ANNUAL REPORT - Cosun...COSUN ANNUAL REPORT 2015 Royal Cosun Van de Reijtstraat 15, 4814 NE Breda...

ANNUAL REPORT

COSUN ANNUAL REPORT 2015

Royal Cosun

Van de Reijtstraat 15, 4814 NE Breda

P.O. Box 3411, 4800 MG Breda

The Netherlands

Telephone: +31(0)76 530 32 22

Fax: +31(0)76 530 33 03

www.cosun.com

[email protected]

Entered in the

Trade Registry of the

Chamber of Commerce

under number 20028699.

The Annual Report is published in English and Dutch. In the event of

inconsistencies between the English and the Dutch version, the latter shall

prevail. In addition to this Annual Report, Cosun issues a separate digital

Sustainability Report. The annual reports are also available at

www.annualreport-cosun.com.

ROYAL COSUN


OVER COSUN

3

ABOUT COSUN

Addresses 4

Profile 5

Business model 6

Locations 7

KEY FIGURES 8

COOPERATIVE ISSUES

Report of the cooperative 10

Members and shares 11

REPORT

Letter from the Chairman and the Chief Executive Officer 12

Financial performance 14

Prospects 16

Corporate social responsibility 17

COSUN AT WORK

Innovation and development 20

Suiker Unie 21

Aviko 23

Sensus 25

SVZ 27

Duynie Group 29

New Business 31

MANAGEMENT ISSUES

Risk profile 33

Corporate governance 37

Report of the Supervisory Board 38

Members of the Board, Supervisory Board, Executive Board and Works Council 40

ANNUAL ACCOUNTS 2015

Consolidated balance sheet 42

Consolidated profit and loss account 43

Consolidated cash flow statement 44

Notes to the consolidated annual accounts 45

Cooperative balance sheet 64

Cooperative profit and loss accounts 65

Notes to the cooperative annual accounts 66

OTHER INFORMATION

Provisions of the Articles of Association governing profit appropriation 73

Independent auditor’s report 74

ROYAL COSUN

3


OVER COSUN

4

ADDRESSES

AVIKOP.O. Box 8

7220 AA Steenderen

Telephone: +31(0)575 45 82 00

Fax: +31(0)575 45 83 80

www.aviko.nl

[email protected]

SENSUSP.O. Box 1308

4700 BH Roosendaal

Telephone: +31(0)165 58 25 00

Fax: +31(0)165 56 77 96

www.sensus.nl

[email protected]

SVZP.O. Box 9535

4801 LM Breda

Telephone: +31(0)76 504 94 94

Fax: +31(0)76 504 94 00

www.svz.com

[email protected]

DUYNIE GROUPP.O. Box 86

2400 AB Alphen aan den Rijn

Telephone: +31(0)172 46 06 06

Fax: +31(0)172 47 34 06

www.duynieholding.com

[email protected]

SUIKER UNIEP.O. Box 100

4750 AC Oud Gastel

Telephone: +31(0)165 52 52 52

Fax: +31(0)165 52 52 55

www.suikerunie.nl

[email protected]

COSUN BIOBASED PRODUCTSP.O. Box 3411

4800 MG Breda

Telephone: +31(0)76 530 32 22

www.cosunbiobased.com

COSUN FOOD TECHNOLOGY CENTERP.O. Box 1308

4700 BH Roosendaal

Telephone: +31(0)165 58 28 10

Fax: +31(0)165 55 13 52

www.cosun.com

ROYAL COSUNP.O. Box 3411

4800 MG Breda

Telephone: +31(0)76 530 32 22

Fax: +31(0)76 530 33 03

www.cosun.com

[email protected]

ABOUT COSUN

5


PROFILE

We produce a wide range of ingredients and intermediate

products from vegetable raw materials such as sugar beet,

potatoes, chicory, fruit and vegetables for the international food

industry. We also make products that are sold to consumers

through the foodservice (out-of-home and wholesale outlets)

and retail channels. We are increasingly developing ingredients

for non-food applications. We supply products to the animal

feed sector, develop building blocks for biobased chemicals and

produce bio-energy (green gas).

Of all the businesses that make up Cosun, Suiker Unie and

Aviko are the most widely known. They have traditionally

produced sugar and potato specialities respectively. Sensus

produces inulin from chicory. Inulin is a dietary fibre that

reduces the sugar and fat content of foodstuffs.

SVZ processes fruit and vegetables into concentrates and purees

for the food industry. Duynie Group is a trader and distributor

of animal feed and develops advanced applications based on

residual flows and co-products from the food industry. Cosun

Biobased Products is a fledgling business specialising, among

other things, in the development and production of functional

green chemicals and materials based on renewable vegetable raw

materials. Its innovations are used in a wide range of applications.

Royal Cosun has a joint research and development centre.

It improves the use of agricultural raw materials, innovates

process technology, optimises energy management and, in

cooperation with customers, develops new products. Cosun

R&D also works with a variety of institutions and universities in

the Netherlands and abroad.

Royal Cosun is an agro-industrial group that processes arable crops and other vegetable raw materials. Cosun is a cooperative of some 9,000 Dutch sugar beet growers. The cooperative has been processing its members’ sugar beet since 1899. Over the years we have added new activities to our portfolio, nearly all of them relating to agriculture or horticulture.

Turnover EUR 1,948 million 3,912 employees (FTE) 29 production facilities in 10 countries

9 million tonnes of vegetable

raw materials processed

9,054 members / shareholders

ABOUT COSUN

6


BUSINESSMODELMAXIMISING THE VALUE OF THE RAW MATERIALS Our commercial success stands or falls on the value we extract

from our raw materials. We therefore use all parts of the plant

in a process known as biorefinery. The challenge is to extract as

many components as possible at the same time.

Our core business is processing vegetable raw materials. We turn

more than 80% of the agricultural raw materials (biomass) into

foodstuffs. Some 10% is made into animal feed and the rest is

converted into bio-energy and biobased products.

SALES MARKETS

Food industry

Livestockfarming

Chemicals

Energy

Sugarbeet

Potatoes

Chicory

Fruits andvegetables

Foodserviceand retail

CULTIVATION BIOREFINERY

ABOUT COSUN

7


Cosun CFTC Aviko Duynie Group

Sensus Suiker Unie SVZ Cosun Biobased Products

LOCATIONS*

* Main offices and production facilities in the Netherlands, Europe, the US and Asia

KEY FIGURES

8

COSUN ANNUAL REPORT 2015COSUN ANNUAL REPORT 2015

KEY FIGURESAs a cooperative of Dutch sugar beet growers, Cosun buys the sugar beet supplied by its members at a price based in part on the

group’s results. The beet price is recognised in full in the profit and loss account as a cost of raw materials and consumables. It

therefore influences the operating profit and net profit for the year, as disclosed in the table below.

In millions of euros (unless stated otherwise) 2015 2014

FINANCIAL

Net turnover 1,948 2,115

Operating profit 59 110

Recurring EBITDA* 167 202

Net profit 46 79

Cash flow from operating activities 54 172

Capital expenditure on fixed assets 109 112

Group equity 1,165 1,257

Group equity as a percentage of total assets 66 63

Average beet yield per hectare in the Netherlands (in euros) 3,301 4,354

Quota sugar beet price** (in euros) 43.01 50.18

Members’ bonus 69 108

SOCIAL

Average number of employees*** 3,912 3,799

Sickness absence (%) 3.9 3.8

Number of lost-time incidents (per 1,000 employees) 24 26

ENVIRONMENT****

Direct CO2 emissions (in tonnes per tonne of product) 0.22 0.22

Water consumption (in m3 per tonne of product) 2.6 2.3

Residual matter (in tonnes per tonne of product) 0.06 0.05

* Recurring EBITDA comprises operating profit before depreciation and amortisation and after adjustment for activities divested and non-recurring items.

** Per tonne of beet with average sugar content and average extractability.

*** Average number of FTEs.

**** See page 19 of this report for further information.

KEY FIGURES

9


59

2011 2012 2013 2014 2015

2,115 1,9482,1661,9451,772

2,200

1,600

2,100

2,000

1,900

1,800

1,700

59

2011 2012 2013 2014 2015

202241270158

300

0

167

250

200

150

100

50

Net turnover in millions of euros Recurring EBITDA in millions of euros

59

2011 2012 2013 2014 2015

108187179118

200

25

69

175

150

125

100

75

50

59

2011 2012 2013 2014

4,3544,9174,8714,038

5,000

0

2015

3,301

4,000

3,000

2,000

1,000

Members’ bonus in millions of euros Average beet yield per hectare in the Netherlands in euros

2011 2012 2013 2014

0.26

0.20

0.22

2015

0.220.210.230.25

0.25

0.24

0.23

0.22

0.21

2011 2012 2013 2014

4,000

3,000

3,7993,4773,799

2015

3,9123,9123,477

3,3963,396

3,5813,288

3,800

3,600

3,400

3,200

Direct CO2 emissiom in tonnes per tonne of product Number of employees, average in FTEs

Average number of FTEs Average number of FTEs (adjusted for divested activities)

10

COOPERATIVE ISSUES


REPORT OF THE COOPERATIVE

The Members’ Council met on four occasions in 2015. A

recurrent item on the agenda was the new sugar system that

Cosun has developed to succeed the EU sugar system. It does

not have a basic reference or a quota allocation, which were

features of the EU system. Cosun has also decided to dispense

with the current share system. The shares will be replaced with

member supply certificates (ledenleveringsbewijzen, LLBs). Every

LLB is an entitlement to supply one tonne of sugar beet, and an

obligation to deliver at least 85% of the total entitlement. The

Articles of Association and the various regulations have been

amended accordingly. The Members’ Council approved the

changes at its meeting of 10 February 2016.

GOVERNANCEHans Megens, an external member of the Board, stood down

at the end of May upon reaching the maximum age laid down

in the Articles of Association. Sander Wijkstra was appointed

in his place. There were no changes in the composition of the

Supervisory Board during the financial year. The membership of

the Members’ Council also remained unchanged in 2015.

Cosun has a Youth Council consisting of enthusiastic young

men and women who work chiefly at their own arable farms

and who have the ambition of learning other skills so that

they can eventually progress to a management position in the

cooperatives of which they are members. The Youth Council

paid a working visit to Avebe during 2015 and took part in a

two-day programme in Limburg.

It was decided to fully digitise the provision of information to

the members in the years ahead. Preparations are already in full

swing. The benefits are that information will be available faster,

can be read any place any time on a computer screen, tablet or

smart phone and will cost less.

MEMBERS’ LOANCosun introduced its own members’ loan programme in 2015.

Members who applied for a payment under the sugar beet

delivery/business termination regulations (UB/BBU) could place

all or part of the payment on a deposit account for between

two and five years.

About EUR 15 million was deposited during the year. It is being

invested in our own businesses, for example to increase the

capacity of the sugar factories. This saving scheme has proved

very popular with our members and will therefore be continued.

Members will be given two opportunities in 2016 to make

deposits for a term of two, three, four or five years. The first will

be in April, when they can deposit beet payments. This option

is open to all members willing to deposit at least EUR 2,500.

The second opportunity will be for members who receive a beet

delivery payment in 2016 and will have the same lower limit.

COSUN SUGAR SYSTEMThe cooperative has the ambition to grow all its activities. We

have identified growth opportunities in the sugar market with

the abolition of the European quota system. We are inviting

our members to grow with us. The system enables us to set the

amount of sugar beet ourselves based on projections of the

long-term sales opportunities for sugar.

Members can apply for LLBs in proportion to their current basic

reference quota. As the shares are linked to the basic reference

quota and the three out of five system will be abolished, the

new system will be simpler. Growers who want to expand can

subscribe for new LLBs that will be issued in August. They can

then deliver more beet as from the 2017 harvest. Members will

still be able to transfer their entitlements to other members

under the new system.

A number of other matters will be amended on the

introduction of the Cosun sugar system. The quality standard

for sugar content, for example, will be raised to 17% and the

extractability rate to 91. The batch premium will be abolished,

the early delivery premium will be slightly higher and the late

delivery premium will not be available until 1 December, but will

rise slightly faster than in the past.

The profit for 2015 was in line with expectations, lower than that for 2014 but better than forecast.The historically low sugar prices inevitably left their mark but some compensation was found in the low prices paid by Suiker Unie for its raw materials and the results from other activities. 2016 will be a transitional year towards a market without the common EU sugar market organisation.

11

COOPERATIVE ISSUES

COSUN ANNUAL REPORT 2015COSUN ANNUAL REPORT 2015

MEMBERS AND SHARES AS AT 31-12-2015 AS AT 31-12-2014

DISTRICT / SECTION Number of members Number of shares Number of members Number of shares

Zeeuwsch-Vlaanderen 736 8,870 742 8,907

Zeeland-Midden 630 7,807 642 7,884

Zeeland-Noord 340 4,638 350 4,673

Goeree-Overflakkee 215 3,538 222 3,616

West-Brabant 803 9,636 813 9,648

Zuid-Hollandse Eilanden 325 5,010 327 4,990

Holland-Midden 256 4,100 259 4,168

Kop van Noord-Holland 406 7,210 410 7,351

Oostelijk Flevoland 375 9,476 385 9,563

Noordoostpolder 618 9,747 622 9,781

Friesland 267 4,795 271 4,807

Groningen 1,045 20,621 1,052 20,637

Drenthe/Overijssel-Noord 969 22,571 994 22,623

Overijssel-Zuid/Gelderland 305 3,862 318 3,923

Oost-Brabant + Limburg (CSV COVAS) 1 28,061 1 28,061

Zuidelijk Flevoland 150 4,914 153 4,946

7,441 154,856 7,561 155,578

B-members CSV COVAS as at 1-05-2015 1,613 1,650

TOTAL members Cosun 9,054 9,211

LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICERThe historically low sugar prices in Europe had an

undeniable impact on Cosun’s financial results in

2015. In line with expectations, the fall in the results

had a knock-on effect on the price the cooperative

paid to its members for their beet. The beet price was

nevertheless higher than we had expected, due to the

good operating profits of all Cosun’s activities.

Step by step, we have very specifically strengthened our activity

portfolio in recent years. This is reflected in the spread of our

turnover. Alongside Suiker Unie – which is good for more than

a third of group turnover – Aviko also earns more than a third

of our turnover. The rest is earned by Sensus, SVZ and Duynie

together.

The spread is proving to have been a good choice because all

business groups made substantial contributions to the result in

2015. Our five activities were able to cushion the volatility in

the markets. We have laid a solid basis under our results and

created stable foundations for the beet price after 2017.

INVESTING IN PROFITABLE GROWTHOur goal is profitable growth in existing and new activities by

extracting more value from our vegetable raw materials. We

therefore made substantial investments in all our businesses in

2015, in total EUR 109 million. We have increased the capacity

of various factories, and invested in process improvements and

energy savings, in R&D facilities and, of course, in our staff.

They, after all, make sure everything runs smoothly.

To prepare ourselves for the new reality of the European sugar

market we worked on three fronts: market share, processing

capacity and raw material supply. We increased our market

share by supplying imported cane sugar to EU markets with

a sugar shortage. We will gradually increase the processing

capacity of the Dutch sugar factories in the years ahead to

28,000 tonnes of beet per day. We can keep our costs low only

if the factories are running at full capacity.

“Our goal is profitable

growth in existing and new

activities by extracting more

value from our vegetable

raw materials.”

Robert Smith


12

REPORT

“Even though the market

organisation is still in force,

we are already living in

the new reality.”

Dirk de Lugt

LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER


13

REPORT

This means that Suiker Unie needs more sugar beet. The beet

acreage and the sugar yield per hectare must – and can – be

increased. The cooperative will have to pay its growers a

good price for their beet to ensure they keep growing sugar

beet. This is a common interest of both the growers and the

cooperative.

MEMBER SUPPLY CERTIFICATESThe abolition of the EU market organisation for sugar also

marks the end of the quota system. Cosun has developed a

new, robust system to match the supply of sugar beet to the

demand for sugar. Cultivation and production are determined

by the ability to make a profit on the sale of sugar. The profit

we forecast for the year determines the allocation ratio. It can

vary from about 90% to 110%. The new system is based on

a combination of the shares and the basic reference for each

member. The conversion will take place in 2016 and will form

the basis for the allocation as from 2017.

NEW REALITYEven though the market organisation will still be in force for

another year, we are already living in the new reality. This can

be seen in the volatility in European sugar prices, which will

continue to have an impact on our business in the future.

What we will offer in return as from 2017 is the security of

the minimum beet price paid by Cosun, which is higher than

the current EU price, plus the members’ bonus and plus the

ability to increase beet cultivation if a member wishes to do so.

And we are certainly intending to consolidate our lead in the

sustainable cultivation and processing or sugar beet. Without it,

we will be unable to sell our sugar at a good price.

All cooperative sugar factories in the Netherlands joined forces

fifty years ago this year. A couple of years later, the EU sugar

market organisation was introduced. In the past 50 years we

have created a solid cooperative that is strong enough to rise to

the challenges of the new reality.

Dirk de Lugt Robert Smith

Chairman of the Board Chief Executive Officer

Breda, 17 March 2016

14

REPORT


FINANCIAL PERFORMANCE

RESULTSIn 2015, operating profit including non-recurring items came

to EUR 59 million (2014: EUR 110 million). Recurring EBITDA

(earnings before interest, tax, depreciation and amortisation)

amounted to EUR 167 million, versus EUR 202 million in 2014.

The lower earnings also meant the members’ bonus was lower.

This payment to the cooperative’s members is part of the beet

price. For 2015 it came to EUR 69 million (2014: EUR 108

million). A reasonable beet price could therefore be paid to the

members despite the low sugar prices in the EU. The members’

bonus is recognised in the regular operating profit as a cost of

raw materials. The net profit came to EUR 46 million

(2014: EUR 79 million).

PERFORMANCE OF THE BUSINESS GROUPSThe low sugar price in the EU reduced Suiker Unie’s turnover.

The business could still profit from the higher prices agreed in

sales contracts concluded in previous years and thanks to the

good cost and market position, it turned in a good result in

the circumstances even if it was significantly lower than in the

previous year. The Dutch sugar factories had a relatively short

but good campaign. The factory in Anklam (Germany) also had

an excellent campaign and booked a profit.

The sugar yield per hectare in the Netherlands was 13.9 tonnes

in 2015. This is less than in the record year of 2014 but still

well above the long-term average. During the campaign, which

lasted 99 days in the Netherlands, we produced 790,000 tonnes

of sugar. Owing to the high production volume in the 2014

sugar campaign, about 190,000 tonnes had been transferred

owing to the sugar market organisation. It qualifies as the first

quota sugar of the 2015 campaign.

Aviko improved its results again in 2015, thanks in part

to higher sales at good prices. In Europe, sales of potato

specialities in particular were higher. Outside Europe, sales of

both French fries and potato specialities were higher, especially

in Central Asia and Japan. The margin was strengthened by

favourable cost prices. The result on the potato granules and

flakes activity was slightly lower than in the previous year.

Sales from Europe were about 9% higher. The result of the

Chinese flakes activity was reduced by the pressure on margins

in the Chinese market.

Despite a limited increase in sales, inulin producer Sensus

posted a lightly lower result than that for 2014, which had

included a one-off income item. Growing competition is

exerting pressure on selling prices and margins. More chicory

was processed during the campaign than in 2014, even though

it started later. Settled weather meant the inulin remained of

very good quality throughout the campaign.

SVZ’s results were comparable with those for 2014. Results were

firmer in the European market but slightly lower in America.

Demand for fruit juices is falling but demand for vegetable

juices is rising. To optimise the production infrastructure it

was decided to close one of the smaller factories in Poland. Its

production was transferred to SVZ’s main production facility in

Poland.

Duynie Group managed to post a significant improvement in its

results despite lower turnover and sales. All the group’s activities

performed better than in 2014. Sales to the biogas industry

were higher and results on the starch activities recovered, with

higher sales of non-food starch being made in the potato

segment. The integration of earlier acquisitions and the

streamlining of the corporate departments again contributed to

a further reduction in costs.

Cosun’s results for the year were better than expected, albeit lower than in 2014. At EUR 1,948 million, turnover was 8% down on 2014. Operating profit came to EUR 59 million. Suiker Unie’s turnover and results were hit particularly hard by the lower sugar prices. Some compensation was found in higher results on other activities.

15

REPORT


FINANCIAL INCOME AND EXPENSETotal financial expense amounted to EUR 6 million owing to

the limited use of external financing. This is slightly higher

than in 2014. The penultimate tranche of the debt payable

to institutional investors was repaid in 2015. A considerable

distribution was also made to members under the beet

delivery/business termination regulations. These payments

were made from our own funds. Investments in tangible and

intangible fixed assets were again higher than depreciation and

amortisation in 2015. We invested to increase the production

capacity of the sugar activities and of the French fries and

potato flakes activities. We also began work to build a new

Cosun Innovation Center at the Nieuw Prinsenland Agro & Food

Cluster which is being developed by Suiker Unie in Dinteloord.

An additional financing source was obtained in 2015 with

the introduction of the Cosun members’ loan programme.

Under this programme, which is open only to the members of

Cosun, members can lend part of their beet delivery/business

termination payments each year to the cooperative for a fixed

term of between two and five years.

TAX BURDENThe effective tax rate for the year was 14.7%. This is

considerably lower than in the previous year (25.8%). The tax

burden was lowered in 2015 by tax facilities for innovative

activities, research & development and environmental

investments. Liquidation losses were also responsible for a one-

off reduction in the tax burden.

CASH FLOWCosun generated a cash inflow of EUR 54 million in 2015,

less than in 2014 on account of the lower operating profit.

Furthermore, working capital was higher, chiefly due to an

increase in inventories and a decrease in current liabilities.

Investments were financed from cash flow and available cash

positions.

INVESTMENTSInvestments in tangible and intangible fixed assets amounted

to EUR 109 million (2014: EUR 112 million). The investments

in the sugar activities were made chiefly to increase production

capacity and make it more flexible. Regular replacement

investments were also made. A part of the master plan,

investments were also targeted at renewing process automation

in the factories, increasing the diffusion capacity of the factories

in Vierverlaten and Anklam and increasing the evaporation

capacity at the sugar factory in Dinteloord.

At Aviko, we invested in increasing the production capacity and

flexibility of the French fries factories. As part of the BetaFib®

innovation project, we invested in a pilot production line. A start

was also made on the construction of the Cosun Innovation

Center, which is expected to be taken into service in the

second half of 2016. The other investment projects related to

replacements and capacity increases at Sensus, SVZ and Duynie.

BALANCE SHEETTotal assets as at 31 December 2015 amounted to EUR 1,773

million. The decline in comparison with the previous year

end was attributable to a sizeable distribution among a large

proportion of the members under the beet delivery/business

termination regulations. The total distribution amounted to

approximately EUR 180 million (2014: EUR 135 million net).

The payment was made from cash and cash equivalents.

Furthermore, a sum of USD 55 million was repaid on the long-

term USPP loan in 2015. As a result, the cash position was

EUR 276 million lower. The distribution under the beet delivery/

business termination regulations reduced group equity by

EUR 92 million to EUR 1,165 million (31 December 2014:

EUR 1,257 million). At the same time, group equity rose to

66% of total assets at the end of the year (31 December 2014:

63%).

The group’s financial position remains strong, despite the

substantial distribution to members in 2015 and the distribution

that will be made in 2016. We expect no significant changes in

these circumstances in 2016.


16

REPORT


BEET PRICEThe members’ bonus for 2015 was set at EUR 69 million. It was

paid as part of the quota beet price. The quota beet price was

also paid on 5% of the beet delivered above quota in 2015. In

the previous year members had received the quota beet price

on 7% of the surplus beet.

The basic price for quota beet (EUR 26.25 per tonne) was based

on the EU minimum price and was equal to that paid in 2014.

The members’ bonus came to EUR 12.25 per tonne (2014: EUR

18.50). In total, the price paid to members per tonne of quota

beet with 16% sugar content and an extractability rate of 87

came to EUR 38.50. The price paid to members per tonne of

quota beet with average extractability and sugar content was

EUR 43.01. The average price paid for surplus beet was EUR

27.89.

The average sugar yield per hectare was lower than in 2014:

13.9 tonnes versus 15.1 tonnes. The average financial yield

per Dutch beet grower was EUR 3,301 per hectare. This is EUR

1,053 less than in the previous year on account of the decline in

the members’ bonus and the lower yield per hectare.

PROSPECTSThe volatility of the price of agricultural products has a major

impact on Cosun’s results. The effect of the low sugar price in

the EU in 2015 can clearly be seen in the result on the sugar

activities for the year. A further decline in Suiker Unie’s results is

foreseen for 2016. This is the outcome of higher costs owing to

the short campaign in 2015 and continued low selling prices for

sugar in the European and world markets. The sugar activities

will still turn in a profit, however, in the current year. Aviko is

expected to report a further increase in its results as its costs

continue to decline.

Sensus’s results will also be slightly higher owing to an increase

in volume. SVZ, by contrast, will see a limited fall in its results

on slightly lower sales. We expect Duynie’s results to improve on

those for 2015 owing to a recovery on turnover and margins.

Cosun will continue to invest in strengthening its position in

the various market segments in the year ahead by both organic

growth and, if feasible, by strategic acquisitions, efficiency

improvements and innovation. We do not expect any significant

change in the number of employees.


2011 2012 2013 2014 2015

43.0150.1867.2668.8055.69

80

0

60

40

20

Quota beet price in euros per tonne

■■ Quality payment (based on sugar content and extractabilityrate of the beet).

■■

Members’ bonus (based on the cooperative’s results). ■■ Basic price (based on the EU minimum price).

17

REPORT


CORPORATE SOCIAL RESPONSIBILITYAs a cooperative and a group, Cosun is responsible for everything that happens within the business groups. How safe are working conditions? How do we use the raw materials, energy and water? And we are equally responsible for how our raw materials are grown and for the inconvenience to local residents caused by our factories.

A business meets the needs of its customers and creates value

for its stakeholders. The figure below shows what we did with

the value Cosun created in 2015. We paid the members for

the beet they supplied, we paid salaries to the employees and

remitted taxes to the government.

We also invested some of the results in the further growth and

development of Cosun.

Added value (in millions of euros) 2015 2014

Net turnover 1,948 2,115

Other revenue and stock movements 39 42

Payments to suppliers of raw materials -/- 981 -/- 1,055

Payments to other suppliers -/- 364 -/- 367

Added value created 642 735

Employees (salaries) 255 251

Members (beet payments and members’ bonus) 230 283

Financiers (interest) 6 4

Government (taxes) 8 27

Value created for stakeholders 499 565

Retained profit 46 79

Depreciation and amortisation 98 91

Value created for reinvestment 143 170

Employees (salaries) 40%

Members (beet purchases and members’ bonus) 36%

Financiers (interest) 1%

Government (taxes) 1%

Retained profit 7%

Depreciation 15%

Reinvested value 2015

Value for stakeholders 2015

18


REPORT

PRIORITIESAs well as creating value for our stakeholders, principally the

members of the cooperative, we have identified four areas where

we are able and willing to bring our influence to bear:

• optimising cultivation in recognition of our responsibility to

growers and the environment;

• optimising production processes with a view to maximising the

use of raw materials and conserving the environment;

• investing in staff skills and a safe working environment;

• respecting the interests of other stakeholders and being

accountable to them.

OPTIMISING CULTIVATIONSustainable cultivation means realising the highest possible yield

per hectare from the fewest inputs. New varieties and modern

processing techniques are good for the soil and biodiversity.

Soil conservation and biodiversity are important factors for the

longer-term security of food supplies. We and our growers are

therefore investing in the further improvement, optimisation and

sustainability of cultivation. Cosun is an active participant in many

initiatives, such as the SAI platform for sustainable agriculture,

the Skylark Foundation for sustainable arable farming and the

Beet Cultivation and Biodiversity project. The agricultural services

and agronomists at our business groups help the growers and

suppliers of our raw materials improve their crops. Programmes

such as Unitip (Suiker Unie) and Cimone (Sensus) increase insight

and transparency in the production chains.

OPTIMISING PRODUCTION PROCESSESOur factories need energy to process raw materials into

foodstuffs and intermediate products. Energy consumption

per tonne of production is a measure of the efficiency of our

production processes: the lower the better. The key figure on

page 9 of this report shows that we emit about 0.22 tonne of

CO2 per tonne of production. In 2010, Cosun had set itself the

goal of using 2% less energy per annum. Although we have

not succeeded every year we are on track to reach our target of

consuming 20% less energy by 2020. Further savings, however,

require an ever larger investment to cut consumption by 2% per

annum. The relatively low production volumes in 2015 (down

8%) made it more difficult to achieve the targeted saving of per

tonne.

The food industry uses a lot of water to wash raw materials,

to processes raw materials and to clean machinery, etc. Our

vegetable raw materials also contain a lot of water, which we can

re-use after it has been treated. The total volume of water we

consume is directly related to the size and quality of the harvests

we process.

We have therefore not set a target for water consumption

in absolute terms. We used more groundwater per tonne of

finished product in 2015 than in 2014, chiefly because of the

variation in the crop and changes in the portfolio.

Cosun classifies its waste as separated or mixed. Separated waste

is sorted before it is sent for disposal. The types of waste we sort

are paper and cardboard, wood, stones, plastic and chemicals.

What remains is mixed waste. For every thousand kilogrammes

of product leaving our factories, there is about six kilograms of

waste that cannot be processed and has to be disposed of. This

figure was less in 2015 than in 2014, and roughly in line again

with the figure for 2013. Cosun aims to minimise the volume of

waste and to make the best possible use of residual materials.

EMPLOYEESCosun cares about all its employees, both permanent and

temporary. It offers every one of them a safe workplace and

opportunities to develop themselves and their skills. Good

working conditions are important for both the employees’

wellbeing and their productivity. A completely new code of

conduct was introduced throughout the group in 2015: the

Cosun Principles. Care for employees is one of the central

themes; it highlights the importance of the workplace being

socially and physically safe. A variety of activities will draw

attention to this in 2016.

Safety at work remains a point of concern. The figures show that

there were 24 lost-time accidents per 1,000 employees in 2015,

in comparison with 26 in 2014. Cosun will take extra measures

to reduce systematically the number of lost-time accidents. The

number of incidents, near-accidents and unsafe situations will

also be given higher priority: prevention is better than cure.

Sickness absenteeism was virtually unchanged at 3.9%, well

below the average for manufacturing companies (CBS, 2014:

4.8%).

In full time equivalents the number of employees at Cosun was

slightly higher, rising from 3,799 in 2014 to 3,912 in 2015.

Temporary employees are not included in these figures. The

increase was due almost entirely to Aviko.

Staff often enjoy a long career with us and accumulate a great

deal of know-how and experience. It is important that they

continue to develop their know-how and skills so that they

remain employable. We therefore invest in our people by offering

them education and training. The average number of training

days in 2015 was three per employee.

CORPORATE SOCIAL RESPONSIBILITY

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VERSLAG


SUGARS AND FOODThe Sugars & Food Platform was set up in 2015. It is made up

of three links in the sugar sector: the beet growers, the sugar

industry and sugar processors in the Netherlands. Representing

their common responsibilities, they seek contact with civil society

organisations, the media and consumers to open up a dialogue

on sugar and its use in food. The relationship between food and

health has been the subject of scientific research, media interest

and countless stories. It is not disputed that consuming more

calories than are expended leads to overweight. But there are

differences of opinion on the causes and the measures to tackle

the problem. The platform wants to contribute to a balanced

understanding of sugar and its role in food, based on factually

correct information on the production and consumption of

sugars.

ACCOUNTABILITYMore and more companies are selecting their suppliers on the

basis of their working conditions and social policies. Cosun’s

major international customers also set exacting standards. And

they want to be reassured that the Cosun business groups

can meet them. To this end, Sensus and SVZ are members of

Sedex, and Aviko is a member of the RSPO (the Roundtable on

Sustainable Palm Oil). They are audited by these organisations

and the findings can be read by customers and others

stakeholders.

Cosun has also introduced the Cosun Principles for directors,

managers and staff. They describe how we should conduct

ourselves and what we can be held accountable for, not only to

each other but also to our customers, business associates and the

society of which we are a part. The Cosun Principles are available

on our website at www.cosun.com – About Cosun – Corporate

Governance.

More information on the measures we take and their results

can be found in our CSR Report for 2015 at

www.annualreport-cosun.com. Annual reports from previous

years are also available from this website.

CORPORATE SOCIAL RESPONSIBILITY


All Cosun’s business groups are engaged in innovation.

More than 70 specialists work on a variety of projects at the

Cosun research and development centre (CFTC). They include

process technologists, chemical analysts, food technologists,

microbiologists and other specialists. They not only carry out

projects closely related to the existing operations but also

develop new products and applications based on vegetable

raw materials and residual flows. Other projects cover process

innovations, with the aim of lowering costs and raising

profitability. The knowledge and experience gained by the R&D

specialists are put to good effect within the group. A method

developed for one business group to cut energy consumption,

for example, will often be used by other Cosun business groups.

The same is true of water treatment techniques that help the

businesses meet their energy requirements. More joint research

projects were started in 2015.

Construction of the Cosun Innovation Center commenced

during the year. This new research and development facility

is being built as part of the Nieuw Prinsenland Agro & Food

Cluster next to the sugar factory in Dinteloord. The centre

will house a pilot factory to test new products and processes.

Customers can also commission small-scale production runs.

CFTC’s staff in Roosendaal will move to the new facility in

Dinteloord. They will soon be working there on innovative

projects with other specialists and counterparts from the

business groups. Cosun invests EUR 15 million in research and

development every year.

INNOVATION AND DEVELOPMENT

COSUN AT WORK

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SUIKER UNIESugar and sugar specialities


In line with expectations market conditions were exceptionally

difficult for Suiker Unie in 2015. Sugar prices on the world

market weakened until the final quarter and then showed

signs of a cautious recovery. Global consumption increased by

about 1.5 to 2% but the world’s sugar stocks are exceedingly

high. Competition on the European sugar market, moreover,

was fiercer. European prices accordingly fell to their lowest

level in 50 years. Suiker Unie produced considerably less sugar

because part of the production from the 2014 harvest had been

carried over to the 2015 season. Despite the lower turnover,

Suiker Unie made a profit and in comparison with most of its

competitors performed relatively well thanks to the efficiency

and processing capacity of our sugar factories.

The pulp and molasses markets were good. Suiker Unie’s

biomass digesters, which produce green gas from beet remains

and beet pulp, was the same as in 2014. Suiker Unie supplied

33.5 million m3 of green gas to some 24,000 households in

both the Netherlands and Germany and part of its vehicle fleet

drives on green gas.

MANAGING BY COSTSIn anticipation of the end of the EU sugar market organisation

in 2017, Suiker Unie made substantial investments in its

factories. Those in Dinteloord and Vierverlaten took new

diffusion towers into service; the factory in Anklam will follow

in 2016. Investments were also made in the evaporation plant

to cut energy consumption and increase capacity.

More efficiency, lower production costs, innovation, more value

from residual flows and more flexible processing must enable

Suiker Unie to retain its market position in the future. Low costs

will be a critical success factor in the sugar market after 2017,

as competition becomes more intense and prices more volatile.

To increase the flexibility of processing, a third thick juice

tank will be installed at the factory in Dinteloord. Two major

investment projects are being prepared for new beet washing

facilities in both Vierverlaten and Dinteloord.

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FEWER BEET PROCESSEDAs some of the sugar was held over to the next selling season

last year, the 2015 campaign was far shorter, lasting just 99

days in the Netherlands. The sugar beet acreage was more than

20% smaller and fewer beet were processed. The sugar yield

in the 2015 campaign was good at 13.9 tonnes per hectare.

Nearly 83 tonnes of beet were grown per hectare. The average

sugar content was 16.7% on account of the less favourable

weather conditions in the summer and autumn.

In Germany, too, the campaign progressed well, lasting 113

days. Bio-ethanol was produced for the first time from thin juice

during the campaign and from thick juice during the summer

months. This yielded a considerable energy saving.

SUSTAINABILITYSustainability is becoming an increasingly important sales

factor. Suiker Unie was awarded Gold status by the Sustainable

Agricultural Initiative (SAI) in 2015. As one of the few sugar

producers in Europe to have been honoured in this way, it is a

leader in the field of sustainable sugar beet cultivation. The SAI

consists largely of large international food manufacturers that

promote sustainable agriculture.

Suiker Unie encourages its beet growers to use as little energy,

fertilisers and crop protection agents as possible. Participants in

the Unitip programme record all relevant data on their activities,

for example their field operations and use of fertilisers. The

digital crop registration system then uses the information to

advise the farmers how they can better protect the environment

and increase their yields per hectare at lower cost.

EcoVadis, the independent supplier rating organisation,

awarded Suiker Unie Gold status again in 2015. On behalf of

more than 40 multinationals, EcoVadis rates over 150 industries

on four themes: environment, fair labour practices, ethics/fair

business practices and supply chain. Suiker Unie ranks among

the top 2% of all businesses taking part in the EcoVadis rating

system.


SUIKER UNIE

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AVIKOPotato products and specialities

Aviko can look back on a good year, one in which it increased

its turnover and made good use of its opportunities for growth.

It took steps in 2015 to improve the quality of its turnover and

launched the Fit for Growth programme. The programme’s goal

is to reduce costs and increase the factories’ output. In addition,

it procured more potatoes at contractually agreed prices, which

had a favourable impact on stabilising the result.

SALES GROWTHThe proportion of potato specialities in sales increased in 2015.

Higher added value specialities such as purees, gratins, hash

browns, speciality snacks and meals performed particularly well

in western Europe. French fries consumption has been stable for

some time in this market and was slightly higher in central and

eastern Europe. Aviko expects to realise a further increase in

these markets as their purchasing power increases.

Aviko has the ambition to be a leader in French fries and potato

specialities in the European food service market (restaurants and

snack bars).

In the retail segment it focuses on a range of basic products

and more luxurious variants of both French fries and specialities,

products that meet the consumers’ demands for quality,

convenience and price.

Outside Europe Aviko saw an increase in sales of both French

fries and specialities, especially in central Asia and Japan. The

growth was attributable chiefly to the emerging middle classes

in these regions and the growing popularity of quick service

restaurants and casual dining. Sales of French fries were also

higher in China. The capacity of the factory in Hebei was tripled

in 2015. Sales of potato flakes also increased sharply. The snack

market is growing worldwide, partly because consumers are

increasingly choosing shaped snacks made with potato flakes or

potato granules as a basic ingredient.

Aviko is the market leader in the snack industry here. The

factory in China produces chiefly for the local market, where

margins are coming under pressure. The Dutch factory also

profited from the growing demand for potato granules and

flakes. Exports of these raw materials to Asia were higher.

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COSUN AT WORK

PROFITABLE GROWTH Aviko launched Fit for Growth during the year. This programme

is designed to improve the quality of turnover by optimising

the product portfolio, strengthening the production capacity

of the factories and increasing efficiency, in combination with

the efficient use of raw materials. Aviko is creating a platform

for further growth that will also improve its cost base. The

programme’s ultimate goals are a stronger market position and

growth. To cut costs, Aviko is planning to reorganise a number

of its production sites and its head office.

The Fit for Growth programme will be consistent wherever

possible with the Total Productive Management (TPM) quality

improvement programme. Maintenance agreements have been

made with the technical service at the factory in Steenderen,

for example. The two programmes have generated so many

improvement proposals that Aviko was awarded A status under

the BRC certification in 2015 as a result. It satisfies the very

highest quality and food safety standards.

RAW MATERIAL PRICES Position management, controlling the fluctuations in raw

material prices, is part of Aviko’s strategy. The wide fluctuations

in potato prices can have a big impact on results. The early

potato harvest in 2015, for example, had an unfavourable

impact on the price paid for the raw material. The main harvest,

however, was markedly better owing to the rainfall later in the

season, and spot prices remained relatively low. To create long-

term stability for both the market and the supply chain, Aviko

concluded more fixed price contracts with growers in 2015.


AVIKO

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SENSUSInulin

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Sensus, a manufacturer of the functional food ingredient

inulin, reported good results for 2015. Sales and turnover

were higher in a market characterised by fiercer competition

on the one hand and an increase in the supply of alternative

soluble fibres on the other. In the European market, the higher

sales were again attributable to an increase in sales of infant

formula based on milk powder to Asia, particularly China.

In southeast Asia, where Sensus concentrates on sales to

manufacturers of baby and infant formula and products for

healthy gut flora, sales growth flattened. This was partly due

to the weaker economic growth in the countries in this region

and partly to the higher exports of baby formula from Europe.

In the American market, sales of inulin were higher in the dairy

segment. Greek yoghurt variants performed particularly well

during the year.

NEW GROWTH OPPORTUNITIESAn important issue among customers in both Europe and

America is lowering the sugar content of foodstuffs. The new

inulin variants that Sensus has developed offer a solution.

Their application in baked goods such as cakes and biscuits

can reduce the sugar content by as much as 30% without

compromising their sweetness. Sensus successfully introduced

several applications in the European market in 2015 to reduce

the sugar content of breakfast cereals, confectionery and,

especially, children’s products. Sales of inulin applications in

animal feed, a market that Sensus entered relatively recently,

jumped sharply in Europe and several South American

countries. Sensus is also extracting more value from the chicory

root by preparing the pulp for use as a food fibre.

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COSUN AT WORK SENSUS

ABOVE-AVERAGE YIELD Sensus can look back on a good campaign with few

interruptions. Yields at the start of the chicory campaign were

below average. As the year progressed, however, the yields

(volume and weight) rose above average thanks to a growth

spurt during the harvesting season. The inulin content of the

roots, though, was markedly lower than in previous years.

YIELD PER HECTARE Sensus expects demand for inulin to increase further in the

years ahead. To meet this growing demand, it wants to increase

the chicory yield to 10 tonnes of inulin per hectare over the

next ten years. To meet this target, the fields will have to yield

4% more per annum. To help the growers, Sensus developed a

special growing programme in 2015. A personal crop monitor

will inform the growers in detail of their performance and

enable them to make comparisons with other farmers. They can

also analyse the causes of lagging yields.

IMPROVEMENT PROGRAMMES IN THE FACTORIESSensus is continuing to improve the processes in its factories.

At the plants in Roosendaal and Zwolle, it has been working

on efficiency and performance improvements for many years.

Both factories have been granted the TPM Excellence Award.

By developing this programme further they hope to achieve the

Consistency Award in the next few years. Sensus has also given

high priority to training and education, partly with a view to

staff deployability. Safety at work is a key issue.


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SVZFruit and vegetable products

SVZ can look back on a good year. The decision to concentrate

on the added value segment of fruit and vegetable purees and

concentrates in combination with effective management of the

position in raw materials meant results were stable again in 2015.

The sales volume was lower but turnover was virtually unchanged.

Position management is also an important part of SVZ’s strategy.

Fluctuations in the supply, the quality of the fruit and vegetables

and prices fed through into the results. To spread this risk, SVZ

processes a wide variety of fruit and vegetables and locates its

production facilities on different continents.

In Europe it concentrates on red fruit (raspberries, strawberries,

cherries and redcurrants). A dry and warm season led to lower

crop yields, especially for raspberries, lower sales volumes at

sharply higher prices, and higher turnover. The juice market was

stable. Vegetables such as beetroot, kale and cucumbers, are

increasingly being added to fruit juices on health grounds and

performance in this area was accordingly good.

Demand for vegetable purees and juice concentrates grew strongly

in America. In Japan, SVZ’s main market in Asia, sales of carrot,

spinach and kale juice and other vegetable concentrates were

unchanged despite competition from other drinks. Demand for

vegetable juices and fruit purees is also gaining momentum in

other countries in Asia, such as Thailand, the Philippines and South

Korea. SVZ has identified growth opportunities in these countries.

NATURAL COLOUR CONCENTRATESSVZ also took other decisions during the year. It sold Added

Value Color Solutions, for instance, to DD Williamson (DDW)

because the specialised sales market for these products was an

uncomfortable match with SVZ’s own market channels. DDW

will take over the development and marketing of the products.

SVZ will continue to produce and sell the natural simple colour

concentrates. The company has signed an agreement with

DDW to supply and mix colour concentrates.

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PRODUCTION INFRASTRUCTUREOptimising the production processes in the factories is a

constant concern of SVZ. It seeks efficiency improvements,

quality improvements and waste prevention. SVZ, too, applies

TPM to prevent waste.

In Poland, SVZ took the next step in improving its production

infrastructure by closing the factory in Karczmiska and

transferring and modernising the production line for

concentrated purees to Tomaszow.

An investment in a state of the art production line for

concentrated purees further improved quality, strengthened

sustainability and increased processing capacity. By processing

the crops close to where they are harvested, which is at the

heart of SVZ’s ‘puree/concentrate from fresh’ strategy, it

has strengthened its grip on supplies and cut freezing and

transport costs. In addition, colour, taste and nutritional value

are optimised. Specialised evaporation techniques are used to

process the vegetables at an exceptionally low temperature.

SUSTAINABILITYSustainability is as strategically important to SVZ as food safety

and the efficient planning of cultivation, logistics, processing

and distribution. SVZ promotes quality and control throughout

the agro supply chain. It processes the harvests as closely as

possible to the fields. A team of agronomists constantly studies

how growers can increase the sustainability of their crops. They

work closely with the growers, and advise them on alternative

crop plans, seed selection, the use of crop protection agents

and artificial fertilisers, food safety and regulatory compliance.

SVZ expects its growers to be certified and to undergo

necessary audits. The intensive cooperation between SVZ and

the growers strengthens the quality of product monitoring.

EcoVadis awarded SVZ Gold status during the year.

SVZ


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DUYNIE GROUPAnimal feed, starch applications and energy products

Duynie is a specialist in extracting value from organic co-

products of the food industry. Under the name Duynie Group,

its activities are organised into five divisions: Feed (animal

feed), Ingredients (raw materials for pet food), Modified Starch

(added value starch products), Renewables (biomass as a raw

material for energy generation) and Innovations (new product

development). Duynie has grown strongly in recent years

through acquisitions. The group has established a particularly

strong position in the European feed market. Diversification

of its utilisation of co-products has also created a more stable

base for turnover. Being able to process the entire supply of co-

products has increased the group’s sales openings and its ability

to respond more flexibly to changes in supply. By building on

this position, Duynie will improve the quality of its turnover.

Total turnover was reduced by lower prices but the group’s

profit for the year was higher than in 2014, chiefly on account

of the better spread of activities cross the application areas.

Raw material purchases were stable, amounting to 4.5 million

tonnes.

ANIMAL FEED AND RAW MATERIALS FOR PET FOODThe fall in meat and milk prices also exerted pressure on animal

feed prices. Duynie Feed nevertheless maintained its sales

thanks to its efficient organisation and further improvements

within the company. Sales of ingredients for pet foods also

developed well. Duynie joined SecureFeed in 2015 and now

satisfies the stricter food safety requirements that will be

introduced for animal feed suppliers in the dairy sector as from

2016.

STARCH ACTIVITIESNovidon enjoyed the results in 2015 of the improvement

programme it had carried out at its factories in the Netherlands,

the United Kingdom, the Czech Republic and Belgium. The

factories are more efficient and the quality of the products is

higher. With its introduction of high quality product series,

Novidon increased its sales in higher added value segments.

Demand for its new adhesive application for bags developed

well and demand for wallpaper paste also grew.

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Sales of drilling starch in the oil industry were lower on account

of the low oil prices.

BIOMASSThe AgriBioSource (ABS) subsidiary supplies biomass for energy

production and water treatment products. The decline in sales

openings in the animal feed sector led to more co-products

being offered for fermentation in this sector. ABS is one of the

few companies in the biogas industry to have a Responsible

Biomass Certificate (RBC). The certificate is similar to the GMP+

system for animal feed and attests to the socially responsible

production of the biogas.

INNOVATIONDuynie has set itself the challenge of innovating better and

smarter applications to extract value from organic co-products.

Research and development are therefore of great importance.

Duynie has its own research facilities and also works with

European research institutes, TNO and universities in the

Netherlands and abroad. Internally Duynie undertakes research

and development projects with CFTC. During the year, the

group developed its first consumer product, eco cat litter. It is

being sold in the United Kingdom under its own brand name.

DUYNIE GROUP

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NEW BUSINESSApplications in the biobased economy

The New Business activity (which includes Cosun Biobased

Products) develops functional ‘green’ chemicals and materials

based on vegetable raw materials. The products meet the

growing demand for renewable alternatives. The business

model requires a great deal of cooperation in many areas, from

research and product development to collaboration on patents

and licences. The group develops new processes, products and

applications by combining its knowledge with that of other

Cosun business groups and third parties such as potential users

and research centres.

The development of biobased solutions for a variety of markets

is a continuous process. The time to market and subsequent

market development are difficult to foresee. The customer

base for applications using the biodegradable descaling agent

Carboxymethyl Inulin (CMI) was further broadened during

the year. CMI is an environmentally friendly alternative to

many petrochemical agents and can be used in, for example,

detergents. The paper, sugar and oil industries use CMI to treat

process water and cooling water.

Progress was also made with BetaFib®, a micro-cellulose fibre

made from vegetable residual flows. The fibre can be used

in paints, liquid detergents and other applications to ensure

that all components remain properly mixed. Following positive

experiences at the pilot plant in Roosendaal, production will be

scaled up in 2016. Various projects are still being carried out

with potential customers to match the product more precisely

to their applications.

PROMISING DEVELOPMENTSNew Business identified the most promising areas in the market

for new products and applications during the year. They are

health promoting proteins and ingredients (food) and building

blocks and biopolymers (non-food). Biopolymers are produced

from vegetable raw materials, such as inulin and BetaFib®.

To support the development New Business appointed an

Advisory Board during the year. Its members have a wealth of

experience in innovation. Strides were also taken to strengthen

the structure of innovation processes within Cosun in order

to increase the likelihood of success, for example by means of

Early Stage Business Planning.

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32

NEW BUSINESS

PULP2VALUE Cosun Biobased Products and six European partners were

awarded a grant in 2015 to develop the Pulp2Value project. The

project will run until 2019 with the objective of developing an

integrated and profitable refinery system for sugar beet pulp.

High value components can be extracted in various steps for

use in cleaning agents, personal care products, and the oil and

gas, paint and coatings, and food industries.


MANAGEMENT ISSUES

33

RISK PROFILE

RISK ANALYSISCosun recognises the importance of risk management to

identify and mitigate risks at an early stage. All business groups

periodically identify, analyse and evaluate potential material risks

with regard to both their likelihood and their impact. This process

is periodically repeated during the budget cycle and the main

risks and quantified and assessed. The results of these analyses

are used to define actions to mitigate risk wherever possible. The

progress made implementing these actions is reported to the

Executive Board.

As part of the four-year cycle, a comprehensive risk analysis will

be made in 2016 with the aid of a detailed framework to assess

all risks and their impact on the business groups’ activities.

RISK PREPAREDNESSOur risk management and internal control systems seek

the right balance between effective and professional

entrepreneurship on the one hand and an acceptable risk profile

on the other.

Cosun is active in a variety of agro-industrial markets in several countries and has to contend with strategic, operational, financial and compliance risks that are inherent in its activities. Its strategy is to control these risks wherever possible by maximising the value it extracts from its raw materials, by developing new product/market combinations, and by means of operational excellence, a targeted product/market strategy, and a sharp focus on cooperation with growers, customers and suppliers, among the Cosun businesses themselves and with knowledge centres and educational institutions.We try to mitigate the risks where possible and make the most of the opportunities.


RISK MANAGEMENT STRATEGYOur internal control system is designed to:

• control the risks attaching to the business activities;

• identify on a timely basis risks that had previously not been

recognised as risks or had been considered immaterial;

• prepare action plans for each risk if desirable and possible to

control and/or mitigate each risk;

• monitor the effectiveness and efficiency of business

processes, including administrative processes.

IMPROVEMENTS IN THE RISK MANAGEMENT SYSTEMFurther steps were taken last year to mitigate safety risks.

Prevention programmes were developed to increase safety at

work: safe working conditions for the staff, the prevention

of errors during production and the prevention of fire and

other material damage at our business groups. Reports

were also introduced to improve insight into purchasing and

selling positions and minimise potential mismatches and take

additional measures if necessary.

RISK CATEGORY STRATEGIC PILLAR RISK PREPAREDNESS AND EXPECTED RETURN

Strategic Profitable growth • Medium/high: right balance between risk and return.• Medium: size of investments in manufacturing footprint relative to projected return

and payback.

Tactical/operational Operational excellence/cost control

• Low in respect of safety issues. • Medium in other areas/issues, with coordination of targets and related costs and

attention to profitability.• Moderate in respect of position management, with a focus on insight into

potential risks.

Financial control &Compliance

• Low in respect of financing, interest and currency risks.• Low in respect of product and food safety. • Low in respect of full compliance with local legislation and regulations.

MANAGEMENT ISSUES


RISK PROFILE

34

Further investments were made to bring about a more

structured, systematic approach to innovative projects.

More attention was focused on shortening the lead time for

innovations and increasing the group’s innovative strength so

that chances can be exploited faster.

Responsibility

Primary responsibility for the internal control system lies with

the boards of the business groups themselves. The Executive

Board and the Board have final responsibility for Cosun’s risk

management and internal control systems.

Design

Cosun introduced the Cosun Principles in 2015 and distributed

them to all the cooperative’s staff and managers. The Principles

are a revised version of the Cosun Code of Conduct issued

in 2000. A whistle blower scheme and the Cosun Speak Up

line have also been introduced to lower the threshold to

report cases that might conflict with the Cosun Principles,

anonymously if desired.

Cosun has a financial and control manual that contains detailed

guidelines on financial reporting and accounting. The business

groups’ financial managers report functionally to Cosun’s Chief

Financial Officer.

Management

• All business groups draw up three-year operating plans.

Detecting and pro-actively responding to risks and

opportunities are part of the operational planning procedure

and are considered in monthly and quarterly reports. The

results are discussed on a monthly basis at Executive Board

level and on a quarterly basis at Board and Supervisory Board

level.

• Risk management is an integral part of the operating plans

and budgets and the internal monthly management and

financial reports.

Monitoring

• The external auditor conducts an annual audit in order to

express an opinion on the consolidated accounts and the

businesses concerned. The external auditor is appointed

by the Members’ Council and reports primarily to the

Supervisory Board. The audit scope and depth are determined

annually in consultation with the Executive Board and the

Supervisory Board, whereby the minimum work required for

the audit opinion is extended to cover specific risks, business

processes or locations that the Supervisory Board or the

Executive Board believes should receive additional attention.

• The general managers and finance managers of all legal

entities in which Cosun has a majority interest sign a Letter

of Representation each year for the entities for which they

are responsible. In it, they declare that they have acted in

accordance with internal guidelines and with the rules arising

from legislation and regulations.

• Recommendations arising at every level from the external

audit are reported to and followed up by the Executive Board.

The Executive Board subsequently reports to the Board and

the Supervisory Board.

RISKS The fall in sugar prices had a significant impact on Cosun’s

results in 2015. In the future, too, the price volatility of our

agricultural raw materials (potatoes, fruit, and vegetables) and

price movements in the sales markets for sugar, potato products

and fruit and vegetable products may have a significant impact

on Cosun’s results in any given year.

The table hereafter show the main risks to our strategy and the

measures we have taken to control them where economically

feasible.


RISK PROFILEMANAGEMENT ISSUES

35

RISK CATEGORY: STRATEGIC

RISK RISK CONTROL MEASURE IMPACT ON RESULTS

• End of the European common market organisation for sugar in October 2017, after which EU sugar production will no longer be regulated.

• Strong price fluctuations/fall in the sugar price.

• Growth targets in existing and new product/market combinations (biobased products and renewable energy).

• Cosun is made up of several business groups. Its activities are spread across several raw materials and sales markets.

• Investment in processing and storage capacity to increase the efficiency, flexibility and cost leadership of the sugar factories.

• Continuous focus on improving the cultivation of sugar beet.

High due to volatility of market prices.

High due to volatility of market prices.

• The customer chooses alternative products for its product composition (substitution risk).

• Offer added value through intensive cooperation with customers and product development. Broad product portfolio at all business groups.

• Cost leadership relative to both direct and indirect competitors.

Medium

Main growth opportunities forfurther growth: • Growth of world population

and increased prosperity, also in emerging markets.

• Further development of the biobased economy.

• Acquisition opportunities.

• Spread of sales across different geographical markets and sales specifically targeted at growth markets.

• Cooperation between Cosun Biobased Products and partners, knowledge centres and in strategic alliances to develop new product/market combinations based on agricultural raw materials processed by the Cosun business groups.

• Corporate development directed at scouting potential acquisition candidates and internal programmes to facilitate the fast integration of acquisitions into existing business groups.

Medium

• Changes in consumer food behaviour (health, sustainability).

• Transparency and clear information on nutritional value and sustainability of Cosun products.

• Further development of innovative, tasty and safe food ingredients with functional added value.

• Initiatives to enhance food safety in the supply chain in cooperation with customers and suppliers.

Medium

RISK CATEGORY: TACTICAL/ OPERATIONAL


• Staff and product safety. • Focus on a safe workplace and safe working practices through training, physical measures, procedures, targets and reports.

• Certification, track and trace system and HACCP procedures.

Low

• Volatility of agricultural and other raw material and energy prices.

• This risk is inherent in Cosun’s campaign-related activities. Risk are controlled by means of position management.

• Continuous focus on cost-efficient production to reduce energy consumption, transport and the use of packaging materials, combined with long-term price and volume agreements.

High

• Influence of the weather on availability and quality of raw materials (harvest risks).

• Spread of raw material processing across several growing regions (also within countries) for sugar beet, potatoes, chicory roots, fruit and vegetables.

• Production organisations are prepared to adapt their processes to changes in the quality of raw materials.

• Support and advice provided to growers by the group and industry associations for specific growing and weather conditions (e.g. spraying and lifting advice for growers).

Medium

• Loss of a major customer. • Very limited reliance on one major customer at Cosun level. Impact may be greater at business groups depending on their customer portfolios.

Low

• Business continuity / disruption in the factory.

• Specific risk management programmes, investments, inspections and maintenance to prevent disruption.

• Insurance: Cosun has several general group insurance programmes to cover product and other liabilities, fire, consequential loss, etc. The consequential loss programme insures assets at appraised value plus an appropriate, tailored cover for consequential losses. The financial robustness of the insurers is periodically assessed. Depending on the size of the risk, cover is arranged with several insurers.

Medium


MANAGEMENT ISSUES

36

RISK PROFILE

RISK CATEGORY: FINANCIAL MANAGEMENT


• Mismatch between buying and selling positions for raw materials and end products.

• Frequent monitoring of buying and selling positions by senior managers of the business groups.

Low

• Financing and interest risks. • Cosun’s financial position is very healthy. At year-end 2015, the group had no net debt. Cosun contracted a five-year syndicated bank facility in 2014, with two options to renew the facility for a period of one year. This option was exercised in 2015 and the term was lengthened for one year. Long-term financing consists of a US private placement programme (USPP) comprising several long-term loans with remaining terms of three years. Only the final tranche of the loans still has to be repaid.

• The group has a central treasury organisation organised as an in-house bank. Subsidiaries, with the exception of joint ventures and liquidity management, are financed at group level.

• Loans are spread wherever possible over a select group of counterparties with a short-term rating of at least A2 or equivalent. All Cosun businesses report their liquidity forecasts for the coming 12 months every month to reduce the risk of unforeseen liquidity shortages. The quality of the liquidity forecasts was improved in 2015.

Low

• Foreign exchange risk. • The greater part of turnover is earned in the eurozone. The main currency exposure is concentrated on the US dollar, the Polish zloty and the pound sterling. Internal policy is to hedge the foreign exchange risks arising from the operating and financial activities wherever possible.

Low

• Risk of underfunding in the defined benefit pension schemes (pension risk).

• The policies of the group’s pension administrators are known for their strict risk management. They have largely covered themselves against the consequences of lower interest rates, for example, and the investment policy is characterised by widely diversified portfolios spread across a broad range of investment categories. Investment transactions have been contracted out in full to external parties.

• The funding rates of Cosun’s pension funds at year-end 2015 was around 110%. As from 1 January 2014, the group is no longer obliged to make contributions if the pension schemes are underfunded. The social partners will consult each other to reach a solution if the schemes are underfunded. The assets and liabilities of Aviko’s pension fund were transferred to Pensioenfonds Grafische Bedrijven as of 31 December 2015.

Low

RISK CATEGORY: COMPLIANCE


• Legislation and regulations. • Implementation of the Cosun Principles for all members of staff and whistle blower scheme.

• Whistle blower scheme and external reporting opportunities for cases that do not comply with the Cosun Principles via the Cosun Speak Up line (with active response to reports).

• Observance of the corporate governance code for cooperatives (NCR code).• Annual signing of an internal Letter of Representation.

Low

• Tax risks. • Cosun is active in many countries. The group seeks a transparent relationship with the tax authorities. Cosun has signed a horizontal supervision agreement with the Dutch tax authorities.

• Activities are structured so that corporation tax is coordinated centrally. Responsibility for VAT, salaries tax, social insurance, etc. lies with the individual entities. The policy and related management processes are periodically assessed.

Low


MANAGEMENT ISSUES

37

CORPORATE GOVERNANCE

Good employment practices, integrity, respect, oversight,

transparent reporting and accountability are the main elements

of Cosun’s corporate governance policy. Cosun endorses

and observes the code of conduct issued by the Netherlands

Cooperative Council for Agriculture and Horticulture.

GOVERNANCE MODELCosun has a traditional governance model. Control of the

cooperative lies with the members, in part through their

election of the Board. Most members of the Board are also

members of the cooperative; three members are not. Members

of the cooperative also form a majority on the Supervisory

Board so that the members have the deciding vote. The external

members of the Board and the Supervisory Board are nominated

and appointed in recognition of their expertise and external

networks. The Board has delegated day-to-day management to

the Chief Executive Officer of the Executive Board.

BOARDThe Board’s primary task is to run the cooperative. It has final

responsibility for the development and implementation of the

policy of both the cooperative and the business groups that

make up Cosun. The Board consists of nine members, three

external members and six members who are also members of

the cooperative.

SUPERVISORY BOARDThe Supervisory Board supervises the policy conducted by the

Board. From its independent position, it advises the Board and

the Members’ Council on request and otherwise. Together

with the external auditor, the Supervisory Board examines the

cooperative’s annual accounts. There are six members: four are

members of the cooperative and two are external.

MEMBERS’ COUNCILThe members of Cosun elect the executive committees of the

districts/sections in which their farms are located (see also page

11 of this report). All Cosun’s district committees together

form the Members’ Council. On a proposal of the Board, the

Members’ Council elects the members of the Board.

To Cosun, corporate governance is the way it regulates the relationships between the members of the

cooperative, the Board, the Supervisory Board, the Executive Board and the staff.

On a proposal of the Supervisory Board, the Members’ Council

elects the members of the Supervisory Board. On a proposal

of the Board it also adopts the annual report and accounts,

the Articles of Association and the regulations. It also acts as a

sparring partner for the Board. The Members’ Council has 61

members, all of whom are members of the cooperative.

YOUTH COUNCILThe Youth Council is the breeding ground for management

talent within the cooperative. The members of the Youth

Council represent candidate and young members. In

consultation with local district and section managers, the Youth

Council itself is responsible for succession when necessary.

More information on corporate governance can be found on

the website www.cosun.com under the heading About Cosun –

Corporate Governance. The Code of Conduct for cooperatives

has been posted on www.cooperatie.nl under NCR-code (in

Dutch).

On behalf of the Board,

D.H. de Lugt G.M. van Tilburg

Chairman Vice-chairman


Districts

Members’ Council

Board

Executive Board

Youth Council

Supervisory Board

Members

ROYAL COSUN


MANAGEMENT ISSUES

38

REPORT OF THE SUPERVISORY BOARD

The Supervisory Board discussed many matters in 2015. Together

with the Board, it considered the management of the cooperative

(governance). The Supervisory Board also agreed with the

Board that this subject would be discussed further in 2016.

The Supervisory Board also studied the HRM policy at group

level in depth, paying particular attention to the development

of management talent. The Supervisory Board met on seven

occasions during the year, with three meetings being held jointly

with the Board. It again followed the entire financial cycle, from

the operating plans via the quarterly reports and the December

projections to the annual accounts and the annual report.

ADVICE AND SUPERVISIONThe Supervisory Board reviewed the strategy again three years

after having adopted it in 2012. The re-evaluation prompted

some minor changes. We found that the strategy had proved its

worth in the face of the unprecedented fall in sugar prices on

the world market and in Europe. We also found that the non-

sugar business groups were continuing to work hard to achieve

the goals set for 2022. The volatility of both the purchasing

and selling markets demands the continuous attention of

the management in order to achieve the required return.

The operating plans for 2016-2018 were submitted to the

Supervisory Board for assessment. The largest activities,

Suiker Unie and Aviko, are implementing cost saving

programmes, often in combination with investments to improve

efficiency and quality. The Supervisory Board recognises the

importance of this but notes that it is only worthwhile if there is

also a market on which they can sell their products at a profit.

The Supervisory Board therefore studied and considered the

plans meticulously before approving them.

Innovation and new activities were also prominent items on

the agenda in 2015. A separate business group was set up for

them in 2014 with its own business plan, Cosun New Business.

It periodically reports upon its procedures and progress. Project

evaluation has been professionalised by the appointment of an

advisory board with external specialists.

The Cosun R&D organisation will move to new premises in

Dinteloord in 2016. New Business and Cosun Biobased Products

will also move into the same building.

This investment in the innovative strength of Cosun will provide

more opportunities for synergy from cooperation.

Several issues affecting the members were discussed during the

year, including the ending of the EU sugar market organisation

and the associated amendment of the Articles of Association

and regulations. The delivery entitlement will in future be based

on the new member supply certificates and beet prices will be

calculated on the basis of a new quality system. These issues

affect both the individual members and the collective, the

cooperative. There was therefore every reason to weigh up all

the interests. The Articles of Association and the regulations

were also modernised as part of this process and adapted to the

latest legislation and governance codes.

FINANCIALCosun constantly invests in improving the profitability of its

business groups so that it can continue generating added value

for its members in the future. Some of the members received

a beet delivery/business termination payment in 2015. It was

paid from funds that had remained within the cooperative over

the past 15 years and then released. In view of the substantial

outflow of capital, a new savings system was introduced, the

Cosun members’ loan scheme. This financial product is open

to members only. It was reviewed and approved by both the

Supervisory Board and the financial regulators. As the first

opportunity to deposit funds with Cosun met all expectations in

2015, the scheme will be continued.

The auditor has examined the annual accounts for 2015

and issued an unqualified opinion on them. The audit was

completed smoothly thanks to the high quality of internal

reporting. Questions about critical factors at our businesses

were answered and the Supervisory Board was reassured that

the audit findings gave a good view of Cosun’s financial health.

The follow-up to the management letter was also discussed,

and explanations were provided if the recommendations had

not yet been acted upon. The Supervisory Board submits the

annual report for 2015 and recommends that the Members’

Council approves it.

The Supervisory Board oversees the execution of Cosun’s policy. From an independent position, it advises the Board and the Members’ Council on request and otherwise.

MANAGEMENT ISSUES REPORT OF THE SUPERVISORY BOARD

39


MEMBERS AND PERFORMANCEBiense Visser, an external member of the Supervisory Board, was

re-elected unanimously during the Annual General Meeting.

Otherwise, there were no changes in the composition of the

Supervisory Board. The Supervisory Board reviewed its own

performance and held individual performance interviews with all

its members. A constructive critical attitude helps to safeguard

the quality of decision-making and raise it to a higher level. At

the beginning of every meeting since 2015, for example, the

Supervisory Board has named the main points on the agenda so

that it can work as efficiently and as effectively as possible.

To retain a feeling for the activities carried on by Cosun, several

working visits were made to the businesses every year. In 2015

we successively spoke to the managers of Suiker Unie’s German

operations in Anklam, with the managers of Duynie Novidon

(starch activities) in Nijmegen and with the managers of Aviko

Rixona in Venray. These meetings were particularly valuable for

the Supervisory Board to gain a proper understanding of the

business, the management and what was happening.

During the visit to Anklam, we also met several beet growers.

The Supervisory Board exchanged ideas with the specialists at

a major bank on the future of the European sugar industry and

visited an innovative production company at which Biense Visser

is also a supervisory director.

A WORD OF THANKSThe Supervisory Board would like to express its gratitude to

the Board, the Executive Board and all members of staff for

the financial results for the year and to thank everyone who

contributed to them. The turbulence that has demanded so

much commitment and flexibility from us all is set to continue

but the Supervisory Board has every confidence in the resilience

of our cooperative and therefore in its future.

On behalf of the Supervisory Board

J. Bartelds W.A. Blijdorp

Chairman Secretary


MANAGEMENT ISSUES


40

MEMBERS OF THE BOARD, SUPERVISORY BOARD, EXECUTIVE BOARD AND WORKS COUNCILBOARD Chairman D.H. de Lugt De Cocksdorp

Vice-Chairman G.M. van Tilburg Emmeloord

Deputy Vice-Chairman B.R. van Doesburgh Loenen a/d Vecht

Members A.J.B.P. Bossers Langeweg

J.M. Klompe Wolphaartsdijk

Ms. G. Prins Nieuwkoop

J.A. Smid Dalerpeel

J.H.D. Voncken Eys

S. Wijkstra Zeist

Secretary J.W.M.J. van Roessel

SUPERVISORY BOARD Chairman J. Bartelds Tweede Exloërmond

Vice-chairman J.L. van Driel Nieuw-Beijerland

Secretary W.A. Blijdorp Middenmeer

Members E.H.W.J.E. Michiels Horst

Ms. J.P. Rijsdijk Leiderdorp

B.T. Visser Haarlem

EXECUTIVE BOARD Chairman R.P. Smith CEO

Members I.H. Blankers director Sensus

G.C.A.M. Corsmit director Duynie Group

Ms. A.E. ter Laak director SVZ

A.J. Markusse director Suiker Unie

P.H. Merckens director Aviko

G.H. de Raaff director Cosun Biobased Products

Ms. T.A. van de Werken director Finance & Control

Secretary Ms. M.J.C.W. van den Maagdenberg director Mergers & Acquisitions

CENTRAL WORKS COUNCIL Chairman J.A.A. Stoopen CFTC

Secretary C.W. van Agtmaal SVZ

Members H. Arfman Aviko

A.C.J. van der Borst Suiker Unie

H.A.M. Flipsen Suiker Unie

S.C.A.M. Geerts Cosun

A. Kayabasi Aviko

C. Kooiman Duynie

H. Maan Sensus

G.G.M. Wilmer Aviko

C. Wijma Suiker Unie

as at 31 December 2015

More information is available at www.cosun.com under About Cosun – Corporate Governance. The website provides relevant personal particulars on the members, the principal and secondary positions they hold and – where applicable – the date of their appointment, term of office, their eligibility for re-election, etc.

ANNUAL ACCOUNTS

42


ANNUAL ACCOUNTS 2015 CONSOLIDATED BALANCE SHEET

Notes 31-12-2015 31-12-2014

ASSETS

Fixed assets

Intangible fixed assets (1) 123.9 137.2

Tangible fixed assets (2) 604.3 577.1

Financial fixed assets (3) 24.9 28.2

753.1 742.5

Current assets

Inventories (4) 633.8 605.8

Trade and other receivables (5) 290.9 280.4

Cash and cash equivalents (6) 95.1 370.5

1,019.8 1,256.7

Total assets 1,772.9 1,999.2

EQUITY AND LIABILITIES

Group equity

Capital and reserves (7) 1,140.6 1,230.5

Minority interests (8) 24.3 26.3

1,164.9 1,256.8

Provisions (9) 77.0 84.1

Non-current liabilities (10) 68.1 59.5

Current liabilities (11)

Current liabilities to credit institutions and liabilities of a financing nature 12.8 61.0

Other current liabilities, accruals and deferrals 450.1 537.8

462.9 598.8

Total equity and liabilities 1,772.9 1,999.2

CONSOLIDATED BALANCE SHEET (after profit appropriation; in EUR million)


43


CONSOLIDATED PROFIT-AND-LOSS ACCOUNT

FOR THE FINANCIAL YEAR Notes 2015 2014

Net turnover (14) 1,947.7 2,114.5

Changes in inventories of finished products 21.4 21.9

Other operating income (15) 17.6 20.5

Total operating income 1,986.7 2,156.9

EU levies (16) 11.0 11.0

Cost of raw materials and consumables (17) 1,211.1 1,337.8

Cost of outsourced work and other external costs (18) 350.6 351.0

Staff costs (19) 255.0 250.9

Amortisation and depreciation on intangible and tangible fixed assets 97.6 91.3

Other changes in the value of intangible and tangible fixed assets (20) - 2.4

Other operating expenses 2.2 2.6

Total operating expenses 1,927.5 2,047.0

Operating profit 59.2 109.9

Interest receivable and similar income 2.0 4.2

Interest payable and similar charges -/- 8.1 -/- 7.8

Financial income and expense (21) -/- 6.1 -/- 3.6

Result from ordinary activities before taxation 53.1 106.3

Taxation (22) -/- 7.8 -/- 27.4

Share in results from participating interests 0.0 0.5

Result from ordinary activities after taxation 45.3 79.4

Minority interests 0.2 -/- 0.3

Net result 45.5 79.1

(in EUR million)

CONSOLIDATED PROFITAND LOSS ACCOUNT


44


CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR Notes 2015 2014

Operating profit 59.2 109.9

Depreciation and amortisation 97.6 91.3

Other value adjust - 2.4

Changes in provisions (24) 0.2 3.9

Changes in working capital (excluding cash and cash equivalents and short-term bank overdrafts)

(24)

-/- 91.4

-/- 18.1

Cash flow from business operations 65.6 189.4

Interest received (paid) -/- 6.6 -/- 5.9

Income tax paid -/- 4.2 -/- 14.5

Other movements -/- 0.8 3.2

-/- 11.6 -/- 17.2

Cash flow from operating activities 54.0 172.2

Investments in (in)tangible fixed assets -/- 108.6 -/- 102.5

Proceeds from the sale of tangible fixed assets 3.8 0.8

Acquisitions of participating interest -/- 2.0 -/- 19.3

Cash flow from investing activities -/- 106.8 -/- 121.0

Gross distribution under sugar beet payment/business termination regulations (30) -/- 179.0 -/- 9.8

Changes in long-term receivables -/- 5.8 -/- 2.6

Changes in non-current liabilities (24) 9.4 -/- 0.5

Changes in current liabilities to credit institutions and liabilities of a financing nature -/- 48.2 -/- 8.2

Cash flow from financing activities -/- 223.6 -/- 21.1

Changes in cash and cash equivalents -/- 276.4 30.1

Cash and cash equivalents at the beginning of the year 370.5 338.2

Cash and cash equivalents at participating interests acquired 1.0 2.2

Cash and cash equivalents at the end of the year 95.1 370.5

CONSOLIDATED CASH FLOWSTATEMENT (in EUR million)


45


NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS

NOTES TO THE CONSOLIDATEDANNUAL ACCOUNTS

TRANSLATED FINANCIAL STATEMENTSThese Annual Accounts is an English translation of the original Dutch publication. In the event of textual inconsistencies between

the English and the Dutch versions, the latter shall prevail.

GENERALCoöperatie Koninklijke Cosun U.A. (hereinafter: ‘Cosun’), with its registered office in Breda, the Netherlands, processes and

prepares raw materials, mostly from agricultural sources, producing semi-manufactures for the international food and beverage

industry and the food service industry (restaurants, caterers and wholesalers), and finished products that are sold to customers

through retail outlets. The group also processes organic residuals into products such as bio-ethanol and animal feed.

The activities are classified as follows:

• Sugar activities: sugar and bio-energy from residual currents (Suiker Unie).

• Potato activities: potato products, such as chilled, frozen and dried potato products and potato specialities (Aviko and Rixona).

• Other activities: fruit and vegetable products (SVZ), inulin (Sensus), animal feed and starch (Duynie Group) and innovation

(Cosun Biobased Products).

APPLICABLE STANDARDSThe annual accounts have been prepared in accordance with the legal requirements as set out in Title 9, Book 2 of the Netherlands

Civil Code. For the cooperative profit and loss account, Cosun has availed itself of the exemption available under Section 402, Book

2 of the Netherlands Civil Code.

CONSOLIDATION PRINCIPLESThe consolidated annual accounts include the financial data of Cosun and its group companies and other companies controlled

by the company. Group companies acquired during the year under review are included as from the date at which direct or indirect

influence can be exercised on the business and financial policy. The results of group companies sold are incorporated up to the

moment the overriding control ended. Intercompany payables, receivables and transactions, as well as profits already recognised on

these within Cosun but not yet realised, are eliminated in the consolidated annual accounts. The group companies are consolidated

in full with the third-party minority interest being presented separately. Joint ventures are consolidated proportionally. In accordance

with Articles 379 and 414, Book 2 of the Netherlands Civil Code, a list of data on group companies and other participating

interests has been filed with the Chamber of Commerce.

ACQUISITIONS AND DISPOSALSThe following acquisitions took place in 2015:

Duynie acquired the remaining 10% shares in Beuker S.R.O., Slovakia, on 29 October. Cosun increased its interest in Eemshaven

Sugar Terminal C.V. by 32.7% as from 9 December, giving it power of control over policy.

The following acquisitions took place in 2014:

Aviko took a 60% interest in Martin Amberger Kartoffelverarbeitung Dolli-Werk GmbH & Co KG, Germany, as of 24 March 2014

and took a 51% interest in the joint venture Aviko SnowValley Food (Hebei) Co. Ltd., China, as of 7 August 2014.

Duynie acquired 100% of the shares in James & Son (Grain Merchants) Ltd. as of 30 May 2014 and the remaining 40% of the

shares in Duynie Ltd. as of 30 June 2014, both located in the United Kingdom.

No significant disposals took place in 2014 or 2015.

(in EUR million)


46



GENERALThe accounting policies adopted for the valuation of assets and liabilities and determination of the result are based on the historical

cost convention. Insofar as not stated otherwise, assets and liabilities are shown at nominal value. An asset is included in the balance

sheet when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the

cost of the asset can be reliably measured. A liability is included in the balance sheet if it is expected to result in an outflow from the

entity of resources embodying economic benefits and the amount of the obligation can be measured with sufficient reliability.

The income and expenses are accounted for in the period to which they relate.

POLICIES FOR THE TRANSLATION OF FOREIGN CURRENCIESThe reporting currency and the functional currency of the annual accounts of Cosun is the euro (EUR). The costs and income arising

from transactions in foreign currencies or monetary receivables and payables, are translated at the average exchange rate or the

rate prevailing at balance sheet date respectively. Translation gains and losses are taken to the profit and loss account. The net

investment in foreign participating interests is translated at the exchange rate prevailing at balance sheet date. Foreign currency

profit and loss account items of foreign participating interests are translated at the average exchange rate. Translation gains and

losses are taken directly to the statutory reserve for exchange rate differences as part of Cosun’s group equity, less tax effects

if applicable. If a foreign operation is fully or partially sold, the respective amount is transferred from the reserve for translation

differences to the other reserves. Translation gains and losses on long-term financing and financial instruments used to hedge

exchange rate risks arising from foreign participating interests are treated accordingly.

NETTINGAssets and liabilities are shown net of each other in the annual accounts only if and in so far as:

• there is a reliable legal instrument to net and simultaneously settle the assets and the liability, and

• there is a firm intention to settle the net amount or the two items simultaneously.

FINANCIAL INSTRUMENTSThe financial statements includes the following primary financial instruments: loans granted, trade and other receivables, cash and

cash equivalents, loans received, other financing commitments, trade payables and other payables. The financial statements also

includes derivative financial instruments (derivatives).

PRIMARY FINANCIAL INSTRUMENTSPrimary financial instruments are initially recognized at fair value which includes the attributable transaction costs. After initial

recognition, primary financial instruments are carried at amortised costs using the effective interest method, less impairment losses.

The effective interest method is used to recognize transaction costs in the profit and loss account. Cosun applies nominal value if

the amortised costs are in line with nominal value. The fair value of cash and cash equivalents is equal to the nominal value; cash

and cash equivalents are freely available to Cosun unless stated otherwise.

ACCOUNTING POLICIES


47



DERIVATIVE FINANCIAL INSTRUMENTS (DERIVATIVES)Currency derivatives, interest derivatives and forward commodity transactions

Cosun uses derivatives to hedge the exchange rate, interest rate and price risk from balances and highly probable future sales

and purchases. Forward exchange contracts, interest rate swaps, forward commodity contracts and other derivative financial

instruments are used to hedge these risks. Derivatives are initially recognized at fair value. After initial recognition derivatives are

stated at cost or lower fair market value unless cost price hedge accounting is applied. At initial recognition the cost price is equal

to the fair value. Cosun applies cost price hedge accounting in order to simultaneously recognise both the results from changes in

the value of the derivatives and the future transaction in the profit and loss account.

If cost price hedge accounting is applicable the accounting policies are defined below:

• As long as the hedged financial asset or liability is not recorded in the balance, the derivative will not be recorded.

• As soon as the hedged position of the expected transaction leads to the recognition of a primary financial instrument, the gains

or losses associated with the derivative are recognised in the profit-and-loss account in the same period in which the primary

financial instrument affects profit or loss.

• Cosun periodically assesses the effectiveness of its hedging relationships. The results from the non-effective part of the hedge

relationship are included in the profit-and-loss account.

• Should the transaction no longer be expected to take place, so the derivative no longer meets the conditions for cost price

hedge accounting, or is sold, the accumulated profit or the accumulated loss is recognised in the profit-and-loss account.

• As soon as the derivative expires before the expected transaction has taken place the accumulated profit or accumulated loss

that has not been included in the profit and loss account is recognised as accrual and deferrals on the balance sheet until the

expected transaction has taken place.

• Translation gains and losses on primary financial instruments are compensated by changes in value of currency derivatives. The

book value of a currency derivative is carried by the difference between the applicable exchange rate as at balance sheet date

and the hedged exchange rate.

• The value of a currency derivative is amortized over the duration of the currency swap.

INTANGIBLE FIXED ASSETSGoodwill is the excess of the purchase price and the fair value of the identifiable assets and liabilities of the acquired participating

interest at the date of acquisition. Goodwill paid upon the acquisition of foreign group companies and subsidiaries is translated

at the exchange rate applicable at the moment of acquisition. The capitalised goodwill is amortised according to the straight-line

method over the estimated useful life, in general between 5 and 20 years.

Other tangible fixed assets (excluding CO2 emission allowances) are carried at cost net of accumulated depreciation and other

downward value adjustments.

Cosun obtained CO2 emission allowances at zero cost. The company has not recognized its surplus CO2 emission allowances

obtained for nothing. Cosun acquires emission allowances to meet future deficiencies. The acquired emission allowances are stated

at cost and will be charged to the result at time of use.


48



TANGIBLE FIXED ASSETSLand and buildings, machinery and equipment and other tangible fixed assets are stated at cost of purchase or manufacture, less

accumulated depreciation and other downward value adjustments. Grants and subsidies are deducted from the cost of purchase or

manufacture of the asset in question.

Depreciation is calculated as a percentage of the cost of acquisition or manufacture according to the straight-line method on the

basis of useful life. Land, tangible fixed assets in production and prepayments are not depreciated. Maintenance expenditure is only

capitalised if it extends the useful life of the asset.

FINANCIAL FIXED ASSETSParticipating interests where significant influence can be exercised over the business and financial policy are stated on the basis of

net asset value. Participating interests in which no significant influence is exercised are valued at the lower of cost and sustainable

realisable value. Participating interest with a negative net asset value are valued at nil. A provision is recognized if necessary.

Deferred tax assets, including off-settable tax losses, are stated insofar as it is deemed probable that these will be realised in future

and are calculated on the basis of the tax rate applicable at the time at which these are expected to be realised.

Other long-term receivables are carried at amortised cost, less a provision deemed necessary for uncollectability.

IMPAIRMENT OR VALUE ADJUSTMENT OF FIXED ASSETSCosun recognises intangible, tangible and financial fixed assets in accordance with accounting policies generally accepted for

financial reporting in the Netherlands. Pursuant to these policies, assets with a long life should be subject to an impairment test in

the case of changes or circumstances arising that lead to the suspicion that the book value of the asset will not be recovered. The

recoverability of assets in use is determined by comparing the book value of an asset with the future net cash flow that the asset is

expected to generate. In the case of a higher book value, the difference is charged to the result. Assets for sale are stated at book

value or lower market value, less selling costs.

INVENTORIESRaw materials and consumables are carried at the lower of cost in accordance with the FIFO (‘first in, first out’) method. Finished

products are valued on the basis of cost of manufacture, including the purchase costs of used raw materials and consumables

and the other costs directly attributable to manufacture. In addition, part of the indirect costs over the period of manufacture is

attributed to the cost of manufacture. Members’ bonus is not included in the valuation of inventory. Goods for resale are valued at

cost. Cost includes the purchase price plus additional related costs. Land designated as project development land is valued at the

historical cost of acquiring the land and other costs, which are directly attributable to the development.

When valuing inventories, account is taken of any value adjustment occurring on the balance sheet date including, if applicable,

lower net realisable value.


49



RECEIVABLESNon-interest bearing short term receivables are stated at nominal value. Interest bearing receivables are stated at amortized cost,

less a provision deemed necessary for uncollectability. Provisions are determined on the basis of individual assessment of the

collectability of receivables.

EQUITYPursuant to Guideline 620 of the Dutch Accounting Standards Board, the part (2%) of the paid-up capital that is payable on

demand by the members is recognised as a liability in the consolidated annual accounts. As a result the consolidated equity differs

from the equity in the cooperative annual accounts.

In so far as members are eligible to payment under the Sugar Beet Delivery Payment Regulations or the Cessation of Business

Regulations, the payment is charged to equity the moment it is paid.

A standard payment regulation applies when a member obtains shares. The present value of the amount payable is recognised

under receivables.

MINORITY INTERESTSThe third-party minority interests are valued at the third parties’ share of the net asset value.

PROVISION FOR DEFERRED TAX LIABILITIESInsofar as valuations for tax purposes differ from the policies described in this section, and these result in deferred tax liabilities, a

provision is formed for these liabilities, calculated according to the tax rate applicable at the time when they are expected to be

paid.

PENSIONS AND OTHER DEFERRED EMPLOYEE BENEFITSDutch pension plans

The main principle is that the pension charge to be recognised for the reporting period should be equal to the pension

contributions payable to the pension fund over the period. Insofar as the payable contributions have not yet been paid as at

balance sheet date, a liability is recognised. If the contributions already paid exceed the payable contributions as at balance sheet

date, a receivable is recognised to account for any repayment by the fund or settlement with contributions payable in future.

In addition, a provision is included as at balance sheet date for existing additional commitments to the fund and the employees,

provided that it is likely that there will be an outflow of funds for the settlement of the commitments and it is possible to reliably

estimate the amount of the commitments. The existence or non-existence of additional commitments is assessed on the basis of

the administration agreement concluded with the fund, the pension agreement with the staff and other commitments to staff. The

liability is stated at the best estimate of the present value of the anticipated costs of settling the commitments as at balance sheet

date. For any surplus at the pension fund as at balance sheet date, a receivable is recognised if the company has the power to

withdraw this surplus, if it is likely that the surplus will flow to the company and if the receivable can be reliably determined.

Foreign pension plans

Pension plans that are comparable in design and functioning to the Dutch pension system, having a strict segregation of the

responsibilities of the parties involved and risk sharing between the said parties (company, fund and members) are recognised and

measured in accordance with Dutch pension plans (see previous section). For foreign pension plans that are not comparable in

design and functioning to the Dutch pension system, a best estimate is made of the commitment as at balance sheet date. This

commitment should then be stated on the basis of an actuarial valuation principle generally accepted in the Netherlands.


50



Other deferred employee benefits

For other deferred employee benefits (such as jubilee) provisions are recorded. This provision is recorded at present value. The

calculation of the present value is based on commitments, expected average remaining working period and age of the employees.

PROVISIONSA provision is recorded when:

• There is a present legal or constructive obligation as a result of a past event.

• A reliable estimate can be made.

• It is probable that an outflow of economic benefits will be required to settle the obligation.

The provisions are valued at the discounted expected future cash flows.

NEGATIVE GOODWILLGiven its long-term nature, negative goodwill is presented as a non-current liability. The negative goodwill is recognised in the

profit and loss account in proportion to the weighted average of the remaining useful life of the acquired depreciable assets.

LONG-TERM LEASE OBLIGATIONSAgreements are assessed as to whether they contain a lease on the basis of economic reality on the contract date.

In case of financial lease (where the costs and benefits of the asset leased are borne entirely or almost entirely by the lessee) the

leased asset and the associated debt on the date on which the agreement is entered into are recognised in the balance sheet at the

lower of the asset’s fair value at the date on which the agreement was entered into and the present value of the minimum lease

payments. The initial direct costs borne by the lessee are included in the initial recognition of the asset. Lease payments are broken

down into interest expense and repayment and the outstanding obligation, using a constant rate of interest over the remaining net

obligation.

The capitalised asset leased is depreciated over the shortest period of the lease term or the useful life of the asset if there is no

reasonable certainty that the lessee will become the owner at the end of the lease term.

In case of operational lease, lease payments are charged to the profit and loss account on a straight-line basis over the lease term.

DETERMINATION OF THE RESULTNet turnover concerns the income from goods and services delivered to third parties, less discounts awarded and turnover tax.

Turnover is only recorded if there is reasonable assurance that future benefit will be accrued by the business and that such benefit

can be estimated reliably. Income is recorded when the significant risk and rewards of ownership have been transferred to the

buyer, receipt of the consideration is probable, and the associated costs and possible return of goods can be estimated reliably and

there is no continuing involvement of the legal entity with the goods.

Members receive a members’ bonus for the beet they deliver. The members’ bonus is recognised as cost of raw materials and

consumables.

The share in the result of participating interests represents Cosun’s share in the result of these participating interests (if the

participating interest is valued at net asset value) or the dividend received or other value adjustment (if the participating interest is

valued at cost).


51



Taxation on the result comprises both taxes payable and deductible in the short term and deferred taxes, taking account of tax

facilities and non-deductible costs. No taxes are deducted from profits if and insofar as these can be offset against losses from

previous years and a deferred tax asset had not been recognized. Taxes are deducted from losses if these can be offset against

profits in previous years. In addition, taxes will be deducted if and insofar as it may be reasonably expected that losses can be offset

against future profits.

FAIR VALUEFair value represents the amount for which an asset is traded or an obligation settled between properly informed independent

parties prepared to enter into a transaction.

THE USE OF ESTIMATESDuring the preparation of the annual accounts, the management must, in accordance with the general prevailing policies, make

certain estimates and assumptions that co-determine the stated amounts. The actual results may deviate from these estimates.

CASH FLOW STATEMENTThe cash flow statement has been prepared using the indirect method. Cash flows denominated in foreign currencies have been

translated into euros at average exchange rates. The cost of group companies acquired and the selling price of group companies

disposed of are included in cash flow from investing activities.


52



(1) INTANGIBLE FIXED ASSETSMovements in intangible fixed assets were as follows:

GOODWILL OTHER INTANGIBLE FIXED ASSETS

TOTAL

At cost as at 1 January 2015 246.6 28.9 275.5

Accumulated amortisation and other value adjustmentsas at 1 January 2015

117.5 20.8 138.3

BOOK VALUE AS AT 1 JANUARY 2015 129.1 8.1 137.2

Movements:

- Investments 0.6 0.6 1.2

- Disposals - -/- 0.3 -/- 0.3

- Amortisation -/- 12.3 -/- 2.0 -/- 14.3

- Exchange differences - 0.1 0.1

BOOK VALUE AS AT 31 DECEMBER 2015 117.4 6.5 123.9

At cost as at 31 December 2015 244.2 28.7 272.9

Accumulated amortisation and other value adjustmentsas at 31 December 2015

126.8 22.2 149.0

GOODWILLThe goodwill related to acquisitions, is amortized over 5 to 20 years. A period of 20 years applies to investments that have a

strategic character and an expected economic useful life of at least 20 years.

OTHER INTANGIBLE FIXED ASSETSThe other items under intangible assets, including software and licensing expenses, are amortised over a period of three to five

years.


53



(2) TANGIBLE FIXED ASSETSMovements in tangible fixed assets were as follows:

LANDAND

BUILDINGS

MACHINERY AND

EQUIPMENT

OTHER TANGIBLE

FIXED ASSETS

PREPAYMENTS AND IN

PRODUCTION

NOT USEDFOR

OPERATIONS

TOTAL

At cost as at 1 January 2015 380.8 1,036.8 65.7 9.6 7.0 1,499.9

Accumulated depreciation and impairmentsas at 1 January 2015

193.4

679.3

49.8

-

0.3

922.8

BOOK VALUE AS AT 1 JANUARY 2015 187.4 357.5 15.9 9.6 6.7 577.1

Movements:

- Investments 11.1 69.6 9.3 17.7 0.3 108.0

- Disposals -/- 1.6 -/- 0.6 -/- 0.3 -/- 0.3 -/- 0.7 -/- 3.5

- New in consolidation 5.7 1.7 - - - 7.4

- Transfer -/- 1.0 -/- 2.8 2.2 -/- 0.4 2.0 -

- Depreciation -/- 12.2 -/- 68.9 -/- 5.8 - - -/- 86.9

- Other changes in value -/- 1.5 1.5 - - - -

- Exchange differences 1.0 1.0 0.2 - - 2.2

BOOK VALUE AS AT 31 DECEMBER 2015 188.9 359.0 21.5 26.6 8.3 604.3

At cost as at 31 December 2015 398.8 1,085.9 75.1 26.6 8.3 1,594.7

Accumulated depreciation and impairments as at 31 December 2015 209.9 726.9 53.6 - - 990.4

The expected useful life and associated depreciation period is 10 to 40 years for the buildings, 10 to 20 years for the machinery

and equipment and four years on average for the other tangible fixed assets. The insured value of the buildings, machinery,

equipment and inventories is EUR 3.3 billion (2014: EUR 3.1 billion).

(3) FINANCIAL FIXED ASSETSMovements in financial fixed assets were as follows:

PARTICIPATING INTERESTS

RECEIVABLES FROM

PARTICIPATING INTERESTS

RECEIVABLES FROM

MEMBERS

DEFERREDTAX

ASSETS

OTHERRECEIVABLES

TOTAL

Balance as at 1 January 2015 4.9 0.9 4.8 9.6 8.0 28.2

Movements:

- Additions and issuances - - 7.0 0.5 - 7.5

- Repayments and releases - - -/- 0.2 -/- 0.7 - -/- 0.9

- Movements in favour of/charged to the result - - -/- 0.5 -/- 0.5 -/- 0.5 -/- 1.5

- Share in results of participating interests and dividend received

-/- 0.2

-

-

-

-

-/- 0.2

- Changes in consolidation -/- 0.9 -/- 0.1 - - - -/- 1.0

- Reclassified as short-term receivables - - -/- 0.9 - -/- 6.3 -/- 7.2

BALANCE AS AT 31 DECEMBER 2015 3.8 0.8 10.2 8.9 1.2 24.9


54



PARTICIPATING INTERESTSThe participating interests relate, among other, to the non-consolidated interest in Aviko Kloosterboer Verpakkingen B.V. and in

the Spanish potato specialities company Eurofrits, S.A. As significant influence can be exercised on these interests, they are stated

based on net asset value. The minority interest in Eemshaven Sugar Terminal C.V. was increased to a majority interest in 2015.

RECEIVABLES FROM MEMBERSThe net present value of the non-interest-bearing receivables from members (EUR 10.2 million) relate to the long-term portion of

amounts still to be deposited for issued shares (2014: EUR 4.8 million).

DEFERRED TAX ASSETSThe deferred tax assets item relates to the recognised available tax losses and temporary differences in the fiscal and commercial

valuations. It is expected that EUR 1.9 million (2014: EUR 2.2 million) of this receivable will be recovered within one year.

The tax loss carry-forwards, insofar as they are not included in the balance sheet under deferred tax assets, amounts to

EUR 6.2 million gross (2014: EUR 2.4 million).

OTHER RECEIVABLESOther receivables consist of capitalised costs incurred for the conclusion of a new financing agreement expiring in June 2020.

(4) INVENTORIES31-12-2015 31-12-2014

Land 10.4 8.8

Raw materials and consumables 69.0 56.7

Finished products and goods for resale 554.4 540.3

633.8 605.8

Of the inventories EUR 1.6 million (2014: EUR 13.9 million) is stated at lower market value. The provision for obsolete

inventories amounts to EUR 6.6 million (2014: EUR 6.1 million). The land included in inventory relates to grounds being

developed for business park AFC Nieuw Prinsenland near Dinteloord.


55



(5) TRADE AND OTHER RECEIVABLES 31-12-2015 31-12-2014

Trade accounts receivable 239.0 220.9

Receivables from members 0.9 2.6

Income tax receivable 1.4 6.7

Other tax receivables 21.1 26.0

Other receivables, prepayments and accrued income 28.5 24.2

290.9 280.4

OTHER RECEIVABLES, PREPAYMENTS AND ACCRUED INCOMEPrepayments and accrued income include an interest rate swap to hedge the interest rate risk of a loan with a term of less than one

year. As at 31 December 2015, the fair value of the interest rate swap was EUR 0.1 million negative.

(6) CASH AND CASH EQUIVALENTSAn amount of EUR 0.4 million (2014: EUR 10.0 million) is not available on demand. The blocked accounts at a Slovenian bank were

released in 2015.

(7) CAPITAL AND RESERVESFor a breakdown of capital and reserves, please refer to the notes to the cooperative annual accounts.

The consolidated statement of total recognised gains and losses is as follows:

2015 2014

Net result 45.5 79.1

Translation differences on foreign participating interests 4.3 2.8

Total result recognised by Cosun 49.8 81.9

(8) MINORITY INTERESTS2015 2014

Balance as at 1 January 26.3 17.8

Movements:

- Share in results -/- 0.2 0.3

- Capital movements and change in consolidation 1.1 9.0

- Dividend paid to minority interests and liquidation distributions -/- 3.4 -/- 1.4

- Exchange differences and other movements 0.5 0.6

BALANCE AS AT 31 DECEMBER 24.3 26.3

The minority interests consist largely of third-party shares in the Slovenian sugar factory Tovarna Sladkorja Ormoz d.d. in liquidation,

the potato-processing factory Gansu Aviko Potato Processing Co. Ltd, Rain Biomasse Wärme GmbH, the trading company

Limako B.V., Agri Bio Source Europe B.V.,Martin Amberger Kartoffelverarbeitung Dolli-Werk GmbH & Co. KG and Eemshaven Sugar

Terminal CV.


56



(9) PROVISIONS31-12-2015 31-12-2014

Deferred tax liabilities 33.9 41.2

Restructuring and reorganization 4.2 0.5

Pensions and other deferred employee benefits 21.9 21.7

Other provisions 17.0 20.7

77.0 84.1

Of the provisions an amount of EUR 54.6 million (2014: EUR 65.9 million) has an expected term of more than one year.

Movements in provisions were as follows:

DEFERREDTAX

LIABILITIES

RESTRUCTURING AND

REORGANISATION

PENSIONAND OTHER

DEFERRED EMPLOYEE

BENEFITS

OTHER PROVISIONS

TOTAL

Balance as at 1 January 2015 41.2 0.5 21.7 20.7 84.1

Movements:

- Additions 1.3 4.0 8.9 6.0 20.2

- Withdrawals -/- 8.6 -/- 0.5 -/- 7.9 -/- 8.0 -/- 25.0

- Mutation to profit and loss account - 0.2 -/- 0.8 -/- 1.7 -/- 2.3

BALANCE AS AT 31 DECEMBER 2015 33.9 4.2 21.9 17.0 77.0

DEFERRED TAX LIABILITIESThe provision for deferred tax liabilities arises from the timing differences between fiscal and commercial profit determination.

RESTRUCTURING AND REORGANISATIONThe provision for restructuring and reorganisation relates mainly to the restructuring announced at Aviko and the closure of a SVZ

factory in Poland.

PENSIONS AND OTHER DEFERRED EMPLOYEE BENEFITSSeveral pension plans and other deferred employee benefits apply within Cosun. The life-long pension plans for the staff of Cosun

Holding, Coöperatie Cosun (including Suiker Unie) and Sensus are administered by the Cosun occupational pension fund. As at

31 December 2015, the Aviko pension fund was wound up and the assets and commitments were transferred to the PGB pension

fund. This fund will administer the pension plans of the member companies of the former Aviko pension fund as from 2016.

COMPANY PENSION FUND ESTIMATED COVERAGEAS AT 31-12-2015

BASIC FEATURES PENSION SYSTEM

Pension fund Cosun 110.0 Average pay pension plan

The company pension fund has conditional indexation for inactive employees.

The pension scheme is based on a fixed contribution and average salary with conditional indexation. The employer has guaranteed

the accrual and indexation of the assets for the members of the Cosun Pension Fund to the end of 2023 in so far as they cannot be

funded from the contribution. The guarantee relates to indexation of up to 2% to the end of 2016 and is then lowered in steps to

1.2% in 2023. The additional commitment for the guaranteed indexation as at 1 January 2016 is recognised as a provision

(EUR 7.2 million).


57



A number of schemes have also been implemented within an industrial-sector pension fund or own management (long service

award and mortality schemes) by the company concerned. In the implementation of these various schemes, local legal frameworks

are taken into account and the regulations are carried out as described in the terms and conditions of employment.

The main actuarial assumptions were:2015 2014

Discount rate 2.0 % 2.0 %

Future salary increases 2.0 % 2.0 %

The Cosun pension fund applies the AG2014 projection table, adjusted for the High-Medium income class, as its mortality table.

OTHER PROVISIONSThe other provisions have been recorded for risks with respect to environment, obligations for demolition of assets, liabilities for the

disposal of soil tare and other risks amounting to EUR 16.4 million (2014: 20.4 million). In addition, a provision of EUR 0.6 million

(2014: EUR 0.3 million) has been recorded for contractual risks, claims and fines.

The discount rate to discounting the future cash flows applied for is 1.5% to 2% depending on the term (2014: 2% for all terms).

(10) NON-CURRENT LIABILITIES

31-12-2015 EFFECTIVEINTEREST RATE


Debts to credit institutions 1.9 4.6 % 4.9 3.7 %

Debts to institutional investors 31.0 5.3 % 31.0 5.1 %

Debts to members 14.6 2.5 % - -

Negative goodwill 6.8 - 9.0 -

Lease obligation 13.8 7.6 % 14.6 7.6%

68.1 59.5

DEBTS TO CREDIT INSTITUTIONSThe non-current debts to credit institutions have a residual term of between one and five years. None of these debts carries variable

interest.

DEBTS TO INSTITUTIONAL INVESTORSAmounts owed to institutional investors consist entirely of a loan placed with a Dutch financial parity member with a lump-sum

repayment in 2018. The loan is denominated in euros and amounts EUR 31.0 million (2014: EUR 31.0 million). Financing is

provided based on certain financial conditions agreed by the parties. All of these conditions are met.

DEBTS TO MEMBERSThe Debts to members relates to the members’ loan programme introduced in 2015. Members of Cosun can loan to Cosun part of

the payments which they receive from Cosun. The loan has a fixed interest rate and a term of between 2 and 5 years. The loans are

subordinated to other creditors.


58



NEGATIVE GOODWILLThe negative goodwill, relating to acquisitions is released to the result based on the weighted average remaining life of the

acquired depreciable assets.

LEASE OBLIGATIONThis relates mainly to lease obligations in respect of a distribution centre and a groundwater treatment plant.

(11) CURRENT LIABILITIES31-12-2015 31-12-2014

Debts to credit institutions 12.5 11.8

Debts to institutional investors - 45.3

Liabilities of a financing nature 0.3 0.5

Short-term derivatives - 3.4

Total debts to credit institutions and liabilities of a financing nature 12.8 61.0

Payables to members 120.2 166.7

Payables to suppliers and trade creditors 181.4 166.6

Income tax payable 14.3 48.1

Other taxes and social security contributions payable 8.9 7.8

Other current liabilities and accruals 125.3 148.6

Total other current liabilities, accruals and deferrals 450.1 537.8

DEBTS TO CREDIT INSTITUTIONSA five-year EUR 400 million financing arrangement was concluded with a bank syndicate in July 2014. The arrangement was

extended for one more year in 2015. As at 31 December 2014 and 2015, no use had been made of this arrangement.

DEBTS TO INSTITUTIONAL INVESTORSAn amount of USD 55 million was repaid on the USPP financing in 2015.

SHORT-TERM DERIVATIVESShort-term derivatives in 2014 included a currency swap to hedge exchange rate risk arising from liabilities to institutional investors.

OTHER LIABILITIES ACCRUALS AND DEFERRALSIncome tax payable at year-end 2015 includes approximately EUR 10 million income tax recoverable in 2016 in respect of the

sugar beet delivery (UB) regulations. This deduction is expected to be made on the payment date and the UB payment will be

charged net to other reserves.

The other current liabilities and accruals relate to production levies, interest, holiday entitlements, bonuses and other

expenses still to be paid.


59



(12) DERIVATIVE FINANCIAL INSTRUMENTS

GENERALCosun’s treasury policy is aimed at hedging exchange and interest rate risks as much as possible. The exchange rate risk on

financing contracts in foreign currency regarding group companies is hedged by currency swaps. Cosun neither holds nor issues

derivatives for trading purposes. Margin calls are not applicable to foreign currency swaps and forward exchange contracts

concluded.

EXCHANGE RATE RISKThe following table shows the contract volumes and fair market value of the contracts outstanding at 31 December all of which

have been concluded with financial institutions with a short term credit rating of A2 or higher.

CONTRACTVOLUME

31-12-2015

BOOK-VALUE

31-12-2015

FAIR MARKET VALUE

31-12-2015

CONTRACTVOLUME

31-12-2014

BOOK-VALUE

31-12-2014

FAIR MARKETVALUE

31-12-2014

Forward exchange contracts and currency swaps:

US dollar 97.9 -/- 1.2 -/- 2.5 122.8 -/- 1.4 -/- 4.7

Pound sterling 73.6 0.1 0.6 53.8 -/- 0.4 -/- 1.3

Polish zloty 0.6 - 0.1 0.2 - -

Australian dollar 9.3 - -/- 0.1 11.8 - 0.2

Swedish crown 1.9 - - 2.7 - -

Canadian dollar -/- 0.4 - - -/- 0.1 - -

Czech koruna 1.7 - - 1.4 - -

Russian ruble 0.9 0.1 0.1 2.2 - -

TOTAL 185.5 -/- 1.0 -/- 1.8 194.8 -/- 1.8 -/- 5.8

The contract volume is the product of the contracted amount and applicable exchange rate as at the balance sheet date. The book

value is the part of the contract volume for which the hedged position has resulted in a financial active or financial liability, and is

carried as the difference between the exchange rate as at balance sheet date and the hedged exchange rate. The fair value pertains

to the total contract volume.

As in 2014, the forward exchange contracts and currency swaps have mainly a term shorter than one year. The contract volume

with a term longer than one year amounts to EUR 4.0 million (2014: EUR 17.3 million).

PRICE RISKBOOK VALUE

31-12-2015FAIR MARKET VALUE

31-12-2015BOOK VALUE

31-12-2014FAIR MARKET VALUE

31-12-2014

Commodity futures contracts - -/- 3.4 - -/- 1.7

As in the previous year, most commodity futures contracts had a term of less than one year. Some of these contracts had not been

exercised as at 31 December 2015.

CREDIT RISKCredit risks differ by country and individual counterparty and are managed by means of credit limits for each country and

counterparty. The credit risk relating to derivatives and other financial instruments is managed by only concluding contracts with

financial institutions with a credit rating of A or higher for long-term or a S&P rating of A2 or higher for short-term.


60



INTEREST RATE RISKTo manage interest rate risks the interest on the permanent financing needs is covered by the derivate financial instruments below:

CONTRACT VOLUME

31-12-2015

BOOK VALUE31-12-2015

FAIR MARKET VALUE

31-12-2015

CONTRACT VOLUME

31-12-2014

BOOK VALUE31-12-2014

FAIR MARKET VALUE

31-12-2014

Currency and interest rate swapsconcerning liabilities toinstitutional investors

- - - 48.7 -/- 3.7 -/- 3.7

Other interest rate derivatives 6.0 -/- 0.1 -/- 0.1 6.0 -/- 0.2 -/- 0.2

For the currency and interest rate swaps concerning liabilities to institutional investors the fair value with maturity shorter than one

year amounts to nil (2014: -/- 3.7 million).

The fair value of other interest rate derivatives maturing within 1 year amounts -/- EUR 0.1 million to nil (2014: nil).

(13) OFF BALANCE SHEET COMMITMENTS

SECURITIES PROVIDEDFinancing agreements include negative pledges with pari passu clauses. A number of group companies have given security to credit

institutions and tax authorities in the form of non-possessory pledges on inventories, machinery and business equipment, silent

pledges on receivables and mortgages on a number of properties.

CLAIMSCosun and/or its group companies are involved in a number of legal cases in connection with the group’s ordinary activities.

Although the outcome of these disputes cannot be predicted with any certainty, it is assumed – partly on the basis of legal advice

– that the total obligations arising from these will not have any significant effect on the consolidated financial position. Provisions

have been formed for all third party claims likely to be awarded for which the size of the potential settlement can be reasonably

estimated.

GARANTEESCosun has given guarantees to third parties to an amount of EUR 30.1 million (2014: EUR 29.6 million).

LONG-TERM FINANCIAL COMMITMENTSLong-term unconditional commitments have been entered into in respect of rent and operating lease. The obligations ensuing from

this amount to EUR 21.6 million (2014: EUR 12.6 million). The rental and lease instalments payable within one year amount to

EUR 6.0 million (2014: EUR 3.8 million). Instalments payable after five years amount to 2.5 million (2014: nil). Contingent

investment liabilities amount to EUR 26.2 million (2014: EUR 12.8 million).


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(14) NET TURNOVERThe break-down of net turnover per product group is as follows:

2015 % 2014 %

Sugar activities 734.0 37.7 904.2 42.8

Potato activities 757.3 38.9 730.6 34.5

Other activities 456.4 23.4 479.7 22.7

TOTAL 1,947.7 100.0 2,114.5 100.0

Net turnover per geographical region can be broken down as follows:

2015 % 2014 %

The Netherlands 613.5 31.5 714.8 33.8

Rest of the EU 1,022.5 52.5 1,119.4 52.9

Rest of Europe 39.0 2.0 38.4 1.8

North and South-America 129.4 6.7 112.7 5.4

Rest of the world 143.3 7.3 129.2 6.1

TOTAL 1,947.7 100.0 2,114.5 100.0

(15) OTHER OPERATING INCOME The book profit on sold assets, insurance payments received, grants, reimbursements received for services to third parties and rental

income are included under these revenues.

(16) EU LEVIES Production levies are imposed by the EU to finance the sugar market regime.

(17) COST OF RAW MATERIALS AND CONSUMABLES This item includes the cost of raw materials and consumables, purchased finished goods and production-related energy costs.

Sugar beet purchases from members amounted to EUR 230.2 million (2014: EUR 282.9 million). This amount includes

EUR 69.3 million payable as members’ bonus (2014: EUR 107.7 million).

(18) COST OF OUTSOURCED WORK AND OTHER EXTERNAL COSTS This expense item includes, among other things, rental costs, research costs, repair and maintenance costs, indirect energy costs,

transport costs, office expenses, selling expenses, insurance costs and IT costs, insofar as such expenses are charged by third

parties.

The total Research & Development costs, including staff costs, amounted to EUR 15.3 million (2014: EUR 14.1 million).


62



(19) STAFF COSTS 2015 2014

Wages and salaries 188.8 182.3

Social security contributions 32.2 32.7

Pension costs 34.0 35.9

255.0 250.9

NUMBER OF EMPLOYEESExpressed in full-time equivalents, the average number of employees at Cosun during the 2015 financial year was 3,912

(2014: 3,799). The employees were engaged in the following product groups (average number of employees):

2015 2014

Sugar activities 851 845

Potato activities 2,055 1,943

Other activities 1,006 1,011

TOTAL 3,912 3,799

Of whom employed outside the Netherlands 1,875 1,758

(20) OTHER CHANGES IN THE VALUE OF INTANGIBLE AND TANGIBLE FIXED ASSETSIn 2015 the impairment on tangible fixed assets amounts to nil. The change in value in 2014 amounted to EUR 2.4 million.

(21) FINANCIAL INCOME AND EXPENSE Financial income and expenses include interest on interest bearing receivables and debts.

(22) TAXATION ON RESULTS FROM ORDINARY ACTIVITIES The corporate income tax disclosed in the profit and loss account amounts to EUR 7.8 million (2014: EUR 27.4 million) on a result of

EUR 53.1 million (2014: EUR 106.3 million). The effective tax rate was 14.7% (2014: 25.8%). The difference from the nominal tax rate

can be specified as follows:

2015 % 2014 %

Profit before taxation 53.1 106.3

Income tax based on Dutch tax rates 13.3 25.0 26.6 25.0

Effect of different / foreign tax rates -/- 1.4 -/- 2.6 1.5 1.4

Non-deductible charges / permanent differences -/- 1.0 -/- 1.9 -/- 0.2 -/- 0.1

Effect of change in valuation of tax losses, assets or temporarily differences -/- 1.4 -/- 2.7

0.2 0.2

Adjustment for prior periods -/- 1.4 -/- 2.6 -/- 0.8 -/- 0.8

Other -/- 0.3 -/- 0.5 0.1 0.1

TOTAL TAX BURDEN 7.8 14.7 27.4 25.8


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The impact of changes in the valuation of tax losses is attributable to the realisation of a tax gain on the liquidation loss of

L. P. Boots Deutschland GmbH.

The adjustment to prior years relates partly to the outcome of the discussion between the Dutch and the U.S. tax authorities on

transfer pricing methodology to be used for one of the activities. Prior year corrections also relate to adjustments for the final

returns for prior years.

(23) FEES OF THE AUDITOR The following fees have been charged by Ernst & Young Accountants LLP to the company, its subsidiaries and other consolidated

companies, as referred to in Section 2:382a (1 and 2) of the Netherlands Civil Code.

In the year 2015 the following fees were charged to the company:

ERNST & YOUNG ACCOUNTANTS LLP

OTHER ERNST & YOUNG NETWORK

TOTALERNST & YOUNG

Audit of the financial statements 0.3 0.2 0.5

Tax advisory services - 0.3 0.3

TOTAL 0.3 0.5 0.8

In the year 2014 the following fees were charged to the company:

ERNST & YOUNG ACCOUNTANTS LLP

OTHER ERNST & YOUNG NETWORK

TOTALERNST & YOUNG

Audit of the financial statements 0.2 0.3 0.5

Tax advisory services - 0.3 0.3

TOTAL 0.2 0.6 0.8

(24) CASH FLOW STATEMENT Movements in the cash flow statement can be derived largely from the movements in the relevant balance sheet items. The balance

sheet movement and the cash flow statement movement of certain items are reconciled below:

WORKING CAPITAL PROVISIONS NON-CURRENTLIABILITIES

Balance as at 1 January 2015 348.4 -/- 84.1 -/- 59.5

Balance as at 31 December 2015 474.6 -/- 77.0 -/- 68.1

Balance sheet movements -/- 126.2 -/- 7.1 8.6

Adjustments for:

- Changes in consolidation -/- 0.9 -/- 0.8 -/- 2.8

- Changes in income tax 28.5 8.1 -

- Release negative goodwill - - 3.6

- Reclassification 7.2 - -

CASH FLOW -/- 91.4 0.2 9.4


64


COOPERATIVE BALANCE SHEET

Notes 31-12-2015 31-12-2014

ASSETS

Fixed assets

Intangible fixed assets (25) 77.2 85.0

Tangible fixed assets (26) 258.3 253.0

Financial fixed assets (27) 609.0 548.6

944.5 886.6

Current assets

Inventories (28) 335.0 323.0

Trade and other receivables (29) 199.5 286.8

Cash and cash equivalents 74.4 329.2

608.9 939.0

Total assets 1,553.4 1,825.6

EQUITY AND LIABILITIES

Shareholders’ equity (30)

Share capital 7.0 7.1

Share premium 53.4 53.5

Reserve for participating interests 5.6 5.3

Reserve for exchange differences 5.0 0.7

Other reserves 1,070.8 1,165.1

1,141.8 1,231.7

Provisions (31) 41.0 48.8

Non-current liabilities (32) 55.3 40.9

Current liabilities (33)

Current liabilities to credit institutions and liabilities of a financing nature 0.1 49.4

Other current liabilities, accruals and deferrals 315.2 454.8

315.3 504.2

Total equity and liabilities 1,553.4 1,825.6

COOPERATIVE BALANCE SHEET (after profit appropriation; in EUR million)


65


COOPERATIVE PROFIT AND LOSS ACCOUNT

For the financial year 2015 2014

Cooperative result after taxation 11.0 39.9

Profit of participating interests after taxation 34.5 39.2

NET RESULT 45.5 79.1

APPROPRIATION OF PROFIT IN ACCORDANCE WITH ARTICLE 1OF THE SUGAR BEET DELIVERY PAYMENT REGULATIONS

Result of participating interests less dividends received 14.8 10.9

Cooperative result including dividends from participating interests 30.7 68.2

(in EUR million)

COOPERATIVE PROFIT AND LOSS ACCOUNT


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NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS

NOTES TO THE COOPERATIVEANNUAL ACCOUNTS (in EUR million)

GENERALInsofar as notes on items in the cooperative balance sheet and profit and loss account are not provided below, reference is made to

the notes to the consolidated balance sheet and profit and loss account.

ACCOUNTING POLICIES The cooperative balance sheet and profit and loss account are prepared using the same accounting policies as applied for the

consolidated balance sheet and profit and loss account.

(25) INTANGIBLE FIXED ASSETS Movements in intangible fixed assets were as follows:

GOODWILL OTHERINTANGIBLE

FIXED ASSETS

TOTAL

At cost as at 1 January 2015 174.6 6.0 180.6

Accumulated amortisation and other changes in value as at 1 January 2015 93.0 2.6 95.6

BOOK VALUE AS AT 1 JANUARY 2015 81.6 3.4 85.0

Movements:

- Amortisation -/- 7.6 -/- 0.2 -/- 7.8

BOOK VALUE AS AT 31 DECEMBER 2015 74.0 3.2 77.2

At cost as at 31 December 2015 174.6 6.0 180.6

Accumulated amortisation and other changes in valueas at 31 December 2015 100.6 2.8 103.4


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(26) TANGIBLE FIXED ASSETSMovements in tangible fixed were as follows:

LANDAND

BUILDINGS

MACHINERYAND

EQUIPMENT

OTHERTANGIBLE

FIXED ASSETS

PREPAYMENTS AND IN

PRODUCTION

NOT USEDFOR

OPERATIONS

TOTAL

At cost as at 1 January 2015 138.8 392.9 7.6 7.6 5.2 552.1

Accumulated depreciation and other changes in value as at 1 January 2015 63.7 229.5 5.9 - - 299.1

BOOK VALUE AS AT 1 JANUARY 2015 75.1 163.4 1.7 7.6 5.2 253.0

Movements:

- Investments 4.2 41.1 0.8 2.6 - 48.7

- Divestments -/- 0.2 -/- 0.2 - - - -/- 0.4

- Disposals -/- 4.0 -/- 35.9 -/- 1.3 - - -/- 41.2

- Other changes in value -/- 3.6 1.9 - - -/- 0.1 -/- 1.8

- Transfer -/- 0.4 -/- 0.9 0.9 0.4 - -

BOOK VALUE AS AT 31 DECEMBER 2015 71.1 169.4 2.1 10.6 5.1 258.3

At cost as at 31 December 2015 142.4 431.6 9.3 10.6 5.1 599.0

Accumulated depreciation and other changes in value as at 31 December 2015 71.3 262.2 7.2 - - 340.7

(27) FINANCIAL FIXED ASSETS 31-12-2015 31-12-2014

Participating interests in group companies 267.8 245.1

Receivables from group companies 329.7 290.6

Receivables from members 10.2 4.8

Deferred tax assets 0.1 0.1

Other receivables 1.2 8.0

609.0 548.6


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Movements in financial fixed assets were as follows:

PARTICIPATINGINTERESTS IN

GROUP COMPANIES

RECEIVABLES FROM GROUP

COMPANIES

RECEIVABLES FROM

MEMBERS

DEFERREDTAX

ASSETS

OTHERRECEIVABLES

TOTAL

Balance as at 1 January 2015 245.1 290.6 4.8 0.1 8.0 548.6

Movements:

- Share in result of participating interests 34.5 - - - - 34.5

- Additions and issuances 3.7 84.3 7.0 - - 95.0

- Repayments and releases - -/- 45.3 -/- 0.2 - - -/- 45.5

- Dividend -/- 19.7 - - - - -/- 19.7

- Exchange results 4.2 0.1 - - - 4.3

- Movements in favour of/charged to the profit and loss account - - -/- 0.5 - -/- 0.5 -/- 1.0

- Reclassification to current - - -/- 0.9 - -/- 6.3 -/- 7.2

BALANCE AS AT 31 DECEMBER 2015 267.8 329.7 10.2 0.1 1.2 609.0

PARTICIPATING INTERESTS IN GROUP COMPANIESSuiker Unie GmbH & Co. KG is a subsidiary and is included in the consolidated financial statements of Royal Cosun as of

31 December 2015. Suiker Unie GmbH & Co. KG uses the exemption to prepare, audit and disclose the financial statement in

accordance with section 264b German Commercial Law.

RECEIVABLES FROM GROUP COMPANIESReceivables from group companies are mainly long-term loans granted to Cosun Holding B.V. (EUR 175 million), Anklam Bioethanol

GmbH (EUR 15 million), Aviko B.V. (EUR 40 million), Sensus B.V. (EUR 15 million), SVZ International B.V. (EUR 15 million) and Duynie

Holding B.V. (EUR 15 million).

RECEIVABLES FROM MEMBERSThe non-interest bearing receivables from members (EUR 10.2 million) relates to the market value of the long-term portion of

amounts still to be deposited for issued shares (2014: EUR 4.8 million).

OTHER RECEIVABLESThe other receivables relate to capitalised costs for the conclusion of a new financing agreement expiring in June 2020.

(28) INVENTORIES31-12-2015 31-12-2014

Land 10.4 8.8

Raw materials and consumables 7.3 7.9

Finished products and goods for resale 317.3 306.3

335.0 323.0

The land included in inventory relates to grounds being developed for business park AFC Nieuw Prinsenland near Dinteloord.

The valuation of inventories takes account of obsolete stock. The provision for obsolete stock amounts to EUR 1.5 million

(31 December 2014: EUR 2.1 million).


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(29) TRADE AND OTHER RECEIVABLES 31-12-2015 31-12-2014

Trade accounts receivable 63.6 58.2

Receivables from group companies 115.5 205.0

Short-term portion of amount still to be paid up for issued shares 0.9 2.6

Recoverable Income tax - 0.1

Other tax receivables 6.0 11.2

Other receivables and accrued income 13.5 9.7

199.5 286.8

(30) CAPITAL AND RESERVES

ISSUED SHARE CAPITAL AND SHARE PREMIUM

CAPITAL ANDRESERVES

SHAREPREMIUM

TOTAL2015

TOTAL2014

Balance as at 1 January 7.1 53.5 60.6 60.7

Movements:

- Shares issued 1.7 5.3 7.0 1.1

- Shares redeemed and withdrawn -/- 1.8 -/- 5.4 -/- 7.2 -/- 1.2

BALANCE AS AT 31 DECEMBER 7.0 53.4 60.4 60.6

The total number of issued shares is 154,856 (2014: 155,578), with the nominal value amounting to EUR 45.40 per share.

In 2015, 38,674 shares were issued and 39,396 shares were redeemed and withdrawn. Based on RJ 620, EUR 1.2 million

(2014: EUR 1.2 million) has been presented as liability in the consolidated annual accounts.

STATUTORY RESERVES, OTHER RESERVES AND RESULTS

RESERVE FOR PARTICIPATING

INTERESTS

RESERVE FOR EXCHANGE

DIFFERENCES

OTHERRESERVES

TOTAL2015

TOTAL2014

Balance as at 1 January 5.3 0.7 1,165.1 1,171.1 1,099.0

Movements:

- Profit appropriation - - 45.5 45.5 79.1

- Paid to members - - -/- 139.5 -/- 139.5 -/- 9.8

- Exchange differences - 4.3 - 4.3 2.8

- Transfer 0.3 - -/- 0.3 - -

BALANCE AS AT 31 DECEMBER 5.6 5.0 1,070.8 1,081.4 1,171.1

The net result 2015 of EUR 45.5 million has been added to the other reserves.

RESERVE FOR PARTICIPATING INTERESTSThe reserve for participating interests is that part of movements in equity that are not freely disposable as from the moment of

consolidation.


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OTHER RESERVESOn the basis of section 46 of the articles of association, payments take place to members and contracted parties. Effective from

January 2000, these payments are in accordance with the Sugar Beet Delivery Payment Regulations; previously the Cessation

of Business Regulations had been applicable. The payment amount depends on the average number of tonnes of sugar beets

delivered, the average cooperative result including the dividend from participating interests per tonne of sugar beet for the three

previous financial years, and a factor per campaign. Payments are deducted from the other reserves.

Until 2017 the payments will also be made based on the Cessation of Business Regulations, for which the amount depends on

the number of shares possessed by the members, the number of financial years that the shares have been in the possession of

the members, and the average cooperative result including dividend from participating interests per share for the three previous

financial years. The payment takes place from the moment business operations ceased, or after a delivery period 30 consecutive

campaigns at the moment the member uses the Cessation of Business Regulations or 2017 at the latest.

Some of the members were entitled to a payment on the termination of their businesses in 2015, having supplied beet for

15 successive campaigns. The gross payment in 2015 based on the cooperative’s results including the dividend received from

participating interests for the period 2012-2014 amounted to EUR 179.0 million (net amount: EUR 139.5 million, charged to other

reserves). This amount is included in the right to business termination payments under the transitional rules.

The former CSM Suiker growers will be eligible to a payment under the Beet Delivery Regulations after delivering beet for a

period of ten years in 2016. If all eligible members exercise this right, the gross payment in 2016 based on the cooperative’s

results including dividends from participating interests for the period 2013-2015 will amount to approximately EUR 50 million

(approximately EUR 38 million net charged to other reserves).

If all members eligible to payment under the Cessation of Business Regulation and the Beet Delivery Regulation, the total payment

as at 31 December 2015 would amount to EUR 89.8 million (2014: EUR 298.0 million).

DIFFERENCE BETWEEN CONSOLIDATED AND COOPERATIVE EQUITYPursuant to Guideline 620 of the Dutch Accounting Standards Board, the part (2%) of the paid-up capital that is payable on

demand by the members is recognised as a liability in the consolidated annual accounts. As a result the consolidated equity differs

from the equity in the cooperative annual accounts.

31-12-2015 31-12-2014

Consolidated capital and reserves 1,140.6 1,230.5

Impact RJ 620 1.2 1.2

COOPERATIVE CAPITAL AND RESERVES 1,141.8 1,231.7


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(31) PROVISIONS 31-12-2015 31-12-2014

Deferred tax liabilities 19.6 26.6

Restructuring and reorganisation 0.1 0.4

Pensions and other deferred employee benefits 14.6 14.8

Other provisions 6.7 7.0

41.0 48.8

EUR 30.3 million (2014: EUR 37.7 million) of the provisions is long term in nature.

Movements in provisions were as follows:

DEFERREDTAX

LIABILITIES

RESTRUCTURINGAND

REORGANISATION

PENSIONSAND OTHER

DEFERREDEMPLOYEE

BENEFITS

OTHERPROVISIONS

TOTAL

Balance as at 1 January 2015 26.6 0.4 14.8 7.0 48.8

Movements:

- Additions - - 6.3 4.9 11.2

- Release to profit and loss account - - - -/- 0.7 -/- 0.7

- Withdrawals -/- 7.0 -/- 0.3 -/- 6.5 -/- 4.5 -/- 18.3

BALANCE AS AT 31 DECEMBER 2015 19.6 0.1 14.6 6.7 41.0

(32) NON-CURRENT LIABILITIES



Debts to institutional investors 31.0 5.3 % 31.0 5.1 %

Lease obligation 9.7 8.4 % 9.9 8.4 %

Debts to members 14.6 2.5 % - -

TOTAL NON-CURRENT LIABILITIES 55.3 40.9

The item Debts to members relates to the members’ loan programme introduced by Cosun in 2015. The amount loaned bears

interest, has a fixed term between 2 and 5 years and is subordinated to other creditors.


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(33) CURRENT LIABILITIES

31-12-2015 31-12-2014

Liabilities of a financing nature 0.1 49.4

Payables to group companies 84.3 129.1

Payables to members 120.2 166.7

Payables to suppliers and trade creditors 41.4 36.5

Income tax payable 10.8 46.8

Other taxes and social security contributions payable 2.0 2.0

Other current liabilities and accruals 56.5 73.7

TOTAL OTHER CURRENT LIABILITIES AND ACCRUALS 315.2 454.8

SHORT-TERM DERIVATIVESLiabilities of a financing nature in 2014 included currency and interest rate swaps to hedge interest and exchange rate risk arising

from liabilities to institutional investors to an amount of EUR 3.4 million.

(34) OFF BALANCE SHEET COMMITMENTS

Several liability and guarantees

Cosun has given guarantees to third parties to an amount of EUR 31.5 million (2014: EUR 31.0 million).

Long-term financial commitments

Long-term unconditional commitments have been entered into in respect of rent and operating lease. The obligations ensuing from

this amount to EUR 4.3 million (2014: EUR 4.6 million). The rental and lease instalments payable within one year amount to

EUR 1.3 million (2014: EUR 1.2 million). Instalments payable after five years amount to nil (2014: nil). Contingent investment

liabilities amount to EUR 22.8 million (2014: EUR 11.4 million).

(35) OTHER INFORMATION The remuneration, including pension costs as referred to in Section 2:383(1) of the Netherlands Civil Code, of members of the

Board amounted to EUR 0.6 million (2014: EUR 0.8 million) and that members of the Supervisory Board to EUR 0.1 million

(2014: EUR 0.1 million). The remuneration was charged to the result.

Board Supervisory Board

D.H. de Lugt J. Bartelds

G.M. van Tilburg J.L. van Driel

A.J.B.P. Bossers W.A. Blijdorp

B.R. van Doesburgh E.H.W.J.E. Michiels

J.M. Klompe Ms J.P. Rijsdijk

Ms. G. Prins B.T. Visser

J.A. Smid

J.H.D. Voncken

S. Wijkstra


OTHER INFORMATION

73


PROVISIONS IN THE ARTICLES

PROVISIONS IN THE ARTICLES OF ASSOCIATION GOVERNING THE APPROPRIATION OF PROFIT The appropriation of the profit for the year is laid down in the Articles of Association (Article 42, paragraphs 1 and 2) as follows:

the Board shall determine what proportion of the cooperative’s profit for the year shall be added to reserves. Unless the Members’

Council resolves otherwise on the Boards’ recommendation, the amount remaining after the above addition shall be distributed

among those members who were A members or B members at the end of the financial year in question, or who had ceased to

be A members or B members during or at the end of that financial year; with regard to B members, the distribution shall be made

with due regard for the Membership Agreement and at the direction of the relevant C members in accordance with the quantity of

produce supplied to the cooperative in that financial year and in accordance with the method of payment stipulated in the Sugar

Beet Regulation.

PROPOSED PROFIT APPROPRIATIONThe net result for the 2014 financial year (EUR 79.1 million) is added to the other reserves, in accordance with the decision of the

Board on 11 March 2015.

The Board intends to decide that EUR 45.5 million be added to the other reserves.

The above has already been included in the cooperative’s 2015 annual accounts.

OTHER INFORMATION

OTHER INFORMATION

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INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORTTo: the Supervisory Board of Coöperatie Koninklijke Cosun U.A.

Report on the financial statements

We have audited the accompanying financial statements 2015 of Coöperatie Koninklijke Cosun U.A., Breda, which comprise the

company and consolidated balance sheet as at 31 December 2015, the company and consolidated profit and loss account for the

year then ended and the notes, comprising a summary of the accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITYManagement is responsible for the preparation and fair presentation of these financial statements and for the preparation of

the management board report, both in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is

responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free

from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION WITH RESPECT TO THE FINANCIAL STATEMENTSIn our opinion, the financial statements give a true and fair view of the financial position of Coöperatie Koninklijke Cosun U.A. as

at December 31, 2015 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to

report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in

accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b-h has

been annexed. Further we report that the management board report, to the extent we can assess, is consistent with the financial

statements as required by Section 2:391 sub 4 of the Dutch Civil Code.

Naaldwijk, 17 March 2016

Ernst & Young Accountants LLP

Signed by M.A.M. Kester

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