Living our values. Creating growth

Annual Report 2012/2013

Living our values. Creating growth.

Hartwig Fuchs, Chief Executive Officer, Nordzucker AG

Mission statement 1

Key figures 2

175 years of sugar production 4

Living our values. Creating growth. 6

Letter from the Executive Board 8

Four values – growing together 10

Responsibility 12

Dedication 20

Courage 26

Appreciation 32

Trends in agribusiness 38

Group management report 48

Nordzucker at a glance 50

Economic environment and market developments 53

Earnings, net assets and financial position 56

Employees 61

Opportunities and risks 61

Supplementary report 66

Forecast 66

Consolidated financial statements 68

Consolidated income statement 68

Statement of comprehensive income 68

Consolidated cash flow statement 69

Consolidated balance sheet 70

Consolidated statement of changes in shareholders’ equity 72

Notes to the consolidated financial statements 73

General remarks 73

Notes to the consolidated income statement 82

Notes to the consolidated balance sheet 86

Consolidated assets schedule for the previous year (2011/2012) 88

Consolidated assets schedule for the financial year 2012/2013 90

Notes to the consolidated cash flow statement 97

Other disclosures 97

List of investments 113

Auditors’ report 115

Corporate Governance 116

Corporate Governance Report 118

Statement of compliance with German Corp. Gov. Code 119

Report by the Supervisory Board 120

Glossary 124

Financial calendar

Contents

Annual Report Nordzucker 2012/2013

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Total operating profitability 1 % 15.2 9.7 16.6 18.4 22.8

Return on revenues 2 % 3.7 -0.7 4.8 10.1 14.4

Return on equity 3 % 6.1 -1.7 10.6 20.4 26.7

Interest coverage ratio 4 10.5 2.8 6.0 12.1 22.3

Redemption period 5 years 1.8 4.0 1.1 0.6 0.1

Cash flow from operating activities per share EUR 3.46 6.78 6.49 4.59 6.49

Earnings (Group) per share 6 EUR 0.91 -0.27 1.80 4.22 7.27

Dividend per share 7 EUR 0.22 – 0.46 1.00 1.80

Total dividend EUR m 10.6 – 22.2 48.3 86.9

1 EBITDA/total revenues2 Net income/revenues3 Net income/equity4 EBITDA/net interest

5 Net debt/EBITDA6 Net income/number of shares7 Total dividend/number of shares

2008/2009 2009/2010

1,192

1,806

2010/2011

1,815

2011/2012

2,018

in EUR m

2012/2013

2,443

Record high yield ratios

Continuous increase in revenues

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Revenues EUR m 1,192 1,806 1,815 2,018 2,443

of which abroad % 39 54 52 54 56

Total revenues EUR m 1,086 1,718 1,699 2,282 2,607

EBITDA EUR m 165 166 283 420 594

EBIT EUR m 79 66 188 315 507

Net income EUR m 44 -10 91 208 360

Cash flow for/from operating activities EUR m 167 328 313 222 313

Investments in property, plant and equipment and intangible assets EUR m 67 62 56 64 74

in EUR m

44

-10

91

208

360

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Operating success drives all key financial figures

Record high net income

Annual Report Nordzucker 2012/2013

Our Nordzucker values of responsibility, commitment, courage and

appreciation are an expression of what we stand for as a company.

We will use them as guidelines to influence our decisions and actions, to

put ourselves on a stable footing and focus on our core business. They

will help us to build on our position as a strong international company.

The values form a strong bond which links all Nordzucker employees;

they define our attitude, the way we present ourselves to others and our

dealings with business partners and stakeholders.

1

1 Cash and cash equivalents – financial liabilities

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Balance sheet total EUR m 1,879 2,456 1,982 2,262 2,393

Equity EUR m 718 744 819 999 1,316

Equity ratio % 38 30 41 44 55

Debt capital EUR m 1,160 1,712 1,163 1,263 1,077

Financial liabilities EUR m 497 778 364 256 71

Cash and cash equivalents EUR m 201 114 50 7 11

Net debt 1 EUR m 295 664 314 249 59

Sound equity ratio, with net debt nearly reduced to zero

Dividend per share reaches high level

1.80

in EUR

0.46

1.00

0.22

0.00

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

2 Annual Report Nordzucker 2012/2013

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Beet farmers 11,430 16,292 16,091 15,379 14,981

Beet cultivation area ha 174,225 287,245 254,300 265,947 265,904

Beet processing t/day 98,681 143,392 133,192 143,520 138,797

Sugar production millions of tonnes 1.68 2.87 2.30 2.91 2.80

Sugar refi neries 2

Sugar factories 5

Liquid sugar factories 2

Sugar factories 5

Bioethanol plants 1

Average number of

employees for the year

1,504

1,242

Liquid sugar factory

Sugar factory

Sugar refi nery

Bioethanol plant

Growth and consolidation alternate

Sugar refi neries(combined withsugar factory) 1

Sugar factories 3

544

3Group figures and ratios

175 years of sugar production

The orientation towards Eastern Europe is a strategic focus for the years ahead. Zucker Aktiengesellschaft Uelzen-Braunschweig (ZAG) invests in the Czech sugar company Cukrovar a Rafinerie Cukru Dobrovice TTD (Thurn und Taxis Dobrovice) A.S.

The success story of 175 years of sugar production in Northern Germany and Northern Europe began in 1838 with the establishment of the sugar factory in Klein Wanzleben.

Start-up boom in the European sugar industry: Nordstemmen begins oper-ations in 1865, followed by the Arlöv factory, now part of Nordic Sugar, in Southern Sweden in 1869, and Culmsee in Pomerania (now Chelmza in Poland) in 1882.

Sugar is deemed “vital to the war effort”. Beet farmers and sugar factories are called on to engage in a “battle for production”.

Following a complete reconstruction on a greenfield site, the factory in Klein Wanzleben goes into operation. It is still one of the most modern plants in Europe today.

Nordzucker AG is created when ZAG transfers its assets to ZVN. This makes Nordzucker the third-largest sugar producer in Europe.

Pict

ure:

Arc

hive

s KW

S

Annual Report Nordzucker 2012/2013 4

Five sugar companies decide to transfer their assets to Zuckerverbund Nord AG (ZVN). This represents a milestone on the path to a common North German sugar company.

Zuckerfabrik Uelzen AG merges with Braunschweiger Zucker AG to form Zucker-Aktiengesellschaft Uelzen-Braunschweig (ZAG).

The sales company Norddeutsche Zucker GmbH & Co. KG is the first large-scale merger of sugar companies in Northern Germany.

Together with Union-Zucker, almost the entire North German sugar industry is united in Nordzucker AG.

Nordic Sugar joins the Nordzucker family, making it the second-largest sugar producer in Europe by a large margin.

Nordzucker’s most successful financial year to date ends with record earnings.

5175 years of sugar production

Living our values.Creating growth.

Hartwig Fuchs, Chief Executive Officer

Axel Aumüller, Chief Operating Officer


Dr Niels Pörksen, Chief Agricultural Officer

Dr Michael Noth, Chief Financial Officer

Mats Liljestam, Chief Marketing Officer

7Living our values. Creating growth.

175 years ago, the first sugar factory in Nordzucker’s current region began producing sugar in Klein Wanzleben, creating

the core of today’s company. Since then, the world of sugar has always had to adapt to changing political circumstances

and economic necessities. Technical progress and the associated productivity gains have a long tradition in our business,

as does the series of mergers that have formed ever larger entities. They have always been founded on close contact with

our partners – our shareholders and beet suppliers – as well as on the drive to become better and stronger. In September

of this year we will be celebrating this 175th anniversary accordingly.

We should also be proud that the financial year 2012/2013 will go down in the history of Nordzucker AG as the most

successful to date. We increased both revenues and earnings again significantly compared with the previous year, which

was already very good. We benefited from higher prices for quota sugar and higher sales volumes of non-quota sugar.

The long-term measures to increase efficiency throughout the Group again bolstered our successful performance. The joint

proposal by the Executive Board and Supervisory Board to pay a dividend of EUR 1.80 per share, which will be voted on at

the Annual General Meeting, has a twin focus: it ensures that you, our shareholders, receive a reasonable portion of these

outstanding earnings, and it strengthens the company financially, enabling it to respond to the challenges that lie ahead.

The figures in brief: We increased our revenues by EUR 424.8 million, from EUR 2,018.0 million in the previous year to

EUR 2,442.8 million and reported excellent net income of EUR 360.3 million. Equity came to EUR 1,316.0 million, exceed-

ing the EUR 1 billion mark for the first time. Although total assets were higher, the equity ratio went up to some 55 per cent.

Increasing the equity ratio was a target that we set ourselves three years ago. We also used last year to reduce our net debt

to around EUR 59 million, and so all in all we are in a very strong financial position. In view of the still volatile situation on

the financial markets, this is an important message for our owners. Our environment is changing rapidly, however. As stock

levels continue to rise and global sugar production exceeds overall consumption, we expect sugar prices on the world

market to stay at their currently much lower level. This may also affect EU prices, so we cannot rule out a decline in rev-

enues and earnings for 2013/2014. The high volatility of sugar prices remains a considerable challenge for our business.

The EU’s decision-making bodies are expected to decide on the future of the sugar market regime in June. Until beginning

2014, it has defined the framework within which at least 85 per cent of the EU sugar market is covered reliably, regularly and

predictably by sugar produced regionally at the social and production standards in force here. Our aim is to ensure that

the EU market continues to enjoy stable supplies of high-quality, domestically produced sugar in the future. On the one

hand, we have to keep improving our efficiency and competitiveness. And on the other, we are still campaigning for an

extension of the sugar market regime until 2020; not only to preserve beet cultivation in our regions, but also to strength-

en it. While doing so, we need time to prepare our company for market liberalisation.

The European sugar market is expected to undergo a further wave of consolidation by 2020. Given our market position,

we have a strong base from which to seize growth opportunities in the EU as they arise. Sugar consumption within the

EU will not go up, however, as growth in the demand for sugar is taking place outside Europe. We are currently looking

closely at how we can participate profitably in this growth. At the same time, we are absolutely convinced that long-term

success can only be secured by running a sustainable business, especially by including environmental protection and social

aspects in business decisions. In parallel, the aim is to increase efficiency along the entire value chain. The five-year efficiency


improvement programme ‘Profitability plus’ has been under way since 2009/2010 and has also delivered savings in all

areas of the company. More than three-quarters of the savings targets have been reached to date. Measures which make

a major contribution to sustainably boosting the company’s competitiveness include the harmonisation and optimisation

of business processes, the increasingly international organisation of sales and production structures, adjustments to

investment and maintenance budgets in line with the demands of longer campaigns and the integration of the Group’s

IT environment.

Alongside major investments to increase efficiency in the factories, sustainable success includes our activities to boost

yields in sugar beet cultivation. The 20 · 20 · 20 initiative aims to make sugar beet even more competitive in comparison

with other crops, so as to safeguard beet cultivation in our regions for the long term. It is vital to complete the integration

of Nordic Sugar and Nordzucker into one European company. The basis for the European corporate culture that we want

to develop across national borders and different languages is formed by the core values defined by our company staff:

responsibility, dedication, appreciation and courage. And we invest in our employees – not only financially, although this

year we were able to pay a performance bonus to all staff in the Group for the first time. With a wide range of programmes

and modules, we not only encourage integration with focused training, but also strengthen employees’ emotional identifi-

cation with the company.

Together with our dedicated colleagues, sustainability, customer focus and efficiency gains form the basis for strengthening

the company’s position and achieving further growth in its core business. We and our highly dedicated team can look

back on our past with pride and look to the future with optimism. Development continues. We thank you, our shareholders,

for accompanying Nordzucker on this journey.

Nordzucker AG

The Executive Board

Axel Aumüller Mats Liljestam

Dr Niels PörksenDr Michael Noth

Hartwig Fuchs

9Welcome

The pillars of our business: four values

Making connections by upholding common values

All employees within the Nordzucker Group have discussed the company’s values in the recent year

and questions such as:

Why are these values in particular important to me?

How do the values help us to achieve our aims?

What do the values mean in our dealings with colleagues, employees and managers?

Shortly after the acquisition of Nordic Sugar, employees of the Group had defined four common values:

responsibility, courage, appreciation and dedication. A broad discussion and introductory process

was then initiated in 2011. Employees from all regions talked about their understanding of the

values, how they experience them and how they put them into practice. The aim was primarily

to make the values known everywhere, but also to talk to one another and generate actions.

The four values will now be integrated into everyday working practices in the months ahead. Not

only minor activities that permanently bring the values to mind, but also broader topics such as

cultural diversity and collaboration across department, factory and national borders are now on

the agenda. The values are also to be linked to everyday work and will form the basis for guidelines

and standards within the Group. However, for the values to be successful, it is vital that they create

a connection between all employees, providing motivation as well as a sense of belonging. They help

when difficult decisions have to be taken and facilitate working relationships. In addition, the values

create a positive culture; a culture we are proud of – proud of a company that is valuable and that

adds value.

Hartwig Fuchs: “Our four corporate values constitute the pillars for the expansion and the integration

of our company. I am very proud of the great commitment with which the value process is being

driven forward by everyone involved, in all regions. The values have brought us a good deal closer

together and have given us much greater clarity about what we can expect from one another.

I believe that Nordzucker has made an exceptionally good choice!”

11Four values – growing together

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“I am really very pleased that Nordzucker is investing such a large amount in Örtofta. It means a

great deal to us: for our factory but of course for the success of the whole company as well.”

Bengt Högberg, Director of the Örtofta sugar factory

For Nordzucker, taking responsibility means acknowledging the needs of our stakeholders and always finding new solutions.

Responsibility for the future

13Responsibility

Nordzucker equips additional factory with innovative technology

Great strides made towards sustainable effi-ciencyIt takes about an hour to drive from the Nordic Sugar

headquarters in Copenhagen via the Öresund

bridge and Malmö to Örtofta, which is home to a

14th-century castle, a church and 200 inhabitants.

At the edge of this small village, surrounded by fields

of rich, heavy soil, stands the largest factory operated

by the Nordzucker subsidiary Nordic Sugar. All round

the factory in the southern Swedish province of

Scania, 2,000 farmers successfully grow sugar beet

on an average of 19 hectares of arable land each.

Last October, some good news and new challenges

found their way across the Öresund to Örtofta:

Director Bengt Högberg and his factory team were

given the go-ahead for the most important energy-

saving project to be carried out at the Örtofta sugar

factory since it began operations in 1890.

Following the plants in Uelzen, Germany, and

Nakskov, Denmark, Nordzucker is now installing an

innovative evaporation dryer at an additional production site, in Örtofta. A vertical crystallisation tower

(VCT) is also being fitted at the same time. The company is investing a total of EUR 23.5 million in new

technology for Örtofta, which will permanently cut the energy consumption of one of its most pro-

ductive factories by 30 per cent. Furthermore, the new equipment will reduce annual CO2 emissions from production by 32,000 tonnes. The investment is another stride towards realising Nordzucker’s

biggest energy-saving project to date.

New technology saves 150 gigawatt hours a yearCapital expenditure of around EUR 17 million is planned for the installation of the new evaporation

dryer. The VCT is to cost another EUR 6.5 million, and both machines are to start operations in the

2014 campaign. The new technology will save the factory 150 gigawatt hours of energy per year.

“We will be saving roughly as much energy as 7,500 Swedish houses use in a year for heating”,

says Högberg, smiling.

Doing more with less energyThe Örtofta factory processes some 18,400 tonnes of sugar beet on every day of the campaign. “It is

an energy-intensive process, which we optimise continuously”, explains the director. “Crystallisation,

the evaporation plant and the pulp dryer are our main consumers of energy.” The new VCT dries

extracted pressed pulp, which the factory turns into high-grade animal feed pellets. The equipment

achieves most of its efficiency by the systematic reuse of steam in production. With the new VCT,

continuous crystallisation is possible at much lower temperatures than before. From 2014, the factory

will save 50 gigawatts a year in this operation alone. Högberg sums it up as follows, “These are great

strides, which bring our company closer to its demanding energy and climate targets while further

boosting our competitiveness.”

Örtofta: consistent energy savings

Good news and new tasks for Bengt Högberg (left) and the team of the Örtofta plant: beginning 2014, the plant will save one-third of its energy per year due to the new technology.

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Meeting customer needs responsibly

“Their reactions are similar”, observes Marion Schaefer of customers visiting one of Nordzucker’s factor-

ies for the first time on a supplier audit. “Most of them are surprised by the unfamiliar dimensions and

the enormous volumes that our factories deal with.” The food chemist coordinates the company’s sus-

tainable development activities from her office in Copenhagen. Product quality and safety have top

priority, alongside occupational health and safety, environmental, climate and social matters, plus the

standards required for the corresponding inspections and certifications.

Customer audit: process quality under the microscopeRegular inspections by customers who trade or process Nordzucker products do not just consist of a

pleasant stroll through the factory. To answer all the customer’s questions, a competent team is available

on site, which includes the plant manager, product or quality manager, factory coordinator and an

engineer or foreman from the sugar house and service centre. Every audit entails the inspection of

documents by the customer, and an analysis of potential product contamination is part of that. It also

covers a concrete inspection of the steps that Nordzucker takes to minimise identified product risks,

for instance.

All Nordzucker sites are certified in accordance with FSSC 22000, an internationally recognised product

safety standard. “Our uniform, Group-wide product safety and product tracing systems are a key area

of every customer audit nowadays”, explains Marion Schaefer: “What precautions are taken to prevent

contamination of the products? How do we ensure the traceability of our supplies, in order to keep

risks for the customer and end consumers, as well as for ourselves, to a minimum because as manufac-

turers, we bear liability for the product?” During the audits, which can last for up to two days, critical

points are examined in detail in ongoing production, issues for improvement are noted, solutions dis-

cussed and implementation followed up. “Often, customers test our metal detectors to ensure they

are working properly. Of course, individual product specifications and service requests to Nordzucker

are also on the agenda – depending on the final product and the target market”, adds

Marion Schaefer.

For materials that are bought in or used as raw materials, such

as imported organic cane sugar or Fairtrade-certified prod-

ucts, Nordzucker is on the other side of the table and carries

out the same kind of audits at its own suppliers – but this

time as the customer.

Everyone bears responsibility“The standards of the food industry also increase the standards

of product safety and traceability for us and our customers”,

emphasises Marion Schaefer. This is an enormous challenge,

especially for food producers with international sourcing and

distribution systems. “We can only reach a solution by assum-

ing our responsibility together – by obtaining systematic

commitments from everyone involved in the manufacturing

process”, says Schaefer.

Keeping step with growing global demands

Marion Schaefer, Corporate Sustainable Development: “We all bear liability to secure sustainable product quality. Our customers honour this.”

15Responsibility

Interview with Prof. Uwe Tegtbur

What is the basis for a healthy, balanced diet and what role do

carbohydrates play in our diet? A conversation with Prof. Uwe

Tegtbur, MD, Director of the Institute of Sports Medicine at the

Hannover Medical School.

Professor Tegtbur, human beings need various nutrients: water, carbohydrates, proteins, fats, minerals and trace elements, just to name a few. What function do carbohy-drates fulfil in the human body?Carbohydrates are the main source of energy for human beings.

They supply energy for us to think and for our muscles to work.

Our brains can only metabolise carbohydrates, not fats or proteins.

Our muscles can also extract energy from fats and proteins. The

body only uses proteins as an energy source when its carbohydrate

reserves are exhausted. This puts a strain on the body, as a lack of

carbohydrates combined with physical activity leads to higher

adrenalin levels, which in turn results in higher blood pressure and

a faster heartbeat.

You said the body stores carbohydrates so that it can use them later for brain and muscle activity. Where are these

“storerooms” for carbohydrates and can we fill them up indefinitely?Our bodies store carbohydrates in the liver and the muscles. It varies from person to person, of course,

but on average you can say that an adult can store around 200 to 400 grams of carbohydrates, and

someone who is physically fit can store more than someone who isn’t. So that means that unfortunately

we can’t build up our reserves indefinitely. If too many carbohydrates are ingested, the body turns

the excess into fat and stores it in this form.

What does that mean in terms of having a balanced, healthy diet?In the first instance, it’s about having the right energy balance. In other words, our energy intake

and energy consumption must be in step. Over time, if we don’t use up enough energy, we put

on weight. Excess weight is more of an exercise problem than a dietary problem. It is also important

to consume carbohydrates when your body needs them, so before exercising or exposure to higher

levels of stress. If you want to lose weight, I believe it can make sense to eat carbohydrates if you can

actually burn them off.

We often hear about low-carb diets, in other words diets based on reducing carbohydrate intake. What do you think of these diets?As I said, carbohydrates supply our brains and our muscles with energy. With low-carb diets, I reduce

my body’s ability to perform. The important thing is when I eat the carbohydrates and whether I

have a good energy balance.

“Carbohydrates are the source of energy for us to think and for our muscles to work.”Prof. Uwe Tegtbur, MD, Hanover Medical School

Focus on health and nutrition


Nordzucker improves its safety culture

“Occupational health and safety are and always have been of the greatest importance for

Nordzucker”, emphasises Axel Aumüller, Chief Operating Officer. Last year, the Group upgraded

its efforts by another notch, focusing even more sharply on safe working conditions, accident

prevention and health care. The reason for the additional efforts was an increase in accidents

causing more than three sick days. A Group strategy has been adopted in consequence that

emphasises the vision of zero accidents.

“Our foremost goal is to get the number of accidents further down again, because we have respon-

sibilities – towards the employees and also as individuals for our own safety. Our renewed vision

of zero accidents is therefore closely related to our value process,” says Joachim Rüger, Senior Vice

President Production, Eastern Europe. Axel Aumüller adds, “We intend to lead the sugar industry

and similar industries in terms of occupational health and safety.” To achieve this goal, the “Health

& Safety Production Workgroup” has drawn up targets, responsibilities and an action plan. “We do

not accept unsafe working conditions. Safety has top priority for us, putting it ahead of production,

for example. Because we can only produce successfully when we offer a safe working environment”,

continues Rüger.

“Safety is a matter for everyone. That is basically our starting point. In our action plan, we have

called this “Talk Safety”. What we mean by that is that we should all make each other aware of risks

at work. Everyone, especially in production, both during the campaign and after it has finished,

should have an awareness of work processes that are potentially dangerous and should have the

courage to tell colleagues who are putting themselves

at risk”, says Iver Drabaek, coordinator of the working

group. The working group is looking in particular at

practical aspects: “Our aim is to establish a distinct

safety culture. We have formed three subgroups in

which safety experts from the factory contribute their

experience. This enables us to identify potential sources

of danger and therefore avoid accidents. Sharing experi-

ences within the group also lets us learn from examples

at other factories and identify measures which could

be implemented as a Group-wide standard”, adds

Drabaek.

These activities already had some initial success in the

last campaign: the number of accidents went down.

“Everyone knows this is just the beginning. It takes

time to improve the safety culture and raise individual

awareness, but we have got off to a good start”,

says Drabaek.

Safety first

Safety is a matter for everyone. Which is why Nordzucker makes every employee aware of risks at work.

17Responsibility

Far-sighted investment

Investments in logistics and replacement machinery will become more important

The Nordzucker campaign begins in autumn, when the lime

kilns are fired up in the 13 sugar factories. The factories op-

erated by Europe’s second-largest sugar producer are then

essentially expected to do one thing – run smoothly 24 hours

a day, seven days a week, for around four months a year. They

are also expected to do so cheaply, protecting the environ-

ment and conserving resources, as evenly as possible and

without interruptions – along the entire process chain, from

the incoming beet scales through to the sugar silo and on

to the customer. It sounds trivial at first, but this actually makes

a complex array of demands of the production managers at

the factories and Group headquarters.

When the Nordzucker production team prepares the annual

investment plan for 13 sugar factories, a large number of ex-

ternal voices make themselves heard indirectly: customers,

shareholders, farmers, the European Commission and national

governments in eight countries, local and regional regulatory

authorities. Internally, it is mainly the sales and beet manage-

ment teams that clamour for attention, as their demands

also have to be aligned with the investment strategy of the

production units. At the end of the day, there’s a whole

host of legitimate interests that have to be continuously

reconciled with production requirements, internal Group

performance indicators and development targets.

Rebalance, prioritise, invest“To ensure our factories stay productive in the long term,

we have to keep rebalancing internal and external demands

and also set priorities”, says Chief Operating Officer Axel

Aumüller. “How does Nordzucker make the most efficient

use of limited resources? That’s the key question.” The pro-

duction team provides the answers in a process of dialogue

organised across the Group. These answers lead to plans for

projects and budgets, which are agreed by the Executive Board

and are then discussed and approved by the Supervisory

Board. In the current financial year, around EUR 70 million is

available for capital expenditure in the factories.

Energy: making up for higher costsAbout EUR 30 million of the total is currently earmarked for

profitable investments: projects large and small that generally

When to invest where on which project? Set priorities today with investments focused on future needs.

Installation of new evaporation dryer at the plants in Uelzen, Nakskov and Örtofta is part of the biggest energy-saving project of Nordzucker.


have a fairly short payback period of four to five

years, save costs and make a positive contribution

to Group earnings. “Energy savings have indisput-

ably played the main role in this area for many

years now”, explains Aumüller. He is particularly

pleased that the Swedish plant in Örtofta is now

to follow those in Uelzen and Nakskov by starting

the 2014 campaign with a new evaporation dryer,

which will cut energy consumption there by a

good 25 per cent. What’s more, every kilowatt-

hour saved reduces carbon emissions and brings

Nordzucker another step closer to reaching its

ambitious reduction targets. “If we’re very good,

we will manage to recoup most of the increase in

energy and personnel expenses with the current

investment volume”, says the COO in summary.

Ensuring high environmental standardsThe bulk of the investment budget, amounting to

some EUR 40 million, is currently split between

replacement and compliance activities. The latter

consist of measures that are necessary to comply

with statutory requirements and environmental standards. Nordzucker is presently focusing on in-

novative technologies for efficient waste-water processing and on steps to reduce unpleasant smells.

“Here, too, we are investing continuously”, emphasises Aumüller. “It means we can maintain the

outstanding environmental standards at our factories going forward.”

New focal areasIn the years ahead, the production team expects a clear shift in capital expenditure towards replace-

ments, compliance and logistics. This will be prompted partly by the EU’s new Industrial Emissions Directive, which stipulates that environmental pollution is to be reduced further in future by using

the best available technology (BAT). “We will therefore need to, for example, renew the boilers for

generating energy at a number of sites over the next few years, or make substantial modifications to

them”, says Aumüller. The cost-cutting efforts that resulted from the sugar market reform have also

left their mark on the production units. “Our capital expenditure on property, plant and equipment

has not kept pace with depreciation for many years”, he stresses. At the same time, the campaign

run by the factories has been a third longer for five years now. “The increase in capacity utilisation

is good, but it also means the machines and components have a shorter useful life.” COO Aumüller

is also expecting the cost of logistics to increase. As part of the sugar market reform, Nordzucker closed

several sites and had to abandon some of the storage capacities available there. Today, production

is concentrated at the remaining sites, where the demand for storage space is correspondingly higher.

Nordzucker maintains outstanding environmental standards with innovative technologies for efficient waste-water processing.

19Responsibility

Dedication is an important part of our culture. A whole series of forward-looking projects, such as 20 · 20 · 20, are preparing our company and our beet farmers for future challenges.

Dedicated team

“It is our job to ensure that knowledge of improved cultivation methods reaches as many of our farmers

as possible. We at Nordzucker have the capacity to conduct trials and pass on the results.”

Markus Reiners, Beet Procurement Manager – Nordzucker, Clauen sugar factory

21Dedication

20 · 20 · 20 in practice

How can 20 per cent of the best-performing beet farmers in the whole of the Nordzucker Group pro-

duce 20 tonnes of sugar per hectare in the year 2020? Nordzucker and its farmers are busy finding

answers to just this question. Nordzucker has been pursuing this goal since 2011 with the 20 · 20 · 20

initiative, concentrating on five areas: plant strains, cultivation methods, harvesting, storage and cultiva-

tion structure.

Regional expert teams have been set up in the seven countries where Nordzucker grows sugar beet.

“Here in Trenčianska Teplá, we have chosen eight topics that we want to look at in detail and improve,

in order to boost the sugar yield. They include preparing the seed beds in the autumn with a prelim-

inary round of fertilisation. The advantage is that in autumn the ground is mostly dry, so it is worked

gently and not compacted unnecessarily. This gives us a soil which absorbs moisture evenly throughout

the winter and then has a homogeneous structure in the spring. In spring, the field then only has to be

harrowed lightly before it can be drilled. We can therefore maintain the capillarity of the undamaged

soil and achieve better crop emergence and very good root growth. This increases beet yields per

hectare. Our cultivation advisers use field trials to demonstrate the advantages of this practice, which

is widespread in Germany, and so help to spread knowledge of it”, says Richard Šulík, member of the

Board, Považský cukor.

Discussing practical cases and disseminating the resultsAnother focal area in Slovakia is mulch seeding: “The mulch-seeded portion currently accounts for

around 30 per cent of land under beet cultivation in Slovakia and we want to increase this to well over

50 per cent in the medium term. This improves the soil structure and offers active protection against

erosion and surface siltation”, adds Richard Šulík.

In the German growing areas too, the farmers are

busy fine-tuning their cultivation methods, to get

closer to the magic figure of 20 tonnes of sugar

per hectare. Here, too, the expert teams include

cultivation advisers and farmers, who discuss

practical situations and share their experience of

growing techniques. It is particularly exciting

when the yields vary considerably in a single

natural environment in spite of being subject to

similar conditions.

“In our 20 · 20 · 20 group, there are currently 20 to

25 farmers testing an app which adapts the

planned crop protection to the local weather fore-

cast. The app then determines the optimal time to

apply the pesticide within the next 48 hours. This

is partly to ensure and improve the effectiveness

of the spraying and partly to protect the beet”,

explains Markus Reiners, the beet procurement

manager in Clauen, Germany. He goes on to add:

Learning from the best

Close up: Nordzucker cultivation advisers make contact and prepare the ground for a broad sharing of knowledge.


“The fact that the app is now being tested in practice

is the result of a 20 · 20 · 20 workshop that we held

in March this year. We invited a Dutch expert to the

workshop, who gave a presentation on the influence

of the weather on crop spraying and showed us this

app. By the end of the talk, so many farmers were

interested in the app that we were able to organise

a trial run with some farmers in the Clauen area.”

Learning from one anotherThe 20 · 20 · 20 initiative has been under way in

the Nordzucker Group since 2011. As different as

the conditions are in all of Nordzucker’s growing

regions, one thing is the same: both sides learn

from one another. “We learn from the farmers’

knowledge too. They are the ones out in the fields

every day, looking for practical new solutions when

they are faced with challenges. And there are a

lot of lateral thinkers among them, who generate

innovative ideas. The latest example is a farmer who

considerably reduced the quantity of crop protec-

tion products he applied. By adjusting the spraying technique and the timing, he achieved substantial

savings here last year. Those are the projects where we at Nordzucker say, “Wow, we’d better have a

look at that”. We have the opportunity to examine the matter in trials and to boost the power of projects

like these by disseminating them widely when we see that they work”, explains Reiners.

Trials in Germany are currently focusing on cultivation and seeding. For example, we are looking at the

effect the choice of catch crop has on sugar yields or what the effects of mulch seeding and autumn

strip tilling are. In Sweden, the size of the trial area was extended from 12 to 22 hectares. As of last year,

trials at Granhill Øst are concentrating on cultivation techniques. An additional trial area for Northern

Europe has also been added in Denmark.

“At our trial area at Sofiehøj in Holeby, for instance, we have held trials with different varieties and

different cultivation methods. Our aim is to pass on our findings by sharing experience directly on

the ground”, says Claus Nordgaard, Manager of Agricenter Denmark, about the activities on the

eight-hectare plot.

The regional 20 · 20 · 20 interim results are also being shared throughout the Group. “In June, we will

be discussing the experience gained to date from the different initiatives within the project at a Group

conference of all Nordzucker cultivation advisers and trial participants. In this way, we can ensure that

the experience of different countries and natural environments is shared and can jointly decide on the

direction things should take going forward. Because together we learn from and with one another”,

says Dr Niels Pörksen, Chief Agricultural Officer.

With its 20 . 20 . 20 initiative, under way since 2011, Nordzucker is aiming for a yield of 20 tonnes of sugar per hectare.

23Dedication

Where does the sugar market regime go from here?

Interview with Marie-Christine Ribera

Marie-Christine Ribera, as CEFS Director General, could you explain a little bit about the organisation?CEFS stands for the Comité Européen des Fabricants de Sucre or the

European Association of Sugar Manufacturers, created in 1953. Based

in Brussels, we represent the activities of European sugar manufacturers

and refiners, approximately 60 companies across 20 EU Member States

plus Switzerland. Sugar is produced in 106 factories across the EU sup-

porting 180,000 direct and indirect jobs and 170,000 growers. We

are a small team, working on different issues of key importance to the

industry, from nutrition to the environment, from trade to agriculture.

And what is your biggest priority at the moment?As an organisation, but also as an industry, our biggest priority is the

reform of the Common Agricultural Policy (CAP). The Single Common Market Organisation (CMO) for sugar provides the rules for managing

the market and these rules are being reformed.

How are these rules being reformed?

In October 2011, the European Commission came forward with a legislative proposal to end the

current Single CMO for sugar on 30 September 2015, which foresees terms for buying sugar beet

and sugar cane and, perhaps most importantly, national quotas to be distributed among EU sugar

companies. It also includes mechanisms to monitor the market and withdraw sugar when there is a

surplus on the market.

And since 2011?

The proposal is now in the hands of the member states (brought together in the Council of the

European Union) and the European Parliament, which have the right and competence to decide on

the final outcome as co-decision makers. In March 2013, the Council decided to prolong the Single

CMO for sugar until 2017 and the Parliament until 2020.

What is CEFS’ position?

CEFS supports the prolongation of the current Single CMO for sugar until 2020. This will enable the

European sugar sector to continue to optimise its competitiveness and efficiency; to counter the

instability of the world sugar market, securing stable supply; and to provide LDC/ACP countries with

more time to invest in their infrastructure in accordance with the EU’s international commitments.

You must have been disappointed with the Council’s position to prolong the Single CMO for sugar until 2017 rather than 2020? Yes. The Parliament sent a clear message to the Council – prolong the Single CMO for sugar until

2020 – and we were deeply disappointed to see the Council did not take this on board. The 2006

reform resulted in the closure of 83 factories (one in two) and the loss of more than 22,000 direct

jobs – this should not have been in vain. We are becoming more competitive, but we need more

time. We are simply asking for stability and predictability for five more years. This is not a long time

in such a capital-intensive industry.

Marie-Christine Ribera, CEFS Director General (Comité Européen des Fabricants de Sucre, European Association of Sugar Manufacturers).


Are there any other issues, apart from the end date, which concern you?CEFS welcomed the Council and the Parliament’s maintenance of the current refiners’ privilege, as

well as the Council’s decision not to include an increase in the quotas. We do not support a reallo-

cation to those who relinquished their quota(s) in the previous reform, nor do we support an in-

crease in isoglucose quotas in certain member states. This would go against the 2006 reform which

aimed to balance the market. We also consider that the production charge the sector has to pay on

each tonne of quota sugar is unjustified and unfair. It should be eliminated when the current finan-

cial framework ends in 2014.

What is CEFS doing to make its position heard? CEFS and our members have been working hard to promote our position

and explain the reasons for the prolongation until 2020. We put forward three

main reasons detailed in our position from March 2012. We also have a joint

position with our partners in the sector, CIBE (the growers), EFFAT (the trade

unions) and the ACP/LDCs (least developed countries). As a coalition, we believe

prolonging the Single CMO for sugar until 2020 would go a considerable way

to guaranteeing decent employment, improving the sector’s sustainability and

providing sufficient sugar supplies at sustainable prices for farmers, processors,

suppliers, workers and consumers.

What is the timetable for the reform? As I said, the Council and the Parliament decided on their positions in March.

Since then, the two bodies have been negotiating with each other in so-called

trilogues in order to reach a common position. It is hoped that this will be done

before June under the Irish Presidency. As you can see, it is a long decision-

making process from October 2011 to June 2013: literally two years in the

best case scenario, let alone the discussions on implementing regulations.

The entry into force is foreseen in 2015.

What next for CEFS?We are following the negotiations. We recognise the hard work that has been

done and understand the need to ensure that the CAP is adopted and imple-

mented in a timely manner. Nonetheless, Europe’s sugar manufacturers need a workable and reli-

able solution, not an agreement for the sake of an agreement, and insist that the prolongation of the

Single CMO for sugar until 2020 with no change to the refiners’ privilege and no increase in quotas

is still feasible – for the sake of the sector as a whole.

One last question, what about after the end of the current Single CMO for sugar?In order to ensure the European market is balanced after the quota, it is of utmost importance that

the sector secures a commitment, such as a political declaration, that there should be no limit on

exports after the quota. It is stating the obvious so it should not be too difficult for our decision-

makers to find a proper way to express it. Similarly, there is a need for a crisis mechanism (market

clearing mechanism), i.e. a withdrawal from all sources so all players make adjustments to ensure the

market is balanced. This will enable the Commission to act before rather than after a crisis.

Dr Niels Pörksen: “Our declared aim remains to make beet farming in Europe even more competitive.”

25Dedication

Courage accompanies decisions and drives projects. Being open to new ideas makes development possible.

Courage as a motor

“Breaking new ground using innovative technology and going beyond national borders requires

a great deal of courage. Nordzucker is developing a culture that not only makes this possible, but

also encourages it.”

Aljoscha Kotulla, SAP Special Applications Specialist, Nordzucker, Braunschweig

Björn Windfall, Senior Consultant, Agri and Beet, Nordic Sugar, Copenhagen

27Courage

Making exemplary use of modern media

What distinguishes human beings from other

animals? There is the upright posture, which is a

requirement for agriculture because it frees your

hands to do other things. You could say it’s the

anatomical prerequisite for beet cultivation. Of

course, that’s not all: human beings can commu-

nicate in words; they can read and write. Modern

media make it possible to exchange information –

even in large quantities, over great distances and

with many people at the same time. Surveys among

our beet farmers have shown that they would like

Nordzucker to improve its communications. One

of the ways we are doing this is by redeveloping

our Agri-Portal.

For a number of years now, Nordzucker has pro-

vided its beet farmers with an information portal,

the contents and technology of which are continu-

ally refined. As part of the increasing integration

of the technologies and content used within the

Group, we are currently working flat out to en-

hance this Group-wide portal solution for the

beet farmers.

“With all the changes to the portal, our main aim is

to always see things from the farmers’ perspective”,

says Björn Windfall, Senior Consultant, Agri and

Beet, describing the objectives of the international Agri-Portal project. “First of all, we asked ourselves

what users really need and how we can provide this information in a user-friendly way, so that it is

easy to find”, explains Björn Windfall. “The main thing is to support farmers with their everyday

work. We provide the information that the farmers really need for their work and which can be

accessed simply, and always in the same way, from a standardised platform.”

A new, clearer page structure will guide the farmers better through the information on offer. “On

the one hand, we want to offer farmers and interested parties a freely accessible area and on the

other hand, it is important for us to have a password-protected page where we can exchange infor-

mation directly with our beet farmers. The public pages always have the latest information and news

about beet cultivation. In the private area, the farmers can find clearly structured, specific operating

information for their business, such as contract details and invoices. They can also carry out compari-

sons between farms and place orders, for seed, for instance. The focus is on rapid, direct access to

personal information. With the new design, the structure and the search function, users can find the

information they are looking for quickly and easily”, adds Aljoscha Kotulla, SAP Special Applications

Specialist.

Communication creates connections

Consistent, coordinated project planning is the foundation for successful implementation.


“In addition, we are currently working on making the

Agri-Portal mobile, i.e. compatible with smartphones

and tablet PCs. Then the farmer out in the field can

read tips on cultivation or the latest news”, points out

Björn Windfall.

From the company’s perspective, the new approach

also has huge advantages: “With the Agri-Portal, we are

pursuing a Group-wide approach. That means we have

a standard design for all country platforms. For the effi-

ciency of the IT environment, the decisive aspect is that

new developments and functionalities can be rolled out

more quickly to other countries. Altogether, this inte-

grated approach cuts maintenance costs and can be

managed better by the IT department”, says Aljoscha

Kotulla, describing the benefits from an IT perspective.

Another objective is to expand the Agri-Portal so that it

becomes the preferred information channel for our

beet farmers – the address where everything should

come together, without the need for complicated

searches.

For all the enthusiasm and the clear advantages of modern communication media, Nordzucker

nonetheless still puts personal contact and dialogue with the farmers at the heart of its strategy.

“The Agri-Portal doesn’t replace the personal conversation, it adds to it. We are positioning the

Agri-Portal as an important communications tool that expands the dialogue with our business

partners. A personal phone call and direct discussions with staff in the beet office are, and will

remain a vital part of our individual service”, says Gerald Dohme, Senior Manager Corporate

Communications.

Modern technology is changing communication.

This is how the Agri-Portal welcomes farmers in Germany today.

29Courage

Sharing experiences – setting trends

Nordzucker has production facilities in seven

countries. This means that different languages

and cultures are confronted with one another.

This can be a challenge for a pan-European com-

pany – especially if it has demanding objectives.

Four years ago, the three regional production

managers responsible for Northern, Eastern and

Central Europe decided on a joint initiative to

drive forward the development of products and

technology in the Nordzucker Group. Their aim is

to share the lessons drawn from past experience

and to intensify the exchange of information

across national borders. This exchange has proven

to be particularly effective since all are focused on

a common vision for the future. The initial meet-

ings were dominated by questions about future

technological developments and the demands

of our customers in terms of product innovation,

product quality and safety, and sustainable development. It quickly became apparent that an organi-

sational structure was required which would enable reciprocal learning and a common assessment

of trends throughout the Group.

A solution was soon found and there are now 13 cross-border Production Working Groups which pool

Group knowledge on topics relevant for the future and also keep developing it. In addition, all the experts,

plant managers and production managers meet with Executive Board member Axel Aumüller twice a

year for Global Production Meetings, to coordinate and optimise subjects such as the planning of in-

vestment and maintenance, energy conservation, technological development, production information

systems, customer-specific product developments, occupational health and safety, and sustainability.

“The important thing is that it’s not just about defining standards and guidelines, but about reaching

a common understanding of what we need in order to keep developing the production processes.

We can only get better if we all pull in the same direction. It is vital that we define and implement a

line of approach for the entire Group”, explains Dr Michael Gauss, Managing Director Central Europe

and Senior Vice President Production Central Europe.

“Planning concrete activities is one aspect of that, but equally important are joint discussions and the

exchange of knowledge. On the one hand, the technology used is the same everywhere, but on the

other, there is a wide range of experiences with different projects. Jointly drawing on this wealth of

experience promotes motivation and innovation ”, adds Achim Rüger, Senior Vice President Produc-

tion Eastern Europe.

Hand in hand towards greater productivity

Axel Aumüller and Zoltán Tóth in Clauen: exchanging know-how on all levels.


“Discussing specific topics with colleagues from other regions is an exceptional experience every time.

It gives you incredible impetus for your own work, in terms of the technology itself on the one hand,

of course, but also in terms of the workflows and processes at a production facility. An inspirational

atmosphere is generated in no time at all”, says Dr Jesper Thomassen, Senior Vice President Production

Northern Europe.

The Production Working Groups pool all of the production technology expertise available within the

company and also serve as important advisory and implementation teams. For example, the Energy

Focus Group evaluated all the evaporation dryer projects that were approved recently and provided

important implementation support. The Waste Stream Focus Group gave advice and support on the

dimensioning and operational launch of the new waste-water treatment reactors in Opalenica, Kėdainiai

and Klein Wanzleben. And an important contribution was made to our value process by the Health &

Safety Group, which created a link between our Nordzucker values and the guidelines and processes

for occupational health and safety.

All the teams have been focusing on their specific topics for more than three years. The exchange

of knowledge informs and inspires a variety of activities, be they investments, environmental topics,

occupational health and safety or the improvement of working practices. In this area, Nordzucker

benefits in many ways from its size and its European structure.

Joachim Rüger, Dr Michael Gauß and Dr Jesper Thomassen in discussion.

31Courage

“It’s the small everyday things that make a difference, for oneself and for others.”

Kristine Koppelhus, Assort Manager, Nordic Sugar, Copenhagen

Appreciation of each other is the basis for growth and progress.

Appreciation is the name of the game

33Appreciation

Human resources management of the future

Focus on people

Attracting and retaining qualified staff is the main

task for human resources at the Nordzucker Group.

Nordzucker has long practised a modern approach

to professional training and development and to

work–life balance.

“The success of our company is based on dedicated,

productive employees at the various sites in Europe.

We offer an international working environment and

wide-ranging development opportunities. We consider

the long-term loyalty of our employees to the company

to be particularly important. For this reason, we fill

vacancies from within the company wherever possible

and in doing so can offer excellent prospects for de-

velopment”, says Inga Dransfeld-Haase, Senior Vice

President Corporate Human Resources, explaining the

principle that applies throughout the Group.

Demographic changes will make it more difficult to

attract qualified professionals in future. Nordzucker

therefore counts on fostering talent from within wher-

ever possible. “For example, we encourage and support

colleagues, especially those working in a technical

field, to complete a part-time degree course in parallel

to their work”, adds Inga Dransfeld-Haase.

Succession planning is another key aspect of human resources work at Nordzucker. A precise analysis

of the age structure is carried out to determine when employees with specific qualifications will

reach retirement age. “We use a modern IT solution, which enables us to model changes in the staff

structure over the long term. This transparency is vital for succession planning and makes us less

dependent on competing for talent”, emphasises Inga Dransfeld-Haase.

In order to address important human resources issues in a systematic and structured way, Nordzucker

introduced HR conferences in 2010, which take place annually with managers at local, national and

Group level. The focus of the HR conferences is the continued development of employees. “The HR

conferences are an important part of our work. We consult with managers about individual staff

development activities across different sites and the Group as a whole. In Germany, for instance, staff

Inga Dransfeld-Haase, Senior Vice President Corporate Human Resources: “Nordzucker relies on professional training and long-term employee loyality.”


can systematically use the standardised training courses on offer at the Sugar Academy for their

personal development”, explains Inga Dransfeld-Haase.

Modern human resources management covers much more than professional training, however.

For many years, there has been an increasing focus on courses related to work–life balance. The

Nordzucker ‘Time Out’ was opened recently at the company headquarters in Braunschweig. This is

a separate area where staff can spend some time attending to their physical and mental well-being. It

provides specific opportunities for fitness and healthy living, among other things. Flexible working hours

and support with childcare have become a well-established feature of the Nordzucker culture, too.

“Nordzucker can therefore present itself as an all-round attractive employer, which is important for

recruiting new staff. The main thing, however, is that people are at the heart of what we do.” Inga

Dransfeld-Haase sums it up as follows, “We give our employees room to expand their abilities and to

identify with the company, and this creates the conditions for a successful working relationship in

which both sides can grow.”

Professional training, courses related to work–life balance and lived corporate values document: we focus on our employees.

35Appreciation

Surveys are the starting point for making far-reaching improvements

Success for us doesn’t just mean the number on the bottom line at the end of the year, but also

and equally the satisfaction of different interest groups. So surveys among different groups of stake-

holders are an important element of Nordzucker’s positioning and continued development. Because

it is only when we really know the expectations of our customers, shareholders and beet farmers

that we have the opportunity of fulfilling them and entering into a constructive dialogue that im-

proves our company.

“We carry out regular customer surveys in all regions and of course we are pleased when the feedback

is positive. But being told about dissatisfaction is just as valuable. So the most important thing after

the survey is to evaluate the results and start taking action”, says Mats Liljestam, Chief Marketing

Officer.

As well as great praise for food safety, product range and punctual deliveries, the last survey of

industrial customers in the Central Europe region revealed some areas where customers would like

Nordzucker to do better. They include the time it takes to deal with complaints or the desire for more

information on market developments, for example. “We started working on these topics immediately

There’s no such thing as a stupid question ...

Anja-Alexandra Horn, Sales Development Manager, is dedicated to customer satisfaction.


after the customer survey. Our process for

dealing with complaints was tightened up

straight away, for instance”, explains Ingo Saß,

Senior Vice President Sales Central Europe.

And it is not only our customers who are sur-

veyed regularly, however, but also the beet

farmers. “A close relationship with our beet

farmers, based on partnership, is a tradition

here and really is a matter of course for us. So

it’s all the more important that every now and

then we ask: What can we do better?”, says

Dr Niels Pörksen, Chief Agricultural Officer,

explaining the approach.

We are in close contact with our beet farmers

and offer them advice and services: via our

websites, in informal telephone conversa-

tions or on personal visits. In February and

March we asked all our farmers to evaluate

our contacts with them and Nordzucker as a

business partner. A total of 5,087 farmers from

seven countries took the opportunity to give their assessment and their comments. In most cases,

Nordzucker came out very well. Compared with the previous survey in 2011, the results were much

better – especially in Germany and Poland and in particular in the areas of cultivation advice and

communications. The steps taken in 2011 have obviously hit their mark.

A survey carried out last year with a selection of shareholders was particularly exciting. The main

focus was to find out how shareholders view the company’s strategy and to what extent they trust

the company and the Executive Board. “The results of this survey were very positive. However, we

did learn that we have to be even clearer and more candid in our communications on specific topics

– especially those concerning the future. As the operating environment is set for more change in fu-

ture, Nordzucker is in the process of becoming an international company. It is therefore all the more

important that we gain the support of our shareholders and make it clear why we have chosen this

strategy”, says Hartwig Fuchs.

Nordzucker will continue its policy of regular exchange with different interest groups in many areas.

Advice and communication with the farmers are particularly important.

37Appreciation

Agricultural trends affect our business. Preparing for change in good time ensures sustainable success.

Focused on the future

“Agriculture thinks, lives and works in long time frames. The trick now is to bring together

the speed of the markets with the long time frames of agriculture.“

Hartwig Fuchs, Chief Executive Officer

39Trends in agribusiness

Trends in agribusiness

A changing industry

Klaus Schumacher: Welcome to Nordzucker. I am delighted to welcome Carl-Albrecht Bartmer,

President of the German Agricultural Society (DLG), and Mark van Driel, Managing Director of

Rabobank, Germany, who will be taking part in our panel discussion today together with our CEO

Hartwig Fuchs and our CFO Dr Michael Noth. Today we want to talk about trends in agribusiness that

influence the entire agricultural industry and therefore also the sugar industry and beet cultivation.

Mr Bartmer, when we look at agriculture in Germany today, what are the trends that farmers

factor into their business decisions? Is it still the megatrends, so global population growth and

rising incomes, which will lead to sustained growth in demand for food in the years ahead?

Carl-Albrecht Bartmer: The familiar megatrends do still have a considerable influence. At the moment,

they also seem to be reflected in the relatively tight supply situation on global agricultural markets,

and in the resulting high prices for almost all agricultural raw materials. The mood in the farming

industry is therefore extremely upbeat. This is the case even though we are currently discussing a

U-turn in agricultural policy, aimed at reducing support for farmers and at the same time tying the

remaining payments much more closely to specific duties, especially concerning the environment.

The willingness of German agriculture to invest is currently at a record high, according to the latest

DLG-Trendmonitor publication. This also reflects the market conditions. So there is no reason to play

down the current global megatrends – they remain strong. However, we must recognise that there

are also particular dynamics in the EU and especially in Germany that affect how farmers run their

businesses.

The best example of this is bioenergy. This has become very important, accounting for nearly 20 per cent

of arable land use in Germany. We are seeing considerable shifts in the competitiveness of certain

Dr Michael Noth, Hartwig Fuchs and Klaus Schumacher organised a round-table discussion.


production lines, which are often caused or acceler-

ated by state intervention, as with Germany’s Renew-

able Energy Sources Act (EEG). I wouldn’t call that a

megatrend, but it is the result of political action that

will be with us for a good while and will continue to

affect business decisions in agriculture.

In Germany, we also have to deal with another trend:

we have a tendency here to see agriculture and the

rural environment more emotionally and expect them

to carry out all kinds of functions for urban centres.

Then there are the calls for the more extensive use of

land for other purposes. The keywords here are ecol-

ogy, sustainability and quality.

Klaus Schumacher: The development of agriculture

over the past 20 years is also closely related to the

creation of the common market in the EU, which

enabled a common agricultural policy to work. Is

the trend now going back to renationalisation?

Carl-Albrecht Bartmer: The EU became powerful

in agriculture because it strived for equal living and

working conditions, with a sensible division of labour. In

addition, the traditional safety nets of agricultural policy based on state intervention in markets have

been scaled back over the past two decades. This has indeed proved to be a great impulse for the

agriculture industry, in terms of qualifications and especially in the enterprising attitude of farm

managers. The farmers have developed their processes much more efficiently as businessmen. There

has been much greater technological progress in response to this environment, and more profitable

methods as a result. Today, the most competitive countries in the EU are those that decided largely

to uncouple production from subsidies very early on. Unfortunately, what we are seeing in discussions

about the current reform of agricultural policy is essentially a step backwards. We are amazed to see

political concepts being revived that we thought had been cast aside long ago, be it a philosophy

of keeping small family farms instead of growing companies, often also run by families, of regionalised

production systems instead of international trade, or of supposedly lost “traditional knowledge”

versus modern technological progress.

Klaus Schumacher: Mr Fuchs, how are these changes in the agricultural industry reflected in the

relations between Nordzucker and its beet farmers?

Hartwig Fuchs: There are various aspects that need to be considered. Here’s a small example of the

willingness to invest: after we had agreed on the final beet price for the 2012 campaign, ten farmers

and machinery syndicates here in Lower Saxony ordered new beet harvesters. In this case, there was

a direct connection between the beet price and the order placed.

Carl-Albrecht Bartmer: “The willingness of German farmers to invest is at a record high.”


In other areas too, we see very clearly that our beet growers increasingly consider themselves to

be businessmen. The close, even emotional relationship with Nordzucker does still largely exist, of

course. But on the other hand, sugar beet increasingly has to compete with alternative crops. That

makes greater demands of us than it used to because we have to be much more competitive. Every

year, we have to fight for land to grow beet, and that brings us back to one of those megatrends:

the global supply of arable land is scarce. For us, that means we have to offer competitive prices for

beet compared with wheat and rapeseed every year, otherwise we won’t get our beet.

Klaus Schumacher: Mr van Driel, over the last few decades, Rabobank has become very closely

involved in farming, agriculture and the food industry. How do you see these trends?

Mark van Driel: My perspective is very similar. Global population growth naturally has an effect on

agriculture and prices. But that has been a topic for the last five years. What we are now seeing is

that agriculture is being linked more and more closely with the major global topics that are concerning

society. And, of course, with the world of finance too. For example, we see more and more investors

trading on futures markets. But I believe this will only affect prices in the short term. In the medium

to long term, prices will always be determined by supply and demand. Another topic is that many

suppliers have begun to finance the farmers. Traditionally, here in Germany, there were the coopera-

tives, of course, which financed the harvest, the seed and the fertiliser. But now we are seeing a new

dynamic worldwide, including in Africa, where funding is scarce. There are more and more links

Mark von Driel: “Population growth affects agriculture and prices.”


between seed and fertiliser companies, traders

and providers of financial services. Another import-

ant area is food quality and safety. Where food

comes from and how it is produced are increas-

ingly becoming matters of social concern.

Klaus Schumacher: Dr Noth, the financial and

agricultural markets are closely related. How does

that affect Nordzucker?

Dr Michael Noth: It is vital for us that we have a

business model which also stands up when markets

are volatile. If we expose ourselves to risks, we

must use the opportunities available to mitigate

those risks as far as possible. Of course, the best

thing is when we can share these risks with our

customers and suppliers. This will never be fully

possible, however, so we make use of the oppor-

tunities offered by banks and futures markets to

hedge market risks. Price movements on the sales

side cannot always be directly passed on to the

beet suppliers; we have to find compensation

mechanisms instead. The second aspect is that

we have to become more active in the area of

hedging. We are making intensive use of the

products on offer from the banks and the markets.

They are an indispensable part of our risk manage-

ment. We are therefore concerned to see that we

are being tied up with a good deal more red tape

as a reaction to the financial crisis. A financial trans-

action tax is also under discussion. All these things

make the necessary hedging of risk more difficult

and more expensive for companies like Nordzucker.

Klaus Schumacher: Does this high degree of

volatility also have consequences for our financing?

Dr Michael Noth: Financial markets now attach

greater importance to a sound business. This is a

result of the 2009 financial crisis and fits well with

Nordzucker’s approach: solid, reliable funding is

the basis of our business. The extreme volatility on

both our procurement and sales markets makes this solid funding all the more important. And we are

not just following a trend either, because this has always been our approach.

Dr Michael Noth: “It is vital for us to have a stable business model which also stands up when markets are volatile.”

Klaus Schumacher: “Finances and agricultural marketsare closely related.”


Klaus Schumacher: We have already heard about

the “step backwards” being taken in agricultural

policy. Mr Fuchs, is that something that could

hold back Nordzucker’s future performance,

which has been very strong in recent years?

Hartwig Fuchs: There are certainly elements

that concern us. We are currently observing a

sharp change in the mood surrounding political

discussions about extending the sugar market regime. The positive aspects of the regime are

not being given enough weight. Let’s talk about

security of supply: the sugar market regime guar-

antees that the European market is supplied reli-

ably and regularly with at least 85 per cent of its

sugar requirements from regional production,

at the social and production standards in force

here. Reliability also means that if the quota re-

gime is abolished, a price hedging mechanism

must be created – and this is an option that we

in the EU sugar industry simply do not have at

present.

Dr Michael Noth: Exactly, that is a very important

point. At Nordzucker, we have to negotiate prices

with our farmers at a very early stage – generally

before the winter wheat is sown – in order to

secure the land for beet. Our beet prices then

have to compete with a wheat futures price, for

example. So we guarantee the farmer a minimum

price for his next harvest today, but only find out the price at which we will be able sell the sugar

ourselves 18 months later.

Klaus Schumacher: Mr van Driel, has Rabobank thought much about what would happen in the EU

sugar sector if the quota regime really was allowed to expire?

Mark van Driel: As soon as the sugar market regime comes to an end, the ones to profit will be those

who can produce the most efficiently and who exploit available growth opportunities. Sugar prices

will become more volatile, and we have already given some thought to whether sugar producers

could hedge themselves using grain futures.

Klaus Schumacher: Of course, that raises the question of whether it would not be more sensible to

think right away about creating a European futures exchange for sugar.

Mark van Driel: If the sugar market regime and the quota system are abolished, then this price hedging

instrument must be set up. Because while there is no hedgeable market price, our funding possibilities

are limited. We would certainly support the introduction of this kind of futures exchange. Because

Intense discussions on the future of agriculture.


the shortages in the European market which would probably arise at times if the quotas were no

longer there would have to be countered. Hedging raw materials from different parts of the world is

becoming more and more important.

Dr Michael Noth: But I also think that the structure of the European sugar industry will undergo

further changes, just as it has over the past decades. It needs to become more efficient and adjust to

the market, especially where growing conditions and proximity to the market are more difficult to

predict. So we have to keep on doing our homework, become more efficient and keep fighting to

improve our processes, in order to hold our own against the competition and to grow.

Hartwig Fuchs: In principle, I don’t doubt that the sugar industry will continue to develop well in

the best sites and the best regions, even without the sugar market regime. But my main concern is

the time factor. Agriculture thinks, lives and works in long time frames. It is time to get the industry

ready for the global market. But at least Nordzucker’s sites are in the best regions. We will, however,

then have to do a great deal more in order to be able to ensure security of supply for our customers.

That will include importing cane sugar for refining. But once again, in everything we do, it’s vital

that we can hedge our risks. This will become more important than anything else. We at Nordzucker

have a very clear task: we produce sugar and have to ensure our competitiveness by continuously

becoming better, leaner and more efficient. Ultimately, we do all this to give our shareholders, i.e.

our beet growers, the opportunity to retain sugar beet in their crop rotation in future.

Klaus Schumacher: If a company like Nordzucker is thinking about becoming more international,

can it count on the support of its agricultural shareholders?

Dr Michael Noth: “We have to keep improving our efficiency and we have to adapt to the market”.


Carl-Albrecht Bartmer: Well, I believe Nordzucker’s development in recent years does indeed reflect

a process of considerable development on the part of the shareholders. It’s a development that has

resulted in much greater recognition of the entrepreneurial role played by a food company that pro-

duces sugar and also in the realisation that sugar factories can no longer be seen as a mere appendix

to the farming business, whose job it is to process the beet so as to maximise the beet price. And I

believe there is a growing recognition that Nordzucker is a company which has to fight its corner

against other sugar manufacturers and has to seize its opportunities in a globalising market. This

evolution is a normal process, you could almost say of emancipation, from a processing company

founded by farmers to a self-confident business in which farmers hold shares. Ultimately, that is

lucrative for the farmers as shareholders and also ensures that beet processing takes place in their

home region.

Mark van Driel: Development and internationalisation are important for the future, certainly, but

Nordzucker also plays a pioneering role in the organisation and management of supply chains.

Given the trends we have just been talking about, this is an increasingly relevant skill.

Hartwig Fuchs: There is still a vast amount of potential in the idea of processing an agricultural

product from the region and producing something which really has this regional connection.

Consumers are making ever higher demands of traceability and transparency in the food supply

chain. With our approach, we can ensure this much more easily and thus differentiate ourselves

from competitors on the world market.

Carl-Albrecht Bartmer: I think the importance of the value chain will keep on growing. And one of

the reasons is something you just mentioned, Mr Fuchs: traceability. Another reason is: I believe that

processes can be organised much more efficiently within an overarching value chain.

Presenting a united front to change – round table at Nordzucker.


Mark van Driel: Customer loyalty can also be improved

with a tightly run value chain. The commodities markets,

where a piece of meat is bought here and a sack of

grain is sold there, will become less important, and

more established, longer-term economic relationships

will develop.

Klaus Schumacher: From a consumer perspective,

food safety and quality are currently major topics. How

do we deal with those?

Carl-Albrecht Bartmer: That is a very important issue.

We have a highly efficient agricultural and food pro-

cessing industry, in which quality assurance has never

been better. The communication channel for this is not

working properly, however. In my opinion, the local

farmer must become a much more vocal ambassador

for their industry, as they enjoy the highest level of

trust in their locality, and this would put agriculture in

general and, of course, the farmer’s own work into a

much better light.

Hartwig Fuchs: Absolutely, that is also one of our most important communication tasks. The aim

must be to express the strength and the benefit of agriculture for society and our economy.

Mark van Driel: In my opinion, the answer to this problem is that we have to communicate the sub-

ject of sustainability much more and also more clearly. The only way we can cope with the increas-

ing demand for food as a result of population growth and higher incomes while the amount of avail-

able land remains unchanged is by means of larger structures, which have to be organised better

and more efficiently – not necessarily organic agriculture, but certainly sustainable farming. And

these subjects will have to be communicated more clearly in future.

Klaus Schumacher: Mr Fuchs, we have a sustainability debate, we have a communications debate

and, looking at the sugar market regime, we are probably also going to see severe changes in our

operating environment. Taken as a whole, does this represent more of an opportunity for Nordzucker

than a threat?

Hartwig Fuchs: Well, it’s certainly a challenge. We will have to adapt in order to stay in touch with the

market. I believe it represents an opportunity because we are convinced that we will be capable of

competing with the world market – if we are given enough time to adapt. That requires certain

things, such as functioning price hedging mechanisms. But I can certainly envisage the EU continu-

ing to regularly export sugar to countries in the future which are dependent on larger import vol-

umes. With a combination of attractive pricing, product quality and first-class services, the European

sugar industry will be able to thrive on the world market. It’s therefore also a huge opportunity.

Hartwig Fuchs: “With a combination of attractive pricing, product quality and first-class services, the European sugar industry will be able to thrive on the world market.”


Facts and figures on the course of the financial year 2012/2013.

Group management report of Nordzucker AG

“Transparency in the the figures is the most important prerequisite for initiating the right

measures.”

Sven Jansen, Senior Vice President Corporate Finance and Controlling, Nordzucker Braunschweig

49Management report

Group management report of Nordzucker AG

Corporate structure of the Nordzucker Group

Nordzucker AG Braunschweig, Germany

Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig, Germany, 70 %

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

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

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

Region Northern Europe (NE) Region Eastern Europe (EE)

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

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

Sucros OY, Säkylä, Finland, 80 %

Suomen Sokeri OY, Kantvik, Finland, 80 %

Nordic Sugar AB, Malmö, Sweden, 100 %

AB Nordic Sugar Kėdainiai, Vilnius, Lithuania, 70.60 %

Nordzucker Ireland Ltd., Dublin, Ireland, 100 %

Region Central Europe (CE)

Nordzucker Group

Nordzucker at a glance

Business activitiesNordzucker is the second-largest sugar producer in the European

Union, with a market share of more than 15 per cent. In the last

financial year, the company produced around 2.8 million tonnes

of sugar from sugar beet at 13 sites in seven European countries.

On average over the year, the Group had 3,290 employees.

Our customers include the confectionery industry as well as

producers of dairy and bakery products, jams, ice cream and

drinks. Nordzucker sells some 80 per cent of its sugar to manu-

facturers of food and beverages. Around 20 per cent of our sugar

is sold via retailers. Nordzucker distributes most of this sugar

under the product brands SweetFamily and Dansukker. The

portfolio includes other products of the sugar-making process,

especially dried pulp pellets and pressed pulp as animal feed

and molasses for the yeast and alcohol industries.

Group structureThe Nordzucker Group consists of three regions: Central,

Northern and Eastern Europe.

Central EuropeNordzucker AG operates five sugar factories in Germany, which

account for the major share of business in Central Europe. The

factories in Lower Saxony and Saxony-Anhalt produce around

one million tonnes of quota sugar a year for customers in the

food and food retail industries – primarily for the German market.

Nordzucker AG also sells other products of the sugar-making

process, such as animal feed and molasses.

A wholly owned subsidiary of Nordzucker AG, fuel 21 GmbH

& Co. KG based in Klein Wanzleben produces and markets bio-ethanol from intermediate products of the sugar-making process

(raw juice, thick juice) and molasses.

Furthermore, Nordzucker AG holds a majority stake in Norddeutsche

Flüssigzucker GmbH & Co. KG (NFZ), which operates two liquid

sugar factories, in Nordstemmen and Groß Munzel.

An average of 1,242 employees worked in the Central Europe

region in the financial year 2012/2103.

Central European business accounted for around 44 per cent of

Group revenues.

Northern EuropeIn the Northern Europe region, Copenhagen-based Nordic Sugar

produces and processes sugar in five factories and two refineries in

Denmark, Sweden, Finland and Lithuania. The company markets a

broad range of sugar products, above all in the Nordic countries,

the Baltic states and Ireland. The Dansukker brand enjoys a high

level of recognition in the region. Nordic Sugar is the market leader


823

25

26

27

28

29

30

3114

16

20 21

17

13

12

155

7

622

419

18

9

31

11102

24

Eastern Europe

Central Europe

Northern Europe

Group headquartersD 1 Braunschweig

Regional head offi ce DK 2 Nordic Sugar, Copenhagen

Sugar plants and refi neriesD 3 Clauen 4 Nordstemmen 5 Uelzen 6 Klein Wanzleben 7 Schladen DK 8 Nakskov 9 NykøbingS 10 Arlöv 11 Örtofta FIN 12 Porkkala 13 SäkyläLT 14 KėdainiaiPL 15 Chełmża 16 OpalenicaSK 17 Trenčianska TepláD 18 Liquid sugar plant Groß Munzel 19 Liquid sugar plant Nordstemmen

Sugar plants – non-consolidated minority stakeCZ 20 Dobrovice 21 České Meziříčí

Other locationsD 22 fuel 21, bioethanolS 23 Köpingebro (Fibrex)DK 24 NP Sweet, CopenhagenB 25 Offi ce Brussels

Sales offi cesLV 26 RigaLT 27 VilniusEE 28 TallinnIS 29 ReykjavikNO 30 OsloIE 31 Dublin

Locations in Europe

Nordzucker at a glance

51Management report

in Northern Europe and its 1,504 employees contributed around

40 per cent to Nordzucker’s consolidated revenues in 2012/2013.

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

tween Nordzucker and PureCircle develops and distributes

products based on the sweetener stevia (steviol glycosides) in

collaboration with its customers.

Eastern EuropeThe Eastern Europe region includes two sugar factories in Poland,

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

Furthermore, Nordzucker has a 35 per cent stake in Tereos TTD

a.s., a sugar producer in the Czech Republic. The Eastern Europe

sales area also includes other Eastern European states. Nordzucker

had an average of 544 employees in the Eastern Europe region in

2012/2013. It accounted for around 16 per cent of consolidated

revenues in 2012/2013.

StrategySince the company was founded in 1997, Nordzucker has f ocused

on growth in its core sugar market. Expansion in Northern Germany

was followed by several acquisitions in Eastern Europe. Nordzucker

pursued its growth strategy with the purchase of Nordic Sugar in

2009 and is now the second-largest sugar producer in Europe.

After radically restructuring its investment portfolio in 2010 and

2011, the Group now initially intends to concentrate on its core

business: the production and distribution of sugar. The Nordzucker

Group benefits from its strong market position in the EU. Developing

this position remains its foremost corporate objective. In addition,

the company reviews growth opportunities outside Europe.

Sustainable activities are important for work processes through -

out the company. Long-term success can only be secured by

running a sustainable business, especially by including envir-

onmental protection and social aspects in business decisions.

Pro duct safety as well as occupational health and safety are other

important factors in this context. Steps to achieve defined sustain-

ability targets are taken continuously in all these areas.

Customer focus and product safety are at the heart of our com-

pany policy. Nordzucker therefore sets great store by certified

quality standards, great flexibility and dependability of supplies.

The Group has a wide product range, which includes custom-

ised solutions and a broad assortment of speciality products.

Continuous efficiency improvements along the entire value chain

are driven by various projects throughout the Group. In addition

to major investments to increase efficiency, these include activities

aimed at achieving sustainable yield increases in beet cultivation.

The 20 · 20 · 20 initiative aims to make sugar beet even more

competitive in comparison to other crops, so as to safeguard

beet cultivation in our regions for the long term.

The five-year efficiency improvement programme “Profitability

plus” has been under way since 2009/2010 and has also deliv-

ered savings in all areas of the company. More than two-thirds

of the savings targets have been reached to date. The harmon-

isation and optimisation of business processes and the integra-

tion of the IT environment throughout the Group are other vital

steps that make a major contribution to sustainably boosting

the company’s competitiveness.

Sustainability, customer focus and efficiency gains form the basis

for strengthening the company’s position and achieving further

growth in its core business.

Company managementThe company is managed by an Executive Board made up of

five members. It reports to the Supervisory Board, which has

21 members, of which 14 represent the shareholders and seven

the employees. The internal management of the company is

carried out by means of financial indicators. The following targets

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

profitability of 15 per cent, a return on equity of 10 per cent and

an equity ratio of 30 per cent.

Shareholder structure of Nordzucker AGThe shares in Nordzucker AG are held by Nordzucker Holding

Aktiengesellschaft (76.2 per cent), Union-Zucker Südhannover

Gesellschaft mit beschränkter Haftung (10.8 per cent) and

Nord harzer Zucker Aktiengesellschaft (7.8 per cent). A small

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

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

Shareholders are to a large extent also active beet suppliers of

Nordzucker AG.

Shareholders’ structure Nordzucker AGEUR 123.7m share capital

Nordharzer Zucker Aktiengesellschaft 7.83 %, EUR 9.7m

Union-Zucker Südhannover Gesellschaft mit beschränkter Haftung 10.82 %, EUR 13.4m

Direct shareholders’5.12 %, EUR 6.3m

Nordzucker Holding Aktiengesellschaft 76.23 %, EUR 94.3m


Economic environment and market developments

Macroeconomic situationEconomic output declined slightly in Europe in 2012 as a result

of the sovereign debt crisis. The downhill trend accelerated

over the course of the year. The macroeconomic performance

was slightly positive in Nordzucker’s main markets, however,

despite slowing over the year. Economic output contracted

sharply in Europe’s southern member states.

Sector developmentsWorld sugar marketWorld market prices for sugar fell in the financial year 2012/2013.

They nevertheless remained high from a long-term perspective.

As in recent years, prices were subject to great volatility. At the

beginning of the 2012/2013 financial year, the sugar price on the

London Futures Exchange (white sugar No. 5, free-on-board, earli-

est delivery) was USD 645 per tonne. It declined successively

over the following months to reach a low of USD 562 in May

2012. In July 2012 the sugar price rebounded to a peak of USD

636, before falling back to USD 497 per tonne in February 2013.

The sugar market in the EUIn the past, the EU sugar market was largely decoupled from the

global market by the European sugar market regime. As a result, it

was characterised by very stable volumes and prices, with its sur-

pluses being exported to the world market.

All this changed with the reform of the sugar market regime in

2006. The quotas for producing sugar for human consumption

in the EU were reduced to around 80 to 85 per cent of market

demand. Since then, it has therefore been necessary to import

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

EU production. The non-quota sugar produced in excess of the

quotas is sold to customers outside the food industry in the EU

or can be exported to non-EU markets up to a total volume of

1.35 million tonnes.

If the import volumes provided for by preferential agreements are

not sufficient, the European Commission can respond to these

market developments within the framework of the sugar market regime to guarantee a stable supply of sugar. To cover demand

for sugar from the food industry, it can both approve non-quota

sugar for human consumption and enable additional imports at

300

400

500

600

700

White sugar EUR/t FOB

White sugar USD/t FOB

Jan.04

July04

Jan.05

July05

Jan.06

July06

Jan.07

July07

Jan.08

July08

Jan.09

July09

Jan.10

July10

Jan.11

July11

Jan.12

July12

Jan.13

200

100

800

900

World market prices for sugar, 2004 – 2013

Source: LIFFE white sugar trading, London No. 5, as of May 2013

53Management report

Nordzucker at a glance | Economic environment and market developments

reduced import duties. The European Commission takes these

decisions on the basis of supply balances for each sugar market-

ing year, which in the EU runs from 1 October to 30 September

of the following year. This means the financial year for Nordzucker

AG straddles two sugar marketing years.

In the last two financial years, the imported volumes were not

sufficient to meet demand in the EU sugar market without add-

itional measures. The European Commission therefore approved

650,000 tonnes of non-quota sugar for human consumption in

two stages in the sugar marketing year 2011/2012. This was sup-

plemented by 399,000 tonnes of additional imports at reduced

rates of duty.

For the current sugar marketing year 2012/2013, the European

Commission has announced that it will allow up to 1.2 million

tonnes of additional import sugar and non-quota sugar onto the

market. Of these 1.2 million tonnes, the Commission has so far

approved 300,000 tonnes of non-quota sugar for use in food and

awarded contracts for imports of 285,000 tonnes at reduced rates

of duty.

Market for animal feed and molassesThe prices for dried pulp pellets stayed high from February to

August 2012 due to low stocks and a sharp rise in the prices

for feed grain. Alternative sources of animal feed were also un-

available, which contributed to the price rise. Prices continued to

go up well into the campaign and only stabilised once it became

clear that good yields could be expected from the beet harvest.

Although beet volumes remained high in the 2012/2013 campaign,

the good beet quality meant that there was no increase in molasses production. In addition, imports of cane molasses to Europe

decreased. Lower availability and the ensuing price rise for cane

molasses made beet molasses competitive again and ensured that

prices remained high overall in the molasses market.

Market for sweeteners The market for stevia and products sweetened with stevia has

developed steadily since stevia (steviol glycosides) was approved

by the EU for food and beverages in 2011. Numerous products

are now on the market and many others are still in the development

phase. These activities will successively boost market volumes,

which are still low.

Market for bioethanolDemand for bioethanol from sustainable production remains

stable in the EU. In Germany, the market share of E10 fuel as a

proportion of total petrol sales is growing slowly but steadily,

accounting for about 15 per cent in the third quarter of 2012.

At the same time, US exports to the EU sank due to the lower

maize harvest in the USA and because of EU action against puta-

tive price dumping. This drove up prices for bioethanol in Europe,

especially from late spring. Price developments for crude oil and

petrol also contributed to the increase. However, the price for

bioethanol varied considerably over the course of the year.

Market developments in the sugar business Market developments: Central Europe regionThe Central Europe region mainly serves the German sugar

market – around 80 per cent of sugar sales by volume go to

the food industry and 20 per cent to consumers via retailers.

Altogether, the sugar market in Germany can be said to be

balanced in terms of volumes of production and demand.

However, imports from neighbouring countries are increasing

competition.

In the financial year 2012/2013, sales in the Central Europe region

were affected by cool, rainy weather in the summer months.

Manufacturers of drinks, ice cream and barbecue sauces in par-

ticular suffered from lost revenue and sales in the summer, and

Nordzucker’s sugar sales were therefore also below expectations.

Sales of preserving sugar were also down since the bad weather

reduced the amount of fruit harvested.

Nordzucker’s customers export a large proportion of their products.

In the financial year 2012/2013, these exports were hampered

by the effects of the euro crisis, above all in Southern Europe. The

export-driven German food industry was partly able to make up

for this drop in sales by opening up new markets outside the EU.

In 2012/2013, Nordzucker sold around 1,000,000 tonnes of

quota sugar in the Central Europe region, which was a slight in-

crease on the previous year. Sales prices remained largely stable

over the year, but were much higher than the previous year on

average.

Sales of non-quota sugar were slightly higher than the previous

year’s figure of approximately 60,000 tonnes.

Market developments: Northern Europe regionThe Northern Europe region consists essentially of Finland, Sweden,

Denmark, Norway, Iceland, Ireland and the Baltic states. Sugar

from internal production is supplemented by world market im-

ports of raw cane sugar for refining.

Nordic Sugar maintained its strong position in the Northern Europe

region, once again selling around 770,000 tonnes of quota sugar

to industrial and retail customers, as it did in the previous year.

High yields in 2011/2012 enabled Nordic Sugar to sell an add-

itional 320,000 tonnes of non-quota sugar, supplying customers


from the chemical industry and markets outside the EU (previous

year: 225,000 tonnes).

Market developments: Eastern Europe regionThe Eastern Europe region is characterised by a heterogeneous

market structure; both purchasing power and the proportion of

sugar sales destined for industrial and retail customers vary widely

from one country to another. Local beet sugar production is not

sufficient to cover demand, so this is a classic import market.

In Eastern Europe, both food retailers and industrial customers

now attach greater importance to securing availability by means

of longer-term contracts.

The Nordzucker Group strengthened its position in the Eastern

Europe region last year and actively seized market opportunities.

The region’s own sugar quota of 200,000 tonnes was far exceeded

by quota sugar sales of 450,000 tonnes. The difference is explained

by purchases of sugar from within the Group, a stronger position

in white sugar trading and activities to refine raw cane sugar.

Beet cultivation and campaignVery good weather conditions from the sowing period through

to the harvest resulted in a high beet and sugar yield in most

regions. Processing conditions were also mostly positive, which

meant that 2012/2013 was a very positive beet year overall for

Nordzucker.

Copenhagen

Braunschweig

Group campaign results

Sweden 2012 2011

Beet yield (t/ha) 59.3 62.9

Sugar content (%) 17.1 16.8

Sugar yield (t/ha) 10.2 10.6

Campaign length (d) 126 129

Denmark 2012 2011





Germany 2012 2011





Finland 2012 2011





Lithuania 2012 2011





Poland 2012 2011





Slovakia 2012 2011





55

Economic environment and market developments

Management report

During the 2012/2013 campaign, Nordzucker produced 2.8 million

tonnes of sugar from beet (previous year: 2.9 million tonnes).

As in the previous year, the campaign lasted for an average of

125 days.

The mostly fine weather was responsible for high yields only

just short of those of the previous year. The average beet yield

for the Group was 65.2 tonnes per hectare (previous year:

67.3 tonnes). The sugar content came to 17.9 per cent (previous

year: 17.6 per cent), which represented an average sugar yield

of 11.7 tonnes per hectare (previous year: 11.9 tonnes).

Beet processing in the Nordzucker factories mostly went smoothly

thanks to targeted investments and forward-looking maintenance.

However, weather conditions towards the end of the campaign

required some additional efforts in order to maintain process-

ing. In Denmark, a small quantity of poor-quality beet could not

be processed.

Excellent cooperation between beet deliveries, production and

sugar logistics also ensured that the campaign went off smoothly

all round. Weather conditions during the processing period only

caused minor temporary disruptions in certain areas.

Earnings, net assets and financial position

Earnings positionGroup earnings again developed very well in the financial year

2012/2013. This was mainly thanks to the prices for quota sugar,

which on average were much higher than the previous year. In

addition to higher prices, greater sales of non-quota sugar and

additional steps to boost efficiency made a major contribution to

the earnings increase.

Nordzucker reported an operating result (EBIT) of EUR 506.7

million in 2012/2013, which was well above EBIT for the previous

year of EUR 315.0 million. After deducting interest and taxes, this

resulted in net income before minority interests of EUR 360.3

million (previous year: EUR 208.3 million). After deduction of

minority interests, this resulted in consolidated net income of EUR

351.0 million compared with EUR 203.9 million the previous year.

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

ests) divided by annual revenue, came to 14.4 per cent in the

reporting year compared with 10.1 per cent the previous year.

This was again well above the target of 5 per cent.

To calculate total operating profitability, EBITDA (earnings before

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

output (revenues plus own work capitalised and changes in fin-

ished goods and work in progress). This year the figure was 22.8

per cent (previous year: 18.4 per cent), which was also well

above the target of 15 per cent.

Revenues came to EUR 2,442.8 million, an increase of EUR 424.8

million on the previous year’s figure of EUR 2,018.0 million. This

sharp increase was achieved mainly with sugar.

Revenue from quota sugar (including purchased sugar) amount-

ed to EUR 1,750.9 million, or EUR 291.9 million more than the

previous year’s EUR 1,459.0 million. Sales of quota sugar were

flat, but average prices were higher than the previous year.

Sales of non-quota sugar rose sharply year on year following the

good harvest in 2011, whereas average prices were lower than

2012/2013

11.7

2011/20122008/2009 2009/2010

9.610.6 10.9

11.9

2010/2011

Average sugar yieldtonnes per hectare

2.8

Sugar production Nordzucker Groupin millions of tonnes

1.7

2.9

2.3

2.9

2012/20132011/20122008/2009 2009/2010 2010/2011


the previous year. Overall, revenue rose to EUR 261.0 million

compared with EUR 162.6 million the previous year.

Bioethanol revenues from its own production at fuel 21 came to

EUR 86.8 million, an increase of EUR 17.5 million on the previous

year. Sales prices and, above all, sales volumes were higher than

a year earlier.

At slightly lower sales volumes, revenues from molasses went

down, despite slightly higher prices, to EUR 45.1 million (EUR 4.2

million less than the previous year). Higher sales volumes for animal

feed (pellets and cossettes) and roughly stable prices lifted revenue

by EUR 22.9 million to EUR 151.7 million.

Revenues from other traded goods (especially seeds) accounted

for EUR 108.7 million, slightly below the previous year (EUR

119.3 million).

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

the financial year by EUR 163.6 million (previous year: EUR 261.8

million). This increase in stocks was EUR 98.2 million lower than a

year ago, mainly as a result of much higher sales of non-quota sugar.

The aggregate of higher revenues, higher stocks and own work

capitalised resulted in total output of EUR 2,607.3 million, which

was well above the previous year’s figure of EUR 2,281.6 million.

Other operating income came to EUR 29.7 million and was thus

below last year’s figure of EUR 42.5 million. As in the previous

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

The cost of materials and services came to EUR 1,622.0 million,

or EUR 121.2 million more than the previous year (EUR 1,500.8

million). Above all, higher beet costs than the previous year were

responsible for this increase.

Personnel expenses rose from EUR 188.7 million the previous

year to EUR 201.5 million. The rise stemmed mainly from collect-

ive wage increases and higher performance-related payments to

the Group’s workforce.

Depreciation, amortisation and impairment (less write-backs) in

the reporting year came to EUR 87.6 million, compared with EUR

105.4 million the previous year. Impairment losses of EUR 20.0

million were recognised the previous year on the non-current

assets of fuel 21.

Other operating expenses rose slightly from EUR 214.2 million to

EUR 219.2 million. The increase was greatest for transport costs,

as a result of much higher sales.

In total, Nordzucker reported an operating result (EBIT) of EUR

506.7 million for the financial year 2012/2013, as against EUR

315.0 million the previous year. The operating result before

depreciation, amortisation and impairment (EBITDA) came to

EUR 594.3 million (previous year: EUR 420.4 million).

Net interest amounted to EUR -26.7 million as against EUR -34.7

million the previous year. It should be noted that actuarial losses

of EUR 14.0 million were recognised through profit or loss in the

reporting year due to the effect of interest-rate movements on

1,192

1,806 1,8152,018

Consolidated revenuesin EUR m

2,443

2012/20132011/20122008/2009 2009/2010 2010/2011

Total revenuesin EUR m

1,086

1,718 1,699

2,282

2,607

2012/20132011/20122008/2009 2009/2010 2010/2011

57

Economic environment and market developments | Earnings, net assets and financial position

Management report

pension provisions. Without this non-recurring effect, net interest

would have been EUR -12.7 million.

The improvement in net interest – without the non-recurring effect

– is largely due to further debt repayment and the favourable

terms of the new loan taken out last year.

The net financial result includes net interest as well as net income/

loss from investments and other net financial income/loss. These

items added up to an earnings contribution of EUR 1.4 million

(previous year: EUR 5.9 million). Overall, the net financial result

came to EUR -25.3 million compared with EUR -28.7 million the

previous year.

Tax expenses on pre-tax earnings of EUR 481.4 million (previous

year: EUR 286.3 million) totalled EUR 121.1 million (previous

year: EUR 78.0 million). This resulted in a tax rate of 25.2 per cent

for the Group in the reporting year (previous year: 27.2 per cent).

In total, Nordzucker reported net income before minority interests

of EUR 360.3 million, as against EUR 208.3 million the previous

year. After deducting minority interests of EUR 9.3 million, this

resulted in net income of EUR 351.0 million (previous year: EUR

203.9 million). This means that net income rose by more than

70 per cent compared with the previous year.

Net assets positionTotal assets for the Nordzucker Group amounted to EUR 2,393.2

million at the end of the reporting year, an increase of EUR 131.6

million on the previous year’s figure of EUR 2,261.6 million. In-

ventories went up sharply thanks to the past two good cam-

paigns. This was financed by a steep rise in equity following

strong earnings; net debt was reduced again.

Non-current assets accounted for EUR 1,058.5 million, roughly

the same as in the previous year (EUR 1,079.2 million).

Consolidated EBITin EUR m

79 66

188

315

507

2012/20132011/20122008/2009 2009/2010 2010/2011

Consolidated EBITDAin EUR m

165 166

283

420

594

2012/20132011/20122008/2009 2009/2010 2010/2011

Consolidated net incomein EUR m

44

91

208

-10

360

2012/20132011/20122008/2009 2009/2010 2010/2011


Intangible assets of EUR 165.3 million (previous year: EUR 174.1

million) include the goodwill on the acquisition of Nordic Sugar

as well as capitalised sugar quotas and software/licences.

Property, plant and equipment came to EUR 853.1 million (previ-

ous year: EUR 861.1 million). Capital expenditure in the reporting

year was slightly below the level of depreciation, amortisation

and impairment.

Financial investments were slightly up on the previous year at

EUR 26.6 million. There were no significant transactions to report

in this area. Deferred tax assets went down year on year from EUR

11.9 million to EUR 7.8 million.

Current assets came to EUR 1,332.2 million, after EUR 1,180.5

million the previous year. The change is due to the further in-

crease in inventories.

Inventories rose by EUR 129.6 million to EUR 1,027.8 million. The

good harvest in the last two campaigns and increased production

costs again drove up the value of sugar stocks considerably year

on year.

Current receivables and other assets were slightly higher year on

year at EUR 293.1 million, compared with EUR 274.9 million the

previous year.

Nordzucker’s equity went up to EUR 1,316.0 million, compared

with EUR 999.2 million the previous year. Net income boosted

equity by EUR 360.3 million, whereas dividends of EUR 51.3 million

paid to the shareholders of Nordzucker AG and minority interests

reduced the figure. Although total assets increased, the equity ratio

went up from 44.2 per cent the previous year to 55.0 per cent. This

figure was in turn well above the Group target of 30 per cent.

Non-current provisions and liabilities fell to EUR 343.6 million

(previous year: EUR 428.2 million). The total includes non-current

provisions of EUR 184.5 million (previous year: EUR 158.1 mil-

lion), mostly for pension obligations.

Non-current liabilities mainly consist of financial liabilities and de-

ferred tax liabilities. Financial liabilities fell year on year from EUR

83.9 million to EUR 4.6 million. Deferred tax liabilities stood at

EUR 136.2 million, as against EUR 153.9 million the previous year.

Current provisions and liabilities declined to EUR 733.6 million

(previous year: EUR 834.2 million). This is largely because current

debt of EUR 101.8 million was repaid, taking the total to EUR

66.1 million.

Overall, non-current and current financial liabilities were reduced

to EUR 70.7 million (previous year: EUR 256.3 million).

Cash and cash equivalents totalled EUR 11.3 million as of 28 February

2013, compared with EUR 7.4 million the previous year. Net debt (financial liabilities less cash and cash equivalents) was therefore

44%

13%

43%

Assets Equity &liabilities

Breakdown of the assets and liabilitiesmaking up the 2012/2013 balancesheet totalin EUR m

2,393 2,393

Non-currentassets

Inventories

Other currentassets

Equity

Non-currentliabilities

Currentliabilities

55%

31%

14%

Consolidated net debtin EUR m

-295

-664

-314-249

-59

2012/20132011/20122008/2009 2009/2010 2010/2011

59

Earnings, net assets and financial position

Management report

reduced sharply year on year by a total of EUR 189.5 million to

EUR 59.4 million.

Financial positionCash flow from operating activities of EUR 313.3 million was high-

er than in the previous year (EUR 221.8 million). It was boosted

in particular by earnings in the reporting period. The increase

was partly offset by increases in working capital, however.

Cash flow from investing activities improved from EUR -129.6 million

to EUR -72.2 million. This stems in particular from the payment of

the final purchase price instalment for Nordic Sugar of EUR 73.7

million, which was recorded as a financial investment in the pre-

vious year. Capital expenditure on intangible assets and property,

plant and equipment came to EUR 74.1 million, compared with

EUR 64.0 million the previous year.

Cash flow from financing activities of EUR -237.2 million was

made up of outflows for current loans (EUR -185.9 million) and

dividend payments (EUR -51.3 million).

As of 28 February 2013, cash and cash equivalents amounted to

EUR 11.3 million (previous year: EUR 7.4 million).

InvestmentsNordzucker invested EUR 74.1 million in property, plant and

equipment and intangible assets (previous year: EUR 64.0 mil-

lion). Key investments were the first construction phase for the

evaporation dryer in Nakskov, the second phase for the second

evaporation dryer in Uelzen, the construction of a sugar silo in

Kėdainiai and the improvement of the waste-water treatment

plants in Klein Wanzleben, Opalenica and Kėdainiai. As in the

previous years, capital expenditure was focused on increasing

efficiency, above all by saving energy, on compliance with regu-

latory requirements and on replacing existing assets.

Responsibilities and objectives of financial managementThe main responsibilities of Nordzucker’s financial management

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

the basis of clearly defined criteria. The most important objective

is to maintain liquidity. This is followed by the optimisation of net

interest expense and the management of interest-rate and foreign-

exchange risks.

The financial management function is also responsible for defin-

ing and executing financing strategies. It also maintains close

contact with the banks.

Capital expenditure in property, plant and equipmentand intangible assetsin EUR m

6762

56

64

74

2012/20132011/20122008/2009 2009/2010 2010/2011

87

Total dividends, Nordzucker AGin EUR m

22

48

11

0

2012/20132011/20122008/2009 2009/2010 2010/2011

Cash flow from operating activitiesin EUR m

167

328313

222

313

2012/20132011/20122008/2009 2009/2010 2010/2011


CovenantsA number of financial covenants were agreed between the banking

consortium and Nordzucker AG as part of the syndicated loan

arranged in June 2011. These consist of obligations to maintain

certain financial ratios over the entire term of the loan.

The covenants are an essential component of the loan agreement.

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

by drawing conclusions from the figures about the company’s

financial position. The covenants have been defined for the

whole Group and not solely for Nordzucker AG.

Nordzucker AG is obliged to demonstrate that it meets the

covenants in the syndicated loan agreement on certain dates in

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

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

available for the Group, the Nordzucker Executive Board assumes

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

DividendA proposal will be put forward at the Annual General Meeting of

Nordzucker AG to distribute a dividend of EUR 1.80 per share of

share capital for the reporting year. This corresponds to a total

dividend distribution of EUR 86.9 million. A total of EUR 48.3 mil-

lion (EUR 1.00 per share) was paid out the previous year.

The much higher dividend than the previous year enables share-

holders to participate in the company’s strong performance. At

the same time, a substantial proportion of net income is retained

in the company to finance future profitable growth.

Employees

The Nordzucker Group had an average of 3,290 employees in

the reporting year, roughly the same as the previous year

(3,280). Of the total, 1,242 were employed in Central Europe,

544 in Eastern Europe and 1,504 in Northern Europe (including

Ireland).

Opportunities and risks

Risk managementBehaving entrepreneurially means seizing opportunities and

exposing a company to risk as a result. To identify these risks at

an early stage, to evaluate them and manage them consistently,

Nordzucker has introduced an integrated system of risk identifica-

tion and management for the entire Group. This ensures that risks

which could jeopardise the company’s business are identified and

evaluated at regular intervals. Individual steps to avert, limit or

transfer exposure to risks are defined for every risk that is identified.

Risk management constantly verifies the progress made on imple-

menting the defined activities and revises them as necessary.

All operating and strategic decision making always takes risk as-

pects into account. Scenario planning is used for example to exam-

ine the effects different market situations would have on the

company’s business. Descriptions of opportunities and risks high-

light alternative developments and encourage discussions of the

steps that need to be taken. Over the course of the year, the Group

reporting and controlling system provides all the responsible de-

cision-makers with continuous information on the actual business

performance.

Some of the risks are passed on to third parties, such as insurance

companies. The scope and amount of insurance coverage is re-

viewed regularly and adjusted as necessary.

Internal auditingInternal auditing examines and evaluates the business processes,

organisational structure, risk management and internal control

systems to ensure they are carried out correctly, are effective and

offer value for money. Once the individual audits have been com-

pleted, the implementation of the agreed recommendations and

Average number of employees in the Nordzucker Groupfor the yearby region

Northern EuropeRegion

Central EuropeRegion

Eastern EuropeRegion

2008/2009 2,8441,360 1,484

2009/2010 4,3461,350 1,302 1,694

2010/2011 3,5081,357 563 1,588

2011/2012 3,2801,211 548 1,521

2012/2013 3,2901,242 544 1,504

61

Earnings, net assets and financial position | Employees | Opportunities and risks

Management report

activities is systematically monitored. As well as audits carried out

on the basis of annual risk planning, the internal audit department

also carries out ad hoc checks.

It answers directly to the Chief Executive Officer and reports

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

Audit and Finance Committee.

Political and legal risksSugar market regimeThe current sugar market regime forms the operating framework

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

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

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

Commission has suggested letting the quota regime for sugar

expire on 30 September 2015. This would mean the end not only

of the quota regime, but also of the minimum beet price. The

WTO export limit, currently set at 1.37 million tonnes, would also

be abolished. The European Commission also suggests maintaining

special rules in the form of national subsidies that Finland pays its

beet farmers (EUR 350 per hectare).

In late January 2013, the European Parliament’s Agriculture and

Rural Development Committee voted to extend the sugar market regime until the end of the sugar marketing year 2019/2020 on

30 September 2020. In mid March 2013, this position was also

adopted by the full European Parliament. For further details, we

refer to our report on events after the balance sheet date.

Nordzucker supports the call by national and European sugar industry

associations to prolong the sugar market regime until at least 2020.

Security of supply for the EU market can be ensured by means of a

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

farmers a sufficient degree of certainty for their planning.

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

able effects on the EU sugar market. As the quotas for isoglucose

would be abolished along with those for sugar, this could lead

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

estimate with any degree of accuracy what the effects on market

supply and competitive structures in the EU market will be.

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

framework, Nordzucker continues to work steadily on making the

cultivation of sugar beet even more competitive with alternative

crops and will also seize all opportunities to increase the product-

ivity and efficiency of the company.

WTO negotiationsThe Doha round of WTO negotiations again made no progress in

the reporting year. The next round of talks is scheduled to take

place in Bali in December 2013. At this conference, the WTO

members will try to reach decisions for the agriculture sector in

the areas of export subsidies/competition, the administration of

preferential import quotas, and food security/public stockpiling of

agricultural products.

A decision may also be taken to reduce import duties in the agri-

culture sector. Over a period of seven years, this could lead to a

sharp reduction in import duties for sugar imports to the EU.

EU free trade agreementsFree trade agreements are becoming more and more important

for the European Union. Such agreements have already been

signed with nine states, including Ukraine, Singapore, Colombia

and countries in Central America, but have yet to take effect.

Negotiations are taking place with 20 other states. This group

includes sugar exporters such as Brazil together with the other

Mercosur states, the USA, Canada, India, Malaysia, Thailand and

Vietnam as well as the Gulf states. Additional regulations for existing

trade agreements are also under discussion, for example with the

Mediterranean countries or the Republic of South Africa.

An agreement has already been reached allowing Colombia, Peru

and the Central American states to export up to 246,000 tonnes

a year (with annual increases) to the EU, duty free. Negotiations

with the South American members of the Mercosur customs union

have come to a standstill at present. In particular, as one of the

largest sugar exporters, Brazil is pressing for an import quota for

sugar and ethanol.

The large number of free trade negotiations currently taking

place clearly shows that import quotas and preferential duties will

become increasingly important for the European sugar market.

Additional costs of CO2 certificatesAs a company that emits carbon dioxide (CO2) from generating

its own electricity and heat, Nordzucker requires corresponding

certificates for its emissions. Some of these certificates are allocated

to the company free of charge; others have to be bought by

Nordzucker in CO2 certificate trading.

The third phase of the CO2 emissions trading scheme that has

been in place in the EU since 2005 begins in 2013. All compan-

ies subject to emissions trading have to buy all the certificates


needed for power generation at auction. Nordzucker receives

certificates for heat generation based on natural gas free of charge

until 2015, as the European Commission has listed the entire

industry as being at risk of carbon leakage. For the industries on

this list, the assumption is that the additional costs of CO2 certi fi-

cates could result in production being outsourced to non-EU

countries.

It can be assumed that emissions trading will represent an increasing

financial burden for the company in future, as the drying facilities

and other equipment not previously taken into account will also

be subject to emissions trading as of 2013. The carbon leakage list

is to be reviewed in 2015.

Under these circumstances, a major focus of capital expenditure

is on steps to reduce energy consumption, such as the installation

of modern evaporation dryers, which use less energy to dry the

cossettes and reduce CO2 emissions at the same time. Furthermore,

Nordzucker monitors the market for certificates in order to purchase

the necessary allowances in good time.

Legal risksAs reported in prior years, competition authorities are carrying

out investigations into possible breaches of competition law in

the sugar industry. Generally speaking, breaches of competition

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

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

Nordzucker nevertheless still assumes that no adverse effects

on the company are to be expected from the proceedings.

Nordzucker is also subject to various statutory regulations, which

can give rise to liability risks. They include in particular the sugar market regime in connection with the relevant provisions of customs

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

risks can also arise from tax regulations in the various countries in

which Nordzucker operates.

Market risksSugarSince the reform of the sugar market regime in 2006, fluctuations

in the world market price have had a considerable impact on

markets in the EU. To cover its supply, the EU is dependent on

imports from world markets. World market prices fell once again

over the course of the past financial year. With world market prices

being lower, there was once again greater incentive for ACP countries and LDCs to export their sugar to the EU, and imports

therefore picked up. This could put pressure on market prices in

the EU in future, which could diminish Nordzucker’s profitability

considerably.

As a foodstuff, sugar has repeatedly been presented as unhealthy

or even harmful. Individual scientists believe that the rising number

of certain diseases can be linked to higher sugar consumption. In

its twelfth Nutrition Report published in December 2012, the German

Nutrition Society (DGE) found that annual sugar sales in Germany

have been constant at around 34 kilograms per capita for years.

It is therefore the change towards a less active lifestyle that leads

to excess weight and obesity. Public and media debates may affect

consumers’ eating habits and thus influence demand for sugar.

The German Sugar Trade Association (WVZ) has launched an

information campaign to present the relationship between sugar

and health objectively, in order to provide a counterweight to

the negative media reporting and the negative public perception.

Nordzucker AG explicitly supports these efforts.

Securing raw materialsFor farmers, sugar beet competes with other arable crops. The

decision whether to plant sugar beet or other crops depends to

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

the yield that can be obtained regionally. Attractive conditions

for growing other crops also increase the cost pressure for pur-

chases of sugar beet.

To secure its volumes of raw materials, Nordzucker always signs

supply contracts with the beet farmers in advance. The company

buys some of its industrial beet on one-year contracts and some

on multi-year contracts. All contracts offer attractive terms com-

pared with alternative crops.

For the existing multi-year industrial beet contracts the company

has agreed on a number of different pricing models. In Germany,

farmers can choose between fixed beet prices and a variable

price for industrial beet that is indexed to prices for wheat and

rapeseed. Similar options for contracts are available in all the

Group’s regions, indexing the beet prices to those for wheat or

sugar, for example, or to local company performance. These

mechanisms ensure that the beet prices paid in each instance

are competitive.

Another vital element of securing raw materials in the years ahead

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

63


Management report

set itself the Group-wide target of achieving a sugar yield of 20

tonnes per hectare with 20 per cent of farmers in 2020. This pro-

gramme is very important for safeguarding the relative attractive-

ness of sugar beet cultivation compared with other arable crops,

especially given the volatility of agricultural markets. To reach this

target, Nordzucker is working closely with farmers, agricultural as-

sociations and other companies in the value chain.

Energy pricesThe tense situation on the commodities markets once again posed

challenges for Nordzucker last year. Crude oil and its derivatives

climbed to historic highs, spurred on by exchange rate movements.

Political conflicts in the Middle East and economic fluctuations

can have a considerable effect on energy prices.

To mitigate the effects of swings in energy prices, Nordzucker is

investing in specific measures to reduce its energy consumption.

Examples include the new evaporation dryers in Uelzen and Nak-

skov. The effect of potential price movements is also limited by

specific hedging activities.

Dependence on individual suppliers and purchase price increasesThe reduction of sugar production capacities in the course of the

sugar market reform in 2006 led to a process of concentration

among suppliers. This has often resulted in a monopoly among

providers of equipment made especially for the sugar industry,

with correspondingly high prices.

To counter this trend, a global sourcing programme has been

launched to identify potential alternative suppliers. A marketing

campaign also aims to attract engineering companies to sugar

technology.

The standardisation of the technologies used often also leads to

dependence on suppliers. Nordzucker therefore relies on long-

term partnerships and signs contracts for periods of several years.

Nordzucker has been able to largely avoid price increases for the

purchase of components by means of long-term framework agree-

ments. The company will also achieve additional savings with its

“Profitability plus” programme, by qualifying European competitors

for selected products and by standardising aspects of maintenance

and packaging.

Operating risksLonger campaignsThe length of the campaign has been increased gradually in the

factories to raise productivity. A campaign now lasts for an average

of more than 120 days. This means that the production phase

generally continues into January. Longer campaigns entail two

risks. One is that the onset of winter weather can severely ham-

per beet harvesting, logistics and processing. The other is that

longer campaigns make production downtime more likely.

Nordzucker has therefore taken wide-ranging precautions both in

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

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

from frost.

New production processes help us to deal better with extreme

changes in weather conditions and beet which has begun to thaw

or decompose. One example is the optimisation of juice purifica-

tion, which is vital for processing even frost-damaged beet.

Longer campaigns increase the risk of production downtime. In

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

but this also leads to longer campaigns at those factories and

much greater logistical expense. Risk-oriented maintenance has

been introduced to reduce the risk of production downtime.

All the essential machinery in a factory is examined closely and

repaired or replaced as necessary in the phase between two cam-

paigns. Nordzucker has also taken out production downtime

insurance to reduce its exposure further.

EnvironmentThe production of sugar has an impact on the environment. It

includes emissions, waste, waste water and smells. There is a risk

that permitted limits may be exceeded.

The Nordzucker factories have been inspected in accordance with

the applicable national and international legislation and standards.

This includes certification in line with the environmental manage-

ment system DIN EN ISO 14001 and the EU Environmental Audit

Regulation (EC) 1221/2009 (EMAS II).

Nordzucker has also taken numerous steps to reduce unpleasant

smells that affect neighbouring residents, particularly from water

purification.


Product safetyAs a food producer, Nordzucker is responsible for the quality and

safety of its products.

Regular inspections and product safety certifications are carried

out to manage these risks. All sites comply with DIN EN ISO 9001

and the product safety standards DIN EN ISO 22000 in conjunction

with PAS 220 (FSSC 22000).

As a result of different local requirements, some sites are also

certified under the following standards and norms: occupational

health and safety management system OHSAS 18001, energy

management system DIN EN ISO 50001, German biofuels sustain-

ability by-law (Biokraft-NachV – the transposition of Directive

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

IFS standards (International Food Standard for food retailing) and

the standard GMP B2 for quality control in raw materials for animal

feed. Organic products are grown and inspected in line with the

applicable legislation.

All processes relating to product safety are reviewed regularly

as part of the certification mentioned above and are adapted as

necessary.

IT risksThe comprehensive use of IT systems gives rise to risks regarding

unauthorised access to sensitive company data and the unavail-

ability of these systems as a result of operating incidents or disas-

ters.

Nordzucker addresses the risk of unauthorised access to company

data by using virus scanners and firewalls. IT security is also in-

creased by granting defined and restricted access to systems and

information, and by backing up data. Proven, market-based tech-

nologies are used throughout the company on the basis of defined

standards. Nordzucker hedges against the risks that would ensue

in the event of operating incidents or disasters by means of redun-

dant IT infrastructures.

Financial risksFinancial risks relate to unrecoverable receivables, currency, raw

materials and interest-rate risks and liquidity risk. Risk exposure

may also arise from the investment strategy and the availability

of loan finance.

Default on receivablesReceivables from customers or other parties may become unrecov-

erable. This risk rises at times of economic crisis or when extreme

swings in the price of raw materials put pressure on customers.

To address these risks, Nordzucker establishes a customer’s credit

standing before signing a contract and generally takes out trade

insurance. The sales team maintains close contact with the cus-

tomer and defaults are limited by active receivables management.

Currency, raw materials and interest-rate risksThe increasing volatility of interest rates and exchange rates and

fluctuations in the price of raw materials give rise to operating

risks, which are pooled by the Group treasury department and

covered in accordance with rules drawn up by the risk manage-

ment department.

To limit these risks, they are analysed thoroughly before contracts

are signed. Standard financial instruments available from banks

and exchanges are also used. Financial derivatives such as for-

ward contracts, swaps and futures are used to hedge the Group’s

open risk positions.

This exposes the Nordzucker Group to a normal measure of

counterparty risk, in the sense that a partner to a contract may

not perform their contractual obligations. To minimise this coun-

terparty risk, financial derivatives are only transacted with first-

class international financial institutions, whose economic perform-

ance is monitored regularly, partly by analysing the financial

ratings issued by international rating agencies. The risk exposure

to a given counterparty is also limited by dividing business volume

between several providers.

All the financial derivatives used serve solely to hedge operating

sales and purchase transactions and financial transactions that are

necessary for the company’s business.

The margins required for exchange-traded derivatives are also held

exclusively on separate margin accounts with first-class international

financial institutions.

As of 28 February 2013, the Nordzucker Group had exchange-

rate derivatives with a notional net volume of EUR 49.9 million.

At the end of the financial year, derivative transactions with a

65


Management report

notional value of EUR 1.5 million were open to hedge against price

movements for raw materials. These existing hedges generally

run for less than one year and match the maturity profile of the

hedged transactions.

Liquidity riskThe seasonality of the Group’s business means that its capital

requirements vary widely over the course of a financial year. The

quality of the harvest and developments in market prices also have

a considerable effect on the company’s funding requirements.

If the company cannot draw on sufficient liquidity – either if there

is a default on its investments or if borrowing is not available – its

continued existence is at risk.

Short- and medium-term liquidity forecasts for the subsidiaries and

the entire Group are therefore regularly drawn up on the basis of

a standardised process. Financing strategies are then prepared

and implemented on the basis of these forecasts.

Availability of creditNo negative effects on the Nordzucker Group’s access to liquidity

have been felt to date, despite the ongoing economic crisis in

the EU and the evolving situation on lending markets due to the

increasing regulation of banks. One important reason for this is

the continued improvement in the Group’s credit rating.

For the period until 2016, the main source of financing will be

a syndicated loan that the company took out in 2011 from 14

banks. In the opinion of the company management, this medium-

term syndicated loan to finance its operating business, together

with its available liquidity, covers the company’s capital needs.

From a current perspective, its cash reserves and unused lines

of credit enable Nordzucker to meet its payment obligations at

all times. Based on current assessments, sufficient funds are also

available to ensure the financing of solid growth. On the basis

of existing corporate planning for the Group, the company as-

sumes that the terms of the loan agreement will be met in sub-

sequent years as well.

The guarantees needed for current operations can also be pro-

vided at any time, as needed, by means of the syndicated loan

and bilateral lines of credit. The Group is not directly dependent

on individual lenders.

Investment policy Errors in investment strategy can result in the loss of financial

assets. Nordzucker has a conservative investment policy with

regard to its cash and cash equivalents. The Group’s free liquidity

is only invested in the money market products of first-class Euro-

pean financial institutions, taking national deposit insurance regu-

lations and the credit rating of counterparties into account.

Potential default risks are also addressed by spreading the invest-

ment of free liquidity across various counterparties.

Supplementary report

Reform of EU agricultural policy The continued existence of the sugar market regime is also being

discussed in the course of reforms to the European Union’s Com-

mon Agricultural Policy (CAP). The European Commission has

proposed not to extend the sugar market regime beyond the

end of its current phase, which expires on 30 September 2015.

With regard to the “trialogue” negotiations between the three

European institutions, the European Parliament is in favour of an

extension until 2020, while the Council of Agriculture Ministers is

backing an extension until 2017.

In addition to the question of how long the sugar market regime is

to continue after October 2015, discussions are also taking place

on issuing new sugar quotas to member states who had returned

theirs after the 2006 reform and on other advantages for traditional

refinery operations.

Forecast

The financial year 2012/2013 was the best in the history of

Nordzucker AG to date. Compared with the previous year, stable

prices and higher sales of non-quota sugar were responsible for

a substantial increase in revenues and earnings. In addition, the

company’s efficiency improvement measures continued to pay

off. The company’s strong performance in 2012/2013 was no longer

held back by the European economic and financial crisis or the

decline in world market prices for sugar towards the end of the

financial year.


In the current 2013/2014 financial year, we expect world mar-

ket prices to remain at their present, substantially lower level,

since stocks are still rising and global sugar production exceeds

consumption overall. Over the course of the financial year, this

will tend to have an effect on the EU sugar market too and we

therefore expect revenues and earnings for 2013/2014 to be

lower.

The fundamental assumption is that sugar prices will remain highly

volatile. Since the political framework for the industry is also un-

certain, it is difficult to provide forecasts for subsequent years.

Nonetheless, the assumption is that earnings for 2014/2015 and

thereafter will flatten out at a lower level than in 2012/2013.

Increasing the efficiency and productivity of sugar production

therefore remains vital.

This also includes examining potential growth options in order to

build on Nordzucker’s strong position in the EU sugar market and

to participate in the growing sugar market outside the EU.

Braunschweig, Germany, 26 April 2013

The Executive Board


Dr Niels PörksenDr Michael Noth

Hartwig Fuchs

67

Opportunities and risks | Supplementary report | Forecast

Management report

Consolidated income statement Nordzucker AG, Braunschweig, Germany, for the period from 1 March 2012 to 28 February 2013

Statement of comprehensive income

Further details in Note

1/3/2012- 28/2/2013

TEUR

1/3/2011 - 29/2/2012

TEUR

Revenues 5 2,442,840 2,018,017

Increase in finished goods and work in progress 163,603 261,834

Own work capitalised 814 1,815

Total revenues 2,607,257 2,281,666

Other operating income 6 29,676 42,477

Cost of materials and services 7 1,621,968 1,500,803

Personnel expenses 8 201,454 188,681

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

9 87,562 106,945

Appreciation of intangible assetsand property, plant and equipment 0 1,537

Other operating expenses 10 219,245 214,231

Operating result (EBIT) 506,704 315,020

Net interesta) Interest income and similar income

11 437 3,806

b) Interest expenses and similar expenses 27,088 38,472

-26,651 -34,666

Net income/loss from investmentsa) Net income/loss from associated companies and joint ventures

accounted for under the equity method

12 -822 76

b) Other net income from investments 4,713 3,471

3,891 3,547

Other net financial income/lossa) Other financial income

13 10,808 12,342

b) Other financial expenses 13,390 9,955

-2,582 2,387

Net financial income/loss -25,342 -28,732

Earnings before taxes 481,362 286,288

Income taxes 14 121,104 77,997

Consolidated net income 360,258 208,291

Consolidated net income attributable to minority interests 9,294 4,348

Consolidated net income attributable to shareholders of the parent company 350,964 203,943

Consolidated net income 360,258 208,291

Currency conversion for foreign operations 6,568 -1,484

Net result of cash flow hedges 930 -2,587

Income taxes -279 769

651 -1,818

Other net income/loss after taxes 7,219 -3,302

Total net income/loss after taxes 367,477 204,989

Consolidated total net income attributable to minority interests 9,294 4,348

Consolidated total net income attributable to shareholders of the parent company 358,183 200,641

Consolidated financial statements Nordzucker AG


Consolidated cash flow statementNordzucker AG, Braunschweig, Germany, for the period from 1 March 2012 to 28 February 2013

1/3/2012- 28/2/2013

EUR m

1/3/2011- 29/2/2012

EUR m

Earnings before taxes 481.4 286.3

Interest and similar income -0.4 -3.8

Interest and similar expenses 27.1 38.5

Net depreciation, amortisation and impairment on non-current assets 87.6 105.4

Changes in non-current provisions 26.3 4.8

Other non-cash expenses -14.1 3.5

Net loss/income from associated companies 0.8 0.0

Changes in finished goods and work in progress -163.6 -261.8

Changes in current provisions 5.6 15.0

Proceeds on disposal of non-current assets 1.6 -1.8

Changes in inventories, trade receivables and other assetsnot attributable to investing or financing activities 13.5 -96.9

Changes in trade payables and other liabilitiesnot attributable to investing or financing activities -16.9 215.7

Interest received in the financial year 0.4 3.8

Interest paid in the financial year -7.7 -23.8

Taxes paid in the financial year -128.3 -63.1

Cash flow from operating activities 313.3 221.8

Proceeds on disposal of property, plant and equipment 1.9 7.1

Payments for investments in property, plant and equipment -69.3 -56.4

Proceeds on disposal of intangible assets 0.0 0.1

Payments for investments in intangible assets -4.8 -7.6

Proceeds from the saleof consolidated companies and other business units 0.0 0.9

Payments for the acquisitionof consolidated companies and other business units 0.0 -73.7

Cash flow for investing activities -72.2 -129.6

Payments to shareholders (dividends) -51.3 -24.9

Proceeds from borrowing 41.7 88.3

Loan repayments -227.6 -198.1

Cash flow from financing activities -237.2 -134.7

Changes in cash and cash equivalents 3.9 -42.5

Cash and cash equivalents at the beginning of the period 7.4 50.3

Additions through mergers/other changes 0.0 -0.4

Cash and cash equivalents at the end of the period 11.3 7.4

69

Consolidated income statement | Statement of comprehensive income | Consolidated cash flow statement

Consolidated financial statements

Consolidated balance sheet as of 28 February 2013, Nordzucker AG, Braunschweig, Germany

AssetsFurther details

in Note28/2/2013

TEUR29/2/2012

TEUR

Non-current assets

Fixed assets

Intangible assets 15 165,337 174,066

Property, plant and equipment 16 853,050 861,059

Investment property 18 5,676 6,785

Financial investments Shares in associated companies and joint ventures accounted for under the equity method

19

19.1 3,068 3,593

Other financial investments 19.2 23,536 20,428

26,604 24,021

1,050,667 1,065,931

Receivables and other assets

Financial assets 23 0 7

Other assets 24 9 1,369

9 1,376

Deferred taxes 14 7,827 11,883

1,058,503 1,079,190

Current assets

Inventories 20

Raw materials, consumables and supplies 46,885 44,451

Work in progress 50,491 43,373

Finished goods and merchandise 930,387 810,414

1,027,763 898,238

Receivables and other assets

Trade receivables from external companies 21 212,425 194,423

Receivables from related parties 22 4,263 233

Receivables from current income tax 14 1,470 5,084

Financial assets 23 12,597 13,185

Other current assets 24 62,376 61,971

293,131 274,896

Cash and cash equivalents 11,297 7,406

Current assets 1,332,191 1,180,540

Assets held for sale 25 2,497 1,867

1,334,688 1,182,407

2,393,191 2,261,597


Shareholders’ equity and liabilitiesFurther details

in Note28/2/2013

TEUR29/2/2012

TEUR

Shareholders’ equity 26

Subscribed capital 26.1 123,651 123,651

Capital reserves 26.2 127,035 127,035

Retained earnings 26.3 954,501 653,603

Other comprehensive income 26.4 58,901 51,682

Equity attributable to shareholders of the parent company 1,264,088 955,971

Minority interests 26.5 51,880 43,260

1,315,968 999,231

Non-current provisions and liabilities

Provisions for pensions and similar obligations 27 151,944 134,727

Other provisions 28 32,541 23,415

Financial liabilities 29 4,575 88,473

Liabilities towards related parties 31 5,500 5,500

Other financial liabilities 32 294 1,181

Other liabilities 33 12,555 20,985

Deferred taxes 14 136,238 153,917

343,647 428,198

Current provisions and liabilities

Provisions for pensions and similar obligations 27 5,283 5,281

Other provisions 28 73,683 68,059

Financial liabilities 29 66,108 167,852

Current income tax liabilities 14 62,882 60,000

Trade payables 30 465,425 455,122

Liabilities towards related parties 31 16,245 11,498

Other financial liabilities 32 6,383 15,900

Other liabilities 33 37,567 50,456

733,576 834,168

2,393,191 2,261,597

71

Consolidated balance sheet

Consolidated financial statements

Consolidated statement of changes in shareholders’ equity Nordzucker AG, Braunschweig, Germany

Subscribed capital

Capital reserves

Retained earnings

Other compre-hensive income

Equity attributable

to share-holders of the parent

companyMinority interests

Total equity

TEUR TEUR TEUR TEUR TEUR TEUR TEUR

As of 1/3/2011 123,651 127,035 471,569 54,984 777,239 41,497 818,736

Net income 203,943 203,943 4,348 208,291

Other net income/loss -3,302 -3,302 -1 -3,303

Other comprehensive income

203,943 -3,302 200,641 4,347 204,988

Dividend payment -22,219 -22,219 -2,691 -24,910

Others 311 311 106 417

As of 29/2/2012 123,651 127,035 653,604 51,682 955,972 43,259 999,231

Net income 350,964 350,964 9,294 360,258

Other net income/loss 7,219 7,219 7,219


350,964 7,219 358,183 9,294 367,477

Dividend payment -48,301 -48,301 -2,949 -51,250

Others -1,766 -1,766 2,276 510

As of 28/2/2013 123,651 127,035 954,501 58,901 1,264,088 51,880 1,315,968


General remarks

1. Accounting principles

The consolidated financial statements as of 28 February 2013 for

Nordzucker AG (Küchenstrasse 9, 38100 Braunschweig) have been

prepared in accordance with Sec. 315a HGB (German Commercial

Code) in accordance with the International Financial Reporting Standards (IFRS) adopted and published by the International Accounting Standards Board (IASB) as applicable in the European

Union and with supplementary provisions of German commercial

law. The financial statements comply fully with IFRS and give a

true and fair view of the earnings and financial position and net

assets of Nordzucker AG and its consolidated subsidiaries, associated

companies and joint ventures (hereinafter known as “Nordzucker Group” or “Group”).

The consolidated financial statements have generally been pre-

pared using the historic cost convention. This does not apply to

the derivative financial instruments or the available-for-sale finan-

cial instruments, which are measured at fair value.

Individual line items of the income statement and the balance

sheet have been aggregated to improve readability. These items

are listed in the notes. The income statement has been classified

according to the total cost method.

The consolidated financial statements have been prepared in

Euros. Unless otherwise stated, all amounts are given in thousands

of Euros (EUR ‘000).

The consolidated financial statements will be approved by the

Executive Board of Nordzucker AG on 23 May 2013 for presenta-

tion to the Supervisory Board.

2. Consolidation

2.1. Principles of consolidationPrinciples of consolidation from 1 January 2010The consolidated financial statements of the Nordzucker Group in-

clude the domestic and foreign subsidiaries in which Nordzucker

AG has direct or indirect control of financial and operating policy.

Subsidiaries are fully consolidated from the acquisition date, i.e.

the date on which the Group obtains control. Consolidation ends

once the parent company no longer exercises control. The finan-

cial statements of the subsidiaries are prepared for the same report-

ing period as the financial statements for the parent company using

uniform accounting methods. All intra-Group balances, trans actions,

unrealised gains and losses from intra-Group transactions and

dividends are eliminated in full.

Losses from a subsidiary are attributed to non-controlling interests

even if this results in a negative net carrying amount. A change in

the equity interest in a subsidiary that does not result in a loss of

control is accounted for as an equity transaction.

Principles of consolidation up to 1 January 2010 items were dealt with on the basis of the previous principles of

consolidation:

The purchase of non-controlling interests was accounted for be-

fore 1 January 2010 using the parent-entity extension method.

This entails the recognition as goodwill of the difference between

the purchase price and the carrying amount of the pro rata inter-

est in the net assets.

Losses were attributed to non-controlling interests until their

carrying amount was reduced to zero. Additional losses were

attributed to the parent company, except in cases in which the

non-controlling interests had undertaken to make good the

losses. The attribution of losses incurred before 1 January 2010

between the non-controlling interests and the shareholders of

the parent company was not revoked.

In the event of a loss of control, the Group recognised the re-

maining interest at the amount of the corresponding share of net

assets at the time control was lost. The carrying amount of these

investments was not adjusted as of 1 January 2010.

2.2. Business combinations and goodwillBusiness combinations from 1 March 2010Business combinations are presented using the purchase method.

The acquisition costs of a business combination are defined

as the total consideration paid, measured at fair value as of the

acquisition date and the non-controlling interests in the ac-

quired entity. For every business combination, the purchaser

measures the non-controlling interests in the acquired entity

either at fair value or at their pro rata share of the identified net

assets of the acquired entity. Costs incurred in the course of the

business combination are recognised in profit and loss and

shown under administrative expenses.

Notes to the consolidated financial statements for the financial year 2012/2013for Nordzucker AG, Braunschweig, Germany

Notes 73

If the Group acquires an entity it determines the appropriate

classification and designation of the financial assets and liabilities

assumed in accordance with the terms of the contract, econom-

ic circumstances and the conditions at the acquisition date. This

also includes separating embedded derivatives from their host

contract.

For business combinations in stages, the fair value of the equity

interest held by the purchaser in the acquired entity is meas-

ured as of each acquisition date and the resulting gain or loss is

recognised in the income statement.

The agreed contingent consideration is recognised at fair value

as of the acquisition date. Subsequent changes in the fair value

of a contingent consideration that constitutes an asset or a li-

ability are recognised either in the income statement or in other

comprehensive income in accordance with IAS 39. Contingent

consideration that is classified as equity is not revalued and its

subsequent settlement is accounted for within equity.

Goodwill is initially recognised at cost, which is defined as the

excess of total consideration transferred and the amount of any

non-controlling interest over the identifiable assets acquired

and the liabilities assumed. If this consideration is below the fair

value of the net assets of the subsidiary, the difference is recog-

nised in the income statement.

Following initial recognition, goodwill is measured at cost less

any accumulated impairment losses. For the purposes of impair-

ment testing, the goodwill acquired in a business combination

is allocated to the cash-generating units or groups of cash-gen-

erating units which benefit from the synergies of the business

combination as of the acquisition date. This applies irrespective

of whether other assets or liabilities of the acquiring company

are assigned to those units or groups of units. Each unit or

group of units to which the goodwill is allocated represents the

lowest level within the entity at which the goodwill is moni-

tored for internal management purposes.

If goodwill has been allocated to a cash-generating unit (group

of cash-generating units) and the entity disposes of an oper-

ation within that unit, the goodwill associated with the operation

disposed of shall be included in the carrying amount of the

operation when determining the gain or loss on disposal. The

value of the goodwill disposed of is measured on the basis of

the relative values of the operation disposed of and the portion

of the cash-generating unit retained. If a cash-generating unit

is disposed of, the difference between the sale price and the

net assets plus accumulated foreign-exchange differences and

goodwill without impairment is recognised in profit and loss.

Business combinations before 1 March 2010The method used previously for accounting for business com-

binations applied the following principles instead of those de-

scribed above:

Business combinations were presented using the purchase method.

Transaction costs directly attributable to the business combin-

ation were part of the acquisition costs. Non-controlling interests

(previously known as minority interests) were measured at their

pro rata share in the identifiable net assets of the acquired entity.

For business combinations achieved in stages, the individual ac-

quisitions were accounted for separately. The acquisition of an

additional interest did not affect the goodwill from a previous

acquisition.

If the Group acquired an entity, the embedded derivatives ac-

counted for separately from the host contract by the acquired

entity were only revalued at the acquisition date if the business

combination led to a change in the terms of the contract result-

ing in significantly different cash flows to those that would other-

wise have resulted from the contract.

A contingent consideration was only recognised if the Group

had a current obligation, if an outflow of resources embodying

economic benefits was more likely than not and if a reliable esti-

mate was possible. Subsequent adjustments to the contingent

consideration were recognised as part of goodwill.

2.3. Group of consolidated companiesThe consolidated companies in the Nordzucker Group are as

follows:

Group of consolidated companies

28/2/2013 29/2/2012

Fully consolidated companiesDomestic 4 4

Foreign 19 18

Companies accounted for under the equity method

Domestic 2 2

Foreign 2 2


The list of investments is filed electronically with the operator of

the electronic German Federal Gazette (Elektronischer Bundes-

anzeiger).

All the companies included in the consolidated financial state-

ments have 28 February 2013 as their reporting date.

Associated companies and joint ventures are accounted for in the

consolidated financial statements under the equity method. Asso-

ciated companies are defined as companies in which the Nord-

zucker Group can exercise a significant influence over financial

and operating policy. A company is defined as a joint venture if

an agreement exists between the partners on joint management

of the economic activities of the company. In applying the equity method, the IFRS financial statements of these companies are

used. Losses from associated companies which exceed the carry-

ing amount or other non-current receivables from financing these

companies are not recognised unless there is an obligation to

provide further capital.

2.4. Conversion of financial statements in foreign currencies

Assets and liabilities of subsidiaries whose functional currency

is not the Euro are converted at the exchange rate applicable

on the balance sheet date. Items in the income statement are

converted at the weighted average rate for the relevant year.

Equity components of subsidiaries are converted at the histor-

ical rate for the date first recognised. Exchange differences

arising from the conversion are recognised as equalisation

amounts within other comprehensive income or in non-

controlling interests.

The rates for the conversion of key financial statements in for-

eign currencies into Euros have changed as follows:

Foreign currency Average rate Spot rate

for EUR 1.00 2012/2013 2011/2012 28/2/2013 29/02/2012

Polish Zloty (PLN) 4.16353 4.18113 4.15150 4.12120

Hungarian Forint (HUF) 288.25639 283.62660 295.80000 288.71000

Danish Crown (DKK) 7.44799 7.44754 7.45600 7.43560

Swedish Crown (SEK) 8.65947 9.02575 8.44750 8.80880

Norwegian Crown (NOK) 7.43935 7.75952 7.48700 7.44050

Lithuanian Litas (LTL) 3.45280 3.45280 3.45280 3.45280

3. Explanation of accounting methods

3.1. Recognition of income and expenseRevenues are recognised when the goods or services are de -

livered if the amount of revenue can be estimated reliably and

the flow of economic benefit is probable. Revenues are reduced

by sales discounts.

Operating expenses are recognised when the service is used or

as of the date they arise.

Interest is recognised as an expense or as income in the period

in which it arises. The Group only capitalises interest expense

arising in connection with the purchase or production of certain

assets if they are qualifying assets.

Dividends are recognised in profit and loss when the legal entitle-

ment is vested.

3.2. Intangible assetsInternally generated intangible assets are recognised at the

costs arising in the development phase after technical and

economic feasibility has been determined and up to completion.

Capitalised production costs consist of the costs directly attribut-

able to the development phase.

Separately acquired intangible assets are recognised at cost.

Internally generated and separately acquired intangible assets

which have a finite useful life are amortised from the time the

asset is available for use on a straight-line basis over the expected

useful life of the asset as follows:

Notes 75

Intangible assetsUseful life

in years

Production quotas acquired against payment 9

ERP licences 20

Other software 3–15

Useful lives are reviewed regularly to ensure they are appropriate.

If necessary, they are adjusted accordingly.

Goodwill is not subject to amortisation (see Note 2.2 above).

Gains or losses on the disposal of intangible non-current assets

are recognised under other operating income or expenses.

3.3. Property, plant and equipmentItems of property, plant and equipment are recognised at cost

and depreciated on a straight-line basis over their expected use-

ful lives. The costs of internally generated items of property, plant

and equipment include all direct costs as well as all indirect costs

incurred in connection with the production process. Borrowing

costs are capitalised when the internally generated items of

property, plant and equipment constitute qualifying assets. Gains

or losses on the disposal of non-current assets are recognised in

other operating income or expenses.

Rented or leased assets which are economically owned by Group

companies (finance leases) are capitalised at the lower of the

pres ent value of the rental or lease payments and fair value of the

leased asset. They are depreciated on a straight-line basis. The

present value of payment obligations for future rental and lease

payments is recognised as a liability.

Depreciation takes place on a uniform basis for the Group over

the following useful lives:

Property, plant and equipmentUseful life

in years

Buildings 20–60

Technical plant and machinery 4–60

Railway tracks 70

Vehicles 4–15

Trailers and rolling stock 25

Other operating and office equipment 3–25

Useful lives are reviewed regularly to ensure they are appropriate.

If necessary, they are adjusted accordingly.

As a rule, depreciation begins when the asset is made ready for

operation. Production-related technical plant and machinery

only used during the campaign are depreciated for the full year.

For assets under finance leases where the transfer of title to Group

companies at the end of the lease term is sufficiently certain,

scheduled depreciation takes place over the useful life of the

assets.

Investment subsidies and public grants for the purchase or pro-

duction of items of property, plant and equipment are accounted

for by recognising an item of deferred income under other liabil-

ities. The deferred income item is then reversed through profit

and loss over the useful life of the subsidised asset.

3.4. Investment propertyProperties classified by the Nordzucker Group as available for let

to third parties are carried at historical cost in accordance with the

classification option defined in IAS 40. These properties are depre-

ciated on a straight-line basis over a useful life of 20 – 60 years.

3.5. Impairment of intangible assets and property, plant and equipment

The Group assesses at each reporting date whether there is any

indication that non-financial assets may be impaired. If any such

indication exists or if an annual impairment test is required for

an asset, the Group estimates the recoverable amount for the

respective asset (“impairment test”).

Impairment losses are recognised for intangible assets and items

of property, plant and equipment if, due to particular events, the

carrying amount of the asset is no longer covered by the antici-

pated proceeds of disposal or the discounted net cash flows from its continued use. If the recoverable amount cannot be

measured for individual assets because the cash flows depend

on other assets, the cash flow is determined for the next higher

group of assets (reporting unit, cash-generating unit) for which

such a cash flow can be determined. The cash flows of the report-

ing units are discounted at a rate which reflects current market

assessments of the time value of money and the specific risks of

the asset. An impairment loss is recognised when the present

value of the cash flows is less than the carrying amount of the

non-current and net current assets of the reporting unit.

An assessment is made as of each reporting date whether there

is any indication that an impairment recognised in prior periods

may no longer exist or may have decreased. Impairment losses

are reversed if the value in use has increased in subsequent periods.

The increased carrying amount of an asset attributable to

a reversal of an impairment loss shall not exceed the carrying

amount that would have been determined (net of amortisation

or depreciation) had no impairment loss been recognised for the

asset in prior years.


3.6. Investment subsidies and grantsClaims for investment subsidies and grants are recognised from

the time the Nordzucker Group is sufficiently certain that they

will be granted and that the conditions for receiving them will

be met. Grants and subsidies for purchasing assets are carried

as liabilities and reversed through profit and loss over the useful

life of the subsidised assets.

3.7. Emissions rightsThe Nordzucker Group does not recognise emissions rights

received free of charge. The Nordzucker Group recognises the

corresponding obligations at cost if the emissions rights held

by the Group are not sufficient.

3.8. Financial instrumentsThe Nordzucker Group accounts for financial instruments in

accordance with IAS 39. All purchases or disposals of financial

assets within the Group are recognised on acquisition, i.e. as

of the settlement date, irrespective of their classification.

Financial assets and financial liabilities are initially recognised at

fair value. The transaction costs directly attributable to the acqui-

sition are also recognised and amortised over the duration for all

financial liabilities which are not subsequently measured at fair

value through profit and loss. The fair values carried in the bal-

ance sheet are normally equivalent to the market prices of the

financial instruments. If these are not directly available from an

active market, measurement is made using the discounted cash flow method (DCF method), i.e. based on expected future cash flows using the reference interest rates applicable at the balance

sheet date.

IAS 39 stipulates that financial instruments are to be classified as

loans and receivables (L&R), available for sale (AFS), held to maturity (HTM), held for trading (HFT), fair value option (FVO) or financial liabilities measured at amortised cost (FLAC).

The Nordzucker Group has not used the option of designating

financial assets or financial liabilities upon initial recognition as at

fair value through profit and loss (FVO).

The Group measures financial assets and liabilities classified as

held for trading at fair value. Changes in fair value are recognised

in profit and loss.

Available-for-sale financial instruments are initially recognised at

fair value. The result of subsequent measurement at fair value is

recognised without effect on profit and loss in other comprehen-

sive income, having accounted for the effects of tax. When the

financial asset is sold, the accumulated results of measurement

changes recognised in equity are reversed and the realised gain

or loss is recognised in profit and loss. If the asset is impaired, the

revaluation surplus is corrected for the amount of the impairment

and the resulting amount recognised in profit and loss.

If the fair value of financial instruments cannot be measured or

derived using appropriate valuation methods, they are carried

at amortised cost. For cash and other current primary financial in-

struments, fair value is equivalent to the carrying amount on each

balance date.

Assets held to maturity are carried at amortised cost using the

effective interest method. An impairment loss is recognised on

these assets if the recoverable amount using the effective interest

originally determined is below the carrying amount.

In the financial year, no financial assets were reclassified from be-

ing available for sale to being held to maturity. Available-for-sale

financial instruments carried at fair value were also not reclassified

as being held at amortised cost. Reclassifications in the opposite

direction were also not applicable for the Nordzucker Group.

The Nordzucker Group also made no disposals of financial assets

without derecognising them, either in the reporting period or in

the previous year.

The Nordzucker Group carries out regular impairment tests on

financial assets held in the balance sheet in the categories loans and receivables, available for sale and held to maturity. These are

based on past experience and individual risk assessments. The

risk assessments include criteria such as severe financial difficulties

of the issuer or debtor, breach of contract, concessions made to

debtors for economic or legal reasons in connection with the

debtor’s financial difficulties and an increased probability of the

debtor’s insolvency. Other criteria are the disappearance of an

active market for the asset in question or observable data which

indicates a measurable reduction in expected future cash flows from a group of financial assets since their initial recognition.

Further information on financial instruments is given in Note 36.

3.9. Financial investments and securitiesOther financial investments and securities are categorised in line

with IAS 39 according to type and purpose and classified either

as available for sale or as held to maturity.

3.10. Assets held for sale

Non-current assets are classified as held for sale if the disposal of

the asset within the next twelve months is highly probable. This

classification is only made when the asset is available for sale in its

present condition and the marketing of the asset has already begun.

Assets held for sale are carried at the lower of amortised cost and

fair value less costs to sell. No further depreciation or amortisa tion is

Notes 77

recognised for assets from the time they are classified as held for

sale. If no sale has taken place within twelve months, the assets

concerned are reclassified to the relevant balance sheet items and

the necessary depreciation or amortisation is made good.

3.11. InventoriesInventories are recognised at cost.

Costs are determined using weighted averages. Costs include all

direct costs attributable to producing the asset as well as indirect

costs attributable to production.

Measurement of inventories at the reporting date is made at the

lower of cost and net realisable value. Net realisable value is the

estimated selling price less estimated costs to sell.

The net realisable value of work in progress is inferred from the

net realisable value of finished goods and services less the out-

standing costs of completion.

Semi-finished goods from production processes are measured

using their respective full cost approach. Indirect costs are allocated

according to production volume and the amount of production

work carried out in-house. If the recognised amounts for finished

products and goods are higher than fair value as of the reporting

date, the inventories are written down to net realisable value.

Sugar stocks from internal production disclosed under finished

products are recognised at cost, unless they are recognised at

lower net realisable value in view of sales opportunities. Costs in-

clude production costs, indirect costs attributable to the produc-

tion department and straight-line depreciation for wear and tear.

The production costs of quota sugar also include the factory por-

tion of the production levy of EUR 6.00 per tonne.

Borrowing costs are not included in costs as the Group’s prod-

ucts are not qualifying assets.

An impairment loss for inventories is reversed if the reasons for

recognising the loss no longer exist.

3.12. Receivables and other assetsTrade receivables and other assets are initially recognised at

fair value plus transaction costs. Subsequent recognition is at

amortised cost. For current financial assets in the loans and receiv-ables category, fair value is approximately equal to the carrying

amount.

Default risks are recognised by appropriate write-downs based

on past experience and individual assessments of risk.

3.13. Cash and cash equivalentsCash and cash equivalents include bank balances and cash in

hand. Carrying amounts are equal to fair value.

3.14. Pension provisionsProvisions for pension obligations are determined in line with IAS 19

using the projected unit credit method and taking future develop-

ments in salaries and pensions into account. The measurement of

the pension obligations is made on the basis of actuarial opinions

and includes the assets available to cover these obligations (plan

assets). The present value of defined benefit obligations is deter-

mined by discounting the estimated future cash outflows. The

discount rate is based on the rate paid by high-quality corporate

bonds which match the underlying pension obligations in terms

of currency and maturity.

If the actuarial gains and losses resulting from changes in the

actuarial parameters exceed 10 per cent of the greater of the pen-

sion obligations and plan assets at the beginning of the financial

year, the amount exceeding the 10 per cent threshold is recog-

nised through profit and loss for the remaining term of service of

the entitled staff (corridor method). As the actuarial parameters

changed sharply during the reporting year (lower interest rates)

and provoked an actuarial loss, the Nordzucker Group made use

of the option to recognise actuarial losses through profit or loss

over a shorter period.

The interest component of pension expenses and the expected in-

come from plan assets is disclosed as part of the net financial result.

3.15. Other provisionsOther provisions include all identifiable legal and constructive

obligations of the Group towards third parties if their settlement

is probable and the amount can be reliably estimated. Provisions

are recognised in line with IAS 37 as the best estimate of the

amount required to settle the obligation. Non-current provisions

are recognised as the present value of the amount required to

settle the obligation, discounted using appropriate market inter-

est rates.

Provisions for restructuring are only recognised if the planned

measures have been developed in sufficient detail as of the

reporting date and if the measures have been announced.

3.16. LiabilitiesLiabilities are recognised initially at fair value including transaction

costs and any premiums and discounts. Subsequent recognition

is at amortised cost using the effective interest method.

3.17. Deferred taxesDeferred taxes are recognised for future tax assets and liabilities

resulting from temporary differences between the value of assets


and liabilities for tax purposes and their carrying amount in the

IFRS financial statements, and for tax loss carry-forwards. Deferred

taxes are measured on the basis of the fiscal legislation enacted at

the end of each financial year for the financial years in which the

differences are expected to reverse or in which it is likely that tax

loss carry-forwards will be used. Deferred tax assets for tax loss

carry-forwards are only recognised if it is sufficiently likely that

they will be realised in the near future.

Deferred tax assets and liabilities are netted out if the conditions

for doing so are met.

3.18. Derivative financial instruments and hedge accounting

Due to the nature of its business, the Nordzucker Group is

exposed to interest-rate, exchange-rate and other market risks.

Derivative financial instruments are used as a means of managing

these risks.

As a rule, derivative financial instruments are recognised at fair

value. The fair value of derivatives can be both positive and nega-

tive. If a market value is not available, fair value is determined

using net present value and option pricing models. The input

parameters for these models are the relevant market prices and

interest rates observed on the balance sheet date as derived from

recognised sources.

Changes in the fair value of derivative financial instruments are

recognised in equity without effect on profit or loss (for cash flow

hedges) or with effect on profit or loss (for fair value hedges) if

they form part of an effective hedging relationship (hedge ac-counting). The principles of hedge accounting are intended to

capture as much as possible the offsetting effects on profit or loss

of changes in the fair values of the hedging instrument and the

hedged item. In addition to documentation on the hedging rela-

tionship, IAS 39 requires that the hedge be shown to be highly

effective in order for hedge accounting to be applied. The effect-

iveness of the hedge is demonstrated by its ability to achieve

offsetting changes to alterations in the hedged item’s fair value

in the case of fair value hedges or to cash flows attributable to

the hedged risk in the case of cash flow hedges.

Changes in the fair value of derivatives used to hedge future cash flows (cash flow hedges) and which are considered effective are

recognised directly in other comprehensive income after ac-

counting for tax effects. The amounts recognised in other com-

prehensive income are derecognised when the hedged item is

recognised in the balance sheet or in profit and loss.

Derivatives which despite their effect as economic hedges do not

fulfil the criteria of IAS 39 for recognition as hedging instruments

are classified as held for trading and carried at fair value through

profit and loss.

When closing hedging transactions, the Nordzucker Group classi-

fies interest-rate derivatives solely as cash flow hedges for hedge accounting purposes. Furthermore, the Group uses derivatives

not designated exclusively as such to hedge exchange-rate and

market risks.

3.19. Foreign currency transactionsPurchases and sales in foreign currencies are converted at the

exchange rate applicable at the time of the transaction. Assets

and liabilities in foreign currencies are translated into the func-

tional currency at the exchange rate on the reporting date. For-

eign currency gains and losses resulting from the conversion are

recognised in profit and loss.

3.20. Use of estimatesPreparing the consolidated financial statements in line with IFRS

requires the use of estimates and assumptions which affect the

carrying amounts of assets and liabilities, the disclosure of contin-

gent liabilities as of the reporting date and the recognition of in-

come and expenses. In particular, key estimates and assumptions

have been made in defining uniform periods of depreciation and

amortisation for the Group, the amount of write-downs on receiv-

ables and the actuarial parameters for measuring pension provi-

sions. For deferred tax assets, the main estimates relate to the tax-

able profits that will be generated in future. Other significant esti-

mates have been made in performing the impairment test in ac-

cordance with IAS 36 concerning the determination of cash flows in the forecast period and the selection of a suitable capitalisation

rate. The actual amounts may vary from the amounts derived from

the estimates and assumptions. We refer to the corresponding

notes to the consolidated balance sheet for the carrying amounts

of balance sheet items affected by significant estimates.

4. Recently published IASB accounting regulations

The present financial statements for the financial year 2012/2013

have been prepared on the basis of the uniform application of

and in compliance with all International Financial Reporting Stand-ards (IFRS) applicable in the European Union as of the reporting

date 28 February 2013. Nordzucker does not apply standards al-

ready published and interpretations by the International Financial Reporting Interpretations Committee (IFRIC) for which application is

not yet mandatory for the reporting year.

The accounting methods applied are the same as those applied

the previous year, with the exception of the following new and

revised standards and interpretations.

Notes 79

4.1. Mandatory application of new and amended standards in the reporting year:

Amendment to IFRS 7 – Disclosures on the Transfer of Financial

Assets: The amendment to IFRS 7 was published in October

2010 and was applicable for the first time in the financial year

2012/2013. The amendment defines extensive new qualitative

and quantitative disclosures on transfers of financial assets that

have not been derecognised and on the continuing involvement

in transferred financial assets as of the reporting date.

The application of the amended standard described in this sec-

tion had no significant effect on the presentation of the Group’s

earnings and financial position and net assets, as the circum-

stances referred to did not exist.

4.2. IFRS endorsed by the EU as of 28 February 2013 but not mandatorily applicable in the reporting year:

The following new and amended standards and interpretations

have already been endorsed by the EU, but were not applied in

the reporting year as their application was not mandatory:

IFRS 10 Consolidated Financial Statements: IFRS 10 was pub-

lished in May 2011 and is applicable for the first time in the finan-

cial year beginning on or after 1 January 2014. The new standard

replaces the provisions of IAS 27 Consolidated and Separate Finan-cial Statements on consolidated accounting and the interpretation

SIC-12 Consolidation – Special Purpose Entities. IFRS 10 defines a

uniform concept of control, which is applied to all companies

including special purpose entities.

IFRS 11 Joint Arrangements: IFRS 11 was published in May 2011

and is applicable for the first time in the financial year beginning

on or after 1 January 2014. The standard replaces IAS 31 Interests in Joint Ventures and the interpretation SIC-13 Jointly Controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 abolish-

es the previous option of accounting for joint ventures using the

proportional consolidation method. In future they are only to be

consolidated using the equity method.

IFRS 12 Disclosure of Interests in Other Entities: IFRS 12 was pub-

lished in May 2011 and is applicable for the first time in the finan-

cial year beginning on or after 1 January 2014. The standard de-

fines uniform rules for mandatory disclosures in the area of con-

solidated accounting and consolidates the disclosures on subsid-

iaries that were previously governed by IAS 27, the disclosures on

joint ventures and associated companies previously defined in IAS

31 and IAS 28 respectively and those for structured entities.

IFRS 13 Fair Value Measurement: IFRS 13 was published in May

2011 and is applicable for the first time in the financial year be-

ginning on or after 1 January 2013. The standard provides guide-

lines for fair value measurement and defines comprehensive

quantitative and qualitative disclosures for fair value measure-

ment. However, the standard does not cover the question of

when assets or liabilities may or must be measured at fair value.

IFRS 13 defines fair value as the price that would be received to

sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

Amendment to IAS 1 – Presentation of Components of Other

Comprehensive Income: The amendment to IAS 1 was published

in June 2011 and is applicable for the first time in the financial

year beginning on or after 1 July 2012. The amendment to IAS 1

relates to the presentation of components of other comprehen-

sive income. Components which are intended to be reclassified

into profit or loss in future (“recycled”) must be presented sep-

arately from those components that will remain in equity.

Amendment to IAS 12 – Deferred Tax: Recovery of Underlying

Assets: The amendment to IAS 12 was published in December 2010


on or after 1 January 2013. The amendment to IAS 12 simplified

the standard. It introduced the (rebuttable) presumption that for

the purpose of measuring deferred tax on investment property

measured at fair value, the recovery of the carrying amount will

normally be through sale. A sale should always be assumed for

items of property, plant and equipment not subject to wear and

tear that are measured using the revaluation model.

IAS 19 Employee Benefits (revised 2011): The revised standard

IAS 19 was published in June 2011 and is applicable for the first

time in the financial year beginning on or after 1 January 2013.

The alterations range from fundamental changes such as to the

calculation of forecast returns on plan assets and the elimination

of the corridor method, which served to smooth volatility result-

ing from pension obligations over time, to simple clarifications

and rewording, and also include new and amended disclosure

requirements. The standard is to be applied retroactively.

Nordzucker had previously used the corridor method in the

course of accounting for pension provisions. The elimination of

the accounting method used to date is expected to have a signifi-

cant effect on Nordzucker’s future consolidated financial state-

ments. Changes of some EUR 23 million in equity and of some

EUR 33 million in pension provisions are expected on the basis of

the new rules. Fluctuations in actuarial assumptions, especially for

the interest rate, will result in greater volatility in shareholders’


equity in future. The amendments to the accounting of phased

early retirement obligations will not have a significant effect on the

earnings and financial position and net assets of the Nordzucker

Group.

IAS 27 Separate Financial Statements (revised 2011): The re-

vised standard IAS 27 was published in May 2011 and is applic-

able for the first time in the financial year beginning on or after

1 January 2014. Following the adoption of IFRS 10 and IFRS 12,

the scope of IAS 27 is limited to accounting for subsidiaries, joint ventures and associated companies in separate financial state-

ments.

IAS 28 Investments in Associates and Joint Ventures (revised

2011): The revised standard IAS 28 was published in May 2011


on or after 1 January 2014. Following the adoption of IFRS 11 and

IFRS 12, the scope of IAS 28 has been extended to cover the ap-

plication of the equity method to joint ventures as well as to associ-

ated companies.

Amendment to IAS 32 and IFRS 7 – Offsetting Financial Assets

and Financial Liabilities: The amendment to IAS 32 and IFRS 7

was published in December 2011 and is applicable for the first

time in the financial year beginning on or after 1 January 2014

and 1 January 2013 respectively. The amendment is intended to

remove existing inconsistencies by extending the application

guidelines. The existing basic rules on offsetting financial instru-

ments are maintained, however. The amendment also defines

additional disclosures.

Apart from the effects caused by the revision of IAS 19 and de-

scribed above, the application of the amendments in this section

would not have had any significant effect on the presentation of

the Group’s earnings and financial position and net assets.

4.3. IFRS still to be endorsed by the EU:The following new and amended standards and interpretations

are still to be endorsed by the EU and have not been applied in

advance:

IFRS 9 Financial Instruments: Classification and Measurement:

The first part of phase I for the preparation of IFRS 9 Financial In-

struments was published in November 2009. The standard in-

cludes new rules on classifying and measuring financial assets. It

provides for debt instruments to be accounted for either at amort-

ised cost or at fair value through profit or loss, depending on

their characteristics and the business model. Equity instruments

must always be carried at fair value. Fluctuations in the value of

equity instruments may be recognised in other comprehensive

income, however, subject to an option specific to the individual

instruments that can be exercised when the financial instrument

is recognised. In this case, only certain dividend income from the

equity instruments is recognised in profit or loss. An exception is

made for financial assets held for trading, which must be meas-

ured at fair value through profit or loss. The IASB completed the

second part of phase 1 of the project in October 2010. This add-

ed provisions on financial liabilities to the standard and retains

the existing rules on classification and measurement of financial

liabilities with the following exceptions: effects of changes in the

entity’s own credit rating on financial liabilities classified as at fair

value through profit or loss must be recognised without effect

on profit or loss and derivative liabilities on unquoted equity in-

struments may no longer be held at cost. IFRS 9 is applicable for

the first time in the financial year beginning on or after 1 January

2015.

Improvements to IFRS (2009–2011)

The 2009–2011 improvements to IFRS are a collection of

amendments published in May 2012, which are binding for

financial years beginning on or after 1 January 2013. The Group

has not yet applied the following amendments:

● IFRS 1: Clarifies that a company is able to apply IFRS 1 again if

it stops reporting in line with IFRS and subsequently decides

or is obliged to resume the use of these accounting stand-

ards. If the company does not apply IFRS 1 again, it must pre-

sent its financial statements retroactively as if it had never

ceased to apply IFRS.

● IAS 1: Clarifies the difference between voluntary additional

comparative information and obligatory comparative informa-

tion, which generally covers the preceding reporting period.

● IAS 16: Clarifies that essential spare parts and servicing equip-

ment that qualify as items of property, plant and equipment

are not to be treated as inventories.

● IAS 32: Clarifies that income taxes on distributions to holders

of equity instruments fall within the scope of IAS 12 Income

Taxes.

● IAS 34: Aligns disclosures on segment assets with disclosures

on segment liabilities in interim reports and aligns disclosures

for interim reports with those for annual financial reporting.

No substantial effects on the presentation of the Group’s earn-

ings and financial position and net assets are expected from the

application of the amendments described in this section.

Notes 81

Notes to the consolidated income statement

5. Revenues

Revenues are made up as follows:

Revenues

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Sugar revenues from own production 1,763,234 1,392,187

Other 679,606 625,830

2,442,840 2,018,017

Regions

Central Europe 1,059,303 940,840

Northern Europe 946,949 800,762

Eastern Europe 436,588 276,415

2,442,840 2,018,017

Miscellaneous revenues include sales of merchandise, bioethanol and other products such as animal feed.

6. Other operating income

Other operating income is made up as follows:

Other operating income

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Proceeds from disposal of non-current assets 861 3,806

Reversals of write-downs (or write-backs) on receivables 104 2

Income from the reversal of provisions 7,714 13,597

Insurance and other compensation for damages 5,249 3,455

Income from the reversal of invest-ment subsidies, grants and other receivables 689 1,032

Rental and leasing income 1,248 1,598

Foreign-exchange gains 2,893 2,167

Miscellaneous operating income 10,918 16,820

Other operating income 29,676 42,477

Foreign-currency gains and the foreign-currency losses disclosed

under other operating expenses are mainly due to the movement

of the relevant national currencies against the Euro.

7. Cost of materials and services

The cost of materials and services is made up as follows:

Cost of materials and services

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Cost of raw materials, consumables and supplies and of purchased merchandise 1,517,620 1,417,629

Cost of purchased services 104,348 83,174

Cost of materials and services 1,621,968 1,500,803

8. Personnel expenses

Personnel expenses are made up as follows:

Personnel expenses

TEUR1/3/2012

-28/2/20131/3/2011

29/2/2012

Wages and salaries 181,179 170,063

Social security contributions and other social expenses 11,389 11,037

Expenses for defined benefit plans 2,281 1,845

Expenses for defined contribution plans 6,604 5,737

Personnel expenses 201,453 188,682

Expenses for defined benefit and defined contribution plans re-

late to Group expenses for defined benefit and defined contribu-

tion pension plans and similar obligations. The interest portion of

defined benefit obligations relating to pension expenses is recog-

nised in the net financial result.

In 2012/2013 and in the previous year, the average number of

employees in the Group was as follows:

Average number of employees

1/3/2012 -28/2/2013

1/3/2011 -29/2/2012

Central Europe 1,242 1,211

Northern Europe (including Ireland) 1,504 1,521

Eastern Europe 544 548

Average number of employees 3,290 3,280


9. Depreciation, amortisation and impairment

Depreciation, amortisation and impairment are made

up as follows:

Depreciation, amortisation and impairment

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Depreciation and amortisation of intangible assets and property, plant and equipment 86,767 85,709

Impairment of intangible assets and property, plant and equip-ment 795 21,236

Depreciation, amortisation and impairment

87,562 106,945

Impairment losses on items of property, plant and equipment

and intangible assets with finite useful lives are recognised in line

with IAS 36 if the recoverable amount for an asset is lower than

the carrying amount, whereby the recoverable amount is defined

as the higher of net realisable value and value in use.

The impairment losses in the previous year were primarily due to

write-downs on non-current assets for the Nordzucker Group’s

bioethanol activities.

10. Other operating expenses

Other operating expenses are made up as follows:

Other operating expenses

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Cost of sales 131,160 112,888

Research and development expenses 3,110 3,340

Expenses for leasing, rent, land leases and other hire costs 11,486 5,161

Administrative expenses 47,478 53,965

Other taxes 1,815 3,799

Foreign-exchange losses 2,657 6,467

Miscellaneous expenses 21,539 28,612

Other operating expenses 219,245 214,232

11. Net interest

Net interest is made up as follows:

Net interest

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Interest and similar income Interest income on bank balances 329 1,166

Income from securities and loans 26 3

Other interest and similar income 82 2,637

437 3,806

Interest and similar expenses Interest expense on bank balances 5,234 23,552

Interest expense on pension provisions (net) 19,873 5,972

Other interest and similar expenses 1,981 8,948

27,088 38,472

Net interest -26,651 -34,666

Net interest includes interest income and interest expense from finan-

cial instruments not held at fair value through profit and loss. Further

details can be found in Note 36.

Net interest expense on pension provisions includes EUR 14,000,000

from the recognition through profit or loss of actuarial losses outside

the 10 per cent corridor. The actuarial losses are recognised within a

shorter period than the remaining term of service of the employees

covered by the pension plan, which is also an option.

12. Net income/loss from investments

Net income/loss from investments is made up as follows:

Net income/loss from investments

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Net income/loss from associated companies

-822 76

Net income/loss from other investments

4,713 3,471

Net income/loss from investments

3,891 3,547

Additional information on the earnings contributions of financial

instruments can be found in Note 36.

Notes 83

13. Other net financial result

Other net financial result consists largely of price effects from fi-

nancing arrangements and net gains/losses on futures transac-

tions and derivatives.

14. Income taxes

Income taxes include taxes on income paid or owed in the indi-

vidual countries and deferred taxes. Income taxes consist of trade

tax, corporation tax, solidarity surcharge and the equivalent for-

eign income taxes.

Income tax expense is made up by origin as follows:

Income taxes

TEUR1/3/2012

-28/2/20131/3/2011

-29/2/2012

Current taxes Current domestic taxes 69,107 45,333

Current foreign taxes 67,400 44,027

136,507 89,360

Deferred taxes Deferred domestic taxes -3,346 -5,988

Deferred foreign taxes -12,057 -5,375

-15,403 -11,363

Income taxes 121,104 77,997

Income taxes include tax expenses from other periods of

EUR 4,909,000 (previous year: EUR 5,057,000).

As of the reporting date, Nordzucker had a long-term tax asset of

EUR 957,000 (previous year: EUR 1,153,000) from the reimburse-

ment of corporation tax. The distribution of potential dividends to the shareholders of Nordzucker does not have any income tax

consequences at the level of Nordzucker.

The expected income tax expense, which would have been

payable if the tax rate for the parent company Nordzucker AG

of 29 per cent (previous year: 29 per cent) were applied

to the consolidated net income under IFRS before taxes and

minority interests, can be reconciled with the income taxes in

the income statement as follows:

Tax reconciliation

TEUR1/3/2012

-28/2/20131/3/2011

-28/2/2012

IFRS net profit before income taxes 481,363 286,288

Group tax rate in % 29.00 29.00

Expected tax expense 139,595 83,024

Differences due to different foreign and domestic tax rates -14,970 -10,649

Change in Group tax rate -8,825 -738

Non-capitalised deferred tax assets on tax loss carry-forwards -126 0

Taxes for prior years 4,909 5,057

Tax loss carry-forwards used 0 -611

Tax-free income -2,169 -1,743

Non-deductible operating expenses for tax purposes 1,285 3,220

Non-offsettable income tax 0 301

Additions/deductions for trade tax 119 497

Other effects 1,286 -361

Tax expense 121,104 77,997

The corporation tax rate for stock corporations based in Germany

is 15 per cent plus 5.5 per cent solidarity surcharge on the corpor-

ation tax liability.

Companies based in Germany are also liable for trade tax at a rate

determined by multipliers set by the local council.

The effects of differences between foreign tax rates and the

Group tax rate for Nordzucker AG (29 per cent) are shown in

the reconciliation statement under tax rate differences between

Germany and abroad.

Deferred tax assets and liabilities result from the capitalisation of

tax loss carry-forwards and primarily from temporary valuation dif-

ferences between the IFRS financial statements and the financial

statements of the individual Group companies for local tax pur-

poses for the following items:


Of the total change in deferred taxes recognised in the consoli-

dated balance sheet as of the reporting date, EUR 15,403,000

was recognised in profit or loss and EUR -279,000 in equity with-

out effect on profit or loss.

Deferred tax assets and liabilities are netted out for each com-

pany or taxable entity. To the extent that deferred taxes relate to

private partnerships, netting out only takes place at the level of

Nordzucker AG for corporation tax purposes. Deferred trade tax-

es are netted out at the level of the individual private partner-

ships.

The recognition of deferred taxes resulted in the following re-

statements of balance sheet items with effect on profit and loss:

Deferred taxes 28/2/2013 29/2/2012

TEUR

Deferred tax

assets

Deferred tax

liabilities

Deferred tax

assets

Deferred tax

liabilities

Intangible assets 443 10,202 59 12,067

Investment property 0 0 2 0

Other property, plant and equipment 2,490 124,278 8,423 134,532

Financial investments 0 0 61 323

Inventories 3,179 9,574 3,593 9,631

Receivables and other assets 459 1,991 2,438 1,082

Pension provisions 8,658 0 4,784 -508

Other provisions 9,221 -2,098 7,188 -2,569

Liabilities to banks 329 458 8 264

Other liabilities 185 11,676 5,061 21,544

Deferred taxes on temporary differences 24,964 156,081 31,617 176,367

Deferred tax assets on tax loss carry-forwards 2,706 0 2,716 0

Gross amount 27,670 156,081 34,333 176,367

Netting -19,843 -19,843 -22,450 -22,450

Carrying amount 7,827 136,238 11,883 153,917

Deferred taxes 1/3/2012 – 28/2/2013 1/3/2011 – 29/2/2012

TEUR

Deferred tax

assets

Deferred tax

liabilities

Deferred tax

assets

Deferred tax

liabilities

Intangible assets -384 -1,865 34 -39

Investment property 2 0 6 103

Other property, plant and equipment 5,933 -11,715 1,046 -8,123

Financial investments 61 -323 0 210

Inventories 413 -57 -2,399 1,655

Receivables and other assets 1,980 589 -1,719 1,924

Pension provisions -3,873 508 1,089 537

Other provisions -2,033 471 -1,223 -865

Liabilities to banks -321 194 509 270

Other liabilities/leasing 4,876 -9,869 -1,467 -4,359

Deferred taxes on temporary differences 6,654 -22,067 -4,124 -8,687

Deferred tax assets on tax loss carry-forwards 10 1,448

Total 6,664 -22,067 -2,676 -8,687

Notes 85

The deferred tax liabilities include EUR 1,097,000 (previous year:

EUR 366,000) for temporary differences from derivatives in cash

flow hedges. As these items are not recognised in profit and loss,

the corresponding deferred taxes are also recognised directly in

other comprehensive income.

With regard to the surplus of deferred tax assets over deferred tax

liabilities in the balance sheet and the capitalised tax loss carry-

forwards at the level of individual Group companies, the value

of the deferred tax assets is considered to be sufficiently certain,

based on the current earnings situation and/or business planning.

Deferred tax assets of EUR 2,706,000 were recognised for domes-

tic trade tax loss carry-forwards of EUR 19,603,000 (previous year:

EUR 20,517,000). Under current legislation, tax losses in Germany

can be carried forward indefinitely.

In the financial year, no deferred tax assets were recognised for

foreign tax loss carry-forwards of EUR 4,594,000 (previous year:

EUR 3,479,000) and domestic trade tax loss carry-forwards of EUR

16,706,000 (previous year: EUR 18,269,000) as no positive tax-

able income is expected in the near future. Furthermore, no de-

ferred tax assets were recognised for tax loss carry-forwards of

EUR 297,000 (previous year: EUR 297,000) that arose before the

consolidated tax group was formed, as these may not be used

for the duration of the consolidated tax group.

No deferred taxes were recognised for retained earnings and

exchange-rate differences of subsidiaries and the resulting tem-

porary differences between the net assets of the subsidiaries in the

IFRS consolidated financial statements and the carrying amount of

the interests in the subsidiaries for tax purposes. As of the balance

sheet date, the temporary differences for which deferred tax lia-

bilities could be recognised came to EUR 364,353,000 (previous

year: EUR 170,223,000). If deferred taxes were to be recognised

for these temporary differences, only 5 per cent of the gain on

disposal or of the dividends, plus any foreign withholding tax,

would be relevant for their measurement under German tax law.

Notes to the consolidated balance sheet

15. Intangible assets

Changes in the individual items of intangible assets are shown in the

statement of changes in non-current assets.

With the exception of goodwill, there were no intangible assets with

an indefinite useful life in the reporting period. Goodwill of EUR 89.0

million comes from the acquisition of the Nordic Sugar Group.

In the financial year 2012/2013, intangible assets purchased for EUR

3,972,000 (previous year: EUR 4,252,000) were still in use, although

they had already been fully amortised.

16. Property, plant and equipment

We refer to the statement of changes in non-current assets for the

Nordzucker Group for changes in property, plant and equipment.

Assets which fulfil the criteria of IAS 17 for a finance lease are

mainly a storage reservoir in Stöcken and various lease agree-

ments for IT equipment.

As of 28 February 2013, items of property, plant and equipment

with acquisition and/or production costs of EUR 245,843,000

(previous year: EUR 238,737,000) were in use although they had

already been fully depreciated.

In the reporting period, expenses of EUR 814,000 (previous year:

EUR 1,816,000) were capitalised for internally generated items of

property, plant and equipment.

In the financial year 2012/2013, the Nordzucker Group received

compensation of EUR 1,824,000 (previous year: EUR 1,522,000)

for the loss or impairment of items of property, plant and equip-

ment from third parties, e.g. insurance companies.

Net carrying amounts of capitalised leased items are as follows:

Finance leases

TEUR 28/2/2013 29/2/2012

Technical plant and machinery 607 711

Finance leases 607 711


17. Impairment test for intangible assets and items of property, plant and equipment

Impairment tests for intangible assets and items of property, plant

and equipment are mainly performed on the basis of the values

in use for cash-generating units. The cash-generating units have

been determined according to the business activities of the

Nordzucker Group and taking regional aspects into account.

An impairment test was carried out for the goodwill of the Nordic

Sugar Group recognised in the consolidated balance sheet (cal-

culation of value in use). The cash flows for this cash-generating

unit were calculated for the next five years based on financial

forecasts. The pre-tax interest rate used to discount the cash flows for this cash-generating unit was around 8.96 per cent (previous

year: 8.74 per cent). A growth rate of 0 per cent (previous year:

0 per cent) was assumed for the long-term earnings component

of the discounted cash flow calculation. No impairment charges

were necessary for this goodwill.

In addition to the impairment tests at the level of the reporting

units, individual items of property, plant and equipment were

written down to their recoverable amount, e.g. in the case of fac-

tory closures, and written back if the reasons for the impairment

ceased to exist. There were no reversals of impairment losses in

the reporting year (previous year: EUR 1,537,000).

18. Investment property

Investment property in the Nordzucker Group mainly consists of

flats and land not required for operating purposes.

In the financial year 2012/2013, rental income of EUR 133,000 (pre-

vious year: EUR 74,000) was generated and offset by expenses

of EUR 171,000 (previous year: EUR 228,000). There were also

expenses of EUR 9,000 (previous year: EUR 11,000) for which

there was no corresponding rental income.

The fair value of the property is EUR 9,502,000 as of 28 February

2013 (previous year: EUR 10,991,000). Fair value was determined

on the basis of internal estimates of market values using compar-

able properties.

No acquisition costs were capitalised retroactively in the financial

year 2012/2013 or in the previous year.

19. Financial investments

There were no significant changes in the Nordzucker Group’s

financial investments in the reporting period.

19.1. Companies accounted for under the equity methodIn the financial year, associated companies and joint ventures accounted for under the equity method reported total net in-

come of EUR 8,000 (previous year: EUR 152,000), revenues of

EUR 1,976,000 (previous year: EUR 0), assets of EUR 17,820,000

(previous year: EUR 14,547,000) and liabilities of EUR

12,546,000 (previous year: EUR 9,314,000) in their financial

statements.

The Nordzucker Group’s share of the profit/losses of the associat-

ed companies was EUR -821,000 in the reporting period (previ-

ous year: EUR 76,000), because an impairment loss of EUR

825,000 was recognised for one joint venture in addition to its

current earnings contribution.

In applying the equity method, losses from an associated company

that exceed the carrying amount of the investment or other non-

current receivables relating to the financing of the associated

company are not recognised as there is no requirement to invest

further equity.

The Nordzucker Group received no dividends in the reporting year.

19.2. Other financial investmentsAvailable-for-sale financial instruments included in other non-cur-

rent financial assets are carried at fair value at the reporting date

or at amortised cost if fair value cannot be reliably determined by

other valuation methods or because there is no active market.

In the reporting year, the company SWEETGREDIENTS GmbH &

Co. KG, which had previously been consolidated pro rata, was

deconsolidated as it was considered insignificant. The carrying

amount of EUR 3,122,000 is now included in other financial in-

vestments.

The shares in Tereos TTD a.s. are disclosed here, despite a stake

of 35.38 per cent, because the company’s articles do not permit

the Group to exercise significant influence over its operating and

financial policy.

The Nordzucker Group received dividends of EUR 4,713,000 in

the reporting year (previous year: EUR 3,763,000).

Notes 87

Consolidated assets schedule for the previous year (2011/2012) Nordzucker AG, Braunschweig, Germany

Cost or fair value Accumulated depreciation, amortisation and impairment Carrying amounts

As of 1/3/2011

Currency effects

Additions Reclassifi-cations

Disposals As of 29/2/2012

As of 1/3/2011

Currency effects

Depreciation, amortisation

Impairment Reversals of impairment

Reclassifi-cations


As of 29/2/2012

As of 28/2/2011

TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR

Intangible assets

Purchased rights and licences 147,182 -431 7,533 358 1,775 152,867 57,184 -232 13,174 358 250 0 1,666 68,568 84,299 89,998

Internally produced software 4,447 -1 0 0 0 4,446 3,912 0 114 0 82 0 0 3,944 502 535

Goodwill 89,072 216 0 0 0 89,288 38 -1 0 0 0 0 0 37 89,251 89,034

Advance payments made 330 2 61 -324 55 14 0 0 0 0 0 0 0 0 14 330

241,031 -214 7,594 34 1,830 246,615 61,134 -233 13,288 358 332 0 1,666 72,549 174,066 179,897

Property, plant and equipment

Land and buildings 481,058 -1,584 1,195 -1,198 18,069 461,402 231,648 421 11,822 1,675 504 -1,430 15,737 227,895 233,507 249,410

Technical plant and machinery 1,491,616 -1,254 19,410 22,983 17,831 1,514,924 849,084 757 57,658 19,092 76 -712 16,529 909,274 605,650 642,532

Other plant, operating and office equipment 45,799 -307 1,699 2,272 3,108 46,355 36,152 -485 2,904 56 0 991 2,905 36,713 9,642 9,647

Advance payments made and plant under construction 4,614 -204 34,104 -26,026 80 12,408 147 1 0 0 0 0 0 148 12,260 4,467

2,023,087 -3,349 56,408 -1,969 39,088 2,035,089 1,117,031 694 72,384 20,823 580 -1,151 35,171 1,174,030 861,059 906,056

Investment property 14,568 0 2 1,986 4,075 12,481 6,052 -1 37 55 624 1,151 974 5,696 6,785 8,516

2,278,686 -3,563 64,004 51 44,993 2,294,185 1,184,217 460 85,709 21,236 1,536 0 37,811 1,252,275 1,041,910 1,094,469



As of 1/3/2011

Currency effects



As of 1/3/2011

Currency effects


Impairment Reversals of impairment

Reclassifi-cations


As of 29/2/2012

As of 28/2/2011

TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR

Intangible assets

Purchased rights and licences 147,182 -431 7,533 358 1,775 152,867 57,184 -232 13,174 358 250 0 1,666 68,568 84,299 89,998

Internally produced software 4,447 -1 0 0 0 4,446 3,912 0 114 0 82 0 0 3,944 502 535

Goodwill 89,072 216 0 0 0 89,288 38 -1 0 0 0 0 0 37 89,251 89,034

Advance payments made 330 2 61 -324 55 14 0 0 0 0 0 0 0 0 14 330

241,031 -214 7,594 34 1,830 246,615 61,134 -233 13,288 358 332 0 1,666 72,549 174,066 179,897


Land and buildings 481,058 -1,584 1,195 -1,198 18,069 461,402 231,648 421 11,822 1,675 504 -1,430 15,737 227,895 233,507 249,410

Technical plant and machinery 1,491,616 -1,254 19,410 22,983 17,831 1,514,924 849,084 757 57,658 19,092 76 -712 16,529 909,274 605,650 642,532

Other plant, operating and office equipment 45,799 -307 1,699 2,272 3,108 46,355 36,152 -485 2,904 56 0 991 2,905 36,713 9,642 9,647

Advance payments made and plant under construction 4,614 -204 34,104 -26,026 80 12,408 147 1 0 0 0 0 0 148 12,260 4,467

2,023,087 -3,349 56,408 -1,969 39,088 2,035,089 1,117,031 694 72,384 20,823 580 -1,151 35,171 1,174,030 861,059 906,056

Investment property 14,568 0 2 1,986 4,075 12,481 6,052 -1 37 55 624 1,151 974 5,696 6,785 8,516

2,278,686 -3,563 64,004 51 44,993 2,294,185 1,184,217 460 85,709 21,236 1,536 0 37,811 1,252,275 1,041,910 1,094,469

Notes 89

Consolidated assets schedule for the financial year 2012/2013 Nordzucker AG, Braunschweig, Germany


As of 1/3/2012

Currency effects



As of 1/3/2012

Currency effects


Impairment Reclassifications


As of 28/2/2013

As of 29/2/2012

TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR

Intangible assets

Purchased rights and licences 152,867 881 3,826 177 2,127 155,624 68,568 197 13,979 2 10 2,110 80,646 74,978 84,299

Internally produced software 4,446 0 0 0 0 4,446 3,944 0 109 0 0 0 4,053 393 502

Goodwill 89,288 -214 0 0 0 89,074 37 0 0 0 0 0 37 89,037 89,251

Advance payments made 14 0 929 -14 0 929 0 0 0 0 0 0 0 929 14

246,615 667 4,755 163 2,127 250,073 72,549 197 14,088 2 10 2,110 84,736 165,337 174,066


Land and buildings 461,402 1,042 3,668 -2,451 2,740 460,921 227,895 -78 11,704 230 -6,455 1,722 231,574 229,347 233,507

Technical plant and machinery 1,514,924 5,066 35,499 25,340 11,053 1,569,776 909,274 1,764 57,536 555 8,904 9,731 968,302 601,474 605,650

Other plant, operating and office equipment 46,355 56 2,669 1,573 4,673 45,980 36,713 9 3,405 5 218 4,428 35,922 10,058 9,642

Advance payments made and plant under construction 12,408 -2 27,462 -27,500 49 12,319 148 0 0 0 0 0 148 12,171 12,260

2,035,089 6,162 69,298 -3,038 18,515 2,088,996 1,174,030 1,695 72,645 790 2,667 15,881 1,235,946 853,050 861,059

Investment property 12,481 0 6 -1,263 62 11,162 5,696 0 34 3 -244 4 5,485 5,677 6,785

2,294,185 6,829 74,059 -4,138 20,704 2,350,231 1,252,275 1,892 86,767 795 2,433 17,995 1,326,167 1,024,064 1,041,910

Reclassifications to net carrying amounts of EUR 1,705,000 relate to assets of Nordzucker AG and the Hungarian subsidiary which are held for sale.



As of 1/3/2012

Currency effects



As of 1/3/2012

Currency effects


Impairment Reclassifications


As of 28/2/2013

As of 29/2/2012

TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR

Intangible assets

Purchased rights and licences 152,867 881 3,826 177 2,127 155,624 68,568 197 13,979 2 10 2,110 80,646 74,978 84,299

Internally produced software 4,446 0 0 0 0 4,446 3,944 0 109 0 0 0 4,053 393 502

Goodwill 89,288 -214 0 0 0 89,074 37 0 0 0 0 0 37 89,037 89,251

Advance payments made 14 0 929 -14 0 929 0 0 0 0 0 0 0 929 14

246,615 667 4,755 163 2,127 250,073 72,549 197 14,088 2 10 2,110 84,736 165,337 174,066


Land and buildings 461,402 1,042 3,668 -2,451 2,740 460,921 227,895 -78 11,704 230 -6,455 1,722 231,574 229,347 233,507

Technical plant and machinery 1,514,924 5,066 35,499 25,340 11,053 1,569,776 909,274 1,764 57,536 555 8,904 9,731 968,302 601,474 605,650

Other plant, operating and office equipment 46,355 56 2,669 1,573 4,673 45,980 36,713 9 3,405 5 218 4,428 35,922 10,058 9,642

Advance payments made and plant under construction 12,408 -2 27,462 -27,500 49 12,319 148 0 0 0 0 0 148 12,171 12,260

2,035,089 6,162 69,298 -3,038 18,515 2,088,996 1,174,030 1,695 72,645 790 2,667 15,881 1,235,946 853,050 861,059

Investment property 12,481 0 6 -1,263 62 11,162 5,696 0 34 3 -244 4 5,485 5,677 6,785

2,294,185 6,829 74,059 -4,138 20,704 2,350,231 1,252,275 1,892 86,767 795 2,433 17,995 1,326,167 1,024,064 1,041,910

Reclassifications to net carrying amounts of EUR 1,705,000 relate to assets of Nordzucker AG and the Hungarian subsidiary which are held for sale.

Notes 91

20. Inventories

Inventories are made up as follows:

Inventories

TEUR 28/2/2013 29/2/2012

Raw materials, consumables and supplies

46,885 44,451

Work in progress 50,491 43,373

Finished goods and merchandise 930,387 810,414

Inventories 1,027,763 898,238

Unfinished goods mainly consist of the thick juice required to pro-

duce bioethanol.

Inventories of EUR 3,025,000 (previous year: EUR 1,258,000) are

carried at net realisable value. Write-downs on inventories

amounted to EUR 2,949,000 (previous year: EUR 2,306,000).

21. Trade receivables

Trade receivables are made up as follows:

Trade receivables

TEUR 28/2/2013 29/2/2012

Gross trade receivables 214,483 197,963

Write-downs on trade receivables 2,059 3,540

Trade receivables from external companies 212,424 194,423

Information on the default risks and the term structure of trade re-

ceivables is given in Note 37. Write-downs on trade receivables

in the financial year amounted to EUR 562,000 (previous year:

EUR 905,000).

22. Receivables from related parties

Receivables from related parties are made up as follows:

Receivables from related parties

TEUR 28/2/2013 29/2/2012

Receivables from associated companies and joint ventures 132 102

Receivables from other related parties 4,132 131

Receivables from related parties 4,264 233

The receivables from related parties remaining after consolidation

are classified as financial assets and other receivables. Details on

the default risks and the term structure for this category can be

found in Note 37.

23. Financial assets

Financial assets are made up as follows:

Financial assets

TEUR 28/2/2013 29/2/2012

Claims for damages 3,260 711

Positive fair value of derivatives 5,033 7,695

Available-for-sale securities 0 10

Other financial assets 4,304 4,776

Financial assets 12,597 13,192

Of total financial assets, EUR 0 (previous year: EUR 7,000) are

non-current.

With the exception of positive fair values of derivatives and

available-for-sale securities, the financial assets have been classi-

fied in the financial assets and other receivables category of finan-

cial instruments. Details of the default risks and term structure for

this category can be found in Note 37.

Current financial assets are included in the financial investments class, which is part of the available-for-sale category, and are all

held at fair value.

24. Other assets

Other assets are made up as follows:

Other assets

TEUR 28/2/2013 29/2/2012

Receivables from other taxes 50,092 31,510

Miscellaneous other assets 12,293 31,830

Other assets 62,385 63,340

Of total other assets, EUR 9,000 (previous year: EUR 1,369,000)

are non-current. From this reporting year onwards, claims for the

reimbursement of energy taxes are presented in receivables from

other taxes. In the previous year, receivables of EUR 12,854,000

were shown in miscellaneous other assets.


25. Assets held for sale

Assets classified as held for sale in accordance with IFRS 5 con-

sist of land and buildings held at EUR 2,497,000 (previous year:

EUR 1,867,000).

26. Shareholders’ equity

Changes in Group shareholders’ equity are shown in the state-

ment of changes in shareholders’ equity.

Capital management at the Nordzucker Group is founded on a

strong equity base and a sustainable dividend policy in order to

secure current operations on the one hand and to enable a rea-

sonable dividend yield for the shareholders on the other. As of

28 February 2013, the equity ratio came to 55 per cent (previous

year: 44 per cent). The Executive Board will put forward a pro-

posal at the Annual General Meeting to distribute a dividend of

EUR 1.80 per share (previous year: EUR 1.00 per share).

Nordzucker AG’s Articles of Association do not require any particu-

lar amount of equity. The Executive Board manages the Group

with the aim of generating a profit. It does this by means of cap-

ital market-oriented targets for the company which are measured

in terms of specific financial indicators. The main financial indica-

tors for the Group are total operating profitability, return on sales, equity ratio and return on equity, for which targets have been set.

26.1. Subscribed capitalAs of 28 February 2013, subscribed capital (ordinary share cap-

ital) remained unchanged at EUR 123,651,328.00 and was div-

ided into 48,301,300 registered common shares.

The ordinary share capital is fully paid in and, as in the previous

year, has a nominal share of subscribed capital of EUR 2.56 per

share.

As of the reporting date, Nordzucker Holding Aktiengesellschaft,

Braunschweig, Germany, had provided evidence that it held

more than 50 per cent of the shares, with 76.23 per cent.

26.2. Capital reserves The capital reserves have been formed from share premiums

paid in the course of capital increases by Nordzucker AG.

26.3. Retained earningsRetained earnings are made up of the net income earned in

prior financial years and the current period by the companies

included in the consolidated financial statements. Goodwill

arising on acquisitions made by the Group before 1 March 2004

has been offset against reserves. In the IFRS opening balance

sheet, the balancing item from the conversion of financial state-

ments prepared in foreign currencies was offset against retained

earnings.

Retained earnings include statutory reserves of 10 per cent of

subscribed capital, amounting to EUR 12,365,000 which, in line

with statutory regulations (Sec. 150 AktG [German Stock Corpor-

ation Act]), are not available for distribution to shareholders.

26.4. Other comprehensive incomeOther comprehensive income is made up as follows:


TEUR 28/2/2013 29/2/2012

Fair value adjustment to derivatives in cash flow hedges 897 246

Currency differences from the con-solidation of foreign subsidiaries 58,004 51,436

Other comprehensive income 58,901 51,682

As of 28 February 2011, the reserve for fair value adjustments

to derivatives in cash flow hedges came to EUR 2,064,000 and

exchange-rate differences from the consolidation of foreign

subsidiaries recognised in equity to EUR 52,920,000.

26.5. Non-controlling interestsMinority interests exist primarily in the following companies:

Non-controlling interests

TEUR 28/2/2013 29/2/2012

Sucros OY 29,844 26,924

AB Nordic Sugar Kėdainiai 16,929 14,278

Norddeutsche Flüssigzucker GmbH & Co. KG

2,458

0

Považský cukor a.s. 2,272 1,708

Cukrownia Melno S.A., i.L. 210 211

Other companies 167 139

Non-controlling interests 51,880 43,260

In the reporting year, 30 per cent of the interests in Nord-

deutsche Flüssigzucker GmbH & Co. KG were sold. The state-

ment of changes in shareholders’ equity shows this transaction

in the row “Other”.

Notes 93

27. Pension obligations

Provisions for pension obligations are made for accrued and cur-

rent benefits of both currently active and former members of staff

of the Nordzucker Group and their surviving dependents.

Benefit obligations are structured in line with the legal, fiscal and

economic conditions in each country.

The Group has both defined contribution plans and defined benefit plans. Pension commitments are based on collective agreements

and in a few cases on individual agreements with fixed benefit

amounts. The defined benefit plans have commitments both

covered by provisions and funded by plan assets.

Pension provisions are determined in accordance with IAS 19 on

the basis of actuarial assumptions. The following weighted vari-

ables were used in the financial year 2012/2013 and the previous

year:

Parameters of pension obligations

28/2/2013 29/2/2012

Discount rate (%) 3.45 4.75

Salary increase (%) 2.50 2.50

Pension increase (%) 1.50 1.50

For domestic companies in the Nordzucker Group, the assumptions

for life expectancy are taken from the actuarial tables 2005 G by

Dr Klaus Heubeck.

Expenses of EUR 22,635,000 (previous year: EUR 7,818,000) were

incurred in 2012/2013 for defined benefit plans, which are made

up as follows:

Expenses for pensions

TEUR 28/2/2013 29/2/2012

Service cost 2,816 2,058

Effects of curtailments and cancella-tions of pension plans 0 -2

Amortisation of unrealised actuarial gains (-) and losses (+) 13,877 -209

Interest expense for provisions for pension obligations in the financial year 9,043 8,832

Return on plan assets -3,170 -2,861

Effects of changes in exchange rates 68 0

Expenses for pensions 22,635 7,818

Provisions for pensions and similar obligations disclosed in the

balance sheet changed as follows:

Net pension obligations

TEUR 28/2/2013 29/2/2012

Change in present value of pension entitlements Present value of pension entitlements at the beginning of the financial year 188,076 179,250

Service cost in the financial year 2,816 2,058

Interest expense for pensions in the financial year 9,043 8,832

Pension payments -10,898 -10,885

Transfers of pension obligations to other companies 0 -71

Effects of curtailments and cancellations of pension plans -2 -2

Actuarial gain (-)/loss (+) in the financial year 32,612 8,751

Effects of changes in exchange rates 2,022 143

Present value of pension entitlements at the end of the financial year 223,670 188,076

Change in plan assets

Present value of plan assets for funded pension obligations at the beginning of the financial year 35,685 38,223

Contributions to pension funds/ plan assets 1,524 152

Income from plan assets -5,039 -3,682

Return on plan assets 1,516 992

Present value of plan assets for funded pension obligations at the end of the financial year 33,686 35,685

Net pension obligations 189,984 152,391

Unrealised actuarial gains (+)/losses (-) -32,756 -12,383

Pension provisions 157,227 140,008

The forecast return on pension plan assets is EUR 3,170,000

(previous year: EUR 2,861,000); the variation based on past

experience for the reporting year was EUR -1,654,000 (previous

year: EUR -1,868,000). As of 28 February 2011, the variation

based on past experience was EUR -760,000 (28 February 2010:

EUR 496,000; 28 February 2009: EUR -620,000).

As of 28 February 2011, the present value of pension obligations

was EUR 179,250,000 (28 February 2010: EUR 177,181,000;

28 February 2009: EUR 137,657,000), the present value of plan

assets was EUR 38,223,000 (28 February 2010: EUR 39,335,000;

28 February 2009: EUR 41,667,000), the unrealised actuarial gains

(+) and losses (-) amounted to EUR -1,633,000 (28 February

2010: EUR -2,542,000; 28 February 2009: EUR +10,942,000) and

the pension provisions to EUR 139,394,000 (28 February 2010:

EUR 135,304,000; 28 February 2009: EUR 106,932,000). No

un realised gains or losses were reported on plan assets in this

period.


28. Other provisions

Other provisions are made up as follows:

Of total other provisions, EUR 32,540,000 (previous year:

EUR 23,415,000) are non-current.

Provisions for recultivation obligations include the forecast ex-

penses for the demolition of buildings and recultivation of land

used for operations as well as demolition obligations at former

production sites.

The provision for early retirement and severance payments covers

the Group’s forecast obligations under existing collective early

retirement agreements as part of a redundancy settlement in

connection with changes to the sugar market regime that will

come into effect in subsequent years. This item also includes

obligations under other individual agreements.

Miscellaneous other provisions were made for bonuses and

commissions, onerous contracts, outstanding invoices and other

anticipated expenses. In the reporting year, EUR 10,939,000

was reclassified to this item from other liabilities. This relates to

Other provisions

TEURAs of

29/2/2012Exchange-

rate effects Addition Utilisation ReversalAs of

28/2/2013

Recultivation obligations 6,615 53 0 252 100 6,316

Expenses for anniversaries 2,253 23 644 108 0 2,812

Partial early retirement 5,878 0 1,688 754 0 6,812

Profit sharing, bonuses and other gratuities 11,113 7 13,668 10,823 297 13,668

Early retirement, severance pay 4,639 0 109 1,670 33 3,045

Miscellaneous other provisions 60,976 -151 48,280 28,250 7,284 73,571

Other provisions 91,474 -68 64,389 41,857 7,714 106,224

provisions made in prior years for probable production levy

payments.

29. Financial liabilities

Financial liabilities are made up as follows:

Financial liabilities

TEUR 28/2/2013 29/2/2012

Liabilities to banks 70,050 255,577

Liabilities from finance leases 634 748

Financial liabilities 70,684 256,325

As of 28 February 2013, liabilities to banks have the following

term structure:

Liabilities to banks

TEURRemaining term of up to one year

Remaining term of one to five years

Remaining term of more than five years Total

28/2/2013 66,013 0 4,037 70,050

29/2/2012 167,741 81,008 6,828 255,577

Interest on bank loans partly depends on certain financial indica-

tors, such as the equity ratio and EBITDA in relation to debt and

interest expense.

On 17 June 2011 a syndicated loan was taken out for a period of

five years to secure Nordzucker AG’s access to liquidity.

Notes 95

The syndicated loan is available to fund short-term operating

business and includes a revolving credit for EUR 465,000,000, of

which EUR 395,892,000 (previous year: EUR 365,000,000) had

not been used in the reporting year.

Further bilateral credit lines were also available as of the reporting

date, of which EUR 47,727,000 (previous year: EUR 44,957,000)

had not been used.

In the financial year, Nordzucker did not pledge any financial

assets within the meaning of IFRS 7.14 as collateral for financial

liabilities.

30. Trade payables

Trade payables are made up as follows:

Trade payables

TEUR 28/2/2013 29/2/2012

Liabilities towards sugar beet suppliers 393,530 326,752

Other trade payables 71,895 128,370

Trade payables 465,425 455,122

31. Liabilities towards related parties

Liabilities towards related parties are made up as follows:

Liabilities towards related parties

TEUR 28/2/2013 29/2/2012

Liabilities towards associated companies and joint ventures 5,500 5,500

Liabilities towards other related parties 16,246 11,498

Liabilities towards related parties 21,746 16,998

EUR 5,500,000 of the item (previous year: EUR 5,500,000) is non-

current.

Liabilities towards related parties have been classified under other financial liabilities and liabilities towards related parties.

32. Other financial liabilities

Other financial liabilities are made up as follows:

Other financial liabilities

TEUR 28/2/2013 29/2/2012

Negative fair value of derivatives 2,615 13,002

Miscellaneous financial liabilities 4,061 4,079

Other financial liabilities 6,676 17,081

Of total other financial liabilities, EUR 294,000 (previous year:


With the exception of derivatives, the other financial liabilities are

classified as other financial liabilities and liabilities towards related parties. The negative fair values of derivatives are carried in the

derivatives class of financial instruments.

33. Other liabilities

Other liabilities are made up as follows:

Other liabilities

TEUR 28/2/2013 29/2/2012

Outstanding social security contributions 23,279 19,700

Investment grants, subsidies and other support payments 11,584 16,897

Deferrals 3,852 5,452

Advance payments received for orders 95 222

Miscellaneous other liabilities 11,312 29,170

Other liabilities 50,122 71,441

Of total other liabilities, EUR 12,555,000 (previous year:


Liabilities from investment grants, subsidies and other support

payments derive from public subsidies in connection with the

purchase or production of subsidised property, plant and equip-

ment. They are reversed through profit and loss over the useful

life of the subsidised assets.

Miscellaneous other liabilities mainly consist of liabilities towards

staff for outstanding wages and salaries.


Notes to the consolidated cash flow statement

34. Components of cash and cash equivalents

The components of cash and cash equivalents are the same as in

the balance sheet. They consist of liquid funds that are available

at any time.

No cash or cash equivalents disclosed in the consolidated cash flow statement were used for bank guarantees or escrow pay-

ments for warranties.

35. Non-cash transactions

No significant non-cash transactions took place for financing and

investing purposes in the reporting year and the previous year.

Other disclosures

36. Other disclosures on financial instruments

Financial instruments are defined as contracts that give rise to a

financial asset for one entity and a financial liability or equity in-

strument for the counterparty.

In this context, financial assets include cash and cash equivalents,

contractual rights to receive cash or other financial assets such

as trade receivables, derivative financial instruments and equity

instruments of another company. Financial liabilities include con-

tractual obligations to deliver cash or other financial assets. These

include borrowing, current loans, trade payables and derivatives.

The following presentation provides information about the carry-

ing amounts of the individual measurement categories. It also

shows the fair value for each class of financial instrument. The

presentation enables a comparison between carrying amounts

and fair values.

For cash and other current primary financial instruments, i.e. trade

receivables, financial assets, derivative financial instruments, and

other receivables and liabilities, the fair value and the carrying

amount on each balance sheet date are the same.

The Nordzucker Group does not make use of the fair value

option. As of the balance sheet date, there are also no financial

instruments in the category “held to maturity”.

Net income from financial instruments – classified under the

measurement categories defined in IAS 39 and listed under Note

3.8 – results from changes in fair value, write-downs, write-backs

and disposals. Also included are interest income and expense and

other earnings components from financial instruments not held at

fair value through profit and loss.

Net interest includes interest income of EUR 411,000 (previous

year: EUR 1,826,000) and interest expense of EUR 7,174,000

(previous year: EUR 30,289,000) from financial instruments not

measured at fair value through profit and loss.

In the reporting period there was no interest income from im-

paired financial assets.

37. Risk management

37.1. General remarksNordzucker has a comprehensive system in place throughout

the company for the early identification and permanent moni-

toring of risk as well as for risk measurement and limitation. The

integrated risk management system is used to identify risks and

the appropriate steps fully and to include them in operational

and strategic planning. Potential risks such as default and credit

risks, liquidity, exchange-rate and interest-rate risks are assessed

permanently as part of risk management, whereby appropriate

steps are developed and implemented. Operating and strategic

decision making always takes risk aspects into account. The

Group-wide reporting and controlling system ensures that all

the responsible decision-makers are continually informed.

By the nature of its business, the Nordzucker Group is exposed

to default and credit risks, liquidity and exchange-rate risks and

interest-rate risks. These are controlled by means of suitable risk

management processes. The Nordzucker Group uses derivative

financial instruments to hedge against interest- and exchange-rate

fluctuations and to hedge costs of raw materials. The use of these

derivatives is governed by Group guidelines and restricted to the

hedging of existing transactions or those which are sufficiently

likely to take place. The guidelines define the individuals respon-

sible, the limits and reporting, and stipulate a strict separation be-

tween trading and clearing. This transparent and functional man-

ner of organising risk management processes applies to all types

of risk.

37.2. Default riskCredit or default risk is the risk that business partners do

not meet their contractual payment obligations, causing the

Nordzucker Group to suffer a loss as a result. As part of credit

risk management, business partners are subject to a credit scor-

ing in order to reduce credit risk. Identifiable default risks are

Notes 97

Assets

Valuation Total 29/2/2012 Nominal value Amortised cost Fair value

Valuation categoryCash & cash equivalents/

cash reserve Loans and receivablesAvailable-for-sale

financial assets (AFS)Held for trading

(FVTPL-HFT) Derivatives in hedging

relationships under IAS 39

TEUR At cost Fair value At cost Fair value At cost Fair value At cost Fair value At cost Fair value At cost Fair value

Financial investments 20,429 10 0 0 70 0 20,359 10 0 0 0 0

Financial assets and other receivables 5,721 0 0 0 5,721 0 0 0 0 0 0 0

Trade receivables 194,423 0 0 0 194,423 0 0 0 0 0 0 0

Derivatives 0 7,695 0 0 0 0 0 0 0 5,910 0 1,785

Cash and cash equivalents 7,407 0 7,407 0 0 0 0 0 0 0 0 0

Total 227,980 7,705 7,407 0 200,214 0 20,359 10 0 5,910 0 1,785

Equity and liabilities

Valuation Total 29/2/2012 Amortised cost Fair value

Valuation categoryFinancial liabilities valued at

amortised costDerivatives in hedging

relationships under IAS 39Held for trading

(FVTPL-HFT)Fair value option

(FVTPL-FVO)

TEUR At cost Fair value At cost Fair value At cost Fair value At cost Fair value At cost Fair value

Financial liabilities 256,325 0 256,325 0 0 0 0 0 0 0

Trade payables 455,122 0 455,122 0 0 0 0 0 0 0

Other financial liabilities and liabilities towards related parties 21,077 0 21,077 0 0 0 0 0 0 0

Derivatives 0 13,002 0 0 0 1,228 0 11,774 0 0

Total 732,524 13,002 732,524 0 0 1,228 0 11,774 0 0

Overview by category and by class of financial instruments for the previous year (2011/2012) Nordzucker AG, Braunschweig, Germany


Assets





(FVTPL-HFT) Derivatives in hedging






Derivatives 0 7,695 0 0 0 0 0 0 0 5,910 0 1,785


Total 227,980 7,705 7,407 0 200,214 0 20,359 10 0 5,910 0 1,785







(FVTPL-FVO)



Trade payables 455,122 0 455,122 0 0 0 0 0 0 0


Derivatives 0 13,002 0 0 0 1,228 0 11,774 0 0

Total 732,524 13,002 732,524 0 0 1,228 0 11,774 0 0

Notes 99

Assets





(FVTPL-HFT)Derivatives in hedging






Derivatives 0 5,033 0 0 0 0 0 0 0 2,038 0 2,995


Total 263,384 5,033 11,297 0 228,614 0 23,473 10 0 2,038 0 2,995







(FVTPL-FVO)



Trade payables 465,424 0 465,424 0 0 0 0 0 0 0


Derivatives 0 2,615 0 0 0 7 0 2,608 0 0

Total 561,914 2,615 561,914 0 0 7 0 2,608 0 0

Overview by category and by class of financial instrumentsfor the financial year 2012/2013 Nordzucker AG, Braunschweig, Germany


Assets





(FVTPL-HFT)Derivatives in hedging






Derivatives 0 5,033 0 0 0 0 0 0 0 2,038 0 2,995


Total 263,384 5,033 11,297 0 228,614 0 23,473 10 0 2,038 0 2,995







(FVTPL-FVO)



Trade payables 465,424 0 465,424 0 0 0 0 0 0 0


Derivatives 0 2,615 0 0 0 7 0 2,608 0 0

Total 561,914 2,615 561,914 0 0 7 0 2,608 0 0

Notes 101

29/2/2012 From subsequent valuation

TEUR From interest

From dividends

At fair value

Currency conversion Write-down Write-back Disposal

Net income/loss 2011/2012

Cash and cash equivalents/cash reserve 1,167 0 0 0 0 0 0 1,167

Loans and receivables 659 0 0 -773 -907 2 0 -1,019

Available-for-sale financial assets (AFS) -613 3,471 -2,587 0 0 0 0 271

Held-for-trading financial instruments (FAHFT and FLHFT) 0 0 2,116 0 0 0 0 2,116

Financial liabilities held at amortised cost (FLAC) -29,676 0 0 0 0 0 0 -29,676

Total -28,463 3,471 -471 -773 -907 2 0 -27,141


TEUR From interest

From dividends

At fair value



Cash and cash equivalents/cash reserve 329 0 0 0 0 0 0 329

Loans and receivables 82 0 0 236 -562 104 0 -140

Available-for-sale financial assets (AFS) 3 4,713 930 0 0 0 0 5,646

Held-for-trading financial instruments (FAHFT and FLHFT) 0 0 -2,582 0 0 0 0 -2,582


Total -6,799 4,713 -1,652 236 -562 104 0 -3,960

Overview of the net earnings from financial instruments Nordzucker AG, Braunschweig, Germany



TEUR From interest

From dividends

At fair value



Cash and cash equivalents/cash reserve 1,167 0 0 0 0 0 0 1,167

Loans and receivables 659 0 0 -773 -907 2 0 -1,019

Available-for-sale financial assets (AFS) -613 3,471 -2,587 0 0 0 0 271

Held-for-trading financial instruments (FAHFT and FLHFT) 0 0 2,116 0 0 0 0 2,116


Total -28,463 3,471 -471 -773 -907 2 0 -27,141


TEUR From interest

From dividends

At fair value



Cash and cash equivalents/cash reserve 329 0 0 0 0 0 0 329

Loans and receivables 82 0 0 236 -562 104 0 -140

Available-for-sale financial assets (AFS) 3 4,713 930 0 0 0 0 5,646

Held-for-trading financial instruments (FAHFT and FLHFT) 0 0 -2,582 0 0 0 0 -2,582


Total -6,799 4,713 -1,652 236 -562 104 0 -3,960

Notes 103

accounted for by write-downs, whereby the risk of default on

receivables is in part limited by trade credit insurance.

The Nordzucker Group does not see itself as exposed to a signifi-

cant credit risk from any individual counterparty. As the customer

structure for the Nordzucker Group is diverse, there is only a limit-

ed concentration of credit risk. There is therefore no special moni-

toring and management on the basis of specific risk categories to

avoid a concentration of risk.

The maximum default risk is equal to the carrying amounts for the

individual categories of financial assets, less all write-downs, and

irrespective of any agreements to reduce risk. (See overview of

classes and categories of financial instruments.)

In the reporting period there were no financial assets which

would have become overdue and/or impaired had the contrac-

tual terms not been renegotiated.

For the portion of the receivables portfolio which has neither

been written down nor is overdue, there is no indication as of

the reporting date that the Nordzucker Group’s debtors will not

fulfil their payment obligations.

The following table shows total carrying amounts, the carrying

amounts for financial assets which are neither overdue nor im-

paired and the term structure of financial assets which are not

impaired but overdue, for the relevant classes of financial instru-

ments:

The total carrying amount of financial instruments in the classes

financial investments, financial assets, and other receivables and

trade receivables before impairment is EUR 254,145,000 (previ-

ous year: EUR 224,122,000). Write-downs of EUR 2,059,000

(previous year: EUR 3,540,000) were made.

In the current and previous reporting period the Nordzucker

Group has neither pledged nor sold collateral within the meaning

of IFRS 7.15.

37.3. Liquidity riskLiquidity risk is the risk that the company cannot meet its pay-

ment obligations at the contractually agreed time. To ensure the

Nordzucker Group’s liquidity, the liquidity needs are monitored

and planned centrally. Sufficient cash is held to be able to meet

all obligations when they are due. Current lines of credit, which

can be drawn down as needed, provide additional liquidity.

The following table shows contractually agreed (undiscounted)

interest and capital repayments for the primary financial liabilities

and for derivative financial instruments.

Term structure of financial assetsNot written down as of the reporting date

and overdue as follows:

TEUR

As of 28/2/2013

Total carrying amount

Neither written down nor over-

due as of the reporting date

Less than 30 days

Between 31 and 60

days

Between 61 and 90

days

Between 91 and 180

daysMore than

181 days

Financial investments 23,537 23,537 0 0 0 0 0

Financial assets and other receivables 16,125 16,125 0 0 0 0 0

Trade receivables 212,424 191,083 15,143 1,535 1,316 1,271 2,076

Total 252,086 230,745 15,143 1,535 1,316 1,271 2,076

As of 29/2/2012

Financial investments 20,439 20,439 0 0 0 0 0

Financial assets and other receivables 5,721 5,721 0 0 0 0 0

Trade receivables 194,422 157,703 23,524 830 1,957 9,866 542

Total 220,582 183,863 23,524 830 1,957 9,866* 542

*) The receivables are offset by corresponding liabilities, which were applied after the reporting date.


The term-to-maturity analysis includes all instruments held for

which payments have been contractually agreed as of the report-

ing date. Forecast payments on expected future liabilities are not

included. Floating-rate interest payments on financial instruments

are determined using the last interest rates set before the balance

sheet date. Financial liabilities repayable at any time are categor-

ised according to their estimated repayment dates.

37.4. Market risksMarket risks arise from potential changes in risk factors, which

lead to fluctuations in market values or alterations in future cash flows. The relevant risk factors for the Nordzucker Group are

exchange-rate and interest-rate fluctuations.

a. Exchange-rate riskDue to its business operations in different countries which are

not part of the Eurozone, the Nordzucker Group is exposed to

an exchange-rate risk.

IFRS 7 requires the disclosure of a sensitivity analysis to illustrate

the dimensions of exchange-rate risks. A sensitivity analysis shows

the effects which changes in given exchange rates would have on

profit and loss and equity for the Nordzucker Group as of the re-

porting date. The effects are determined by applying a hypothet-

ical change of 10 per cent in the exchange rates to the amount

of the relevant items in foreign currencies (the net risk position in

the foreign currency) as of the reporting date. It is assumed that

the exposure at year-end is representative of the whole year.

The net risk position is adjusted for planned transactions within

the next twelve months and for existing hedging instruments

(even if no hedge accounting takes place in accordance with

IAS 39).

Foreign currency positions in Danish Crowns and Lithuanian Litas

are only exposed to an insignificant exchange-rate risk as these

states are part of the European Union’s exchange-rate mecha-

nism. The exchange-rate risk from foreign currency positions in

US Dollars is also insignificant as the amounts are minor and are

hedged directly.

Furthermore, the Nordzucker Group hedges a large proportion

of actual currency risks using the natural hedge approach and by

using derivatives, so that the remaining net risk exposure is insig-

nificant.

b. Interest-rate riskDue to its borrowing activities, the Nordzucker Group is exposed

to interest-rate risk. Financing is arranged in various currency areas,

although the most frequent currency is the Euro. Interest-rate

risks from financing activities denominated in Hungarian Forints,

Swedish Crowns, Lithuanian Litas, Polish Zloty or Danish Crowns

are insignificant as the amounts involved are minor.

As of the reporting date, Group companies hold a total of EUR

65.2 million (previous year: EUR 256.3 million) in interest-bearing

or interest-rate-sensitive instruments. They consist exclusively of

Term to maturity

TEUR

As of 28/2/2013Carrying amount

Gross inflow/ outflow

Term to maturity up to one year

Term to maturity from one to 5 years

Term to maturity more

than 5 years

Financial liabilities 70,684 -71,359 65,284 0 6,075

Trade payables 465,425 -465,425 465,425 0 0

Other financial liabilities and liabilities towards related parties 25,806 -25,806 20,306 5,500 0

Derivative financial liabilities 2,615 -2,615 2,615 0 0

Derivative financial assets 5,033 5,033 5,033 0 0

Total 569,563 -560,172 558,663 5,500 6,075

As of 29/2/2012

Financial liabilities 256,325 -265,666 172,998 84,871 7,797

Trade payables 455,122 -455,122 455,122 0 0

Other financial liabilities and liabilities towards related parties 21,077 -21,077 15,577 5,500 0

Derivative financial liabilities 13,002 -13,002 13,002 0 0

Derivative financial assets 7,695 7,695 7,695 0 0

Total 753,221 -747,172 664,394 90,371 7,797

Notes 105

accounting purposes in line with IAS 39. As of the reporting

date, the Nordzucker Group had not taken out any interest-

rate derivatives, since based on its financial planning it could

not identify any exposure to interest-rate risk as of this date.

The previous year, interest-rate swaps with a total nominal value

of EUR 196.6 million were in place to hedge the interest-rate

risk. The corresponding market value the previous year was

EUR -1,228,000.

It is generally assumed that the hedged transactions will

actually take place. If a hedging transaction is cancelled, the

amounts accumulated in other comprehensive income during

the term of the transaction are reversed when the hedged item

is recognised in profit and loss or if it no longer takes place.

In addition to the natural hedge approach for Poland and Sweden,

the gross positions are hedged to reduce exchange-rate risk.

Exchange-rate risks are also hedged by means of appropriate

derivatives such as currency futures – including for periods of

less than a year.

As of the balance sheet date, the Group holds derivatives

aimed at hedging currency risks and price risks for sugar

and energy (CO2). The following table provides an overview

of the derivative financial instruments used in the Group

and their market values:

floating-rate instruments (previous year: EUR 244.6 million). The

previous year, an additional EUR 11.7 million related to fixed-rate

instruments.

In accordance with IFRS 7, interest-rate risks are illustrated using

sensitivity analyses. The sensitivity analysis determines the effect

of a change in market interest rates on profit and loss and equity

as of the reporting date.

In contrast to the previous year, the Nordzucker Group had no

cash flow hedges to hedge the interest-rate risk of floating-rate

instruments as of the reporting date, since these funds are sched-

uled to be repaid shortly and no further loans are to be taken out

at floating rates of interest thereafter. In view of the remaining

duration of the derivatives, a hypothetical change in the

relevant interest rates for floating-rate instruments of +/- 50 basis

points would therefore not have a significant effect in relation

to the Group’s equity and net interest.

c. Hedging transactionsThe Nordzucker Group uses derivative financial instruments

solely to hedge interest-rate and exchange-rate risks as well

as price risks for raw materials.

As a rule, the existing interest-rate risk for floating-rate loans is

reduced by means of interest-rate derivatives. All interest-rate

derivatives are designated as cash flow hedges for hedge

In the reporting period, EUR 930,000 (previous year: EUR

-2,587,000) was recognised in equity.

A fair value hierarchy is to be established for the measurement of

financial instruments at fair value, which categorises the inputs into

three levels. Measurement at level 1 is based on quoted prices on

active markets, which are used directly. Measurement at level 2

uses prices derived from quoted prices on active markets. Indi-

vidual measurement parameters are used for measurement at

Derivative financial instruments 2012/2013

TEURNominal

value

Total market

value

Market value assets

Market value

liabilities

Currency-related transactionsforward exchange contracts 186,388 -125 982 -1,107

Currency swaps 321,293 2,747 2,995 -248

Commodity price-related transactionsSugar future 41,520 -455 1,056 -1,511

Total 549,201 2,167 5,033 -2,866

All derivatives mature within one year.

Derivatives with market values of EUR 2,995,000 (assets) and EUR

7,000 (liabilities) are not held for trading. A sensitivity analysis

for the market values in the balance sheet would not produce a

significant effect in relation to the Group’s equity and earnings.

The effective portion of changes in the market value of cash flow

hedges is recognised in equity without effect on profit and loss.


39. Related party transactions

For the Nordzucker Group, related parties within the meaning of IAS 24

are individuals and companies which control the Group or exercise

significant influence over it or are controlled or significantly influenced

by the Group. The first category includes the active members of the

Executive Board and Supervisory Board of Nordzucker AG and its

majority shareholder Nordzucker Holding Aktiengesellschaft. The

subsidiaries, parent company, associated companies and joint ven-tures in the Nordzucker Group are also defined as related parties.

Receivables from and liabilities towards related parties are based

on arm’s length transactions.

The following commercial relationships existed with related parties

in addition to those existing with fully consolidated subsidiaries:

Related party transactions

TEUR 28/2/2013 29/2/2012

Balance sheet Receivables from related parties 4,263 233

Liabilities towards related parties 21,745 16,997

TEUR1/3/2012-

28/2/20131/3/2011- 29/2/2012

Income statement Services provided to related parties 391 107

Net financial income/loss -822 -216

Receivables from related parties of EUR 4,105,000 (previous year:

EUR -5,693,000) were owed almost exclusively by Nordzucker

Holding Aktiengesellschaft, Braunschweig.

Liabilities towards related parties consist mainly of EUR 5,500,000

(previous year: EUR 5,500,000) owed to MEF Melasse-Extraktion

Frellstedt GmbH, Frellstedt, EUR 6,150,000 (previous year: EUR

3,628,000) to Union-Zucker Südhannover Gesellschaft mit be-

schränkter Haftung, Nordstemmen, EUR 3,542,000 (previous

year: EUR 1,966,000) to Nordharzer Zucker Aktiengesellschaft,

Schladen, and for the first time, EUR 3,339,000 to SWEETGREDI-

ENTS GmbH & Co. KG, Nordstemmen.

Nordzucker Holding Aktiengesellschaft, Union-Zucker Südhannover

Gesellschaft mit beschränkter Haftung and Nordharzer Zucker Aktien-

gesellschaft are shareholders of Nordzucker AG; the liabilities relate

to current accounts. The remaining liabilities relate to other related

parties and stem largely from loans and trade in goods and services.

The provision of services for related companies concerns Nord-

zucker Holding Aktiengesellschaft, Braunschweig, and the net

financial result is from associated companies and joint ventures.

level 3. The Nordzucker Group measures financial instruments on

the basis of level 2 inputs.

The Group does not measure the derivatives itself. The fair value

calculation (mark to market) is carried out by the contracting

banks using recognised mathematical models and existing market

data (measurement level 2).

38. Significant subsidiaries and joint ventures

Significant subsidiaries and joint ventures Group stake

Central Europe region

NORDZUCKER GmbH & Co. KG, Braunschweig 100 %

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

Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig 70 %

Northern Europe region

Nordic Sugar A/S, Copenhagen, Denmark 100 %

Nordic Sugar AB, Malmö, Sweden 100 %

Suomen Sokeri OY, Kantvik, Finland 80 %

Sucros OY, Säkvlä, Finland 80 %

AB Nordic Sugar Kėdainiai, Vilnius, Lithuania 71 %

Nordzucker Ireland Limited, Dublin, Ireland 100 %

Eastern Europe region

Považský cukor a.s., Trenčianska Teplá, Slovakia 97 %

Nordzucker Polska S.A., Przeżmierowo, Poland 99 %

Joint ventures

NP Sweet A/S, Copenhagen, Denmark 50 %

MEF Melasse-Extraktion Frellstedt GmbH, Frellstedt, Germany 50 %

The list of Nordzucker AG’s and the Group’s equity investments

is filed with and published in the electronic edition of the Ger-

man Federal Gazette (Elektronischer Bundesanzeiger).

The following trading companies, structured as limited partner-

ships (GmbH & Co. KG),

● NORDZUCKER GmbH & Co. KG, Braunschweig ● fuel 21 GmbH & Co. KG, Klein Wanzleben ● Norddeutsche Flüssigzucker GmbH & Co. KG, Braunschweig

are exempt from the obligation to prepare annual financial state-

ments in accordance with the regulations applicable to compan-

ies with limited liability pursuant to Sec. 264b HGB (German

Commercial Code).

Notes 107

41. Other financial obligations

The Group’s other financial obligations are made up as follows:

Other financial obligations

TEUR 28/2/2013 29/2/2012

Purchase commitments for property, plant and equipment

21,463 15,448

Maintenance obligations 0 0

Finance leases 815 985

Operating leases/rent 12,614 7,594

Other financial obligations 34,892 24,027

As of 28 February 2013, total future payment obligations from

rental and lease contracts are made up as follows:

40. Contingent liabilities

The Group has the following contingent liabilities:

Contingent liabilities

TEUR 28/2/2013 29/2/2012

Liabilities for securities 1,395 1,288

As of 28 February 2013, items of property, plant and equipment

held at EUR 0 (previous year: EUR 42,214,000) have been

pledged as collateral for liabilities.

Rental and leasing agreements

TEURRemaining term

of up to one yearRemaining term

of one to five years

Remaining term of more

than five years Total

Future payments for finance leases 152 558 105 815

Future payments for operating leases 3,903 7,740 971 12,614

Finance leases

TEURRemaining term

of up to one yearRemaining term

of one to five years

Remaining term of more

than five years Total

Principal 123 495 103 721

Interest 29 63 2 94

Payment 152 558 105 815

As of 28 February 2013, future payments under finance leases are

as follows:

42. Auditors’ fees

Companies in the Nordzucker Group purchased services for EUR

352,000 from Ernst & Young GmbH in connection with the statu-

tory audit of financial statements for the Nordzucker Group and

Nordzucker AG, as well as tax advisory services for EUR 136,000

and other services for EUR 412,000.


Ulf Gabriel, electrician, Banteln

Dieter Woischke, electrician, Algermissen, Vice Chairman

Marina Strootmann, Industrial clerk, Chair of the Works Council, Nordzucker AG, Braunschweig

The members of the Executive Board in the financial year

2012/2013 were as follows:

Hartwig Fuchs, Hamburg, Chief Executive Officer

Axel Aumüller, Oelber a.w.W., Chief Operating Officer

Mats Liljestam, Höllviken, Sweden, Chief Marketing Officer

Dr Niels Pörksen, Limburgerhof, Chief Agricultural Officer

Dr Michael Noth, Braunschweig, Chief Financial Officer

44. Remuneration report

In the following section the principles of remuneration for

members of the Executive Board and Supervisory Board will be

explained together with disclosures on shares held by members

of the Executive Board and Supervisory Board.

44.1. Remuneration of the Executive BoardThe structure and amount of Executive Board remuneration are

determined and regularly reviewed by the full Supervisory

Board following a proposal from the Human Resources Commit-

tee of the Supervisory Board.

The criteria for determining the remuneration of individual

Executive Board members are their responsibilities, personal

performance, the economic situation, business success, future

prospects, sustainable corporate development and also the ex-

tent to which the remuneration is generally accepted considering

the sphere of comparison and remuneration structures applicable

elsewhere in the company.

The total remuneration of Executive Board members includes

monetary payments, benefit commitments and other commit-

ments such as the provision of a company car. The monetary

remuneration components consist of a fixed annual salary, paid

in twelve equal monthly instalments, as well as an earnings and

performance-related payment. The variable bonus can be up to

a maximum of 50 per cent of total compensation (total compen-

sation is made up of fixed annual salary and the variable bonus).

43. Supervisory Board and Executive Board

In the financial year 2012/2013 the Supervisory Board was made

up as follows:

As shareholder representatives

Hans-Christian Koehler, farmer, Barum-Eppensen, Chairman

Helmut Meyer, farmer, Betheln, Vice Chairman

Dr Harald Isermeyer, farmer, Vordorf

Gerhard Borchert, farmer, Brome

Michael Gerlif, CFO of Lekkerland AG & Co. KG, Frechen

Rainer Knackstedt, farmer, Dedeleben

Matts Eskil Rosendahl, consultant, Huddinge, Sweden

Hans-Heinrich Prüße, farmer, Lehrte-Ahlten (until 12 July 2012)

Hans Jochen Bosse, farmer, Ohrum

Dr Karl-Heinz Engel, Managing Director of Hochwald Nahrungsmittel-Werke GmbH, Riol

Dr Clemens Große Frie, CEO of AGRAVIS RAIFFEISEN AG, Münster, Hanover

Dr Hans Theo Jachmann, Managing Director of Syngenta Agro GmbH and Syngenta Germany GmbH, Maintal

Jochen Johannes Juister, farmer, Nordhastedt

Andreas Scheffrahn, farmer, Cramme

Helmut Bleckwenn, farmer, Garmissen (since 12 July 2012)

As employee representatives

Rolf Huber-Frey, businessman, Freiburg (until 12 July 2012)

Wolfgang Wiesener, metalworker, Uelzen, Vice Chairman (until 12 July 2012)

Olaf Joern, mechatronics engineer, Uelzen (since 12 July 2012)

Gerd von Glowczewski, metalworker, Schladen

Marie Lohel, energy electronics engineer, Magdeburg (since 12 July 2012)

Sigrun Krussmann, laboratory technician, Seelze

Notes 109

The structure of Executive Board remuneration is aligned with the

company’s sustainable development, as recommended by the

German Corporate Governance Code (GCGC). In consequence,

45 per cent of variable remuneration is paid as a short-term in-

centive (STI) linked to the achievement of targets for the given

financial year. The remaining 55 per cent is paid as a long-term

incentive (LTI), calculated on the basis of average performance

against targets for the past three years.

Benefit commitments made to Executive Board members in the

event that their appointment to the Executive Board ends prema-

turely are limited to the value of the remaining term of their

contract.

This results in the following remuneration for individual members

of the Executive Board for the financial year 2012/2013:

Remuneration of members of the Management Board 2011/2012

Cash payments Pensions Other1) Total

EUR SalaryVariable

annual bonus

Hartwig Fuchs 450,000 430,962 160,000 15,926 1,056,888

Axel Aumüller 341,667 327,212 125,000 28,298 822,177

Mats Liljestam 342,235 327,756 108,000 26,812 804,803

Dr Niels Pörksen 362,500 347,163 125,000 14,663 849,326

Dr Michael Noth 380,000 363,923 125,000 16,273 885,196

Total 1,876,402 1,797,016 643,000 101,972 4,418,390

1) Non-cash benefit for tax purposes, e.g. for company car etc.

Remuneration of members of the Management Board 2012/2013

Cash payments Pensions Other1) Total

EUR SalaryVariable

annual bonus

Hartwig Fuchs 460,417 455,403 160,000 15,996 1,091,816

Axel Aumüller 350,000 346,188 125,000 27,958 849,146

Mats Liljestam 350,000 346,188 108,000 26,933 831,121

Dr Niels Pörksen 380,000 375,861 125,000 14,733 895,594

Dr Michael Noth 380,000 375,861 125,000 16,172 897,033

Total 1,920,417 1,899,501 643,000 101,792 4,564,710

1) Non-cash benefit for tax purposes, e.g. for company car etc.

For the financial year 2011/2012 the members of the Executive

Board were remunerated as follows:

The pension commitments given to members of the Executive

Board are solely defined contribution commitments.

Former Executive Board members received pension payments

of EUR 752,000. Nordzucker AG has recognised provisions of

EUR 10,728,000 (previous year: EUR 9,463,000) for pension

commitments to former Executive Board members.

In the financial year 2012/2013 members of the Executive Board

received neither loans nor advances from the company.


above 5 per cent. Subject to approval at the Annual General

Meeting, the dividend for the financial year 2012/2013 will be

EUR 1.80 (previous year: EUR 1.00) per share, or 70.31 (previous

year: 39.06) per cent. The Chairman of the Supervisory Board

receives treble the fixed remuneration for a normal member while

the two Deputies and the Chairman of the Audit and Finance

Committee each receive one-and-a-half times the amount. In

addition, each member of the Supervisory Board receives EUR

300 per meeting for attendance at meetings in their capacity as

members of the Supervisory Board.

Subject to the approval of the dividend proposal at the Annual

General Meeting, the following payments will be made for the

financial year 2012/2013:

44.2. Remuneration of the Supervisory BoardThe remuneration of the Supervisory Board is based on the size

of the company, the duties and responsibilities of the members

of the Supervisory Board and the economic situation of the

company. The remuneration includes a dividend-related compo-

nent and an attendance fee, in addition to a fixed payment. The

Chairman and Deputy Chairman and the Chairman of the Audit

and Finance Committee receive additional remuneration.

The remuneration of the Supervisory Board is defined in Sec. 14

of the Articles of Association of Nordzucker AG.

According to these rules, members of the Supervisory Board re-

ceive a fixed remuneration of EUR 13,000 and a dividend-related

payment of EUR 500 for every per cent of dividend distributed

Remuneration of members of the Supervisory Board 2012/2013

EURFixed

remuneration1Variable

remuneration1Attendance

fee1 TotalTotal

previous year

Hans-Christian Koehler 39,000.00 32,656.25 16,200.00 87,856.25 62,711.58

Helmut Meyer 19,500.00 32,656.25 3,600.00 55,756.25 41,331.25

Dieter Woischke 19,500.00 32,656.25 6,900.00 59,056.25 42,831.25

Andreas Scheffrahn 19,500.00 32,656.25 9,300.00 61,456.25 41,458.03

Dr Harald Isermeyer 13,000.00 32,656.25 6,600.00 52,256.25 48,424.14

Gerhard Borchert 13,000.00 32,656.25 3,900.00 49,556.25 35,731.25

Hans Jochen Bosse 13,000.00 32,656.25 2,400.00 48,056.25 32,131.25

Dr Clemens Große Frie 13,000.00 32,656.25 2,400.00 48,056.25 33,631.25

Sigrun Krussmann 13,000.00 32,656.25 4,800.00 50,456.25 34,231.25

Dr Karl-Heinz Engel 13,000.00 32,656.25 1,500.00 47,156.25 31,231.25

Dr Hans Theo Jachmann 13,000.00 32,656.25 3,300.00 48,956.25 33,031.25

Jochen Johannes Juister 13,000.00 32,656.25 5,400.00 51,056.25 32,431.25

Gerd von Glowczewski 13,000.00 32,656.25 2,400.00 48,056.25 32,431.25

Rainer Knackstedt 13,000.00 32,656.25 3,300.00 48,956.25 33,031.25

Michael Gerlif 13,000.00 32,656.25 4,200.00 49,856.25 33,031.25

Marina Strootmann 13,000.00 32,656.25 5,100.00 50,756.25 34,231.25

Ulf Gabriel 13,000.00 32,656.25 4,800.00 50,456.25 23,133.67

Matts Eskil Rosendahl 13,000.00 32,656.25 4,500.00 50,156.25 21,328.52

Rolf Huber-Frey 4,772.60 11,988.87 1,200.00 17,961.47 31,831.25

Wolfgang Wiesener 4,772.60 11,988.87 1,800.00 18,561.47 33,931.25

Hans-Heinrich Prüße 4,772.60 11,988.87 2,400.00 19,161.47 35,731.25

Olaf Joern 8,227.40 20,667.38 1,800.00 30,694.78 -

Marie Lohel 8,227.40 20,667.38 1,800.00 30,694.78 -

Helmut Bleckwenn 8,227.40 20,667.38 1,800.00 30,694.78 -

Total 318,500.00 685,781.25 101,400.00 1,105,681.25 747,855.94

1 Does not include the VAT paid on behalf of Supervisory Board members for their work.

Notes 111

46. Events after the reporting date

The continued existence of the sugar market regime is also being

discussed in the course of reforms to the European Union’s Com-

mon Agricultural Policy (CAP). The European Commission has

proposed not to extend the sugar market regime beyond the end

of its current phase, which expires on 30 September 2015. With

regard to the “trialogue” negotiations between the three European

institutions, the European Parliament is in favour of an extension

until 2020, while the Council of Agriculture Ministers is backing

an extension until 2017.

In addition to the question of how long the sugar market regime

is to continue after October 2015, discussions are also taking

place on issuing new sugar quotas to member states who had

returned theirs after the 2006 reform and on other advantages

for traditional refinery operations.

Braunschweig, Germany, 26 April 2013

Executive Board

Hartwig Fuchs


Dr Michael Noth Dr Niels Pörksen

Furthermore, the members of the Supervisory Board are reim-

bursed for all out-of-pocket expenses incurred in the exercise

of their duties as well as for the VAT payable on their remuner-

ation and on the reimbursed expenses. The total amount of these

reimbursements, including VAT, was EUR 38,000 (previous year:

EUR 37,000).

In the financial year 2012/2013 members of the Supervisory

Board received neither loans nor advances from the company.

44.3. Shares held by members of the Executive Board and Supervisory Board

Members of the Executive Board hold no shares.

As of 28 February 2013, members of the Supervisory Board and

related parties held under 1 per cent of the issued share capital of

Nordzucker AG. The shares bear no relation to the remuneration

of the Supervisory Board.

44.4. MiscellaneousBoard members of Nordzucker AG are indemnified by Nordzucker AG

against third-party liability as allowed by law. For this purpose,

the company has taken out D&O insurance for members of the

Boards of Nordzucker AG. The insurance policy is taken out or

renewed annually and covers the personal liability of Board

members for claims for damages arising in the course of their

work. It includes an excess in accordance with Sec. 3.8 of the

German Corporate Governance Code.

45. Dividend proposal

The dividends that can be distributed to shareholders are defined

in the German Stock Corporation Act (AktG) as the net balance

sheet profit as determined under German commercial law and

disclosed in the annual financial statements of Nordzucker AG.

The annual financial statements for the financial year 2012/2013

show a net distributable profit of EUR 90,562,352.13. The Execu-

tive Board proposes to use this net distributable profit to pay a

dividend for the financial year 2012/2013 (EUR 1.80 per share

with dividend entitlement).


Shareholding

direct indirect

Shortened form % % via subsidiaries

Consolidated subsidiaries

fuel 21 GmbH & Co. KG (Stadt Wanzleben-Börde, Germany) fuel 21 100

Norddeutsche Flüssigzucker GmbH & Co. KG (Braunschweig, Germany) NFZ KG 70

NORDZUCKER SPEZIAL GmbH (Braunschweig, Germany) NZ SPEZIAL 100

NORDZUCKER GmbH & Co. KG (Braunschweig, Germany) NZ KG 100

Nordzucker Eastern Europe GmbH [in liquidation] (Vienna, Austria) NZ EE 100

Nordzucker Polska S.A. (Opalenica, Poland) NZ Polska 99.87

Cukrownia Melno S.A. [in liquidation] (Opalenica, Poland) Melno 84.32

Považský cukor a.s. (Trenčianska Teplá, Slovakia) Povazsky 96.798

Matra Cukor z.r.t. (Hatvan, Hungary) Matra 99.89

Nordic Sugar Holding A/S (Copenhagen, Denmark) NSH AS 100

Nordic Sugar A/S (Copenhagen, Denmark) NS AS 100 NSH AS

Titoconcerto AB (Malmö, Sweden) Titoconcerto 100 NSH AS

Nordic Sugar AB (Malmö, Sweden) NS AB 100 Titoconcerto

Nordic Sugar Services AB [as of 28/02/2013: Gold Cup 8590 AB] (Malmö, Sweden) NSS AB 100 NS AB

AB Nordic Sugar Kėdainiai (Kėdainiai, Lithuania) NS Kėdainiai 70.6 NS AS

Nordic Sugar UAB [in liquidation] (Vilnius, Lithuania) NS UAB 100 NS AS

Nordic Sugar Oy (Kantvik, Finland) NS Oy 100 NS AS

Sucros Oy (Säkylä, Finland) Sucros Oy 80 NS Oy

Suomen Sokeri Oy (Kantvik, Finland) Suomen Oy 80 Sucros Oy

SIA Nordic Sugar (Riga, Latvia) NS SIA 100 NS AS

Ingolf Wesenberg & Co. AS (Oslo, Norway) IW AS 50 NS AS

Nordzucker (Ireland) Limited (Dublin, Ireland) NZ Ireland 100

SugarPartners Holdings Limited [in liquidation] (Dublin, Ireland) SP Holdings 100 NZ Ireland

List of investments Nordzucker AG, Braunschweig, as of 28 February 2013

Notes 113

List of investments

Shareholding

direct indirect

Shortened form % % via subsidiaries

Associated companies accounted for using the equity method in accordance with Sec. 312 HGB

MEF Melasse-Extraktion Frellstedt GmbH (Frellstedt, Germany) MEF 50 NZ KG

Norddeutsche Zucker-Raffinerie Gesellschaft mit beschränkter Haftung (Frellstedt, Germany) NZR 50 NZ KG

NP Sweet A/S (Copenhagen, Denmark) NP Sweet 50 NSH AS

Eurosugar S.A.S. (Paris, France) ES 50

Subsidiaries not consolidated in accordance with Sec. 296 paragraph 2 German Commercial Code (HGB)

Bioethanolgesellschaft Klein Wanzleben mbH (Stadt Wanzleben-Börde, Germany) Bioethanol KW 100

Norddeutsche Flüssigzucker Verwaltungs-GmbH (Braunschweig, Germany) NFZ GmbH 70

Nordzucker Verwaltungs-GmbH (Braunschweig, Germany) NZ GmbH 100 NZ KG

SWEETGREDIENTS GmbH & Co. KG (Nordstemmen, Germany) SG KG 100 NZ NZ SPEZIAL

SWEETGREDIENTS Verwaltungs GmbH (Nordstemmen, Germany) SG GmbH 100 SG KG

NZ Erste Vermögensverwaltungsgesellschaft mbH (Braunschweig, Germany) NZ 1. VVG 100

NZ Zweite Vermögensverwaltungsgesellschaft mbH [as of 28/2/2013: Nordwestdeutsche Zucker Handelsge-sellschaft mbH] (Braunschweig, Germany) NZ 2. VVG 100

Associated companies not consolidated in accordance with Sec. 311 paragraph 2 German Commercial Code (HGB)

Nordzucker Bioerdgas GmbH & Co. KG (Braunschweig, Germany) NZ BEG KG 50

Nordzucker Bioerdgas Verwaltungs-GmbH (Braunschweig, Germany) NZ BEG GmbH 50

Other non-consolidated investments

Tereos TTD, a.s. (Dobrovice, Czech Republic) TTD 35.38


We issued the following opinion on the consolidated financial

statements and the group management report:

”We have audited the consolidated financial statements prepared

by Nordzucker AG, Braunschweig, comprising the balance sheet,

the income statement, statement of consolidated income, the

notes to the consolidated financial statements, the cash flow

statement and the statement of changes in shareholders’ equity,

together with the group management report for the fiscal year

from 1 March 2012 to 28 February 2013. The preparation of the

consolidated financial statements and the group management

report in accordance with IFRS as adopted by the EU, and the

additional requirements of German commercial law pursuant to

Sec. 315a (1) HGB are the responsibility of the parent company’s

management. Our responsibility is to express an opinion on the

consolidated financial statements and on the group management

report based on our audit.

We conducted our audit of the consolidated financial statements

in accordance with Sec. 317 HGB and German generally

accepted standards for the audit of financial statements promul-

gated by the Institut der Wirtschaftsprüfer [Institute of Public

Auditors in Germany] (IDW). Those standards require that we

plan and perform the audit such that misstatements materially

affecting the presentation of the net assets, financial position and

results of operations in the consolidated financial statements in

accordance with the applicable financial reporting framework and

in the group management report are detected with reasonable

assurance. Knowledge of the business activities and the eco-

nomic and legal environment of the Group and expectations as

to possible misstatements are taken into account in the determin-

ation of audit procedures. The effectiveness of the accounting-

related internal control system and the evidence supporting the

disclosures in the consolidated financial statements and the

group management report are examined primarily on a test basis

within the framework of the audit. The audit includes assessing

the annual financial statements of those entities included in con-solidation, the determination of entities to be included in consoli-dation, the accounting and consolidation principles used and sig-

nificant estimates made by management, as well as evaluating

the overall presentation of the consolidated financial statements

and the group management report. We believe that our audit

provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated

financial statements comply with IFRSs as adopted by the EU, the

additional requirements of German commercial law pursuant to

Sec. 315a (1) HGB and give a true and fair view of the net assets,

financial position and results of operations of the Group in accord-

ance with these requirements. The group management report is

consistent with the consolidated financial statements and as a

whole provides a suitable view of the Group’s position and suitably

presents the opportunities and risks of future development.”

Hanover, 29 April 2013

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Hentschel Janze

Wirtschaftsprüfer Wirtschaftsprüfer

[German Public Auditor] [German Public Auditor]

Auditors’ report

Notes 115

List of investments | Auditors’ report

Good corporate governance is a vital pillar of our business.

Corporate Governance

“We on the Supervisory Board of Nordzucker accompany the path chosen by our company

as a critical partner and support it fully. In addition to the ongoing dialogue with the Execu-

tive Board in matters of strategic development, we focus on monitoring the integration of

Nordic Sugar, the programme to boost efficiency and sustained maintenance and investment

in the Group’s factories.”

Hans-Christian Koehler, Chairman of the Supervisory Board

117Corporate Governance

Corporate governance covers the system of managing and moni-

toring a company, including its organisational structure, its corpor-

ate policies and guidelines as well as the internal and external

mechanisms of control and monitoring. Nordzucker AG attaches

great importance to well-structured, authentic corporate govern-

ance as it ensures that the management of the company is carried

out in the spirit of long-term value creation. It fosters the confi-

dence of shareholders, financial markets, business partners, staff

and the general public in the management and monitoring of

the Nordzucker Group.

Corporate governance is the foundation for the decision-making

and controlling processes at Nordzucker AG. The activities of

Nordzucker AG are carried out in accordance with clearly defined

guidelines. These guidelines ensure that the company’s actions

are systematically aligned with the interests and expectations

of shareholders, customers, business partners and staff.

For publicly traded companies the principles of good company

management are laid down in the German Corporate Governance Code (hereafter known as the Code). The Code consists of rec-

ommendations and suggestions for good company management

and also describes statutory obligations for publicly listed compan-

ies. Section 161 of the German Stock Corporation Act (AktG) stip-

ulates that publicly traded companies must issue an annual state-

ment on compliance with the Code’s recommendations. This

declaration relates to both past and future periods. As Nordzucker

AG is not listed on a stock exchange, it is not legally obliged to

issue a statement in accordance with Sec. 161 AktG. The Code

is intended for listed companies, but non-listed companies are

also well advised to follow its recommendations. Nordzucker AG

therefore studies the Code’s recommendations closely on a volun-

tary basis and reports at regular intervals, generally annually, on

the company’s own corporate governance. This includes making

a declaration on the recommendations of the Code, which re-

flects the contents of the statement of compliance required under

Sec. 161 AktG. To the extent that the Code refers to statutory ob-

ligations of publicly quoted companies outside the scope of its

recommendations, these are not applicable to Nordzucker AG. The

company also assumes no voluntary obligation to adhere to them.

The actions of all our staff are aimed at earning an appropriate and

sustainable profit, continually generating growth and increasing

our market share. Continuous improvement of all business pro-

cesses by competent, well-managed staff earning performance-

related pay secures the existence and the systematic long-term

Corporate Governance Report for the financial year 2012/2013development of the company in an ever-changing competitive

environment.

Meeting high standards for food and animal feed quality and safety,

conserving resources, continuously minimising and preventing

environmental damage as well as safeguarding health and safety

at work are an integral part of all Nordzucker’s activities. Particular

importance is attached to avoiding and preventing errors.

The Executive Board of Nordzucker AG is responsible for deter-

mining company policy. It sets corporate strategy, plans and ap-

proves company budgets, decides on the allocation of resources

and monitors company development. The Executive Board is also

responsible for preparing the quarterly and annual financial state-

ments for Nordzucker AG and the consolidated financial statements.

The Supervisory Board of Nordzucker AG has 21 members. Two-

thirds of the Supervisory Board members represent the share-

holders and one-third represents the workforce. The Super visory

Board monitors the Executive Board and advises it on the manage-

ment of the company. The Supervisory Board regularly discusses

the course of business and company planning as well as corporate

strategy and its implementation. It examines and approves the

annual financial statements of Nordzucker AG and the consolidated

financial statements for the Group, giving due regard to the audi-

tors’ report and the results of the examination by the Audit Com-

mittee. Major Executive Board decisions are subject to its approval.

In order to reflect recommendation 5.4.1 of the German Corporate Governance Code, the Supervisory Board decided on 10 March

2011 to take the following elements relating to its composition

into account:

l at least three Supervisory Board seats for people with a particu-

larly international background (e.g. from having worked

abroad or holding foreign citizenship);

l at least three Supervisory Board seats for people who hold no

functions at customers, farmers’ associations or other business

partners;

l at least two Supervisory Board seats for women.

At present these targets have been met.

According to the rules of procedure for the Supervisory Board,

an age limit of 65 years applies to proposals for election to the

Supervisory Board.


Declaration by Nordzucker AG on the German Corporate Governance Code in line with Sec. 161 AktG (German Stock Corporation Act)

The Executive Board and Supervisory Board of Nordzucker AG,

Braunschweig, have examined the recommendations of the German Corporate Governance Code as amended on 15 May 2012 in detail.

Although the German Corporate Governance Code is not binding

for Nordzucker AG, which is not publicly listed, the company has

complied and continues to comply with the recommendations it

contains, with the following exceptions:

1. In view of the shareholder structure, the invitation to the Annual

General Meeting and the relevant documentation are not sent

electronically (Number 2.3.2).

2. Beyond the requirements for companies that are not publicly

listed, the Supervisory Board includes two members who are

financial experts within the meaning of Sec. 100 paragraph 5

AktG. Neither of these financial experts chairs the Audit Com-

mittee, but both are members of it (Number 5.3.2).

3. Given the particular significance of agricultural expertise for the

company, conflicts of interest to which Supervisory Board mem-

bers may be subject are of secondary importance (Number 5.5.3).

4. The provision on performance-related pay for Supervisory Board

members, which has formed part of the Articles of Association

since Nordzucker AG was established, is based on the dividend

payment for a given year. It therefore does not comply with the

recommendation of the Code introduced in May 2012, by which

performance-related pay for Supervisory Board members should

be aligned with the long-term performance of the company

(Number 5.4.6). The Executive Board and Supervisory Board are

reviewing amendments to this provision and will put them for-

ward for adoption at the Annual General Meeting as appropriate.

5. As Nordzucker AG is included in the consolidated financial

statements of Nordzucker Holding Aktiengesellschaft, the latter

has a particular need for information (Number 6.3).

To the extent that the Code refers to statutory obligations of publicly

quoted companies outside the scope of its recommendations, these

are not applicable to Nordzucker AG. The company also assumes

no voluntary obligation to adhere to them. Otherwise, we refer to

the comments in the Corporate Governance Report.

Braunschweig, March 2013

Hartwig Fuchs Hans-Christian Koehler

Chief Executive Chairman of the

Officer Supervisory Board


Corporate Governance Report

In the financial year 2012/2013, the Supervisory Board continu-

ously monitored the work of the Executive Board and advised the

Executive Board on its management of the company. The Execu-

tive Board fulfilled its obligations and informed the Supervisory

Board regularly, both orally and in writing, promptly and compre-

hensively about events of importance for the company. This in-

cluded information on matters of strategy, company planning

and any divergence between actual performance and these

plans, the course of business, the current state of the company,

its strategic development, the risk position, risk management and

transactions of particular significance. The Supervisory Board held

five ordinary meetings in the financial year to discuss the com-

pany’s operating and strategic development. Furthermore, all

matters requiring the authorisation of the Supervisory Board were

presented to us for approval. After thorough review and discussion

the Supervisory Board gave its approval to the Executive Board

proposals.

In addition to the Supervisory Board meetings, the Chairman of

the Supervisory Board was in regular contact with the Executive

Board. He was informed of the current state of business and

major transactions and discussed matters of strategy, planning,

corporate development, risk exposure, risk management and

compliance affecting the company. All of the Supervisory Board’s

discussions and decisions were aimed at protecting and increasing

the company’s assets.

In the financial year 2012/2013, the Supervisory Board focused on

providing support for the company’s continued strategic devel-

opment. The Supervisory Board was kept abreast of European

and global developments and prospects for the sugar market and

their importance for Nordzucker by the Executive Board. Based

on this, the Executive Board reported to the Supervisory Board

regularly and in detail regarding Nordzucker AG’s strategic activ-

ities and initiatives, in particular at a strategy meeting held in

November 2012.

In addition, the Supervisory Board prepared the proposal put to

the Annual General Meeting on amending the Articles of Associ-

ation with respect to the remuneration of the Supervisory Board

from the financial year 2013/2014. The proposal stipulates that

a maximum of two attendance fees per day may be charged for

meetings of the Supervisory Board and its committees and that

fees may no longer be charged for other meetings. The proposed

increase in fixed remuneration for Supervisory Board members is

Report by the Supervisory Board of Nordzucker AGFinancial year 2012/2013

Hans-Christian KoehlerChairman of the Supervisory Board


intended to make up for the second part of the amendment.

Variable remuneration for Supervisory Board members is to be

aligned with sustainable company development as recommend-

ed by the German Corporate Governance Code in May 2012 and

will therefore henceforth be linked to the average dividend paid

over the previous three years. A further proposal is to cap the vari-

able remuneration at the amount of fixed salary and at the same

time to set the hurdle for obtaining the maximum variable remu-

neration sufficiently high that it is not paid as a matter of course.

Other proposals include paying members of committees, apart

from the Nomination Committee, a premium of 20 per cent on

their fixed and variable remuneration. The Chairman of the Super-

visory Board shall receive a premium of 150 per cent and the

Chairman and Deputy Chairman of the Audit and Finance Com-

mittee shall each receive a premium of 40 per cent on their fixed

and variable remuneration. This proposal is based on an analysis

of remuneration following broad market research, which includes

data from nearly 1,000 companies. Overall, the new regulations

would reduce the remuneration of the Supervisory Board com-

pared with that paid for the financial year 2012/2013.

The topics of cost-effectiveness and efficiency remain a high pri-

ority given the further adjustments that are due to be made to

the sugar market regime. The Supervisory Board therefore also

heard regular reports on the implementation of cost-cutting

measures taken as part of the company’s long-term efficiency

improvement programme and discussed these activities with the

Executive Board. The targets for the financial year 2012/2013

were met, so that the programme has again resulted in cost

savings in all areas of the company. The Supervisory Board will

continue to accompany and monitor the implementation of the

efficiency programme closely.

The Supervisory Board dealt thoroughly with Group planning for

the financial year 2012/2013, including planned capital expenditure,

mid-term planning and regular earnings forecasts for the last

financial year.

Furthermore, we discussed compliance with the recommenda-

tions and suggestions of the German Corporate Governance Code.

The Executive Board and Supervisory Board have issued an up-

dated statement of compliance in accordance with Sec. 161 AktG

(Stock Corporation Act), which has been made permanently

available to shareholders on Nordzucker AG’s website. In this

context, we report that the Supervisory Board again carried out

a review of its efficiency in accordance with 5.6 of the German Corporate Governance Code in the financial year 2012/2013.

The result of the review was that the efficiency of the Supervisory

Board’s work had been further improved by the steps taken

following the efficiency review in the financial year 2010/2011.

The Supervisory Board aims to perpetuate this trend and achieve

further efficiency gains.

The Supervisory Board welcomes the request addressed to the

Executive Board of Nordzucker AG by Nordzucker Holding

Aktien gesellschaft and Nordharzer Zucker Aktiengesellschaft

in accordance with Sec. 122 paragraph 2 (AktG) to include a

resolution on the agenda of the ordinary Annual General Meeting

of Nordzucker AG not to pursue claims against members of the

Supervisory Board of Nordzucker AG for receiving attendance fees

inconsistent with the Articles of Incorporation. In the opinion of

the Supervisory Board, it is vital for the judgement of this matter

that over a period of many years, those involved assumed that the

attendance fees were a justified and legitimate compensation for

the services those members of the Supervisory Board provided,

which in some cases were complex and required a considerable

amount of time. On this understanding, attendance fees were only

charged for meetings which actually took place, were in connec-

tion with the activity of the Supervisory Board and which were

therefore in the interest of Nordzucker AG. The great dedication

of the Supervisory Board members on this basis has made a major

contribution to the company’s strong position throughout Europe

today.

Supervisory Board committeesThe Supervisory Board has set up committees to discharge its

duties efficiently. The committees prepare the Supervisory Board

resolutions and matters for discussion by the full Supervisory

Board. The committee chairs report to the Supervisory Board on

the work of the committees at the following Supervisory Board

meeting.

The Executive Committee of the Supervisory Board met four

times in the reporting period. The Executive Committee dealt

with Nordzucker AG’s statement on the German Corporate Govern-ance Code in accordance with Sec. 161 AktG, the preparation and

analysis of the efficiency review, proposed amendments to the

Articles of Association relating to the remuneration of Supervisory

Board members and other important topics, and also prepared

the subsequent Supervisory Board meetings.

The Audit and Finance Committee met five times during the re-

porting period. The Audit and Finance Committee examined the

financial statements and management reports for Nordzucker AG

and the Group for the financial year 2011/2012 in the presence of

the auditors. Furthermore, the Audit and Finance Committee


Report by the Supervisory Board

made a recommendation to the Supervisory Board for its proposal

to the Annual General Meeting on the election of auditors for

the financial year 2012/2013. Its work also included appointing

the auditors for the financial year 2012/2013, verifying their inde-

pendence and setting their remuneration. The Audit and Finance

Committee also dealt with Group and investment planning, quar-

terly reports and the interim financial statements for Nordzucker

AG and the Group, earnings forecasts for the financial year

2012/2013, the risk management system, the effectiveness, cap-

acities and findings of the internal audit department, and the

internal control system. The examination and approval of the sep-

arate and consolidated financial statements for the past financial

year as well as the proposal for election of the auditors for the

financial year 2013/2014 were prepared at an additional meeting

outside the period under review. Separate meetings took place

between the Chairman of the Audit and Finance Committee, the

Chairman of the Supervisory Board and the auditors.

The Human Resources Committee met four times in the reporting

period. The Human Resources Committee looked at the system

of Executive Board remuneration and in particular at the arrange-

ments for the long-term performance component. Based on this,

the Human Resources Committee prepared the Supervisory Board

decisions on variable remuneration for the Executive Board members.

The Human Resources Committee also prepared the renewed

appointment of Hartwig Fuchs as Chief Executive Officer of

Nordzucker AG and the renewed appointment of Axel Aumüller as

a member of the Executive Board of Nordzucker AG.

The Supervisory Board also formed a Nomination Committee

responsible for selecting suitable candidates for the Supervisory

Board to put forward for election as shareholder representatives

at the Annual General Meeting.

Financial statements 2012/2013The Executive Board presented the financial statements for

2012/2013 and the management report for Nordzucker AG to

the Supervisory Board in good time. This also applies to the con-

solidated financial statements in accordance with IFRS, the Group

management report and the proposal for the appropriation of net

profit. Under Sec. 315a of the German Commercial Code (HGB),

these IFRS consolidated financial statements exempt the company

from the obligation to prepare consolidated financial statements

in line with German law.

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Hanover,

audited the 2012/2013 financial statements for Nordzucker AG

and its management report, the consolidated IFRS financial state-

ments and the Group management report. It issued each with an

unqualified audit opinion and presented the auditors’ reports to

the Supervisory Board in good time. These were examined thor-

oughly by the Audit and Finance Committee and the Supervisory

Board, and were discussed in detail in the presence of the auditors

following their report on the main findings of the audit. The Super-

visory Board concurs with the result of the audit and concluded

from its own examination that it has no objections to make. The

Supervisory Board approved the annual financial statements as

prepared by the Executive Board, which are thereby adopted.

The Supervisory Board also approved the Executive Board’s pro-

posal for the use of distributable profit.

Executive Board report on related partiesThe Executive Board presented the Supervisory Board with its

report on related parties (dependent company report) in the

financial year 2012/2013 in good time. The auditors audited the

dependent company report and gave the following opinion:

“On the basis of our audit and our professional judgement, we

confirm that

1. the report is factually correct,

2. the consideration paid by the company for the transactions

listed in the report was not inappropriately high.”

The dependent company report and the corresponding audit

report were sent to all the members of the Supervisory Board in

good time. They were examined thoroughly by the Supervisory

Board and discussed in detail in the presence of the auditors fol-

lowing their report on the main findings of the audit. The Super-

visory Board came to the conclusion that it approves the result of

the audit and has no objections to make in relation to the Executive

Board’s declaration on the dependent company report.

Personnel matters concerning the Supervisory BoardOn 12 July 2012, Hans-Heinrich Prüße left the Supervisory Board

of Nordzucker AG as his age prevented him from standing for re-

election. The Supervisory Board would like to thank Hans-Heinrich

Prüße for his work on the Board over many years. At the Annual

General Meeting held on 12 July 2012, farmer Helmut Bleckwenn

was elected to the Supervisory Board in place of Hans-Heinrich

Prüße, until the close of the Annual General Meeting that votes

on discharging the boards for the financial year 2016/2017. On


12 July 2012, the Annual General Meeting also re-elected farmer

Hans-Christian Koehler, farmer Rainer Knackstedt and farmer

Andreas Scheffrahn to the Supervisory Board until the close of

the Annual General Meeting that votes on discharging the boards

for the financial year 2016/2017.

Rolf Huber-Frey and Wolfgang Wiesener also stepped down from

the Supervisory Board of Nordzucker AG as of 12 July 2012. The

Supervisory Board would also like to thank Rolf Huber-Frey and

Wolfgang Wiesener for their work on the Board over many years.

On 19 June 2012, Ulf Gabriel, Gerd von Glowczewski, Sigrun

Krussmann, Marina Strootmann and Dieter Woischke were re-elected

and Olaf Joern and Marie Lohel were elected anew to the Supervisory

Board as employee representatives for a period of five years.

In its constitutive meeting on 12 July 2012 the Supervisory Board

elected Hans-Christian Koehler as its Chairman. The shareholder

representative Helmut Meyer and the employee representative

Dieter Woischke were elected as Deputy Chairmen. At its consti-

tutive meeting the Supervisory Board also elected Michael Gerlif,

Dr Harald Isermayer, Jochen Johannes Juister, Andreas Scheffrahn,

Sigrun Krussmann and Dieter Woischke as members of the Super-

visory Board Executive Committee. The Supervisory Board elected

Dr Harald Isermeyer and Dieter Woischke to the Human Resources

Committee. The Supervisory Board appointed Gerhard Borchert,

Dr Harald Isermeyer, Dr Hans Theo Jachmann and Helmut Meyer

to the Nomination Committee. Hans-Christian Koehler is Chairman

of the Supervisory Board and therefore a member and Chairman

of the Supervisory Board Executive Committee, the Human Re-

sources Committee and the Nomination Committee. In addition,

the Supervisory Board elected Michael Gerlif, Matts Eskil Rosen-

dahl, Andreas Scheffrahn, Ulf Gabriel and Marina Strootmann to

the Audit and Finance Committee. Andreas Scheffrahn was elected

as Committee Chairman.

The Supervisory Board would like to thank the Executive Board

and all the staff for their personal and highly successful commit-

ment.

Braunschweig, Germany, 23 May 2013

Hans-Christian Koehler

Chairman of the Supervisory Board


Report by the Supervisory Board

FinanceCash flow Net inflow of funds. Difference between receipts and spending expenses within one accounting period. For the sake of simplicity, the cash flow is determined on the basis of net income, plus non-spending expenses, in particular write-downs and changes in non-current pro visions . The cash flow is available to the company for investment, repayment of liabil ities and distribution of profits.

Consolidation The Group accounts are drawn up as if all Group mem-ber companies formed one uniform company in law. All expenditures and earnings as well as all interim trade results and other transactions between the Group members are eliminated by way of offsetting (expense and result as well as interim result consolidation). Stakes held in Group companies are set off against their equity capital (capital consolidation), and all intra-Group receivables and liabilities are elim-inated (debt consolidation) because such legal relationships do not exist within a legal entity. Summation and consolidation of the remain-ing items of the annual financial statements result in the consolidated balance sheet and the consolidated income statement.

Declaration of compliance Annual declaration made and published by the Executive and Supervisory Boards of listed companies in accordance with Sec. 161 AktG (German Stock Corporation Act), stating to which extent the company management complies with the recommen dations of the Commission of the German Corporate Governance Code and which recommendations are not applied.

Dividend The amount of a stock corporation’s net income apportioned to each individual share. Dividends are either expressed as a percent-age of the par value or as a currency amount per share (earnings per share). The Annual General Meeting votes on the distribution of the dividends. Dividends are paid out on an annual basis in Germany.

EBIT (earnings before interest and taxes) This figure supplies informa-tion on the results of current operations. Differences in capitalisation are not accounted for, therefore the general interest-rate level and tax rates are not considered.

EBITDA (‚earnings before interest, taxes, depreciation and amortisati-on‘) This key indicator is a way of measuring operating performance before capital expenditure.

Equity method An accounting method in which shares in a company are initially recognised at cost and subsequently adjusted to reflect the shareholders’ interest in the net assets of the investee company.

Equity ratio A financial indicator describing the relationship between shareholders’ equity and total assets.

Finance lease In contrast to an operating lease, the lessor transfers the risk of the investment and thereby the economic ownership of the asset to the lessee.

German Corporate Governance Code Guidelines formulated in 2002 on the management and supervision of German companies listed on the stock exchange. The German Corporate Go v ernance Code out-lines nationally and inter nationally accepted standards of responsible business management, which primarily aim at transparency and clar-ity. The Code defines the responsibility of Executive and Supervisory Boards and sets forth or makes recommendations on how to protect

the rights of shareholders, how executive and supervisory bodies should be filled and how their members should be remunerated . Non-listed companies are also recommended to comply with the Corporate Governance Code.

Hedge accounting under IAS 39 Refers to the way in which two or more contracts (or financial instruments) between which hedging relationships exist are recognised in the balance sheet. This method differs from conventional accounting methods.

IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) are accounting standards that render balance sheet and disclosure methods comparable on a global scale. These accounting standards have been compulsory for listed companies in Germany and throughout the EU since the beginning of 2005.

Impairment test This test must be conducted regularly according to IFRS in order to verify the valuation of non-current assets. It may result in the recognition of impairment.

Interest-rate swap Contractual agreement on the swap of interest cash flows at specific points in time according to a basic notional principal. Interest -rate swaps enable variable interest-rate agreements to be converted to fixed interest rates.

International Accounting Standards Board (IASB) is an independent international committee of accounting experts that develops and revises International Financial Reporting Standards (IFRS) as needed.

International Financial Reporting Interpretations Committee (IFRIC) is the name of a group within the International Accounting Standards Committee Foundation (IASC). The job of IFRIC is to publish interpret-ations of IFRS and IAS accounting standards in cases where it becomes apparent that the standard is capable of being interpreted differently or incorrectly or when new circumstances emerge which have not been dealt with fully in the previous standards.

Joint venture A cooperation between companies in which a new, legally independent business unit is created in which the founding companies (two or more) invest capital. In addition to capital, the founding com-panies generally contribute a sig nificant amount of technology, intellectual property rights, technical or other expertise and operating equipment.

Natural hedge approach Minimising currency risks by financing foreign-currency investments in the same currency, for example.

Net debt Financial liabilities minus cash and cash equivalents.

Operating lease A lease is classified as an operating lease under IFRS if it does not transfer essentially all the risks and rewards of ownership of the leased asset.

Registered share The subscribed share capital of Nordzucker AG is divided into registered shares with a nominal value of EUR 2.56 each.

Return on equity A figure which shows the profitability of capital employed and is calculated by dividing net income for the year by shareholders’ equity.

Return on revenues A financial indicator obtained by dividing net in-come for the year by revenues and enabling an analysis of a com-pany’s profitability .

Glossary


Syndicated loan Lending by several banks (syndicate) on the basis of standardised contract documents and identical terms and conditions.

Total profitability This indicator is calculated by dividing EBITDA (earnings before interest, taxes, depreciation and amortisation) by total output (revenues plus changes in inventories).

Volatility (‘unpredictable, liable to change’) A market is volatile if it is subject to major price fluctuations. Volatility is the statistical means of measuring market fluctuations.

Sugar and bioethanolBioethanol Ethanol produced from biomass (renewable substances containing carbon). Starch (e.g. from wheat or maize) is broken down by enzymes into glucose. Yeast is then added and the glucose is fermented to create ethanol. When sugar beet is used to produce ethanol, the raw juice or thick juice created as a by-product of sugar extraction is fermented directly. Unlike fossil fuels, bioethanol is CO2-neutral and has long-term economic benefits. In Germany, the Biofuel Quota Act has been in force since 2007, which stipulates the amount of bioethanol to be blended with petrol.

Carbohydrates or saccharides, which mainly consist of sugars and starches, form the largest usable and unusable (dietary fibre) share of the human diet, along with fats and proteins. Carbohydrates are the main source of energy for the human organism.

CO2 (carbon dioxide, ‘greenhouse gas’) Chemical compound consist-ing of carbon and oxygen which, like carbon monoxide, is a carbon oxide. This colourless and odourless gas is a natural component of air. It is created when substances containing carbon are burnt, and during cellular respiration. Plants and some bacteria convert CO2 into biomass.

Cossettes Pressed beet chippings are a by-product of the sugar pro-duction process. They are used as animal feed.

Crystal sugar The term for standard grade sugar used in industry and the home for a variety of purposes, particularly for making desserts and cakes. In a second processing step the crystal sugar is turned into caster sugar, which retails under the name of household sugar for instance.

Emission The release of substances into the environment.

Isoglucose Sugar made primarily from corn starch and used in bever-ages and preserved fruit. Isoglucose is a regulated market product.

Molasses Syrupy by-product of sugar production. Used to manufacture yeasts and animal feed.

Mulch seeding Mulch seeding is a ploughless sowing method in which the remains of a catch crop or the stubble of the preceding crop cover the soil before and after sowing and protect it from erosion and siltation.

Pellets By-product of sugar production. These extracted, dried sugar beet pellets are sold molassed or unmolassed as animal feed.

Raw cane sugar Sugar made from sugar cane. This can then be refined to convert it into white sugar.

Raw juice Sugary juice extracted from sugar beet which can be processed to make sugar or bioethanol.

Refining Used in a general sense to describe a process of cleaning or purifying raw materials. For sugar this means bleaching brown raw sugar (from sugar cane or sugar beet) by a (repeated) series of different processes.

Strip tilling In some cases beet has also been sown recently using the strip tilling method. This is a special method of sowing individual seeds in which the soil is only tilled in the seed row to a depth of 25 cm. This is done by chisel coulters attached in front of the drilling machine. Initial findings suggest that the advantages compared with conven-tional mulch seeding with seed bed preparation in the spring include greater energy efficiency and reduced work intensity per hectare, the conservation of ground water and good protection against soil erosion.

Thick juice Concentrated, purified sugar juice containing some 70 to 75 per cent solid material. Thick juice is produced at the end of the steam dryer unit before the sugar undergoes the actual crystallisation process in the sugar factory’s juice boilers.

White sugar is normal household sugar and is made from raw sugar.

Sugar industryACP countries (Africa, Caribbean and Pacific) This encompasses 77 states, most of them former French or British colonies. The EU has granted these countries preferential access to the European market and duty-free imports of 1.3 million tonnes of raw sugar since 1975 by means of the Cotonou Agreement. As of 2008, the EU wants to re-place this treaty with Economic Partnership Agreements (EPA) with the ACP countries. In terms of sugar, this should place the countries on an equal footing with the least developed countries (LDC).

CEFS Comité Européen des Fabricants de Sucre, the European Committee of Sugar Manufacturers represents all European sugar manufacturers and refiners among the European institutions (Council of Ministers, European Commission, European Parliament, Economic and Social Committee, etc.) and among different international organisations (FAO, WTO, etc.).

CIBE (Confédération Internationale des Betteraviers Européens) International Confederation of European Beet Growers

Dansukker Nordic Sugar, part of the Nordzucker Group, offers con-sumers a wide range of sweet sugar products from sugar beet and sugar cane under the brand name of Dansukker. The assortment is refined continuously in keeping with the needs of modern house-holds and includes for example various types of granulated sugar, sugar cubes and icing sugar, brown sugar and syrups as well as organic and Fairtrade products.

Doha development round is the name for a package of activities that the economic and trade ministers of the WTO member states were supposed to work through at the fourth World Trade Conference in Doha (capital of Qatar) in 2001 and complete by 2005. The main topics of negotiations included the liberalisation of agricultural trade, improved market access for developing countries and matters relating to intellectual property. Negotiations were suspended as no agreement was reached at the WTO conference in Cancun in 2003. They were resumed in July 2004 and again suspended unresolved in late July 2006 by the WTO General Director Pascal Lamy.

EFFAT European Federation of Food, Agriculture and Tourism Trade Unions

125Glossary

Fairtrade The heart of the Fairtrade standard is the payment of a guaranteed minimum price above the level of the world market price that covers the cost of living and production of the producers.

LDC (Least developed countries) LDC relate to an EU resolution of 2001 according to which the 50 least developed countries in the world may import any goods except arms into the EU free of any duty. Sugar falls under a special transitional arrangement until 2009. As of 1 July 2009, sugar can also be imported into the EU free of duty and with no restriction of quantities.

Sugar market regime A common market organ isation for sugar found-ed in 1968 (active in the EEC/EC/EU) which regulates prices for sugar and sugar beet, maximum production quantities for sugar, and import safeguards. The previous regulation (EC) No. 1260/2001 was replaced on 1 July 2006 by regulation (EC) No. 318/2006, which was passed by the ministers of agriculture of the EU member states on 20 February 2006.

Sugar quota Sugar quotas were introduced in the EU to limit sugar production and prevent surpluses. Volumes produced within these quotas benefit from a sales and price guarantee.

SweetFamily SweetFamily is the Nordzucker Group’s international umbrella brand. Beet sugar products for end consumers, bakers and the food industry have been marketed in Germany, Poland, Slovakia and Hungary under the SweetFamily brand since November 2004.

WTO (World Trade Organisation) Multinational organisation located in Geneva, in which 150 member states negotiate world trade liberali sation.

Certification, quality assurance and consumer protectionDIN EN ISO 9001 This standard is part of the EN ISO 9000 series, which documents the principles of quality management activities. EN ISO 9001 deals in particular with requirements of quality man-agement systems for which organ isations must show that they are capable of supplying products which conform to customer and regulatory demands.

DIN EN ISO 14001 This internationally valid standard lays down globally acknowledged specifications for environmental management.

DIN EN ISO 22000 Covers rules for internationally accepted food safety management standards.

DIN EN ISO 50001 An ISO (International Organisation for Standard-isation) certifiable standard that specifies requirements for establishing, implementing, maintaining and improving an energy management system.

EMAS II (Eco-Management and Audit Scheme) Voluntary system used by the EU as an environmental management instrument and to promote environmental action.

FSSC 22000 is the first global food safety norm covering food production. The norm was developed specially for companies producing or pro-cessing animal or plant-based products or ingredients.

GMP B2 (Good Manufacturing Practice B2) Dutch standard of quality control for animal feed from non-resident suppliers.

IFS (International Food Standard) This standard is a means of safe-guarding food safety and consumer protection.

OHSAS 18001 (Occupational Health and Safety Assessment Series) is not a norm, but can be used as a certification basis for management systems relating to health and safety at work. The structure of OHSAS is oriented towards DIN EN ISO 14001. This makes it suitable for use as an integrated management system.

PAS 220 (Publicly Available Specification 220) Certification standard developed to define basic requirements for the certification of production processes with the food supply chain and intended to assist in con-trolling food safety standards. It is intended to be used in conjunction with DIN EN ISO 22000. ISO 22000 and PAS 220 are generally known as FSSC 22000.

Q&S Standard German feed standard established by Q&S-GmbH, Bonn, Germany, to guarantee feed quality.

Work-life balance The term work-life balance refers to a situation in which people give equal priority to their professional and private lives. It assumes that an equilibrium can be reached between two opposing demands.


Important dates

Financial calendar

Annual General Meetings 2 July 2013 9 a.m. Union-Zucker Südhannover Gesellschaft mit beschränkter Haftung,

Atrium at the country estate Gräflicher Landsitz Hardenberg, Nörten-Hardenberg

9 July 2013 10 a.m. Nordharzer Zucker Aktiengesellschaft, city hall Braunschweig

10 July 2013 10 a.m. Nordzucker Holding Aktiengesellschaft, city hall Braunschweig

11 July 2013 10 a.m. Nordzucker AG, city hall Braunschweig

Online publications

The following publications can be downloaded from www.nordzucker.de

• Annual reports and interim reports

• Declaration of compliance

• Letter to shareholders

Latest publication

• Sustainability Report 2012/2013 – „Follow us“

A deep-rooted approach

Our focus on sustainability builds on a long-standing tradition in our company and is a

natural priority for us. As a business dependent on nature’s resources and stable climates,

our environmental and climate consciousness is deeply rooted.

Nordzucker AGKüchenstrasse 938100 BraunschweigGermanyTelephone: +49 (0)531 2411 0Fax: +49 (0)531 2411 [email protected]

Corporate CommunicationsKlaus SchumacherTelephone: +49 (0)531 2411 [email protected]

Investor RelationsBianca Deppe-LeickelTelephone: +49 (0)531 2411 [email protected]

Shares registerClaus-Friso GellermannTelephone: +49 (0)531 2411 [email protected]

Printed copies of this Annual Report for the Nordzucker Group are also available in German.

Alternatively, the report can be downloaded online as a PDF in German or English at

www.nordzucker.de from the Download Centre.

Living our values. Creating growth

Documents

Transcript of Living our values. Creating growth