Interim Report Nordzucker AG Three Months 2013/2014 - July 2013

Nordzucker AG Interim ReportFinancial Year 2013/2014 First Quarter / March 1 – May 31, 2013

Hartwig Fuchs, Chief Executive Officer, Nordzucker AG

Group figures and ratios

Nordzucker Q1-Report 2013/2014

Group figures and ratios first quarter 2013/2014

Operating business

Q1 2013/2014

Q1 2012/2013

Change absolute

Revenues

EUR m

580

586

-6

Total revenues

EUR m

376

404

-28

Gross income

EUR m

216

231

-15

EBITDA

EUR m

130

143

-13

EBIT

EUR m

109

121

-12

Net income

EUR m

87

90

-3

Cash flow from operating activities

EUR m

-59

176

-235

Investments in property, plant and equipment and intangible assets

EUR m

19

10

9

31/5/2013

31/5/2012

Change absolute

Balance sheet as of May 31

Balance sheet total

EUR m

2,202

2,142

60

Equity

EUR m

1,394

1,079

315

63

50

Equity ratio

%

Debt capital

EUR m

808

1,063

-255

Financial liabilities

EUR m

148

156

-8

Cash and cash equivalents

EUR m

14

73

-59

Net debt (Cash and cash equivalents less financial liabilities)

EUR m

134

83

51

Q1 2013/2014

Q1 2012/2013

Change absolute

Northern Europe Sugar factories

5

5

–

2

2

–

Structure figures

Sugar refineries

Central Europe Sugar factories

5

5

–

Liquid sugar factories

2

2

–

Bioethanol plants

1

1

–

Eastern Europe Sugar factories

3

3

–

1

1

–

Sugar refineries

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2

Highlights

Nordzucker Q1-Report 2013/2014

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Highlights of the first quarter 2013/2014

Contents Living our values. Creating growth.

4

Letter from the Management Board

5

Sites in Europe

6

Management Report

7

Earnings, financial position and net assets

7

Supplementary report

9

Outlook 9 Income statement

10

Statement of comprehensive income

10

Cash flow statement

11

Balance sheet

12

Statement of changes in shareholders’ equity

14

Financial calendar

15

Results for the quarter In the first three months of the 2013/2014 financial year Nordzucker generated revenues of EUR 579.8 million, only slightly below the high figure of EUR 586.3 million reported in the same period in the previous year. Higher sales of quota sugar offset lower prices and lower sales volumes of non-quota sugar. Net income of EUR 87.2 million for the first three months of the current financial year was only EUR 2.4 million lower than net income in the same period in the previous year.

The current sugar market regime expires in 2017 The current sugar market regime (SMR), which regulates the terms of trade for sugar manufacturers in the EU, expires on 30 September 2017 in accordance with a resolution of the Council of Ministers for Agriculture, the European Parliament and the European Commission. The SMR continues to apply in its current form until then. Subsequent to that date, quota rules and minimum beet ­prices no longer apply.

Sugar beet development Due to the prevailing weather conditions, sowing Group-wide took place ten days ­later than the five-year average. Sowing in Germany and Finland was comparatively late, even very late. The less than optimal weather conditions in April and May – first cold, then a lot of rain and little sun – together with a very strong herbicidal impact contributed to substantial growth delays. In addition to this, there were problems in some German regions due to heavy rain and flooding. As a result the harvest this year is expected to be lower than in the previous year, reaching the five-year average at best.

3

Living our values. Creating growth.

Nordzucker Q1-Report 2013/2014

Living our values.

Creating growth.

Axel AumĂźller, Chief Operating Officer

Hartwig Fuchs, Chief Executive Officer

Mats Liljestam, Chief Marketing Officer

Dr Michael Noth, Chief Financial Officer

Dr Niels PĂśrksen, Chief Agricultural Officer

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4

Letter from the Management Board

Nordzucker Q1-Report 2013/2014

Dear Shareholders, We were once again able to report good business performance in the first three months of 2013/2014. Both revenues and earnings are only slightly below the high levels reported in the previous year. The primary reason for this was the continued increase in sales of quota sugar at similar prices to those applying last year. However, we need to ­remain realistic for the current year. Worldwide, production is significantly higher than consumption, so that sugar stocks are increasing both in the EU and elsewhere. This is resulting in falling prices on the global market. This price decrease is expected to have an increasing impact on the EU sugar market in the course of the current financial year.

Contracts closed recently already indicate this trend. In view of this, it is unlikely that our results in the current year will match the record results we reported last year.

However, we can be satisfied with the development of our earnings in the first quarter of this year. The financial statements for the first quarter of our financial year are being completed at an eventful time for Nordzucker. With the decision of the EU bodies to allow the sugar market regime in its current form to expire in 2017, the sugar industry in the EU is again facing far-reaching changes. Over recent years we have established a good basis to meet these challenges, so that we are in a position to take advantage of the resulting opportunities for further growth. At the same time we continue to prepare the company for the changes in the business conditions. We are improving our competitiveness when it comes to beet cultivation, sugar production and marketing. Only in this way will we be able to expand our market position further. Our 175-year history, in which you as shareholders have taken a number of decisions of historic importance, shows that we are able to emerge stronger from periods of continuous change. ­Accordingly we appreciate the support that you showed us in the recent Annual General Meeting for the journey ahead.

This also applies to the resolution approving the merger of Nordharzer Zucker Aktiengesellschaft with Nordzucker Holding Aktiengesellschaft. The Executive Board of Nordzucker AG particularly welcomes this decision to make the farmers’ ownership structure more efficient, streamlined and robust. A strong holding company not only facilitates our collaboration and processes, but also gives us an even bigger and more dependable partner for future development.

Yours sincerely, Nordzucker AG The Executive Board

Axel Aumüller

Hartwig Fuchs

Dr Michael Noth

Mats Liljestam

Dr Niels Pörksen

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5

Sites in Europe

Nordzucker Q1-Report 2013/2014

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6

Sites in Europe

29

Group headquarters D 1 Braunschweig

Northern Europe

Regional head office DK 2 Nordic Sugar, Copenhagen Sugar plants and refineries D 3 Clauen 4 Nordstemmen 5 Uelzen 6 Klein Wanzleben 7 Schladen DK 8 Nakskov 9 Nykøbing S 10 Arlöv 11 Örtofta FIN 12 Porkkala 13 Säkylä LT 14 Kėdainiai PL 15 Chełmża 16 Opalenica SK 17 Trenčianska Teplá D 18 Liquid sugar plant Groß Munzel 19 Liquid sugar plant Nordstemmen Sugar plants – non-consolidated minority stake CZ 20 Dobrovice 21 České Meziříčí Other D S DK B Sales LV LT EE IS NO IE

locations 22 fuel 21, bioethanol 23 Köpingebro (Fibrex) 24 NP Sweet, Copenhagen 25 Office Brussels

offices 26 Riga 27 Vilnius 28 Tallinn 29 Reykjavik 30 Oslo 31 Dublin

13 12 30 28

26 11 2 10 24 23 8 9

31

14 27

15

5 18 4

25

3

19

6

1

22

16

7

20

Central Europe

21 17

Eastern Europe

Management report

Nordzucker Q1-Report 2013/2014

Earnings, financial position and net assets Consolidated revenues

The quarterly financial report of the Nordzucker Group as of 31 May

In EUR m

2013 has been prepared in accordance with the International Financial Reporting Standards (IFRS) adopted and published by the Interna-

586

580

tional Accounting Standards Board (IASB). The financial statements comply fully with the IFRS and result in the presentation of a true and fair view of the earnings and financial position and net assets of Nordzucker AG and its consolidated subsidiaries and associated companies. No changes have been made to the accounting methods used for the preparation of the consolidated annual financial statements as of 28 February 2013.

Q1 2012/2013

Q1 2013/2014

For more information please see the Notes section of the 2012/2013 Annual Report.

The production of sugar is a seasonal business. The production stage, from the beginning of September until January, is entirely in the second half of the financial year. This should be taken into consideration when interpreting the first quarter earnings.

Consolidated EBIT In EUR m

121

Revenues and earnings 109

In the first quarter of the 2013/2014 financial year, the Nordzucker Group achieved revenues of EUR 579.8 million, which was thus slightly lower than the previous year’s level (EUR 586.3 million). ­Increased quota sugar revenues offset lower revenues from nonquota sugar. Sales of quota sugar increased compared to the same period in the previous year, while prices remained at a similar level to those in the previous year. These trends were offset by changes in the non-quota sugar business. Here we recorded lower sales

Q1 2012/2013

Q1 2013/2014

­volumes compared to the previous year as well as lower prices.

The increased level of reduction in stocks – EUR 21.3 million more than in the previous year – was primarily a result of the higher beet costs in the last campaign and which determine the stock valuation.

On the other hand, the cost of materials and services fell from EUR 172.5 million to EUR 159.6 million. This was primarily a result of lower sugar import volumes compared to the previous year.

At EUR 46.0 million, personnel expenses remained at a similar level to the previous year (EUR 45.7 million). Depreciation, amortisation and impairment were also constant at EUR 20.9 million. Other operating expenses fell from EUR 49.1 million to EUR 46.8 million.

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7

Management report

Nordzucker Q1-Report 2013/2014

Consolidated net income

The operating result (EBIT) of the Nordzucker Group totalled

In EUR m

EUR 108.8 million in the first quarter of the 2013/2014 financial

90

87

year, compared to EUR 121.5 million in the same period of the ­previous year.

The net financial result improved, amounting to EUR 5.0 million in the first quarter of the reporting year compared with EUR -2.0 million in the previous year. This included in particular the higher dividend received from our investment in the Czech company Tereos TTD a.s. in the amount of EUR 8.3 million (previous year: EUR 4.7 million).

Q1 2012/2013

Q1 2013/2014

Overall the net income for the period is slightly lower for the Group than in the previous year, totalling EUR 87.2 million before minority interests (previous year: EUR 89.6 million).

Consolidated balance sheet structure as of 31 May 2013 In EUR m 2,202

Cash flow and balance sheet Cash flow from operating activities of EUR -59.3 million in the first

2,202

three months of the financial year was significantly less than in the previous year (EUR 176.2 million). This trend was largely a result of

48%

the reduction of trade payables as of the balance sheet date. The 63%

reduction was due to the fact that beet payments in Germany were made earlier in 2013.

38%

16%

14%

21%

Assets

Equity &

Cash flow from investing activities fell from EUR -10.2 million to ­ EUR -16.5 million. This was due to higher levels of investment in property, plant and equipment compared to the previous year (EUR 18.5 million; previous year: EUR 9.8 million).

liabilities

The cash flow from financing activities amounted to EUR 77.5

Non-current assets

Equity

Inventories

Non-current liabilities

the quarter.

Other current assets

Current liabilities

The Nordzucker Group’s consolidated balance sheet total increased

­million, compared to EUR -100.3 million in the previous year. Cash and cash equivalents amounted to EUR 14.2 million at the end of

slightly compared to the previous year, amounting to EUR 2,202.2 million at the end of the quarter (previous year: EUR 2,141.6 million).

The reason for the increase was the higher level of stocks compared

Consolidated net debt

to the end of the first quarter of the previous year. In contrast, a

In EUR m

lower level of trade payables was recorded, which in turn was more 134

than offset by the changes in equity.

Thanks to this positive development, equity rose from EUR 1,079.3

83

million at the end of the first quarter of the previous year to EUR 1,394.1 million. Despite the rise in the balance sheet total, the ­equity ratio went up from 50.4 per cent to 63.3 per cent.

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

Q1 2012/2013

Q1 2013/2014

creased compared to the previous year, totalling EUR 134.2 million after EUR 83.2 million in the previous year. This reflects the earlier timing of beet payments compared to the previous year.

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8

Nordzucker Q1-Report 2013/2014

Management report

Supplementary report Expiry of the sugar market regime on 30 September 2017 In their negotiations on the future of the Common Agricultural Policy (CAP) on 26 June 2013, the European Commission, the Council of Ministers for Agriculture and the European Parliament agreed that the sugar market regime is to expire at the end of the sugar marketing year 2016/2017 (30 September 2017). The SMR continues to apply in its current form until then. Since the last SMR reform, the quota regime has limited the internal EU supply of sugar for the food industry to approximately 85 per cent of actual consumption.

After 2017 all the sugar produced in the EU will be allowed to be used for food purposes in the common European market. An increasing supply of isoglucose and increased competition present new challenges for beet cultivation and sugar production in the EU. In addition, more consolidation in the European sugar market can be expected.

Merger of Nordharzer Zucker Aktiengesellschaft and Nordzucker Holding Aktiengesellschaft resolved At the Annual General Meeting on 9 July 2013, the shareholders of Nordharzer Zucker Aktiengesell足足 schaft voted to approve the merger of Nordharzer Zucker Aktiengesellschaft with Nordzucker Holding Aktiengesellschaft. The shareholders of Nordzucker Holding Aktiengesellschaft also voted to approve the merger at their Annual General Meeting the following day.

Nordharzer Zucker Aktiengesellschaft holds approximately 7.8 per cent of the shares of Nordzucker AG, and Nordzucker Holding Aktiengesellschaft holds a further 76.2 per cent.

The changes will become effective upon entry into the commercial register, at which time the shareholdings in Nordzucker Holding Aktiengesellschaft will be combined to create a significant shareholding in Nordzucker AG of approximately 84.1 per cent.

Outlook In the current 2013/2014 financial year, we expect world market prices to remain at their present, substantially lower level, since stocks are still rising and global sugar production exceeds consumption overall. This price decrease is expected to have an increasing impact on the EU sugar market in the course of the current financial year. Contracts closed recently already indicate this trend. 足Accordingly, lower revenues and earnings can be expected for the financial year 2013/2014.

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9

Nordzucker Q1-Report 2013/2014

Consolidated quarterly financial statements

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Consolidated quarterly financial statements Consolidated income statement Nordzucker AG, Braunschweig Germany, for the period from March 1 to May 31, 2013

Revenues Changes in finished goods and work in progress Own work capitalised Total revenues Other operating income Cost of materials and services

1/3/2013 - 31/5/2013 TEUR

1/3/2012 - 31/5/2012 TEUR

Change TEUR

579,768

586,291

-6,523

-204,039

-182,675

-21,364

213

125

88

375,942

403,741

-27,799

6,222

6,170

52

159,648

172,485

-12,837

Personnel expenses

45,974

45,729

245

Depreciation of property, plant and equipment, amortisation and impairment of intangible assets

20,949

21,116

-167

Appreciation of property, plant and equipment, amortisation and impairment of intangible assets 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

76

0

76

46,829

49,111

-2,282

108,840

121,470

-12,630

823

1,870

-1,047

2,806

4,164

-1,358

-1,983

-2,294

311

-97

-70

-27

8,318

4,712

3,606

8,221

4,642

3,579

18

3,056

-3,038

1,239

7,372

-6,133

-1,221

-4,316

3,095

5,017

-1,968

6,985

113,857

119,502

-5,645

26,646

29,950

-3,304

87,211

89,552

-2,341

2,803

1,960

843

84,408

87,592

-3,184

87,211

89,552

-2,341

Currency conversion for foreign operations

-6,792

-9,015

2,223

Net result of cash flow hedges

-2,686

-353

-2,333

b) Other financial expenses Net financial income/loss Earnings before taxes Income taxes Consolidated net income Consolidated net income attributable to minority interests Consolidated net income attributable to shareholders of the parent company

Statement of comprehensive income Consolidated net income

Income taxes Other net income/loss after taxes Total net income/loss after taxes Consolidated total net income attributable to minority interests Consolidated total net income attributable to shareholders of the parent company

1,054

106

948

-8,424

-9,262

838

78,787

80,290

-1,503

2,773

1,960

813

76,014

78,330

-2,316

10

Nordzucker Q1-Report 2013/2014

Consolidated quarterly financial statements

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Consolidated cash flow statement Nordzucker AG, Braunschweig, Germany, for the period from March 1 to May 31, 2013

Earnings before taxes Interest and similar income Interest and similar expenses Net depreciation, amortisation and impairment on non-current assets Net depreciation on financial assets Changes in non-current provisions Other non-cash expenses Net loss/income from associated companies

1/3/2013 - 31/5/2013

1/3/2012 - 31/5/2012

TEUR

TEUR

TEUR

113,857

119,502

-5,645

Change

-823

-1,870

1,047

2,806

4,164

-1,358

20,873

21,116

-243

4

0

4

-13,281

2,517

-15,798

-4

-102

98

97

70

27

204,039

182,675

21,364

Changes in current provisions

21,229

13,323

7,906

Proceeds on disposal of non-current assets

-2,000

830

-2,830

-10,874

-40,372

29,498

-346,745

-115,006

-231,739

160

1,870

-1,710

Changes in finished goods and work in progress

Changes in inventories, trade receivables and other assets not attributable to investing or financing activities Changes in trade payables and other liabilities not attributable to investing or financing activities 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 Payments for investments in intangible assets Proceeds on disposal of financial assets Payments for investments in financial assets

-880

-3,793

2,913

-47,763

-8,733

-39,030

-59,305

176,191

-235,496

2,412

232

2,180

-18,491

-9,849

-8,642

0

0

0

-437

-594

157

-5

9

-14

-11

0

-11

Proceeds from the sale of consolidated companies and other business units

0

0

0

Payments for the acquisition of consolidated companies and other business units

0

0

0

-16,532

-10,202

-6,330

Cash flow for investing activities Payments to shareholders (dividends)

0

6

-6

Proceeds from borrowing

144,217

0

144,217

Loan repayments

-66,733

-100,280

33,547

Cash flow from financing activities

77,484

-100,274

177,758

Changes in cash and cash equivalents

1,647

65,715

-64,068

11,297

7,406

3,891

Currency-related changes in cash and cash equivalents

1,241

-582

1,823

Cash and cash equivalents at the end of the period

14,185

72,539

-58,354

Cash and cash equivalents at the beginning of the period

11

Nordzucker Q1-Report 2013/2014

Consolidated quarterly financial statements

|

Consolidated balance sheet as of May 31, 2013, Nordzucker AG, Braunschweig, Germany Assets

29/2/2013 TEUR

31/5/2013 TEUR

31/5/2012 TEUR

Intangible assets

165,337

162,171

170,914

Property, plant and equipment

853,050

850,154

841,568

5,676

5,077

6,117

Non-current assets Fixed assets

Investment property Financial investments

Shares in associated companies and joint ventures

accounted for under the equity method

Other financial investments

3,068

2,674

3,536

23,536

23,843

20,407

26,604

26,517

23,943

1,050,667

1,043,919

1,042,542

Financial assets

0

0

0

Other assets

9

1

48

9

1

48

Receivables and other assets

Deferred taxes

7,827

23,266

2,692

1,058,503

1,067,186

1,045,282

Raw materials, consumables and supplies

46,885

51,011

48,187

Work in progress

50,491

46,391

47,123

Current assets Inventories

Finished goods and merchandise

930,387

738,631

609,243

1,027,763

836,033

704,553

250,088

Receivables and other assets Trade receivables from external companies

212,425

218,915

Receivables from related parties

4,263

4,411

122

Current income tax receivables

1,470

2,203

3,135

Financial assets

12,597

11,725

16,444

Other current assets

62,376

44,954

47,157

293,131

282,208

316,946

Cash and cash equivalents Assets held for sale

11,297

14,185

72,539

1,332,191

1,132,426

1,094,038

2,497

2,547

2,286

1,334,688

1,134,973

1,096,324

2,393,191

2,202,159

2,141,606

12

Nordzucker Q1-Report 2013/2014

Consolidated quarterly financial statements

|

Consolidated balance sheet as of May 31, 2013, Nordzucker AG, Braunschweig, Germany Shareholders’ equity and liabilities

29/2/2013 TEUR

31/5/2013 TEUR

31/5/2012 TEUR

Subscribed capital

123,651

123,651

123,651

Capital reserves

127,035

127,035

127,035

Retained earnings

954,501

1,038,092

741,041

58,901

50,507

42,420

1,264,088

1,339,285

1,034,147

51,880

54,790

45,202

1,315,968

1,394,075

1,079,349

Shareholders’ equity

Other comprehensive income Equity attributable to shareholders of the parent company Minority interests

Non-current provisions and liabilities 151,944

151,665

134,410

Other provisions

Provisions for pensions and similar obligations

32,541

18,933

25,525

Financial liabilities

4,575

4,754

86,343

Liabilities towards related parties

5,500

5,500

5,511

294

2,689

1,071

Other financial liabilities Other liabilities

12,555

11,999

15,868

Deferred taxes

136,238

150,382

146,390

343,647

345,922

415,118

Current provisions and liabilities Provisions for pensions and similar obligations

5,283

5,283

5,281

Other provisions

73,683

94,304

80,437

Financial liabilities

66,108

143,592

69,429

Current income tax liabilities Trade payables Liabilities towards related parties Other financial liabilities Other liabilities

62,882

57,886

70,080

465,425

95,273

340,901

16,245

17,174

11,394

6,383

3,996

13,837

37,567

44,654

55,780

733,576

462,162

647,139

2,393,191

2,202,159

2,141,606

13

Consolidated quarterly financial statements

Nordzucker Q1-Report 2013/2014

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Consolidated statement of changes in shareholders’ equity for the consolidated quarterly financial statements as of May 31, 2013, Nordzucker AG, Braunschweig Equity attributable to shareholders of the parent company

Minority interests

Total equity

Subscribed capital

Capital reserves

Retained earnings

Other comprehensive income

TEUR

TEUR

TEUR

TEUR

TEUR

TEUR

TEUR

123,651

127,035

653,604

51,682

955,972

43,259

999,231

Consolidated net income

0

0

87,592

0

87,592

1,960

89,552

Other net income/loss

0

0

0

-9,262

-9,262

0

-9,262

Total net income / loss after taxes

0

0

87,592

-9,262

78,330

1,960

80,290

Dividend payment

0

0

0

0

0

6

6

Others

0

0

-155

0

-155

-23

-178

As of 31/5/2012

123,651

127,035

741,041

42,420

1,034,147

45,202

1,079,349

As of 1/3/2013

123,651

127,035

954,501

58,901

1,264,088

51,880

1,315,968

Consolidated net income

0

0

84,408

0

84,408

2,803

87,211

Other net income/loss

0

0

0

-8,394

-8,394

-30

-8,424

Total net income / loss after taxes

0

0

84,408

-8,394

76,014

2,773

78,787

Dividend payment

0

0

0

0

0

0

0

Others

0

0

-817

0

-817

137

-680

123,651

127,035

1,038,092

50,507

1,339,285

54,790

1,394,075

As of 1/3/2012

As of 31/5/2013

Shareholders‘ structure Nordzucker AG* EUR 123.7m share capital

Nordzucker Holding Aktiengesellschaft 84.1 %, EUR 104.0 m

Union-Zucker Südhannover Gesellschaft mit beschränkter Haftung 10.8 %, EUR 13.4m

Direct shareholders‘ 5.1 %, EUR 6.3m

*Only effective following entry into the commercial register.

14

Nordzucker Q1-Report 2013/2014

Important dates

Financial calendar Publications July 15, 2013

Release Q1/3M Interim Report 2013/2014

October 15, 2013

Release Q2/6M Interim Report 2013/2014

January 15, 2014

Release Q3/9M Interim Report 2013/2014

Online publications The following publications can be downloaded from www.nordzucker.de • Annual Report • Interim Reports • Declaration of compliance • Sustainability report

Financial calendar

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15

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

This Interim Report for the Nordzucker Group is also available in German.

The report can be downloaded in German or English from the internet under www.nordzucker.de from the download center as a PDF.