there were no intangible assets with

based on the current earnings situation and/or business planning.

an indefinite useful life in the reporting period. Goodwill of EUR 89

An impairment test was carried out for the goodwill of the Nordic

million comes from the acquisition of the Nordic Sugar Group.

Sugar Group recognised in the consolidated balance sheet (cal-

There were no significant changes in the Nordzucker Group’s

culation of value in use). The cash flows for this cash-generating

financial investments in the reporting period.

Deferred tax assets of EUR 2,716,000 were recognised for domes-

19. Financial investments

tic trade tax loss carry-forwards of EUR 20,517,000 (previous year:

In the financial year 2011/2012 intangible assets purchased for EUR

unit were calculated for the next five years based on financial

EUR 24,792,000). Under current legislation tax losses in Germany

4,252,000 (previous year: EUR 6,110,000) were still in use, although

forecasts. The pre-tax interest rate used to discount the cash flows

19.1. Companies accounted for under the equity method

can be carried forward indefinitely.

they had already been fully amortised.

for this cash-generating unit was around 8.74 per cent (previous

In the financial year associated companies and joint ventures

year: 9.63 per cent). A growth rate of 0 per cent (previous year:

accounted for under the equity method reported a total net prof-

Deferred tax assets of EUR 0 (previous year: EUR 882,000) were

0 per cent) was assumed for the long-term earnings component

it of EUR 152,000 (previous year: EUR -2,467,000), revenues of

recognised for foreign tax loss carry-forwards of EUR 0 (previous

of the discounted cash flow calculation. No impairment charges

EUR 0 (previous year: EUR 289,000), assets of EUR 14,547,000

were necessary for this goodwill.

(previous year: EUR 19,309,000) and liabilities of EUR 9,314,000

year: EUR 4,641,000).

16. Property, plant and equipment

(previous year: EUR 12,097,000) in their financial statements.

We refer to the statement of changes in non-current assets for In the financial year no deferred tax assets were recognised for

the Nordzucker Group for changes in property, plant and

In view of the rising cost of raw materials an impairment test

foreign tax loss carry-forwards of EUR 3,479,000 (previous year:

equipment.

(measurement of the value in use) was performed on the assets

The share of profit/loss from associated companies attributable to

and liabilities assigned to fuel 21 in the reporting year. The cash

the Nordzucker Group in the reporting period was EUR 76,000 (previous year: EUR -1,234,000).

EUR 4,505,000) and domestic trade tax loss carry-forwards of EUR 18,269,000 (previous year: EUR 16,332,000) as no positive taxa-

Assets which fulfil the criteria of IAS 17 for a finance lease are

flows for this cash-generating unit were calculated for the next

ble income is expected in the near future. Furthermore, no de-

mainly a storage reservoir in Stöcken and various lease agree-

five years based on financial forecasts. The pre-tax interest rate

ferred tax assets were recognised for tax loss carry-forwards of

ments for IT equipment.

used to discount the cash flows for this cash-generating unit was

In applying the equity method, losses from an associated compa-

8.41 per cent. A growth rate of 0 per cent (previous year: 0 per

ny that exceed the carrying amount of the investment or other

EUR 297,000 (previous year: EUR 297,000) that arose before the consolidated tax group was formed, as these may not be used

As of 29 February 2012, items of property, plant and equipment

cent) was assumed for the long-term earnings component of the

non-current receivables relating to the financing of the associated

for the duration of the consolidated tax group.

with acquisition and/or production costs of EUR 123,737,000

discounted cash flow calculation. An impairment loss of EUR

company are not recognised as there is no requirement to invest

(previous year: EUR 135,434,000) were in use although they

20,000,000 was recognised on the basis of these financial fore-

further equity.

had already been fully depreciated.

casts. The impairment loss was attributed to items of property,

No deferred taxes were recognised for retained earnings and exchange rate differences of subsidiaries and the resulting tempo-

plant and equipment in proportion to their carrying amounts.

The Nordzucker Group received no dividends in the reporting

rary differences between the net assets of the subsidiaries in the

In the reporting period expenses of EUR 1,816,000 (previous

IFRS consolidated financial statements and the carrying amount of

year: EUR 3,132,000) were capitalised for internally generated

In addition to the impairment tests at the level of the reporting

the interests in the subsidiaries for tax purposes. As of the balance

items of property, plant and equipment.

units, individual items of property, plant and equipment were

19.2. Other financial investments

year.

sheet date the temporary differences for which deferred tax liabil-

written down to their recoverable amount, e.g. in the case of

Available-for-sale financial instruments included in other non-

ities could be recognised came to EUR 170,223,000 (previous

In the financial year 2011/2012 the Nordzucker Group received

factory closures and written back if the reasons for the impair-

current financial assets are carried at fair value at the reporting

year: EUR 108,545,000). If deferred taxes were to be recognised

compensation of EUR 1,522,000 (previous year: EUR 1,483,000)

ment ceased to exist. In the reporting year EUR 1,537,000

date or at amortised cost if fair value cannot be reliably deter-

for these temporary differences, only 5 per cent of the gain on

for the loss or impairment of items of property, plant and equip-

(previous year: EUR 405,000) was written back.

mined by other valuation methods or because there is no active

disposal or of the dividends, plus any foreign withholding tax,

ment from third parties, e.g. insurance companies.

market.

would be relevant for their measurement under German tax law. Net carrying amounts of capitalised leased items are as follows: Finance-Leases TEUR

Technical plant and machinery Other plant, operating and office equipment Finance leases

29/2/2012

28/2/2011

711

1,986

711

2,020

18. Investment property

The shares in Tereos TTD a.s. are disclosed here, despite a stake

Investment property in the Nordzucker Group mainly consists of

the Group to exercise significant influence over its operating and

flats and land not required for operating purposes.

financial policy.

In the financial year 2011/2012 rental income of EUR 74,000 (pre-

The Nordzucker Group received dividends of EUR 3,763,000 in

vious year: EUR 117,000) was generated, offset by expenses of

the reporting year.

EUR 228,000 (previous year: EUR 279,000). There were also expenses of EUR 11,000 (previous year: EUR 9,000) for which there was no corresponding rental income.

of 35.38 per cent, because the company’s articles do not permit

| 85

| Annual Report Nordzucker 2011/2012

Consolidated assets schedule for the previous year (2010/2011) Nordzucker AG, Braunschweig, Germany Cost or fair value

Accumulated depreciation, amortisation and impairment

As of 1/3/2010

Currency effects

Additions

Reclassifications

Disposals

As of 28/2/2011

As of 1/3/2010

TEUR

142,270

2,656

3,204

987

147,182

44,170

Carrying amounts

Impairment

Reversals of impairment

Reclassifications

Disposals

As of 28/2/2011

As of 28/2/2010

TEUR

268

13,447

737

57,184

89,998

98,100

Currency Depreciation, effects amortisation

Intangible assets Purchased rights and licences Internally produced software Goodwill Advance payments made

4,446

4,447

3,815

164

3,912

535

631

129,144

-115

39,957

89,072

39,993

39,957

89,034

89,151

340

-16

330

275,866

2,541

3,545

40,944

241,031

87,978

271

13,611

40,694

61,134

179,897

187,888

Property, plant and equipment Land and buildings Technical plant and machinery Other plant, operating and office equipment Advance payments made and plant under construction

Investment property

472,471

6,231

5,147

9,506

12,297

481,058

229,701

407

12,174

3,064

258

-2,027

11,413

231,648

249,410

242,770

1,490,118

13,717

19,732

17,863

49,814

1,491,616

832,216

2,098

58,248

3,334

-210

46,585

849,084

642,532

657,902

47,174

344

2,630

296

4,645

45,799

35,251

146

4,329

197

3,793

36,152

9,647

11,923

9,487

25,092

-30,003

4,614

147

4,467

9,340

2,019,250

20,330

52,601

-2,338

66,756

2,023,087

1,097,315

2,651

74,751

6,420

275

-2,040

61,791

1,117,031

906,056

921,935

12,681

2,315

430

14,568

4,066

2,027

6,052

8,516

8,615

2,307,797

22,873

56,146

108,130

2,278,686

1,189,359

2,920

88,396

6,464

405

102,517

1,184,217

1,094,469

1,118,438

| 87

| Annual Report Nordzucker 2011/2012

Consolidated assets schedule for the previous year 2011/2012 Nordzucker AG, Braunschweig, Germany Cost or fair value

Accumulated depreciation, amortisation and impairment

As of 1/3/2011

Currency effects

Additions

Reclassifications

Disposals

As of 29/2/2012

As of 1/3/2011

TEUR

147,182

-431

7,533

358

1,775

152,867

57,184

Carrying amounts

Impairment

Reversals of impairment

Reclassifications

Disposals

As of 29/2/2012

As of 28/2/2011

TEUR

-232

13,174

358

250

1,666

68,568

84,299

89,998

Currency Depreciation, effects amortisation

Intangible assets Purchased rights and licences Internally produced software Goodwill Advance payments made

4,447

-1

4,446

3,912

114

3,944

502

535

89,072

216

89,288

-1

89,251

89,034

330

-324

330

241,031

-214

7,594

1,830

246,615

61,134

-233

13,288

358

332

1,666

72,549

174,066

179,897

Property, plant and equipment Land and buildings Technical plant and machinery Other plant, operating and office equipment Advance payments made and plant under construction

Investment property

481,058

-1,584

1,195

-1,198

18,069

461,402

231,648

421

11,822

1,675

504

-1,430

15,737

227,895

233,507

249,410

1,491,616

-1,254

19,410

22,983

17,831

1,514,924

849,084

757

57,658

19,092

-712

16,529

909,274

605,650

642,532

45,799

-307

1,699

2,272

3,108

46,355

36,152

-485

2,904

991

2,905

36,713

9,642

9,647

4,614

-204

34,104

-26,026

12,408

147

148

12,260

4,467

2,023,087

-3,349

56,408

-1,969

39,088

2,035,089

1,117,031

694

72,384

20,823

580

-1,151

35,171

1,174,030

861,059

906,056

14,568

1,986

4,075

12,481

6,052

-1

624

1,151

974

5,696

6,785

8,516

2,278,686

-3,563

64,004

44,993

2,294,185

1,184,217

460

85,709

21,236

1,536

37,811

1,252,275

1,041,910

1,094,469

25. Assets held for sale

26.2. Capital reserves

20. Inventories

The receivables from related parties remaining after consolidation

Inventories are made up as follows:

the default risks and the term structure for this category can be

Assets classified in line with IFRS 5 as held for sale relate to the

found in Note 37.

following operations:

The capital reserves have been formed from share premiums

are classified as financial assets and other receivables. Details on

Inventories TEUR

29/2/2012

28/2/2011

700

ing on acquisitions made by the Group before 1 March 2004

Land held for sale

1,867

126

has been offset against reserves. In the IFRS opening balance

Assets held for sale

1,867

826

sheet the balancing item from the conversion of financial state-

43,373

17,981

Seed operations

810,414

533,205

898,238

592,022

Financial assets are made up as follows: Financial assets TEUR

Unfinished goods mainly consist of the thick juice required to pro-

Claims for damages

duce bioethanol.

Positive fair value of derivatives

Inventories of EUR 1,258,000 (previous year: EUR 1,787,000) are carried at net realisable value. Write-downs on inventories

Financial assets

cluded in the consolidated financial statements. Goodwill aris-

ments prepared in foreign currencies was offset against retained 29/2/2012

28/2/2011

711

4,206

Assets of the seed business designated as held for sale comprise

7,695

7,331

the entire business operations, including production facilities, in-

Retained earnings include statutory reserves of 10 per cent of

ventories, receivables and other assets attributed to the activities

subscribed capital, amounting to EUR 12,365,000 which, in line

4,776

9,546

in question, which were sold in the reporting year.

with statutory regulations (Sec. 150 AktG [German Stock Corpo-

13,192

21,093

Available-for-sale securities Other financial assets

or financial years and the current period by the companies in29/2/2012

40,836

44,451

Retained earnings are made up of the net income earned in pri-

Assets held for sale

23. Financial assets

TEUR

Work in progress Inventories

paid in the course of capital increases by Nordzucker AG. 26.3. Retained earnings

Raw materials, consumables and supplies Finished goods and merchandise

| 89

| Annual Report Nordzucker 2011/2012

earnings.

ration Act]), are not available for distribution to shareholders.

amounted to EUR 2,306,000 (previous year: EUR 4,299,000). Of total financial assets, EUR 7,000 (previous year: EUR 32,000)

21. Trade receivables

are non-current.

Trade receivables are made up as follows:

With the exception of positive fair values of derivatives and

26. Shareholders’ equity

TEUR

Gross trade receivables Write-downs on trade receivables Trade receivables from external companies

29/2/2012

28/2/2011

197,963

159,474

3,540

3,577

194,423

155,897

Other comprehensive income is made up as follows:

Changes in Group shareholders’ equity are shown in the statement of changes in shareholders’ equity.

Trade receivables

26.4. Other comprehensive income

Other comprehensive income 29/2/2012

28/2/2011

Fair value adjustment to derivatives in cash flow hedges

246

2,064

dividend yield for the shareholders on the other. As of 29 February

Currency differences from the consolidation of foreign subsidiaries

51,436

52,920

2012 the equity ratio came to 44 per cent (previous year: 41 per

Other comprehensive income

51,682

54,984

available-for-sale securities, the financial assets have been classi-

Capital management at Nordzucker Group is founded on a strong

fied in the financial assets and other receivables category of finan-

equity base and a sustainable dividend policy in order to secure

cial instruments. Details of the default risks and term structure for

current operations on the one hand and to enable a reasonable

this category can be found in Note 37. Current financial assets are included in the financial investments

cent). The Executive Board will put a proposal at the Annual Gen-

class, which is part of the available-for-sale category, and are all

eral Meeting to distribute a dividend of EUR 1.00 per share (previ-

held at fair value.

ous year: EUR 0.46 per share).

TEUR

As of 28 February 2010 the reserve for fair value adjustments to derivatives in cash flow hedges came to EUR -1,161,000 and

Information on the default risks and the term structure of trade

Nordzucker AG’s Articles of Association do not require any partic-

exchange rate differences from the consolidation of foreign sub-

receivables is given in Note 37. Write-downs on trade receivables

24. Other assets

ular amount of equity. The Executive Board manages the Group

sidiaries recognised in equity to EUR 20,682,000.

Other assets are made up as follows:

market-oriented targets for the company which are measured in

26.5. Non-controlling interests

terms of specific financial indicators. The main financial indicators

Minority interests exist primarily in the following companies:

in the financial year amounted to EUR 905,000 (previous year: EUR 304,000).

with the aim of generating a profit. It does this by means of capital

for the Group are total profitability, return on sales, equity

Other assets

22. Receivables from related parties

TEUR

Receivables from other taxes

Receivables from related parties are made up as follows: Receivables from related parties TEUR

29/2/2012

28/2/2011

31,510

23,196

Miscellaneous other assets

31,830

14,065

Other assets

63,340

37,261

102

Receivables from other related parties

131

Receivables from related parties

233

26.1. Subscribed capital As of 29 February 2012, subscribed capital (ordinary share capital) remained unchanged at EUR 123,651,328.00 and was divided

28/2/2011

Receivables from associated companies and joint ventures

ratio and return on equity, for which targets have been set.

into 48,301,300 registered common shares. Of total other assets, EUR 1,369,000 (previous year: EUR 1,530,000) are non-current.

The ordinary share capital is fully paid in and, as in the previous year, has a nominal share of subscribed capital of EUR 2.56 per share. As of the reporting date, Nordzucker Holding AG, Braunschweig, Germany, had provided evidence that it held more than 50 per cent of the shares, with 76.23 per cent.

Non-controlling interests 29/2/2012

28/2/2011

Sucros OY

26,924

27,720

AB Nordic Sugar Kèdainiai

14,278

12,107

1,708

1,308

Cukrownia Melno S.A., i.L.

211

218

Other companies

139

144

43,260

41,497

TEUR

Považský cukor a.s.

Non-controlling interests

| 91

| Annual Report Nordzucker 2011/2012

27. Pension obligations

28. Other provisions

Provisions for pensions and similar obligations disclosed in the balance sheet changed as follows:

Provisions for pension obligations are made for accrued and current benefits of both currently active and former members of staff

Net pension obligations

of Nordzucker Group and of their surviving dependents.

TEUR

Benefit obligations are structured in line with the legal, fiscal and economic conditions in each country.

Change in present value of pension entitlements Present value of pension entitlements at the beginning of the financial year

Other provisions are made up as follows: 29/2/2012

28/2/2011

Other provisions TEUR

179,250

177,181

As of 1/3/2011

Exchange rate effects

Addition

Utilisation

Reversal

As of 29/2/2012

Recultivation obligations

7,912

-49

348

1,346

250

6,615

Expenses for anniversaries

2,173

-23

249

146

2,253

5,201

1,297

620

5,878 11,113

The Group has both defined contribution plans and defined benefit

Service cost in the financial year

2,058

1,917

Partial early retirement

plans. Pension commitments are based on collective agreements

Interest expense for pensions in the financial year

8,832

9,197

Profit sharing, bonuses and other gratuities

8,904

-32

11,140

7,997

902

and in a few cases on individual agreements with fixed benefit

Early retirement, severance pay

7,328

-61

530

2,856

302

4,639

amounts. The defined benefit plans have commitments both

Pension payments

-10,885

-11,220

Miscellaneous other provisions

40,750

-19

59,894

27,506

12,143

60,976

covered by provisions and funded by plan assets.

Transfers of pension obligations to other companies

-71

Other provisions

72,268

-184

73,458

40,471

13,597

91,474

Pension provisions are determined in accordance with IAS 19 on

Effects of curtailments and cancellations of pension plans

-2

-9

8,751

2,927

the basis of actuarial assumptions. The following weighted variables were used in the financial year 2011/2012 and the previous year:

Actuarial gain (-)/loss (+) in the financial year Effects of changes in exchange rates

Parameters of pension obligations

Present value of pension entitlements at the end of the financial year

1/3/2011 -29/2/2012

1/3/2010 -28/2/2011

Discount rate (%)

4.75

5.10

Change in plan assets

Salary increase (%)

2.50

2.00

Pension increase (%)

1.50

Present value of plan assets for funded pension obligations at the beginning of the financial year Contributions to pension funds/ plan assets Income from plan assets

For domestic companies in the Nordzucker Group the assumptions for life expectancy are taken from the actuarial tables 2005 G by Dr Klaus Heubeck.

Return on plan assets Present value of plan assets for funded pension obligations at the end of the financial year

Expenses of EUR 7,818,000 (previous year: EUR 8,121,000) were

Net pension obligations

incurred in 2011/2012 for defined benefit plans, which are made

Unrealised actuarial gains (+)/ losses (-)

up as follows:

Pension provisions

143

-743

Of total other provisions, EUR 23,415,000 (previous year:

Miscellaneous other provisions were made for bonuses and

EUR 19,218,000) are non-current.

commissions, onerous contracts, outstanding invoices and other anticipated expenses.

188,076

179,250

Provisions for recultivation obligations include the forecast expenses for the demolition of buildings and recultivation of land used for operations as well as demolition obligations at former production sites.

38,223

39,335

152

377

-3,682

-3,713

992

2,224

35,685

38,223

152,391

141,027

-12,383

-1,633

140,008

139,394

29. Financial liabilities Financial liabilities are made up as follows:

The provision for early retirement and severance payments covers the Groupâ&#x20AC;&#x2122;s forecast obligations under existing collective early retirement agreements as part of a redundancy settlement in

Financial liabilities

connection with changes to the sugar market regime that will

TEUR

come into effect in subsequent years. This item also includes

Liabilities to banks

obligations under other individual agreements.

Liabilities from finance leases Financial liabilities

29/2/2012

28/2/2011

255,577

362,890

748

882

256,325

363,772

Expenses for pensions TEUR Service cost Effects of curtailments and cancellations of pension plans Amortisation of unrealised actuarial gains (-) and losses (+) Personnel expenses Interest expense for provisions for pension obligations in the financial year

29/2/2012

28/2/2011

2,058

1,917

-2

-9

The forecast return on pension plan assets is EUR 2,861,000 (pre-

As of 29 February 2012 liabilities to banks have the following

vious year: EUR 2,984,000); the variation based on past experi-

term structure:

ence for the reporting year was EUR -1,868,000 (previous year: EUR -760,000).

-209

1,846

1,908

8,832

9,197

Return on plan assets

-2,861

-2,984

Interest expense

5,971

6,213

Expenses for pensions

7,818

8,121

As of 28 February 2010 the present value of pension obligations

Liabilities to banks

TEUR

was EUR 177,181,000 (28 February 2009: EUR 137,657,000; 29

29/2/2012

February 2008: EUR 156,037,000), the present value of plan as-

28/2/2011

Remaining term of up to one year

Remaining term Remaining term of one to five years of more than five years

Total

167,741

81,008

6,828

255,577

87,738

268,804

6,348

362,890

sets was EUR 39,335,000 (28 February 2009: EUR 41,667,000; 29 February 2008: EUR 43,438,000), the unrealised actuarial gains (+) and losses (-) amounted to EUR -2,542,000 (as of 28 February

Interest on bank loans partly depends on certain financial indicators,

also been confirmed for Nordzucker Group companies in the

2009: EUR +10,942,000; 29 February 2008: EUR -7,055,000) and

such as the equity ratio and EBITDA in relation to debt and interest

Âfinancial year.

the pension provisions to EUR 135,304,000 (28 February 2009:

expense. Currently unused non-current and current lines of credit

EUR 106,932,000; 29 February 2008: EUR 105,544,000). No unre-

totalling EUR 409,957,000 (previous year: EUR 502,732,000) have

alised gains or losses were reported on plan assets in this period.

In the financial year Nordzucker did not pledge any financial assets within the meaning of IFRS 7.14 as collateral for financial liabilities.

| Annual Report Nordzucker 2011/2012

30. Trade payables

Of total other financial liabilities, EUR 1,181,000 (previous year: EUR 1,447,000) are non-current.

Trade payables are made up as follows:

Notes to the consolidated cash flow statement

29/2/2012

28/2/2011

Liabilities towards sugar beet suppliers

326,752

136,615

Other trade payables

128,370

78,571

Trade payables

455,122

215,186

TEUR

Nordic Sugar Group and were settled in March 2011.

34. Components of cash and cash equivalents

With the exception of derivatives, the other financial liabilities are

The components of cash and cash equivalents are the same as in

classified as other financial liabilities and liabilities towards related

the balance sheet.

measurement categories defined in IAS 39 and listed under Note 3.8 – results from changes in fair value, write-downs, write-backs other earnings components from financial instruments not held at fair value through profit and loss. Net interest includes interest income of EUR 1,826,000 (previous year: EUR 2,302,000) and interest expense of EUR 30,289,000

parties. The negative fair values of derivatives are carried in the derivatives class of financial instruments.

Net income from financial instruments – classified under the

and disposals. Also included are interest income and expense and

The purchase price liabilities resulted from the acquisition of the Trade payables

| 93

No cash or cash equivalents disclosed in the consolidated cash

(previous year: EUR 41,468,000) from financial instruments not

flow statement was used for bank guarantees or escrow payments

measured at fair value through profit and loss.

for warranties. In the reporting period there was no interest income from im-

33. Other liabilities

31. Liabilities towards related parties

paired financial assets.

Other liabilities are made up as follows:

35. Non-cash transactions

Liabilities towards related parties are made up as follows:

TEUR

No significant non-cash transactions took place for financing and

Other liabilities

Liabilities towards related parties 29/2/2012

Liabilities towards associated companies and joint ventures

28/2/2011

5,500

7,223

Liabilities towards other related parties

11,498

10,590

Liabilities towards related parties

16,998

17,813

TEUR

Outstanding social security contributions Investment grants, subsidies and other support payments Deferrals Advance payments received for orders Miscellaneous other liabilities

EUR 5,500,000 of the item (previous year: EUR 5,500,000) is noncurrent.

Other liabilities

investing purposes in the reporting year and the previous year. 29/2/2012

28/2/2011

19,700

20,357

16,897

17,810

5,452

8,800

222

305

29,170

30,815

71,441

78,087

Liabilities towards related parties have been classified under other

Of total other liabilities, EUR 20,985,000 (previous year: EUR

financial liabilities and liabilities towards related parties.

23,762,000) are non-current.

37. Risk management 37.1. General remarks Nordzucker has a comprehensive system in place throughout

Other disclosures

the company for the early identification and permanent monitoring of risk as well as for risk measurement and limitation. The integrated risk management system is used to identify risks and

36. Other disclosures on financial instruments

the appropriate steps fully and to include them in operational

Financial instruments are defined as contracts that give rise to a

permanently as part of risk management, whereby appropriate

financial asset for one entity and a financial liability or equity in-

steps are developed and implemented. Operating and strategic

strument for the counterparty.

decision-making always takes risk aspects into account. The

and strategic planning. Potential risks such as default and credit risks, liquidity, exchange rate and interest rate risks are assessed

Group-wide reporting and controlling system ensures that all In this context, financial assets include cash and cash equivalents,

the responsible decision makers are continually informed.

contractual rights to receive cash or other financial assets such Liabilities from investment grants, subsidies and other support

as trade receivables, derivative financial instruments and equity

By the nature of its business Nordzucker Group is exposed to de-

32. Other financial liabilities

payments derive from public subsidies in connection with the

instruments of another company. Financial liabilities include con-

fault and credit risks, liquidity and exchange rate risks and interest

purchase or production of subsidised property, plant and equip-

tractual obligations to deliver cash or other financial assets. These

rate risks. These are controlled by means of suitable risk manage-

Other financial liabilities are made up as follows:

ment. They are reversed through profit and loss over the useful

include borrowing, current loans, trade payables and derivatives.

ment processes. Nordzucker Group uses derivative financial instruments to hedge against interest and exchange rate fluctua-

life of the subsidised assets. Other financial liabilities TEUR

29/2/2012

28/2/2011

73,614

Negative fair value of derivatives

13,002

9,402

Miscellaneous financial liabilities

4,079

5,888

Purchase price liabilities

Other financial liabilities

17,081

88,904

The following presentation provides information about the carry-

tions and to hedge costs of raw materials. The use of these deriv-

Miscellaneous other liabilities mainly consist of liabilities towards

ing amounts of the individual measurement categories. It also

atives is governed by Group guidelines and restricted to the

staff for outstanding wages and salaries as well as unused holiday

shows the fair value for each class of financial instrument. The

hedging of existing transactions or those which are sufficiently

entitlement.

presentation enables a comparison between carrying amounts

likely to take place. The guidelines define the individuals respon-

and fair values.

sible, the limits and reporting and stipulate a strict separation between trading and clearing. This transparent and functional man-

For cash and other current primary financial instruments, i.e. trade

ner of organising risk management processes applies to all types

receivables, financial assets, derivative financial instruments, and

of risk.

other receivables and liabilities, the fair value and the carrying amount on each balance sheet date are the same.

37.2. Default risk Credit or default risk is the risk that business partners do not

Nordzucker Group does not make use of the fair value option. As

meet their contractual payment obligations, causing Nordzucker

of the balance sheet date there are also no financial instruments

Group to suffer a loss as a result. As part of credit risk manage-

in the category “held to maturity”.

ment, business partners are subject to a credit scoring in order to reduce credit risk. Identifiable default risks are accounted for

| 95

| Annual Report Nordzucker 2011/2012

Term to maturity

by write-downs, whereby the risk of default on receivables is in

In the reporting period there were no financial assets which

part limited by trade credit insurance.

would have become overdue and/or impaired had the contrac tual terms not been renegotiated.

Nordzucker Group does not see itself as exposed to a significant credit risk from any individual counterparty. As the customer

For the portion of the receivables portfolio which has neither

structure for the Nordzucker Group is diverse there is only a limit-

been written down nor is overdue there is no indication as of the

ed concentration of credit risk. There is therefore no special mon-

reporting date that Nordzucker Group’s debtors will not fulfil

itoring and management on the basis of specific risk categories to

their payment obligations.

avoid a concentration of risk.

As of 29/2/2012

Carrying amount

Gross inflow/ outflow

Term to maturity up to one year

Term to maturity from one to 5 years

Term to maturity more than 5 years

Financial liabilities

256,325

-265,666

172,998

84,871

7,797

Trade payables

455,122

-455,122

455,122

TEUR

Other financial liabilities and liabilities towards related parties

21,077

-21,077

15,577

5,500

Derivative financial liabilities

13,002

-13,002

13,002

Derivative financial assets

The following table shows total carrying amounts, the carrying

Total

7,695

753,221

-747,172

664,394

90,371

7,797

The maximum default risk is equal to the carrying amounts for the

amounts for financial assets which are neither overdue nor im-

individual categories of financial assets, less all write-downs, and

paired and the term structure of financial assets which are not

As of 28/2/2011

irrespective of any agreements to reduce risk. (See overview of

impaired but overdue, for the relevant classes of financial instru-

Financial liabilities

363,772

-386,051

88,467

289,143

8,441

classes and categories of financial instruments.)

ments:

Trade payables

215,186

-215,186

215,186

97,315

-97,315

91,815

5,500

Derivative financial liabilities

9,402

-9,402

9,402

Derivative financial assets

7,361

4,893

2,468

693,036

-700,593

409,763

297,111

8,441

Not written-down as of the reporting date and overdue as follows:

Term structure of financial assets

TEUR

As of 29/2/2012 Financial investments

Total carrying amount

Neither writtendown nor overdue as of the reporting date

20,439

Less than Between 31 30 days and 60 days 0

Between Between 61 and 90 91 and 180 days days 0

Other financial liabilities and liabilities towards related parties

Total More than 181 days

The term to maturity analysis includes all instruments held for

Foreign currency positions in Danish Crowns, Lithuanian Litas

which payments have been contractually agreed as of the report-

and Estonian Crowns are only exposed to an insignificant ex-

ing date. Forecast payments on expected future liabilities are not

change rate risk as these states are part of the European Union’s

included. Floating-rate interest payments on financial instruments

exchange rate mechanism. The exchange rate risk from foreign

are determined using the last interest rates set before the balance

currency positions in US Dollars is also insignificant as the

As of 28/2/2011

sheet date. Financial liabilities repayable at any time are catego-

amounts are minor.

Financial investments

20,486

rised according to their estimated repayment dates.

Financial assets and other receivables

13,780

37.4. Market risks

of actual currency risks using the natural hedge approach and

Trade receivables

155,961

130,450

13,464

1,472

7,617

624

2,334

Market risks arise from potential changes in risk factors, which

by using derivatives, especially for the Swedish, Norwegian and

Total

190,227

164,716

13,464

1,472

7,617

624

2,334

lead to fluctuations in market values or alterations in future cash

Eastern European areas, so that the remaining net risk exposure is

flows. The relevant risk factors for the Nordzucker Group are ex-

insignificant.

Financial assets and other receivables Trade receivables Total

5,721

194,422

157,703

23,524

830

1,957

9,866

542

220,582

183,863

23,524

830

1,957

9,866*

542

Furthermore, the Nordzucker Group hedges a large proportion

*) The receivables are offset by corresponding liabilities, which were applied after the reporting date.

change rate and interest rate fluctuations. b. Interest rate risk a. Exchange rate risk

Due to its borrowing activities Nordzucker Group is exposed to

Due to its business operations in different countries which are

interest rate risk. Financing is arranged in various currency areas,

not part of the Eurozone, Nordzucker Group is exposed to an

although the relevant currency is the Euro. Interest rate risks

exchange rate risk.

from financing activities denominated in Hungarian Forints,

The total carrying amount of financial instruments in the classes

37.3. Liquidity risk

financial investments, financial assets, and other receivables and

Liquidity risk is the risk that the company cannot meet its pay-

trade receivables before impairment is EUR 224,122,000 (previ-

ment obligations at the contractually agreed time. To ensure

IFRS 7 requires the disclosure of a sensitivity analysis to illustrate

Zloty or Danish Crowns are insignificant as the amounts in-

ous year: EUR 193,804,000). Write-downs of EUR 3,540,000

the Nordzucker Group’s liquidity, the liquidity needs are moni-

the dimensions of exchange rate risks. A sensitivity analysis shows

volved are minor.

(previous year: EUR 3,577,000) were made.

tored and planned centrally. Sufficient cash is held to be able

the effects which changes in given exchange rates would have on

to meet all obligations when they are due. Current lines of

profit and loss and equity for Nordzucker Group as of the report-

As of the reporting date Group companies hold a total of EUR

In the current and previous reporting period Nordzucker Group

credit, which can be drawn down as needed, provide addition-

ing date. The effects are determined by applying a hypothetical

256.3 million (previous year: EUR 437.7 million) in interest-bear-

has neither pledged nor sold collateral within the meaning of

al liquidity.

change of 10 per cent in the exchange rates to the amount of the

ing or interest rate-sensitive instruments. Floating rate instru-

relevant items in foreign currencies (the net risk position in the

ments account for EUR 244.6 million (previous year: EUR 341.2

The following table shows contractually agreed (undiscounted)

foreign currency) as of the reporting date. It is assumed that the

million) and fixed rate instruments for EUR 11.7 million (previous

interest and capital repayments for the primary financial liabili-

exposure at year-end is representative of the whole year.

year: EUR 96.5 million).

IFRS 7.15.

Swedish Crowns, Norwegian Crowns, Lithuanian Litas, Polish

ties and for derivative financial instruments. The net risk position is adjusted for planned transactions within the next twelve months and for existing hedging instruments (even if no hedge accounting takes place in accordance with IAS 39).

| 97

| Annual Report Nordzucker 2011/2012

Overview by category and by class of financial instruments for the previous year (2010/2011) Nordzucker AG, Braunschweig, Germany

Assets Valuation

Total 28/2/2011

Valuation category

Amortised cost

Cash & cash equivalents/ cash reserve

Loans and receivables

Fair Value Available for sale financial assets (AFS)

Held for trading (FVTPL-HFT)

Derivatives in hedging relationships under IAS 39

TEUR

At cost

Financial investments

20,476

133

20,343

Financial assets and other receivables

13,780

155,961

7,361

50,289

240,506

7,371

50,289

169,874

20,343

7,361

Trade receivables Derivatives Cash and cash equivalents Total

Fair value

Nominal value

At cost

Fair value

At cost

Fair value

At cost

Fair value

At cost

Fair value

Equity and liabilities Valuation

Financial liabilities valued at amortised cost

Valuation category

TEUR

Amortised cost

Total 28/2/2011

At cost

Fair value

At cost

Fair value

Fair Value Derivatives in hedging relationships under IAS 39

At cost

Fair value

Held for trading (FVTPL-HFT)

At cost

Fair value

Fair value option (FVTPL-FVO)

At cost

Fair value

Financial liabilities

363,772

Trade payables

215,186

97,315

9,402

676,273

9,402

676,273

9,402

Other financial liabilities and liabilities towards related parties Derivatives Total

At cost

Fair value

| 99

| Annual Report Nordzucker 2011/2012

Overview by category and by class of financial instruments for the financial year 2011/2012 Nordzucker AG, Braunschweig, Germany

Assets Valuation

Total 29/2/2012

Valuation category

Amortised cost

Cash & cash equivalents/ cash reserve

Loans and receivables

Fair Value Available for sale financial assets (AFS)

Held for trading (FVTPL-HFT)

Derivatives in hedging relationships under IAS 39

TEUR

At cost

Financial investments

20,429

20,359

5,721

194,423

7,695

5,910

1,785

7,407

227,980

7,705

7,407

200,214

20,359

5,910

1,785

Financial assets and other receivables Trade receivables Derivatives Cash and cash equivalents Total

Fair value

Nominal value

At cost

Fair value

At cost

Fair value

At cost

Fair value

At cost

Fair value

Equity and liabilities Valuation

Financial liabilities valued at amortised cost

Valuation category

TEUR

Amortised cost

Total 29/2/2012

At cost

Fair value

At cost

Fair value

Fair Value Derivatives in hedging relationships under IAS 39

At cost

Fair value

Held for trading (FVTPL-HFT)

At cost

Fair value

Fair value option (FVTPL-FVO)

At cost

Fair value

Financial liabilities

256,325

Trade payables

455,122

21,077

13,002

1,228

11,774

732,524

13,002

732,524

1,228

11,774

Other financial liabilities and liabilities towards related parties Derivatives Total

At cost

Fair value

100 | Annual Report Nordzucker 2011/2012

| 101

Overview of the net earnings from financial instruments Nordzucker AG, Braunschweig, Germany

29/2/2012 TEUR

From subsequent valuation

From interest

From dividends

At fair value

Currency conversion

Write-down

Write-back

Disposal

Net income/loss 2011/2012

1,167

659

-773

-907

-1,019

-613

3,471

-2,587

271

2,116

Financial liabilities held at amortised cost (FLAC)

-29,676

Total

-28,463

3,471

-471

-773

-907

-27,141

Cash and cash equivalents/cash reserve Loans and receivables Available-for-sale financial assets (AFS) Held-for-trading financial instruments (FAHFT and FLHFT)

28/2/2011 TEUR

From subsequent valuation

From interest

From dividends

At fair value

Currency conversion

Write-down

Write-back

Disposal

Net income/loss 2010/2011

Cash and cash equivalents/cash reserve

1,078

Loans and receivables

1,068

-56

-804

467

675

156

1,981

4,830

6,967

Financial liabilities held at amortised cost (FLAC)

-41,469

Total

-39,167

1,981

4,830

-56

-804

467

-32,749

Available-for-sale financial assets (AFS)

102 | Annual Report Nordzucker 2011/2012

| 103

In accordance with IFRS 7 interest rate risks are illustrated using

In addition to the natural hedge approach, derivative spread

As of the balance sheet date the Group holds derivatives aimed

●

NORDZUCKER GmbH & Co. KG, Braunschweig

sensitivity analyses. The sensitivity analysis determines the effect

hedges for less than a year are carried out to reduce exchange

at hedging currency risks and price risks for sugar and energy, in

●

fuel21 GmbH & Co. KG, Klein Wanzleben

of a change in market interest rates on profit and loss and equity

rate risk for beet payments by the Eastern European compa-

addition to the interest rate hedges.

●

Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig

as of the reporting date. To hedge interest rate risks from floating

nies. Exchange rate risks are also hedged by means of appro-

rate instruments the Nordzucker Group has taken out cash flow

priate derivatives such as currency futures – including for peri-

The net amount covered by currency hedges was EUR 5,823,000

are exempt from the obligation to prepare annual financial state-

hedges for a nominal amount of EUR 196.6 million, so that an

ods of less than a year.

as of the reporting date. The derivatives generally mature in less

ments in accordance with the regulations applicable to compa-

than one year.

nies with limited liability pursuant to Sec. 264b German Commer-

amount of EUR 48.0 million is exposed to interest rate risk (previous year: around EUR 47.9 million). The fair value of the hedging

The existing interest rate risk for floating rate loans is reduced

instruments is EUR -1,228,000 (previous year: EUR 2,468,000). In

by means of interest rate derivatives. All interest rate deriva-

The Group does not measure the derivatives itself. The fair value

view of the remaining duration of the derivatives, a hypothetical

tives are designated as cash flow hedges for hedge accounting

calculation (mark-to-market) is carried out by the contracting banks

change in the relevant interest rates for instruments held by the

purposes in line with IAS 39.

using recognised mathematical models and existing market data.

cial Code (HGB).

Nordzucker Group of +/- 50 basis points would therefore not have a significant effect in relation to the Group’s equity.

To hedge the interest rate risk, two interest rate swaps with a total nominal value of EUR 196.6 million have been closed.

c. Hedging transactions

Interest is generally exchanged monthly.

For the Nordzucker Group, related parties within the meaning of IAS

38. Significant subsidiaries and joint ventures

24 are individuals and companies which control the Group or exercise significant influence over it or are controlled or significantly in-

The Nordzucker Group uses derivative financial instruments

fluenced by the Group. The first category includes the active mem-

solely to hedge exchange rate and interest rate risks as well as

The nominal values and market values are made up as follows:

price risks for raw materials.

29/2/2012

Derivative Finanzinstrumente TEUR

28/2/2011

Nominal value

Fair value

Nominal value

Fair value

196,550

-1,228

260,450

2,468

Forward interest rate swaps

Significant subsidiaries and joint ventures

bers of the Executive Board and Supervisory Board of Nordzucker Group stake

Central Europe region

in the Nordzucker Group are also defined as related parties.

fuel21 GmbH & Co. KG, Klein Wanzleben

100 %

Receivables from and liabilities towards related parties are based

Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig

100 %

on arm’s length transactions.

Nordic Sugar A/S, Copenhagen, Denmark

100 %

Nordic Sugar AB, Malmö, Sweden

100 %

Suomen Sokeri OY, Kantivik, Finland

100 %

Sucros OY, Säkvlä, Finland

80 %

AB Nordic Sugar Kèdainiai, Vilnius, Lithuania

71 %

It is generally assumed that the hedged transactions will actually

hedges is recognised in equity without effect on profit and loss.

take place. If a hedging transaction is cancelled, the amounts ac-

In the reporting period EUR -2,587,000 (previous year: EUR

cumulated in other comprehensive income during the term of

Eastern Europe region

4,830,000) was recognised in equity.

the transaction are reversed when the hedged item is recognised

Považský cukor a.s., Trencianska Teplá, Slowakia

>97 %

Nordzucker Polska S.A., Przeżmierowo, Poland

>99 %

Mátra Cukor Rt., Hatvan, Hungary

>99 %

shows when the cash flows from cash flow hedges take place and what effects on profit and loss are expected:

Nordzucker Irland Limited, Dublin, Ireland

100 %

Joint ventures

Interest rate hedges

sidiaries, parent company, associated companies and joint ventures

100 %

The effective portion of changes in the market value of cash flow

in profit and loss or if it no longer takes place. The following table

AG and its majority shareholder Nordzucker Holding AG. The sub-

NORDZUCKER GmbH & Co. KG, Braunschweig

Northern Europe region

TEUR 29/2/2012

39. Related party transactions

NP Sweet A/S, Copenhagen/Denmark

50 %

Melasse Extraktion Frellstedt GmbH, Frellstedt, Germany

50 %

The following commercial relationships existed with related parties in addition to those existing with fully consolidated subsidiaries: Related party transactions TEUR

Balance sheet Receivables from related parties Liabilities towards related parties

TEUR

Income statement Services provided to related parties Net financial income/loss

29/2/2012

28/2/2011

233

16,997

17,813

1/3/201129/2/2012

1/3/2010 28/2/2011

107

108

-216

-1,702

Begin

End

Nominal amount

Forward interest rate swap

23/8/2010

22/8/2013

78,275

1 month Euribor

The list of Nordzucker AG’s and the Group’s equity investments

Receivables from related parties result almost exclusively from

Forward interest rate swap

28/2/2011

22/8/2013

58,275

1 month Euribor

is filed with and published in the electronic edition of the Ger-

trade in goods and services. No write-downs were necessary for

man Federal Gazette (Elektronischer Bundesanzeiger).

the receivables listed.

The following trading companies structured as limited partner-

Of total liabilities towards related parties EUR 5,500,000 are owed

ships (GmbH & Co. KG)

to MEF Melasse-Extraktion Frellstedt GmbH, Frellstedt (previous

Forward interest rate swap

Interest rate

28/2/2011

31/8/2012

60,000

1 month Euribor

Forward interest rate swap

23/8/2010

22/8/2013

103,325

1 month Euribor

Forward interest rate swap

28/2/2011

22/8/2013

97,125

1 month Euribor

year: EUR 5,500,000), EUR 3,628,000 to Union Zucker Südhanno-

Forward interest rate swap

28/2/2011

31/8/2012

60,000

1 month Euribor

ver GmbH, Nordstemmen (previous year: EUR 2,897,000), EUR

28/2/2011

104 | Annual Report Nordzucker 2011/2012

1,966,000 to Nordharzer Zucker-AG, Schladen (previous year:

As of 29 February 2012 items of property, plant and equipment

EUR 1,233,000), and EUR 5,693,000 to Nordzucker Holding AG,

held at EUR 42,214,000 (previous year: EUR 45,030,000) have

Braunschweig (previous year: EUR 6,746,000). There were no

been pledged as collateral for liabilities.

43. Supervisory Board and Executive Board In the financial year 2011/2012 the Supervisory Board was made

Ulf Gabriel, electrician, Banteln (since 15 June 2011)

up as follows:

Dieter Woischke, electrician, Algermissen

As shareholder representatives

Marina Strootmann, industrial clerk, Braunschweig

The Group’s other financial obligations are made up as follows:

Hans-Christian Koehler, farmer, Barum-Eppensen, Chairman (since 7 July 2011

The members of the Executive Board in the financial year

Nordzucker Holding AG, Braunschweig, and net financial in-

Other financial obligations

Hartwig Fuchs, Hamburg, Chief Executive Officer

come/loss results from associated companies and joint ventures.

Dr Harald Isermeyer, farmer, Vordorf, Chairman (until 7 July 2011)

TEUR

liabilities to Eurosugar S.A.S., Paris, France (previous year: EUR 1,723,000). These companies are shareholders of Nordzucker AG and the liabilities relate to current settlement accounts. The re-

41. Other financial obligations

maining liabilities relate to other related parties and largely stem from trade in goods and services. The provision of services for related companies concerns

Purchase commitments for property, plant and equipment

40. Contingent liabilities

Maintenance obligations

The Group has the following contingent liabilities:

Operating leases/rent

Finance leases Other financial obligations

29/2/2012

28/2/2011

15,448

11,305

764

985

1,052

7,594

8,168

24,027

21,289

Contingent liabilities TEUR

Liabilities for securities

29/2/2012

28/2/2011

1,288

12,222

As of 29 February 2012, total future payment obligations from rental and lease contracts are made up as follows:

Remaining term of up to one year

Future payments for finance leases Future payments for operating leases

Remaining Remaining term of term of more one to five years than five years

Total

168

580

237

985

3,662

3,058

874

7,594

Finance-lease

TEUR

Gerhard Borchert, farmer, Brome Michael Gerlif, CFO of Lekkerland AG & Co. KG, Frechen Rainer Knackstedt, farmer, Dedeleben

Rental and leasing agreements

TEUR

Helmut Meyer, farmer, Betheln, Vice Chairman

Remaining term of up to one year

Remaining Remaining term of term of more one to five years than five years

Total

Principal

135

496

227

858

Interest

127

168

580

237

985

Payment

42. Auditors’ fees

tory audit of financial statements for the Nordzucker Group and Nordzucker AG, as well as other audit-related services for EUR

Companies in the Nordzucker Group purchased services for EUR

88,000, tax advisory services for EUR 40,000 and other services

380,000 from Ernst & Young GmbH in connection with the statu-

for EUR 178,000.

Matts Eskel Rosendahl, consultant, Huddinge (since 7 July 2011)

| 105

2011/2012 were as follows:

Axel Aumüller, Oelber a.w.W., Chief Operating Officer Mats Liljestam, Höllviken, Sweden, Chief Marketing Officer Dr Niels Pörksen, Limburger Hof, Chief Agricultural Officer Dr Michael Noth, Braunschweig, Chief Financial Officer.

44. Remuneration report

Hans-Heinrich Prüße, farmer, Lehrte-Ahlten

In the following section the principles of remuneration for mem-

Hans Jochen Bosse, farmer, Ohrum

AG are described and the amount of their remuneration dis-

Dr Karl-Heinz Engel, Managing Director of Hochwald NahrungsmittelWerke GmbH, Riol

of the Executive Board and Supervisory Board.

Dr Clemens Große Frie, CEO of AGRAVIS Raiffeisen AG, Münster/Hanover

44.1. Remuneration of the Executive Board

Dr Hans Theo Jachmann, Managing Director of Syngenta Agro GmbH and Syngenta Germany GmbH, Maintal

The structure and amount of Executive Board remuneration are

Jochen Johannes Juister, farmer, Nordhastedt

the Supervisory Board.

Andreas Scheffrahn, farmer, Cramme

bers of the Executive Board and Supervisory Board of Nordzucker closed, together with disclosures on shares held by members

determined and regularly reviewed by the full Supervisory Board following a proposal from the Human Resources Committee of

The criteria for determining the remuneration of individual Executive Board members are their responsibilities, personal performance, the economic situation, business success, future prospects, sus-

As employee representatives

tainable corporate development and also the extent to which the

Rolf Huber-Frey, businessman, Freiburg

remuneration is generally accepted considering the sphere of

Wolfgang Wiesener, metalworker, Uelzen, Vice Chairman

the company.

Gerd von Glowczewski, metalworker, Schladen

monetary payments, benefit commitments and other commit-

Sigrun Krussmann, laboratory technician, Seelze

remuneration components consist of a fixed annual salary, paid

Dr Andreas Schwarz, chemist in technical chemistry and process engineering, Braunschweig (until 28 February 2011)

performance-related payment. The variable bonus can be up to a

comparison and remuneration structures applicable elsewhere in

The total remuneration of Executive Board members includes ments such as the provision of a company car. The monetary in twelve equal monthly instalments, as well as an earnings and maximum of 50 per cent of total compensation (total compensa-

106 | Annual Report Nordzucker 2011/2012

| 107

tion is made up of fixed annual salary and the variable bonus).

last two financial years. There are no share-based remuneration

The pension commitments given to members of the Executive

The remuneration of the Supervisory Board is defined in Sec. 14

In line with the German Corporate Governance Code (GCGC),

components.

Board are solely defined contribution commitments.

of the Articles of Association of Nordzucker AG.

closely to the sustainable development of the company. For this

Benefit commitments made to Executive Board members in the event

Former Executive Board members received pensions of EUR

According to these rules, members of the Supervisory Board re-

reason, starting in 2012/2013, 45 per cent of the variable remu-

that their appointment to the Executive Board ends prematurely are

717,000 and a bonus of EUR 75,000 was paid retrospectively

ceive a fixed remuneration of EUR 13,000 and a dividend-related

neration will be dependent on achieving the goals for the finan-

limited to the value of the remaining term of their contract.

to one former Executive Board member. Nordzucker AG has

payment of EUR 500 for every per cent of dividend distributed

recognised provisions of EUR 9,463,000 (previous year: EUR

above 5 per cent. Subject to approval at the Annual General

Executive Board remuneration will in future be tied even more

cial year as a short-term incentive (STI). The remaining 55 per cent will be distributed as a long-term incentive (LTI) dependent

The Human Resources Committee of the Supervisory Board has

8,717,000) for pension obligations to former Executive Board

Meeting, the dividend for the financial year 2011/2012 will be

on the average achievement of goals set for the last three finan-

proposed the following bonuses for the individual members of

members.

EUR 1.00 (previous year: EUR 0.46) per share, or 39.06 (previous

cial years. A trial run of the new Executive Board remuneration

the Executive Board for the financial year 2011/2012. The full

system will first be held in the 2011/2012 financial year. As an

Supervisory Board will vote on the proposals at its meeting on

In the financial year 2011/2012 members of the Executive Board

receives treble the fixed remuneration for a normal member while

interim solution, the LTI will be calculated using figures from the

24 May 2012.

received neither loans nor advances from the company.

the two Deputies and the Chairman of the Audit and Finance

year: 17.97) per cent. The Chairman of the Supervisory Board

Committee each receive one and a half times the amount. In 44.2. Remuneration of the Supervisory Board

300.00 per meeting for attendance at meetings in their capacity

Remuneration of members of the Management Board 2011/2012

The remuneration of the Supervisory Board is based on the size

Cash payments

Pensions

Other

Total

Variable annual bonus

Salary

EUR Hartwig Fuchs

450,000

430,962

160,000

15,926

1,056,888

Axel Aumüller

341,667

327,212

125,000

28,298

822,177

Mats Liljestam

342,235

327,756

108,000

26,812

804,803

Dr Niels Pörksen

362,500

347,163

125,000

14,663

849,326

Dr Michael Noth

380,000

363,923

125,000

16,273

885,196

1,876,402

1,797,016

643,000

101,972

4,418,390

Total 1)

addition, each member of the Supervisory Board receives EUR

Non-cash benefit for tax purposes, e.g. for company car, etc.

For the financial year 2010/2011 the members of the Executive Board were remunerated as follows: Remuneration of members of the Management Board 2010/2011 Cash payments

Pensions

Other 1)

Total

as members of the Supervisory Board.

of the company, the duties and responsibilities of the members of the Supervisory Board and the economic situation of the com-

Subject to the approval of the dividend proposal at the Annual

pany. The remuneration includes a dividend-related component

General Meeting the following payments will be made for the

and an attendance fee, in addition to a fixed payment. The Chair-

financial year 2011/2012:

man and Deputy Chairman and the Chairman of the Audit and Finance Committee receive additional remuneration.

Remuneration of members of the Supervisory Board 2011/2012 Fixed remuneration

Variable remuneration

Attendance fee

Total

Total previous year

Hans-Christian Koehler

32,180.33

17,031.25

13,500.00

62,711.58

32,969.31

Helmut Meyer

19,500.00

17,031.25

4,800.00

41,331.25

32,584.38

Wolfgang Wiesener

13,000.00

17,031.25

3,900.00

33,931.25

27,199.45

Dr Harald Isermeyer

22,092.89

17,031.25

9,300.00

48,424.14

69,784.38

Hans-Heinrich Prüße

13,000.00

17,031.25

5,700.00

35,731.25

25,484.38

Gerhard Borchert

13,000.00

17,031.25

5,700.00

35,731.25

26,084.38

Rolf Huber-Frey

13,000.00

17,031.25

1,800.00

31,831.25

24,884.38

Dieter Woischke

19,500.00

17,031.25

6,300.00

42,831.25

29,369.31

Hans-Jochen Bosse

13,000.00

17,031.25

2,100.00

32,131.25

23,684.38

Dr Clemens Große Frie

13,000.00

17,031.25

3,600.00

33,631.25

22,184.38

Sigrun Krussmann

13,000.00

17,031.25

4,200.00

34,231.25

23,684.38

Dr Karl-Heinz Engel

13,000.00

17,031.25

1,200.00

31,231.25

21,884.38

EUR

Salary

Variable annual bonus

Hartwig Fuchs

450,000

380,333

160,000

7,914

998,247

Dr Hans Theo Jachmann

13,000.00

17,031.25

3,000.00

33,031.25

22,784.38

Axel Aumüller

316,667

269,753

125,000

26,825

738,245

Jochen Johannes Juister

13,000.00

17,031.25

2,400.00

32,431.25

23,384.38

Mats Liljestam

317,235

270,237

108,000

21,226

716,698

Andreas Scheffrahn

17,226.78

17,031.25

7,200.00

41,458.03

23,984.38

Dr Niels Pörksen

320,883

273,302

125,000

21,574

740,759

Gerd von Glowczewski

13,000.00

17,031.25

2,400.00

32,431.25

23,684.38

Dr Michael Noth

313,542

267,091

108,000

14,910

703,543

Rainer Knackstedt

13,000.00

17,031.25

3,000.00

33,031.25

23,384.38

1,718,327

1,460,716

626,000

92,449

3,897,492

Michael Gerlif

13,000.00

17,031.25

3,000.00

33,031.25

23,684.38

Marina Strootmann

13,000.00

17,031.25

4,200.00

34,231.25

20,837.89

Ulf Gabriel

9,234.97

12,098.70

1,800.00

23,133.67

Matts Eskel Rosendahl

EUR

Total 1)

Non-cash benefit for tax purposes, e.g. for company car, etc.

8,453.55

11,074.97

1,800.00

21,328.52

Henning Hansen-Hogrefe

12,854.71

Gert Lindemann

14,431.21

Dr Andreas Schwarz

24,284.38

310,188.52

346,767.42

90,900.00

747,855.94

573,111.96

Total

108 | Annual Report Nordzucker 2011/2012

| 109

List of investments Furthermore the members of the Supervisory Board are reim-

The annual financial statements for the financial year 2011/2012

bursed for all out-of-pocket expenses incurred in the exercise

show a net balance sheet profit of EUR 48,301,300. The Executive

of their duties as well as any VAT payable on their remuneration

Board proposes to use this net balance sheet profit to pay a divi-

and on the reimbursed expenses. The total amount of these

dend for the financial year 2011/2012 (EUR 1.00 per share with di-

reimbursements was EUR 37,000 (previous year: EUR 49,000).

vidend entitlement).

Nordzucker AG, Braunschweig, as of 29 February 2012 Shareholding direct Company name, Registered Office

Shortened form

fuel 21

100

NFZ KG

100

NZ SPEZIAL

100

NZ KG

100

indirect %

via subsidiary

NS AS

100

NSH AS

Titoconcerto

100

NSH AS

In the financial year 2011/2012 members of the Supervisory Board received neither loans nor advances from the company.

46. Events after the reporting date

Consolidated subsidiaries

44.3. Shares held by members of the Executive Board

In view of the rise in average prices tracked by the EU price re-

fuel 21 GmbH & Co. KG (Stadt Wanzleben-Börde, Germany)

and Supervisory Board Members of the Executive Board hold no shares.

porting system to over EUR 700 per tonne, the European Commission decided on 12 April 2012 to approve another 250,000 tonnes of non-quota sugar and 13,000 tonnes of non-quota iso-

As of 29 February 2012, members of the Supervisory Board and

glucose for the European market. A reduced surplus levy of EUR

related parties held under 1 per cent of the issued share capital of

211 per tonne of sugar was set for these volumes. The first dead-

Nordzucker AG. The shares bear no relation to the remuneration

line for applications is 2 May 2012; applications may be made for

of the Supervisory Board.

up to 50,000 tonnes per company and application date. If the volume is not taken up by the first deadline, further application

44.4. Miscellaneous

dates are 23 May, 6 June and 20 June 2012. Three tenders were

Board members of Nordzucker AG are indemnified by Nordzucker

also opened for imports of world market sugar. On 2 May, 23

AG against third-party liability as allowed by law. For this pur-

May and 6 June 2012 all qualifying parties can enter a bid for the

pose the company has taken out D&O insurance for members

customs duty to be paid on import sugar. The maximum amount

of the Boards of Nordzucker AG. The insurance policy is taken

that each applicant can apply for in each tender is 45,000 tonnes.

out or renewed annually and covers the personal liability of Braunschweig, Germany, 20 April 2012

of the German Corporate Governance Code.

Nordzucker Eastern Europe GmbH (Vienna, Austria) Nordzucker Polska S.A. (Opalenica, Poland) Cukrownia Melno S.A. [in liquidation] (Opalenica, Poland) Považský cukor a.s. (Trencianska Tepla, Slovakia) Matra Cukor z.r.t. (Hatvan, Hungary) Nordic Sugar Holding A/S (Copenhagen, Denmark) Nordic Sugar A/S (Copenhagen, Denmark) Titoconcerto AB (Burlöv, Sweden) Nordic Sugar AB (Burlöv, Sweden) Nordic Sugar UAB [in liquidation] (Vilnius, Lithuania) Nordic Sugar Oy (Kantvik, Finland) Suomen Sokeri Oy (Kantvik, Finland) SIA Nordic Sugar (Riga, Latvia)

45. Dividend proposal Hartwig Fuchs The dividends that can be distributed to shareholders are defined Axel Aumüller

Mats Liljestam

Dr Michael Noth

Dr Niels Pörksen

sheet profit as determined under German commercial law and disclosed in the annual financial statements of Nordzucker AG.

NORDZUCKER GmbH & Co. KG (Braunschweig, Germany)

Sucros Oy (Säkylä, Finland)

Executive Board

in the German Stock Corporation Act (AktG) as the net balance

NORDZUCKER SPEZIAL GmbH (Braunschweig, Germany)

AB Nordic Sugar Kedainiai (Kedainiai, Lithuania)

Board members for claims for damages arising in the course of their work. It includes an excess in accordance with Sec. 3.8

Norddeutsche Flüssigzucker GmbH & Co. KG (Braunschweig, Germany)

Ingolf Wesenberg & Co. AS (Oslo, Norway)

NZ EE

100

NZ Polska

99.87

Melno

84.32

Povazsky

96.798

Matra

99.89

NSH AS

100

NS AB

100

Titoconcerto

NS Kedainiai

70.6

NS AS

NS UAB

100

NS AS

NS Oy

100

NS AS

Sucros Oy

NS Oy

Suomen Oy

Sucros Oy

NS SIA

100

NS AS

IW AS

NS AS

100

NZ Ireland

Nordzucker (Ireland) Limited (Dublin, Ireland)

NZ Ireland

SugarPartners Holdings Limited [in liquidation] (Dublin, Ireland)

SP Holdings

100

110 | Annual Report Nordzucker 2011/2012

| 111

List of investments Auditors‘ report

Auditors‘ report

Shareholding direct Company name, Registered Office

Shortened form

indirect %

via subsidiary

Joint ventures included proportionately SWEETGREDIENTS GmbH & Co. KG (Nordstemmen, Germany)

Norddeutsche Zucker-Raffinerie Gesellschaft mit beschränkter Haftung (Frellstedt, Germany) NP Sweet A/S (Copenhagen, Denmark) Eurosugar S.A.S. (Paris, France)

evidence supporting the disclosures in the consolidated financial

statements and the group management report:

statements and the group management report are examined primarily on a test basis within the framework of the audit. The

SG KG

NZ SPEZIAL

Associated companies accounted for using the equity method MEF Melasse-Extraktion Frellstedt GmbH (Frellstedt, Germany)

We issued the following opinion on the consolidated financial

MEF

NZR NP Sweet ES

NZ KG

NSH AS

”We have audited the consolidated financial statements prepared

audit includes assessing the annual financial statements of those

by Nordzucker AG, Braunschweig, comprising the balance sheet,

entities included in consolidation, the determination of entities

the income statement, statement of consolidated income, the

to be included in consolidation, the accounting and consolidation

notes to the consolidated financial statements, the cash flow

principles used and significant estimates made by management,

statement and the statement of changes in shareholders’ equity,

as well as evaluating the overall presentation of the consolidated

together with the group management report for the fiscal year

financial statements and the group management report. We believe

from 1 March 2011 to 29 February 2012. The preparation of the

that our audit provides a reasonable basis for our opinion.

consolidated financial statements and the group management report in accordance with IFRS as applicable in the EU and the

Our audit has not led to any reservations.

supplementary German commercial regulations applicable in Subsidiaries not consolidated in accordance with Sec. 296 paragraph 2 German Commercial Code (HGB)

accordance with Sec. 315a (1) HGB is the responsibility of the

In our opinion, based on the findings of our audit, the consolidated

Nordwestdeutsche Zucker Handelsgesellschaft mbH (Nordstemmen, Germany)

Company’s management. Our responsibility is to express an

financial statements comply with IFRS as applicable in the EU and

opinion on the consolidated financial statements and the group

the supplementary German commercial regulations applicable in

management report based on our audit.

accordance with Sec. 315a (1) HGB and give a true and fair view

Bioethanolgesellschaft Klein Wanzleben mbH (Stadt Wanzleben-Börde, Germany) Norddeutsche Flüssigzucker Verwaltungs-GmbH (Braunschweig, Germany) Nordzucker Verwaltungs-GmbH (Braunschweig, Germany) SWEETGREDIENTS Verwaltungs GmbH (Nordstemmen, Germany)

NwdZH

100

Bioethanol KW

100

NFZ GmbH

100

NZ GmbH

of the net assets, financial position and results of operations of the

100

SG GmbH

NZ KG SG KG

We conducted our audit of the consolidated financial statements

Group in accordance with accepted principles of proper accounting.

in accordance with Sec. 317 HGB [“Handelsgesetzbuch”: German

The group management report is consistent with the consolidated

Commercial Code] and German generally accepted standards for

financial statements and as a whole provides a suitable view of the

the audit of financial statements promulgated by the Institut der

Group’s position and suitably presents the opportunities and risks

Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).

relating to future development.”

Those standards require that we plan and perform the audit such Associated companies not consolidated in accordance with Sec. 311 paragraph 2 German Commercial Code (HGB)

that misstatements materially affecting the presentation of the net

Nordzucker Bioerdgas GmbH & Co. KG (Braunschweig, Germany)

assets, financial position and results of operations in the consoli-

Nordzucker Bioerdgas Verwaltungs-GmbH (Braunschweig, Germany) Tereos TTD, a.s. (Dobrovice, Czech Republic)

NZ BEG KG

NZ BEG GmbH

TTD

35.38

Hanover, 27 April 2012

dated financial statements in accordance with accepted principles

Ernst & Young GmbH

of proper accounting and in the group management report are

Wirtschaftsprüfungsgesellschaft

detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into

Hentschel

account in the determination of audit procedures. The effective-

Wirtschaftsprüfer Wirtschaftsprüfer

Spalthoff

ness of the accounting-related internal control system and the

[German Public Auditor]

112 | Annual Report Nordzucker 2011/2012

| 113

CORPORATE GOVERNANCE. TRANSPARENCY FOR OUR SHAREHOLDERS. Hans-Christian Koehler Chairman of the Supervisory Board

In the financial year 2011/2012, the Supervisory Board concentrated on supporting the company‘s strategic further development.

114 | Annual Report Nordzucker 2011/2012

| 115

Report by the Supervisory Board

Report by the Supervisory Board of Nordzucker AG Financial year 2011/2012 sugar imports from countries which are allowed to supply prefer-

resolutions and matters for discussion by the full Supervisory

In addition the Human Resources Committee looked closely at

ence sugar to the EU. The company also has a strong sugar trad-

Board. The committee chairs report to the Supervisory Board on

the system of Executive Board remuneration and in particular at

ing department, which can open up new sales channels for the

the work of the committees at the subsequent Supervisory Board

the arrangements for the long-term performance component.

sugar Nordzucker exports from the EU.

meeting.

Finally, the Human Resources Committee prepared the Supervisory Board decisions on variable remuneration for the Executive

The Executive Committee of the Supervisory Board met four

optimise and secure its financing beyond the year 2015. The

times in the reporting period. The Supervisory Board Executive

refinancing was approved by the Supervisory Board at its meet-

Committee dealt with matters of corporate governance and im-

Financial statements 2011/2012

ing on 24 May 2011.

portant current topics and prepared the following Supervisory

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Hanover,

Board meetings.

audited the 2011/2012 financial statements and management report for Nordzucker AG and gave an unqualified certificate of

The topics of cost-effectiveness and efficiency remain a high

Hans-Christian Koehler, Chairman of the Supervisory Board

Board members.

The company’s good financial performance made it possible to

priority given the further adjustments that are due to be made to

The Audit and Finance Committee met five times during the re-

confirmation. This also applies to the consolidated financial state-

the sugar market regime. The Supervisory Board therefore heard

porting period. In addition the committee held several telephone

ments in accordance with IFRS and the Group management report.

regular reports on the implementation of cost-cutting measures

conference calls. The Audit and Finance Committee examined the

Under Sec. 292a of the German Commercial Code (HGB) these

taken as part of the company’s long-term efficiency improvement

financial statements and management reports for Nordzucker AG

IFRS consolidated financial statements exempt the company from

programme. The targets for the financial year 2011/2012 were

and the Group for the financial year 2010/2011 in the presence of

the obligation to prepare consolidated financial statements in line

met, so that the programme has again resulted in lower costs for

the auditors. Furthermore, the Audit and Finance Committee made

with German law. The Executive Board proposal on the use of

all areas of the company. The Supervisory Board will continue to

a recommendation to the Supervisory Board for its proposal to

distributable profit and the auditors’ reports were presented to

accompany and monitor the implementation of the efficiency

the Annual General Meeting on the election of auditors for the

the Supervisory Board in good time. They have been examined

programme closely.

financial year 2011/2012. Its work also included appointing the

thoroughly by the Audit and Finance Committee and by the

auditors for the financial year 2011/2012, verifying their inde-

Supervisory Board and discussed in depth in the presence of the

The Supervisory Board of Nordzucker AG held five ordinary meet-

The Supervisory Board dealt thoroughly with Group planning for

pendence and setting their remuneration. The Audit and Finance

auditors. The Supervisory Board concurs with the result of the

ings in the financial year 2011/2012 to discuss the company’s op-

the financial year 2011/2012, including planned capital expenditure,

Committee also dealt with Group and investment planning, the

audit and concluded from its own examination that it has no ob-

erating and strategic development. The members of the Supervi-

mid-term planning and regular earnings forecasts for the financial

financial restructuring, quarterly reports and the interim financial

jections to make. The Supervisory Board approved the financial

sory Board advised the Executive Board on the management of

year 2011/2012.

statements for Nordzucker AG and the Group, earnings forecasts

statements as prepared by the Executive Board, which are there-

for the financial year 2011/2012, the risk management system,

by adopted. The Supervisory Board approved the Executive Board’s

provided the Supervisory Board with regular, prompt and com-

Furthermore, in the meeting held on 10 March 2011 we discussed

the effectiveness, capacities and findings of the internal audit

proposal for the use of distributable profit.

prehensive information on corporate planning, the course of

at length compliance with the recommendations and suggestions

department, the internal control system and Nordzucker AG’s

business, the current state of the company, its strategic develop-

of the German Corporate Governance Code. The Executive Board

statement on the German Corporate Governance Code. The

Personnel matters concerning the Supervisory Board

ment and transactions of great importance. Furthermore, all mat-

and Supervisory Board have issued an updated statement of com-

examination and approval of the separate and consolidated finan-

Ulf Gabriel was appointed to the Supervisory Board of Nordzucker

ters requiring the authorisation of the Supervisory Board were

pliance in accordance with Sec. 161 AktG (Stock Corporation Act),

cial statements for the past financial year as well as the proposal

AG on 15 June 2011 by resolution of the Braunschweig district

presented to us for approval. After thorough review and discus-

which has been made permanently available to shareholders on

for election of the auditors for the financial year 2012/2013 were

court following the departure of Dr Andreas Schwarz.

sion the Supervisory Board gave its approval to the Executive

Nordzucker AG’s website. At the meeting on 10 March 2011 the

prepared at an additional meeting outside the period under review.

Board proposals. In addition to the Supervisory Board meetings

Supervisory Board also adopted concrete targets for its own com-

Separate meetings took place between the Chairman of the Audit

In its constitutive meeting on 7 July 2011 the Supervisory Board

the Chairman of the Supervisory Board was in regular contact

position to reflect the recommendation 5.4.1 of the German

and Finance Committee, the Chairman of the Supervisory Board

elected Hans-Christian Koehler as its Chairman. For professional

with the Executive Board and was informed of the current state

Corporate Governance Code, which have been published in the

and the auditors.

reasons Dr Harald Isermeyer was no longer able to stand for re-

of business and major transactions. All of the Supervisory Board’s

Corporate Governance Report. At the meeting on 29 September

discussions and decisions were aimed at protecting and increas-

2011 the Supervisory Board adopted a revised version of its own

The Human Resources Committee met five times in the reporting

Board thanks Dr Harald Isermeyer for his successful work as Chair-

ing the company’s assets.

rules of procedure and other measures resulting from the efficiency

period. At its meetings during and outside the reporting period the

man over many years and is very grateful that he is to remain on

review carried out in 2010/2011 in line with 5.6 of the German

Human Resources Committee prepared the renewed appointment

the Supervisory Board as an ordinary member.

Corporate Governance Code.

of Hartwig Fuchs as Chief Executive Officer of Nordzucker AG un-

the company and monitored its activities. The Executive Board

In the financial year 2011/2012 the Supervisory Board focused on

election as Chairman of the Supervisory Board. The Supervisory

til January 2016, which was adopted on 24 May 2012. Previously

The shareholder representative Helmut Meyer and the employee

opment. The Supervisory Board was therefore kept abreast of

In November 2011 the Supervisory Board held a meeting in Sweden

the Human Resources Committee had prepared the renewed

representative Dieter Woischke were elected as Deputy Chairmen.

European and global developments on the sugar market and

and took the opportunity to visit the refinery in Arlöv and the

appointment of Dr Michael Noth as Chief Financial Officer until

At its constitutive meeting the Supervisory Board also elected

their importance for Nordzucker by the Executive Board. The

sugar factory in Ortöfta.

August 2014, which was adopted by the Supervisory Board on

Gerhard Borchert, Helmut Meyer, Hans-Heinrich Prüße, Sigrun

providing support for the company’s continued strategic devel-

29 September 2011. The Supervisory Board welcomes the renewed

Krussmann and Dieter Woischke as members of the Supervisory

Wilmar International. Since the reform of the sugar market regime

Supervisory Board committees

appointments of Hartwig Fuchs as Chief Executive Officer and

Board Executive Committee. The Supervisory Board elected Dr

in 2006, the EU sugar market has changed from an export to an

The Supervisory Board has set up committees to discharge its

Dr Michael Noth as Chief Financial Officer as key factors for the

Harald Isermeyer and Dieter Woischke to the Human Resources

import market. The aim is to improve access via Wilmar to raw

duties efficiently. The committees prepare the Supervisory Board

company’s continued successful development.

Committee. The Supervisory Board appointed Gerhard Borchert,

Supervisory Board welcomes the programme of cooperation with

116 | Annual Report Nordzucker 2011/2012

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Report of the Supervisory Board Corporate governance report Statement of compliance with GCGC

Dr Harald Isermeyer, Hans-Heinrich Prüße and Helmut Meyer to

The Supervisory Board would like to thank the Executive Board

Supervisory Board monitors the Executive Board and advises it

the Nomination Committee. Hans-Christian Koehler is Chairman

and all the staff for their personal and highly successful commit-

on the management of the company. The Supervisory Board

functions at customers, farmers’ associations or other business

of the Supervisory Board and therefore a member and Chairman

ment.

regularly discusses the course of business and company planning

partners;

at least three Supervisory Board seats for people who hold no

as well as corporate strategy and its implementation. It examines

of the Supervisory Board Executive Committee, the Human Resources Committee and the Nomination Committee. In addition the Super-

Braunschweig, Germany, 24 May 2012

and approves the annual financial statements of Nordzucker AG

at least two Supervisory Board seats for women.

and the consolidated financial statements for the Group, giving

visory Board elected Michael Gerlif, Dr Harald Isermeyer, Andreas Scheffrahn and Marina Strootmann to the Audit and Finance Com-

Hans-Christian Koehler

due regard to the auditors’ report and the results of the exami-

mittee. Andreas Scheffrahn was elected as Committee Chairman.

Chairman of the Supervisory Board

nation by the Audit Committee. Major Executive Board decisions are subject to its approval.

At present these targets have been met. According to the rules of procedure for the Supervisory Board, an age limit of 65 years applies to proposals for election to the

In order to reflect recommendation 5.4.1 of the German Corporate

Supervisory Board.

Governance Code, the Supervisory Board decided on 10 March

Corporate governance report for the financial year 2011/2012

2011 to take the following elements relating to its composition

The remuneration of the Executive Board and the Supervisory Board

into account:

as well as company shares held by members of the Executive and Supervisory Boards are dealt with in the notes to the consolidated

at least three Supervisory Board seats for people with a par-

statements (Nos. 45.2 and 45.3). Neither members of the Executive

Corporate governance covers the system of managing and

This includes making a declaration on the recommendations

ticularly international background (e.g. from having worked

Board nor members of the Supervisory Board bought or sold com-

monitoring a company, including its organisational structure,

of the Code, which reflects the contents of the statement of

abroad or holding foreign citizenship);

pany shares for more than EUR 5,000 in the calendar year.

its corporate policies and guidelines as well as the internal and

compliance required under Sec. 161 AktG. To the extent that

external mechanisms of control and monitoring. Nordzucker

the Code refers to statutory obligations of publicly quoted com-

AG attaches great importance to well-structured, authentic

panies outside the scope of its recommendations, these are not

corporate governance as it ensures that the management of the

applicable to Nordzucker AG. The company also assumes no

company is carried out in the spirit of long-term value creation.

voluntary obligation to adhere to them.

It fosters the confidence of shareholders, financial markets, business partners, staff and the general public in the management

The actions of all our staff are aimed at earning an appropriate

and monitoring of the Nordzucker Group.

and sustainable profit, continually generating growth and increasing our market share. Continuous improvement of all busi-

Corporate governance is the foundation for the decision-making

ness processes by competent, well-managed staff earning per-

and controlling processes at Nordzucker AG. The activities of

formance-related pay secures the existence and the systematic

Nordzucker AG are carried out in accordance with clearly de-

long-term development of the company in an ever-changing

fined guidelines. These guidelines ensure that the company’s

competitive environment.

actions are systematically aligned with the interests and expectations of shareholders, customers, business partners and staff.

Declaration by Nordzucker AG on the German Corporate Governance Code in line with Sec. 161 AktG (German Stock Corporation Act)

3. It is particularly important for the company to be able to draw on agricultural expertise. As a result, the recommendation to deal with personal conflicts of interest affecting Supervisory Board members is of secondary importance (Item 5.5.3).

The Executive Board and Supervisory Board of Nordzucker AG, 4. As Nordzucker AG is included in the consolidated financial

Meeting high standards for food and animal feed quality and

Braunschweig, have examined the recommendations of the

safety, conserving resources, continuously minimising and pre-

German Corporate Governance Code (version: 26 May 2010)

statements of Nordzucker Holding AG, the latter has special

For publicly traded companies the principles of good company

venting environmental damage as well as safeguarding health

in detail. Although the German Corporate Governance Code is

information requirements (Item 6.3).

management are laid down in the German Corporate Governance

and safety at work are an integral part of all Nordzucker’s activi-

not binding for Nordzucker AG, which is not publicly listed,

Code (hereafter known as the Code). The Code consists of

ties. Particular importance is attached to avoiding and prevent-

the c ompany has complied and continues to comply with the

To the extent that the Code refers to statutory obligations of

recommendations and suggestions for good company manage-

ing errors.

recommendations it contains, with the following exceptions:

publicly quoted companies outside the scope of its recommen-

companies. Section 161 of the German Stock Corporation Act

The Executive Board of Nordzucker AG is responsible for de-

1. We do not convene the Annual General Meeting and send

(AktG) stipulates that publicly traded companies must issue an

termining company policy. It sets corporate strategy, plans

out the related documents by electronic means due to our

annual statement on compliance with the Code’s recommenda-

and approves company budgets, decides on the allocation of

shareholder structure (Item 2.3.2).

tions. This declaration relates to both past and future periods.

resources and monitors company development. The Executive

As Nordzucker AG is not listed on a stock exchange it is not le-

Board is also responsible for preparing the quarterly and annual

gally obligated to issue a statement in accordance with Sec. 161

financial statements for Nordzucker AG and the consolidated

including a financial expert as defined in Sec. 100 paragraph

Hartwig Fuchs Hans-Christian Koehler

AktG. The Code is intended for listed companies, but non-listed

financial statements.

5 AktG in our Supervisory Board who – although not the Chair-

Chief Executive

Chairman of the

man – is also a member of the Audit Committee (Item 5.3.2).

Officer

Supervisory Board

ment and also describes statutory obligations for publicly listed

dations, these are not applicable to Nordzucker AG. The com-

companies are also well advised to follow its recommendations. Nordzucker AG therefore studies the Code’s recommendations

The Supervisory Board of Nordzucker AG has twenty-one mem-

closely on a voluntary basis and reports at regular intervals, gen-

bers. Two thirds of the Supervisory Board members represent

erally annually, on the company’s own corporate governance.

the shareholders and one third represents the workforce. The

pany also assumes no voluntary obligation to adhere to them. Please refer to the corporate governance report for more details. Braunschweig, May 2012

2. We go beyond the requirements for non-listed companies by

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118 | Annual Report Nordzucker 2011/2012

Glossary Finance Cash flow Net inflow of funds. Difference between receipts and spending expenses within one accountingperiod. For the sake of simplicity, the cash flow is determined on the basis of net income, plus non-spending expenses, in particular write-downs and changes in non-current provisions. The cash flow is available to the company for investment, repayment of liabilities and distribution of profits. Consolidation The Group accounts are drawn up as if all Group member companies formed one uniform company in law. All expenditures and earnings as well as all interim trade results and other transactions between the Group members are eliminated by way of offsetting (expense and result as well as interim result consolidation). Stakes held in Group companies are set off against their equity capital (capital consolidation), and all intra-Group receivables and liabilities are eliminated (debt consolidation) because such legal relationships do not exist within a legal entity. Summation and consolidation of the remaining items of the annual financial statements result in the consolidated balance sheet and the consolidated income statement. Declaration of compliance Annual declaration made and published by the Management and Supervisory Boards of listed companies in accordance with Sec. 161 German Stock Corporation Act (AktG) stating to which extent the company management complies with the recommendations of the Commission of the German Corporate Governance Code and which recommendations are not applied. Dividend The amount of a stock corporation‘s net income apportioned to each individual share. Dividends are either expressed as a percentage of the par value or as a currency amount per share (earnings per share). The Annual General Meeting votes on the distribution of the dividends. Dividends are paid out on an annual basisin Germany. EBIT (earnings before interest and taxes) This figure supplies information on the results of current operations. Differences in capitalisation are not accounted for, therefore the general interest rate level and tax rates are not considered. EBITDA (‚Earnings before interest, taxes depreciation and amortization‘) Stands for earnings before interest, taxes, depreciation and amortisation. This key indicator is a way of measuring operating performance before capital expenditure. Equity method An accounting method in which shares in a company are initially recognised at cost and subsequently adjusted to reflect the shareholder‘s interest in the net assets of the investeecompany. Equity ratio A financial indicator describing the relationship between shareholders‘ equity and total assets. EURIBOR (Euro InterBank Offered Rate) is the interest rate for term deposits in Euros in the interbank market. Finance lease In contrast to an operating lease the lessor transfers the risk of the investment and thereby the economic ownership of the asset to the lessee.

Forward swap An agreement between two parties e.g. to swap future interest rate payments at different fixed rates on an existing amount.

Operating lease A lease is classified as an operating lease under IFRS if it does not transfer essentially all the risks and rewards of ownership of the leased asset.

German Corporate Governance Code Guidelines formulated in 2002 on the management and supervision of German companies listed on the stock exchange. The German Corporate Governance Code outlines nationally and internationally accepted standards of responsible business management, which primarily aim at transparency and clarity. The Code defines the responsibility of Management and Supervisory Boards and sets forth or makes recommendations on how to protect the rights of shareholders, how executive and supervisory bodies should be filled and how their members should be remunerated. Non-listed companies are also recommended to comply with the Corporate Governance Code.

Registered share The subscribed share capital of Nordzucker AG is divided into registered shares with a nominal value of EUR 2.56 each.

Hedge accounting under IAS 39 Refers to the way in which two or more contracts (or financial instruments) between which hedging relationships exist are recognised in the balance sheet. This method differs from conventional accounting methods. IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) are accounting standards that render balance sheet and disclosure methods comparable on a global scale. These accounting standards have been compulsory for listed companies in Germany and throughout the EU since the beginning of 2005. Impairment test This test must be conducted regularly according to IFRS in order to verify the valuation of non-current assets. It may r esult in the recognition of impairment. Interest rate swap Contractual agreement on the swap of interest cash flows at specific points in time according to a basic notional principal. Interestrate swaps enable variable interest rate agreements to be converted to fixed interest rates. International Accounting Standards Board (IASB) is an independent international committee of accounting experts that develops and revises International Financial Reporting Standards (IFRS) as needed. International Financial Reporting Interpretations Committee (IFRIC) is the name of a group within the International Accounting Standards Committee Foundation (IASC). The job of IFRIC is to publish interpretations of IFRS and IAS accounting standards in cases where it becomes apparent that the standard is capable of being interpreted differently or incorrectly or when new circumstances emerge which have not been dealt with fully in the previous standards. Joint venture A cooperation between companies in which a new, legally independent business unit is created in which the founding companies (two or more) invest capital. In addition to capital the founding companies generally contribute a significant amount of technology, intellectual property rights, technical or other expertise and operating equipment. Natural hedge approach Minimising currency risks by financing foreign currency investments in the same currency, for example. Net debt Financial liabilities minus cash and cash equivalents.

Return on equity A figure which shows the profitability of capital employed and is calculated by dividing net income for the year by shareholders‘ equity. Return on revenues A financial indicator obtained by dividing net income for the year by revenues and enabling an analysis of a com pany‘s profitability. Syndicated loan Lending by several banks (syndicate) on the basis of standardised contract documents and identical terms and conditions. Total profitability This indicator is calculated by dividing EBITDA (earnings before interest, taxes, depreciation and amortisation) by t otal output (revenues plus changes in inventories). Volatility (‘unpredictable, liable to change’) A market is volatile if it is subject to major price fluctuations. Volatility is the statistical means of measuring market fluctuations. Sugar and bioethanol Bioethanol (agricultural alcohol) Ethanol produced from biomass (renewable substances containing carbon). Starch (e.g. from wheat or maize) is broken down by enzymes into glucose. Yeast is then added and the glucose is fermented to create ethanol. When sugar beet is used to produce ethanol, the raw juice or thick juice created as a by-product of sugar extraction is fermented directly. Unlike fossil fuels, bioethanol is CO2-neutral and has long-term economic benefits. In Germany, the Biofuel Quota Act has been in force since 2007, which stipulates the amount of bioethanol to be blended with petrol. CO2 (carbon dioxide, ‘greenhouse gas’) Chemical compound consisting of carbon and oxygen which, like carbon monoxide, is a carbon oxide. This colourless and odourless gas is a natural component of air. It is created when substances containing carbon are burnt, and during cellular respiration. Plants and some bacteria convert CO2 into biomass. Combined drilling Combined drilling is the term used for applying fertiliser below the level of the seed at the same time the seed is planted. Cossettes Pressed beet chippings are a by-product of the sugar production process. They are used as animal feed. Crystal sugar The term for standard grade sugar, used in industry and the home for a variety of purposes, particularly for making deserts and cakes. In a second processing step the crystal sugar is turned into caster sugar, which retails under the name of household sugar for instance. Emission The release of substances into the environment. Insecticide An insecticide is a plant protection product that is used to kill, dispel or control insects in their various stages of development.

Insecticides are used in agriculture and forestry to protect stocks and materials and for hygiene purposes. Isoglucose Sugar made primarily from corn starch and used in beverages and preserved fruit. Isoglucose is a regulated market product. Molasses Syrupy by-product of sugar production. Used to manufacture yeasts and animal feed. Mulch seeding Mulch seeding is a ploughless sowing method in which the remains of a catch crop or the stubble of the preceding crop cover the soil before and after sowing and protect it from erosion and siltation. Pelleted seed Pelleting is a special form of impregnation whereby the seed is coated with a pelleting substance and insecticides, so that every grain of seed has a standardised weight and size. Pelleted seed is required when sugar beet is sown individually, because it obviates the need for time-consuming hoeing to separate the beet in the spring. Treating the seed with insecticide saves on work and resources and is environmentally compatible because 80 grams of the active ingredient can be enough to treat seed for one hectare against insects. Pellets By-product of sugar production. These extracted, dried sugar beet pellets are sold molassedor unmolassed as animal feed. Raw cane sugar Sugar made from sugar cane. This can then be refined to convert it into white sugar. Raw juice Sugary juice extracted from sugar beet which can be processed to make sugar or bioethanol. Refining Used in a general sense to describe a process of cleaning or purifying raw materials. For sugar this means bleaching brown raw sugar (from sugar cane or sugar beet) by a (repeated) series of different processes. Strip tilling In some cases beet has also been sown recently using the strip tilling method. This is a special method of sowing individual seeds in which the soil is only tilled in the seed row to a depth of 25 cm. This is done by chisel coulters attached in front of the drilling machine. Initial findings suggest that the advantages compared with conventional mulch seeding with seed bed preparation in the spring include greater energy efficiency and reduced work intensity per hectare, the conservation of ground water and good protection against soil erosion. Thick juice Concentrated, purified sugar juice containing some 70 to 75 per cent solid material. Thick juice is produced at the end of the steam dryer unit before the sugar undergoes the actual crystallisation process in the sugar factory‘s juice boilers. White sugar is normal household sugar and is made from raw sugar. Sugar industry ACP countries (Africa, Caribbean and Pacific) This encompasses 77 states, most of them former French or British colonies. The EU has granted these countries preferential access to the European market and dutyfree imports of 1.3 million tonnes of raw sugar since 1975 by means of the Cotonou Agreement. As of 2008, the EU wants to replace this treaty with Economic Partnership Agreements (EPA) with the ACP

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120 | Annual Report Nordzucker 2011/2012

countries. In terms of sugar, this should place the countries on an equal footing with the least developed countries (LDC).

food industry have been marketed in Germany, Poland, Slovakia and Hungary under the SweetFamily brand since November 2004.

Dansukker Nordic Sugar, part of the Nordzucker Group, offers consumers a wide range of sweet sugar products from sugar beet and sugar cane under the brand name of Dansukker. The assortment is refined continuously in keeping with the needs of modern households and includes for example various types of granulated sugar, sugar cubes and icing sugar, brown sugar and syrups as well as organic and fairtrade products.

WTO (World Trade Organisation) Multinational organisation located in Geneva, in which 150 member states negotiate world trade liberali sation.

Doha development round is the name for a package of activities that the economic and trade ministers of the WTO members states were supposed to work through at the fourth world trade conference in Doha (capital of Qatar) in 2001 and complete by 2005. The main topics of negotiations included the liberalisation of agricultural trade, improved market access for developing countries and matters relating to intellectual property. Negotiations were suspended as no agreement was reached at the WTO conference in Cancun in 2003. They were resumed in July 2004 and again suspended unresolved in late July 2006 by the WTO general director Pascal Lamy. LDC (Least developed countries) LDC r elate to an EU resolution of 2001 according to which the 50 least d eveloped countries in the world may import any goods except arms into the EU free of any duty. Sugar falls under a special transitional arrangement until 2009. As of July 1, 2009, sugar can also be imported into the EU free of duty and with no restriction of quantities. Reference price The reference price stipulated in the sugar market regime for EU quota sugar serves as a basis for minimum beet prices. In this way, the European Commission also provides orientation for pricing sugar of the standard Category II supplied loose ex works in the new market regulation period beginning July 1, 2006. Market prices for sugar which are significantly above or below the EU reference price may trigger market regulation measures. Sugar market regime A common market organisation for sugar founded in 1968 (active in the EEC/EC/EU) which regulates prices for sugar and sugar beet, maximum production quantities for sugar, and import safeguards. The previous regulation (EC) No. 1260/2001 was replaced on July 1, 2006 by regulation (EC) No. 318/2006, which was passed by the ministers of agriculture of the EU member states on February 20, 2006. Sugar marketing year The reform also heralds a change in the marketing year used by the common market organisation for EU sugar. In the future, the year will begin on October 1 and end on September 30. This excludes the 2006/2007 marketing year, which begins on July 1, 2006 and ends on September 30, 2007. Sugar quota Sugar quotas were introduced in the EU to limit sugar production and prevent surpluses. Volumes produced within these quotas benefit from a sales and price guarantee. SweetFamily SweetFamily is the Nordzucker Group‘s international umbrella brand. Beet sugar products for end consumers, bakers and the

Certification, quality assurance and consumer protection DIN EN ISO 9001 This standard is part of the EN ISO 9000 series, which documents the principles of quality management activities. EN ISO 9001 deals in particular with requirements of quality management systems for which organisations must show that they are capable of supplying products which conform to customer and regulatory demands.

Important dates

Financial calendar Annual General Meetings July 3, 2012 09.00 a.m. Union-Zucker Südhannover GmbH, Atrium at the country estate Gräflicher Landsitz Hardenberg, Nörten-Hardenberg July 10, 2012

10.00 a.m. Nordharzer Zucker Aktiengesellschaft, city hall Braunschweig

July 11, 2012

10.00 a.m. Nordzucker Holding Aktiengesellschaft, city hall Braunschweig

July 12, 2012

10.00 a.m. Nordzucker AG, city hall Braunschweig

DIN EN ISO 14001 This internationally valid standard lays down globally acknowledged specifications for environmental management.

Online publications DIN EN ISO 22000 Covers rules for internationally accepted food safety management standards. EMAS II (Eco-Management and Audit Scheme) Voluntary system used by the EU as an environmental management instrument and to promote environmental action. DS 2403:2008 Danish energy management standard. FSSC 22000 is the first global food safety norm covering food production. The norm was developed specially for companies producing or processing animal or plant-based products or ingredients. GMP B2 (Good Manufacturing Practice B2) Dutch standard of quality control for animal feed from non-resident suppliers. IFS Standard (International Food Standard) This standard is a means of safeguarding food safety and consumer protection. OHSAS 18001 (Occupational Health and Safety Assessment Series) is not a norm, but can be used as a certification basis for management systems relating to health and safety at work. The structure of OHSAS is oriented towards DIN EN ISO 14001. This makes it suitable for use as an integrated management system. PAS 220 (Publicly Available Specification 220) Certification standard developed to define basic requirements for the certification of production processes with the food supply chain and intended to assist in controlling food safety standards. It is intended to be used in conjunction with DIN EN ISO 22000. ISO 22000 and PAS 220 are generally known as FSSC 22000. Q&S Standard German feed standard established by Q&S-GmbH, Bonn, Germany, to guarantee feed quality.

The following publications can be downloaded from www.nordzucker.de • Annual Report • Declaration of compliance • Sustainability Report

Nordzucker AG K端chenstrasse 9 38100 Braunschweig Germany Telephone: +49 (0)531 2411 0 Fax: +49 (0)531 2411 100 info@nordzucker.de www.nordzucker.de Corporate Communications Klaus Schumacher Telephone: +49 (0)531 2411 366 pr@nordzucker.de Investor Relations Bianca Deppe-Leickel Telephone: +49 (0)531 2411 335 ir@nordzucker.de Shares register Claus-Friso Gellermann Telephone: +49 (0)531 2411 118 aktien@nordzucker.de

Printed copies of this Annual Report for the Nordzucker Group are also available in German. Alternatively, the report can be downloaded in German or English from the internet under www.nordzucker.de from the download center as a PDF.