TEREOS Annual Report 2015-16

A NNUA L REPO RT

2015-2016

ONE STEP AHEAD

P. 8

TEREOS PLAYS

HOW TO BE

INTERVIEW

GOVERNANCE

RESULTS

ONE STEP AHEAD

STRATEGY

TIME FOR ACTION

P. 68

CONSOLIDATED

BY ACTIV ITY

STATEMENT

BALANCE SHEET

FROM SUGAR BEET

ACCOUNTS

RESULTS

INCOME

CONSOLIDATED

INCOME

P. 20

THE BIG NEWS

A COMPETITIVE,

FROM THROUGHOUT THE YEAR

DIVERSIFIED AND INTERNATIONALISED GROUP

TIME FOR PERFORMANCE P. 32

SUGAR

SUGAR

STARCH

EUROPE

INTERNATIONA L

AND SWEETENERS

TIME FOR RELATIONSHIPS P. 46

AGRICULTURAL WORLD:

CUSTOMERS:

EMPLOYEES:

CONSUMERS:

ACTING WITH A V ISION OF THE INDUSTRY

DEDICATED PRODUCTS AND SERVICES

DEVELOPING TALENT

LOCAL BRANDS

TIME FOR COMMITMENT P. 56

THE 5 PILLARS

SUSTAINABLE AGRICULTURE:

CIRCULAR ECONOMY:

RENEWABLE ENERGIES:

OF COMMITMENT

TEREOS STRENGTHENS ITS COMMITMENT

TEREOS MAKES THE MOST OF RESOURCES

A VIRTUOUS AND SUSTAINABLE MODEL

ITS PART IN THE COMMUNITY

KEY INFORMATION

THE FACILITIES

ABOUT TEREOS

OF THE GROUP

P. 4

P. 6

ONE STEP AHEAD

TEREOS TURNS RAW AGRICULTURAL COMMODITIES INTO SUGAR, ALCOHOL AND STARCH

3 TEREOS – ANNUAL REPORT 2015-2016

Source F.O. Lichts – May 2015

KEY INFORMATIONABOUT TEREOS

As a Cooperative sugar group, Tereos uses raw agricultural commodities to produce sugar, alcohol and starch. With fi rm roots

in the territories in which it operates, Tereos brings together 12,000 cooperative growers around one shared long-term vision:

adding value to agricultural produce and offering high-quality food products.

No. 1 IN EUROPE No. 3 IN EUROPE

STARCHALCOHOL AND ETHANOL

WORLD’S 3RD LARGEST SUGAR GROUP

No. 1in France

No. 3in Brazil

4

SUGAR AND SWEETENERS

ANIMAL FEED

RAW MATERIALS

MARKETS REVENUES

HECTARES OF FARMLAND

RECOVERED

COOPERATIVE GROWERS 12,000

EMPLOYEES 24,000

€4.2 BN

1 MM1

STARCH

PLANT PROTEINS

ALCOHOL AND ETHANOL

ENERGY

SUGAR CANE CORN CASSAVA

SUGAR BEET WHEAT POTATOES

5 TEREOS – ANNUAL REPORT 2015-2016

Countries: (Paris)

(Geneva)

(Nairobi)

(New Delhi)

(Saõ Paulo).

France

Switzerland

Singapore

Kenya

India

Brazil

TEREOS COMMODITIES

SALES

OFFICES

6

Countries: (Aalst)

(Marckolsheim

Saint-Denis-de-La-Réunion)

(Zaragoza)

(Palmital).

Belgium

France

Spain

Brazil

R&D CENTERS

5 INDUSTRIAL FACILITIES

Countries:

Raw materials:

Brazil

sugar cane, corn, cassava.

8

LATIN AMERICA

TEREOS COMMODITIES

SALES OFFICES

OUR FACILITIES

R&D CENTERS

AROUND THE WORLD

6

COUNTRIES

16

INDUSTRIAL

FACILITIES

45

Countries: (FR),

Raw materials:

Countries:

Raw materials:

Countries:

Raw materials:

Réunion Tanzania,

Mozambique, Kenya.

sugar cane.

China, Indonesia.

wheat, corn.

France, Belgium, Spain, Italy, Czech Republic, Romania,

United Kingdom.

sugar beet, wheat, potatoes, corn.

AFRICA/ INDIAN OCEAN

ASIA

EUROPE

INDUSTRIAL FACILITIES



3

6

28

7 T EREOS – A NNUA L REPORT 201 5-201 6

KEY INFORMAT ION

A BOUT T EREOS

ONE STEP

AHEADT IME

FOR A CT ION

THE 2015-2016 FINANCIAL YEAR

ALLOWED TEREOS TO CONSOLIDATE

A VIRTUOUS MODEL THAT WAS A KEY

FACTOR IN THE GROUP’S SUCCESS.

The ability to create a long-term vision

and to anticipate changes in its

environment is one of the foundations

on which Tereos has built solid

and sustainable development. During

the 2015-2016 fi nancial year, Tereos

implemented strategic initiatives designed

to anticipate the opening and key

developments of its markets.

ANTICIPATION OF REGULATORY DEVELOPMENTS

In a European environment where deregulation of the Common Agricultural Policy has been a dominant feature for 20 years, Tereos has proved itself capable of anticipating major regulatory changes. In becoming the largest sugar group in France and a European leader, the Group grew to the critical size essential for remaining competitive in a more open market. After expanding its European activity to include the processing of cereals and potatoes, the Group now has a diversified business model, a balancing factor in more volatile markets.

CONTINUOUS IMPROVEMENT OF PERFORMANCE

Competitive in agriculture, industry and energy: Tereos strives for increased production and better quality. Being competitive has always been a key development factor. It is through this level of efficiency that Tereos is able to position itself on liberalized markets. The search for continuous improvement is an essential lever in strengthening its performance in a sustainably more open and volatile environment.

INTERNATIONAL DEVELOPMENT

Since it is very quick to recognize any major changes likely to impact its historic position in the French sugar market, and in order to maintain a sustainable and profitable business, Tereos has expanded its model by establishing itself in growth markets. The Group first developed in Eastern Europe, then in Brazil, in order to benefit from strong export potential. Finally, Tereos established itself in Africa and Asia in order to take advantage of significant growth opportunities driven by strong population growth on these continents.

INNOVATION AS A CATALYST FOR DEVELOPMENT

Innovation allows Tereos to anticipate market developments and trends in nutrition, energy and the environment, in order to meet the developing needs of its customers. Innovation is also a differentiating factor which positions the Group as a major player with partners and industrial clients seeking excellence and quality.

As a cooperative group that has become the largest sugar group in France, the third largest in Brazil and the third largest in the world, Tereos has succeeded, throughout its development, in taking the strategic options that have allowed it to stay several steps ahead of the rest.

HOW TO BEONE STEP AHEAD

10

KEY INFORMATION ABOUT TEREOS

P.4

ONE STEP AHEAD

P.8-19

Top left: using drones

to study crops.

Above:

the Marckolsheim R&D center.

Opposite: the betaine

production unit at the

Origny-Sainte-Benoite site.

11 T EREOS - A NNUA L REPORT 201 5 - 201 6

T IME FOR A CT ION

P.20 P.32

T IME FOR PERFORMA NCE

INTERVIEW WITH THIERRY LECOMTE, CHAIRMAN OF THE SUPERVISORY BOARD,

AND ALEXIS DUVAL, CHIEF EXECUTIVE OFFICER.

A SOLID

GROUP

12

KEY INFORMAT ION A BOUT T EREOS

P.4

ONE ST EP A HEA D

P.8-19

Alexis Duval : Market environment throughout

the year was very poor, probably one of the

toughest the Group has ever faced. In this con-

text, Tereos has shown great resilience, demon-

strating the strength of its model. This is a

prime source of satisfaction.

Moreover, the Group was able to strengthen its

positions and continue implementing its long-

term strategy, which aims to anticipate a num-

ber of major changes in its markets, namely

the liberalization of the European sugar and

isoglucose markets in 2017, globalization of the

supply chain, changes in consumer habits and

the rise of environmental and energy issues.

Let me give two examples. Firstly, the culture

of continuous improvement in performance

and operational excellence that we previously

established is now beginning to bear fruit, as

shown by the very pleasing operational results

we recorded over the year.

Secondly, the development of our interna-

tional trading activities and the distribution

operations in our historical markets contrib-

uted to the Group achieving better control of

the supply chain in order to offer our custom-

ers a very high level of service and food safety.

AS WE APPROACH THE PIVOTAL PERIOD

IN WHICH QUOTAS WILL BE REMOVED, HOW

HAS THE GROUP PREPARED FOR THIS

MAJOR MILESTONE?

T. L : We couldn’t prepare for such an important

change at short notice. We anticipated it at an

early stage, as we gathered our resources over

the years, by creating a group of French coop-

erative growers that now has over 12,000

cooperative members and works on an inter-

national scale.

WHICH SIGNIFICANT EVENTS STAND OUT

FOR YOU FROM 2015-2016?

Thierry Lecomte: The decision to remove sugar

quotas from October 2017 will be an important

milestone for the European market. However,

this liberalization doesn’t actually constitute

news for Tereos. It follows on from the 2006

sugar market reform. The majority of it was

included in the 2020 CAP reform, which we

always keep in mind and we have anticipated.

Our strategy is guided by the ability to take the

right course to ensure well-priced agricultural

produce in the long term.

The strength of our model, from a cooperative

grower’s point of view, lies in establishing a

cooperative group that works with an overall

sectoral vision and in having been able to build

a largely open group on the international

stage, at a time when export issues are grow-

ing ever more significant. It also lies in being

able to rely on a balanced and diversified

model at a time when our markets will face

increasingly high volatility.

“The Group was able to strengthen its positions and continue the implementation of its long-term strategy.”

ALEXIS DUVAL, Chief Executive Officer

continued

13 TEREOS - ANNUAL REPORT 2015 - 2016

TIME FOR ACTION

P.20 P.32

TIME FOR PERFORMANCE

A. D : With the end of quotas and the liberaliza-

tion of the market, the European sugar indus-

try will face new challenges, which may be a

threat to the market but could also be a source

of opportunity.

In a market that will come to show a structural

surplus, export issues will take center stage.

That is the sense we are getting of how our

trading activities have developed since

November 2014 through Tereos Commodities.

Against this backdrop, the strong positions

that we hold internationally, particularly in Brazil,

become an asset for a competitive offering

around the world.

As far as our operations in Europe are con-

cerned, the acquisition of Napier Brown in

2015 allowed us to strengthen our market

share in the UK, the number-one export mar-

ket for French sugar. Through its development

in Europe, Tereos has built one of the most effi-

cient distribution networks of the entire conti-

nent. This reflects a more volatile environment

in sugar beet contracting to ensure we are vis-

ible to both our cooperative growers and our

customers. In this regard, Tereos may rely on

the strong links between the company and its

cooperative growers, as well as its successful

past experience in out-of-quota sugar beet

contracting. Remember that even before the

“We anticipated the end of quotas at an early stage by creating a group of French cooperative growers that now has over 12,000 cooperative members and works on an international scale.”

THIERRY LECOMTE, Chairman of the Supervisory Board

continued

14

KEY INFORMATION ABOUT TEREOS

P.4

ONE STEP AHEAD

P.8-19

MEASURES WE HAVE TAKEN IN PREPARATIONFOR THE END OF THE SUGAR QUOTA REGIME

DEVELOPMENT OF DISTRIBUTION NETWORKS IN EUROPE

The acquisition of Napier Brown in May 2015 means that Tereos will be able to offer its customers a wider range of products and

a fi rst-rate logistics service in the United Kingdom. With Group facilities in Spain and Italy too, Tereos now holds

signifi cant positions in the key European export markets.

A MAJOR ENERGY SAVINGS PLAN

Energy is the primary cost item when it comes to processing sugar beet. Controlling how it is consumed is therefore a key issue for Tereos, which has conducted an extensive investment program amounting to almost €100 million. Over a period of fi ve years, this will result in a 15% reduction in energy consumption by all French

sugar factories and a 20% reduction in CO2 emissions.

LAUNCH OF TEREOS COMMODITIES OPERATIONS

In 2015, Tereos Commodities began its trading and distribution activity in sugar for export and it now has sales offi ces in Europe,

Brazil, Singapore, Kenya and India. As of the beginning of the 2016 fi nancial year, its activity has been expanded to cover ethanol trading.

STRENGTHENING THE INDUSTRIAL FACILITIES

Competitiveness will receive a major boost when, from 2017, Tereos is able to implement its plan to extend campaigns beyond 130 days. Factories are currently receiving major investment in

order to increase fl exibility of production between sugar and ethanol, and thus to control production based on market trends.

INDUSTRIAL

DISTRIBUTION

SUPPORT FOR COOPERATIVE GROWERS

Tereos has modernized the sugar beet reception process, investing in order to improve conservation, access to silos

and harvest organization. Additional benefi ts were also introduced as part of the campaign extension process.

A MINIMUM PRICE FOR SUGAR BEET AFTER 2017

Decisive in its preparations for the post-2017 period, the Tereos group was the fi rst to guarantee its cooperative

growers a minimum price for sugar beet in the 2017 and 2018 campaigns.

AGRICULTURE

On October 1, 2017, the sugar quotas in force throughout the European Union will come to an end after half a century of regulation. It is for this reason, in preparation for the post-quota period, that the Group has been implementing long-term measures

to improve productivity and competitiveness for the past four years.


TIME FOR ACTION

P.20 P.32


reform, out-of-quota sugar beet already

accounted for half of our sugar beet business

in France. This is the basis for the new long-

term contractual framework put in place this

year between Tereos and its cooperative grow-

ers for the post-2017 period. Lastly, there are

growing issues around competitiveness. In this

regard, Tereos can rely on its size and the per-

formance of its sugar beet basins and indus-

trial tools. In total, this should allow the Group

to grow its business by 20% in France.

The cooperative model that Tereos has

built over the years is a strong model for coop-

erative growers because adding value to agri-

cultural produce is at the heart of its mission. It

is also a model that brings security to coopera-

tive growers because Tereos directly rep-

resents their interests within inter-trade

bodies, taking into account the specific fea-

tures of cooperatives.

When contracting post-2017 sugar beet was

first brought up, we were the first group in

Europe to commit to guaranteeing a mini-

mum sugar beet price and to providing a

framework capable of making our cooperative

growers visible in the long-term. Over the

years, Tereos has successfully demonstrated its

commitment to paying its cooperative grow-

ers for their produce.

WHAT DOES THE END OF QUOTAS

CHANGE FOR COOPERATIVE GROWERS?

T. L :

“The strong positions

we hold internationally are

an asset for a competitive

offering around the world.”

ALEXIS DUVAL, Chief Executive Officer

16


P.4

ONE ST EP A HEA D

P.8-19

For French sugar beet, we had expected a vol-

ume increase from 15 to 18 million tonnes. We

are finally going to exceed this 18 million tonne

target. The confidence of cooperative growers

in the model that we have built is the primary

reason for this commitment.

HOW DOES YOUR MISSION GUIDE THE

AMBITIONS AND DEVELOPMENT OF THE

GROUP?

A. D : Our operations cater for basic human

needs: primarily nutrition, then energy. Given

the current demographic and societal

changes, these needs are both fast growing

and changing, particularly as regards nutrition.

One of our major challenges is to meet this

demand by increasing production while still

ensuring sustainability and quality.

All of this is part of the reason for Tereos’ com-

mitment to sustainable production, from

upstream agricultural activity to the nutritional

profile of our products, via ever more virtuous

industrial processing, particularly as regards

energy. For example, almost half of the energy

consumed in our factories today comes from

renewable sources. Getting the best value

from the potential of the raw agricultural com-

modities we process is therefore at the heart of

our mission and our model, taking into account

the entire value chain, from upstream agricul-

tural activity to the end consumer.

“Over the years, Tereos has successfully demonstrated its commitment to paying its cooperative growers for their produce.”

THIERRY LECOMTE, Chairman of the Supervisory Board


TIME FOR ACTION

P.20 P.32


ONE ST EP A HEA D

P.8-19

cultural commodities and the amount of net

income to be distributed.

proposes to the Supervi-

sory Board any policies that it considers neces-

sary in the best interests of both the company

and its cooperative growers. Then, working

alongside the

managers and all teams of operational and

functional divisions of the Group, it heads up

operational implementation and guarantees

the performance of these operations.

Tereos is governed in such a way that it is able

to define and implement the Group’s long-

term strategy. The governance aims to com-

bine permanent operational efficiency and

close relations with the cooperative growers. It

is based on a strong link between responsibili-

ties and clearly dividing them between elected

representatives and the management.

appoints the Chief

Executive Officer and approves the strategy

and major financial decisions proposed by the

Executive Board. It sets the price of raw agri-

The Executive Board

the Management Committee,

The Supervisory Board

GOVERNANCE

Front row, from left to right, the office: Back row, from left to right:Denis Lecart,

Jean-Charles Lefebvre,Xavier Laude,Gilles Bollé,Bertrand Magnien,Thierry Lecomte,

Gérard Clay,

François Leroux,Laurent Caudron,

Philippe Hennebert,Étienne Clabaut,Laurent Courtier,François-Xavier Beaury,Rémi Baudel,Christophe Dedours,Marc Turpin,Guillaume Perdereau,Benoît Philipon,Olivier Legrand,Pascal Foy,Didier Beauvais,

Vice Chairman of the Supervisory Board, Chairman

of the Connantre Cooperative

Member of the SDA Cooperative office

Chairman of the Escaudoeuvres Cooperative

Chairman of the Chevrières Cooperative

Chairman of the SBP Cooperative

Chairman of the Supervisory Board,

Chairman of the SDA Cooperative

Vice-chairman of the Supervisory Board,

Chairman of the SDHF Cooperative

Vice-chairman of the SDA Cooperative


Member of the SDHF Cooperative office

Vice-chairman of the SDHF Cooperative

Vice-chairman of the Chevrières Cooperative

Vice-chairman of the SDHF Cooperative

Vice-chairman of the Boiry Cooperative

Administrator of the SDHF Cooperative

Chairman of the Boiry Cooperative

Vice-chairman of the Artenay Cooperative

Chairman of the Vic-sur-Aisne Starch Cooperative

Chairman of the Artenay Cooperative

Chairman of the Haussimont Starch Cooperative


SUPERVISORY BOARD

18


P.4


T IME FOR A CT ION

P.20 P.32


Close relations

Cooperative General Meetings

At each Annual General Meeting, the cooperative

growers elect their representatives to the Board

of Administrators of their cooperative. Boards of

Administrators meetings provide a valuable

forum for discussion and reflection. They act as

the essential link between the Supervisory Board

and the 12,000 cooperative growers.

These annual meetings are held once the

sugar beet season is over, bringing together

several thousand cooperative growers for a

valuable opportunity to exchange views.

Front row (bottom), from left to right:

Middle row, from left to right:

Back row, from left to right:

Jacyr Costa,Alexandre Luneau,

Anne Wagner,Yves Belegaud,Alexis Duval,Patrizia Campos,

Olivier Casanova,

Philippe Labro,

Olivier Leducq,Jean-François Villard,Patrick Duquesne,Raphaël Delpech,Marc Milward,

Oldrich Reinbergr,Vincent Pobelle,Laurent Berger,Pierre Santoul,Christophe Lescroart, Gérard Benedetti,

Brazil Region, member of the Executive Committee

Strategic Marketing, R&D and Market Risks,

member of the Executive Committee

Research and Development

Europe Region, member of the Executive Committee

Chief Executive Officer

Development and Strategic Investments,

member of the Executive Committee

Finance and Information Systems, member

of the Executive Committee

Tereos Sugar Indian Ocean

Tereos Sugar France

Human Resources

Information Systems

Public Affairs

Legal, Fiscal and Compliance

Tereos TTD Sugar Czech Republic

Processing

Management Audit

Guarani, Tereos Sugar and Energy Brazil

Tereos Starch and Sweeteners Europe

Communication & CSR

EXECUTIVE COMMITTEE AND MANAGEMENT COMMITTEE

General administrators’ meeting

Cooperatives’ Boards of Administrators

The 180 Group Directors meet twice a year in

plenary meeting with the Supervisory Board

and the Executive Committee to share strate-

gic directions, projects and Group news.

Between the Cooperative Board of Adminis-

trators meetings and the General Meetings of

Administrators, the 180 Administrators meet

six times a year, in addition to the Annual Gen-

eral Meetings.

ONE ST EP

A HEA D

TIME FOR ACTION

T IME FOR

PERFORMA NCE

AS WELL AS ANTICIPATING THE END OF QUOTAS

AND THE PROGRESSIVE LIBERALIZATION OF

ITS MARKETS FROM AN EARLY STAGE in order to better

prepare for these eventualities, in 2015-2016, Tereos

further accelerated the implementation of its strategy

for competitiveness, international development and

innovation. The Group has made signifi cant progress in

all these areas, including through the launch of operations

at Tereos Commodities, its subsidiary for trading,

merchandising and distributing sugar and ethanol,

and also through the acquisition of UK sugar distributor

Napier Brown. 2015-2016 also saw fi ve new factories opened

in Asia, Africa and South America and a sharp increase

in activity at all of them.

ONE ST EP A HEA D

P.8

T IME FOR A CT ION

P.20-31

TEREOS ADDS TO ITS OPERATIONS IN ASIA

After acquiring a corn starch facility in Tieling, a large

production region, Tereos launched operations at its newly

completed wheat starch facility in Dongguan in a joint venture

with Chinese group Wilmar. With an annual crushing capacity

of over 500,000 tons, this unit produces native starch

and other products such as alcohol and glucose, fructose

and protein syrups. The new factory is in a major strategic

location, close to the main logistics hubs in the country

and nearby various food industries.

TEREOS COMMODITIES

CONTINUES TO GROW

After its creation was announced in

November 2014, Tereos Commodities began

operations in March 2015. The subsidiary

for trading, merchandising and distributing

the Group’s products initially focused

on sugar, then expanded its scope of activity

to the ethanol market in April 2016.

Since its creation, Tereos Commodities

has established operations in strategic

locations close to its main markets: in France,

Switzerland, Singapore, India, Brazil

and Kenya.

NEWS FROM

THROUGHOUT THE YEAR

MARCH 2015 APRIL 2015

MARCH 2015

NAPIER BROWN

JOINS TEREOS

Tereos strengthened its positions in Europe

and the UK by acquiring Napier Brown Sugar

Limited, the third largest sugar company

in the UK market. Napier Brown sells over

300,000 tons of sugar every year.

The company is also developing a mass

distribution business which has been

growing quickly for several years, with

a market share of 20%.

22

CONSOLIDATION OF OPERATIONS

UNDER A SINGLE BRAND

Over 20 years, Tereos has built a large

portfolio of operations around its core

business – sugar and sweeteners – both

inside and outside France. As it has

grown, the Group has structured

its brands around its operations

and geographic locations: Tereos France,

Tereos Syral, Tereos Indian Ocean,

Tereos Romania, Tereos TTD, Guarani, etc.

Now, the Group is bringing together all

of its operations under a “single brand”

in order better to meet the challenges

of more open markets and offer better

value to its customers through one

of the broadest product portfolios

on the market. This also allows Tereos

to demonstrate its ability to export

and innovate.

SEPTEMBER 2015

NOVEMBER 2015

TEREOS AND SCANIA UNVEIL A CLIMATE BUS

During the Cop 21, Tereos and Scania unveiled their “climate

bus”. Fitted with a Scania engine, it runs on ED95, a renewable

fuel of local origin with a 95% ethanol content. It is produced

by Tereos from residue left after processing sugar beet grown

in the Greater Seine Basin. This bus was used by several officials

as a mode of transport during the conference. ED95 biofuel

was certified and approved for use in April 2016.

DECEMBER 2015


P.32


P.4 6

T IME FOR RELAT IONS HIPS

KENYA: A NEW SETUP IN A GROWING

MARKET

Tereos strengthened its presence in East Africa

by acquiring Kenya-based Transmara Sugar

Company Limited (TSCL) alongside its Mauritian

partner Alteo. Sugar consumption is growing rapidly

in Kenya and there is a large production shortfall.

By 2025, production is expected to increase from

650,000 tons to 700,000 tons, while consumption

is expected to almost double, rising from

850,000 tons to 1.4 million tons.

A GREEN STEAM NETWORK IN LILLEBONNE

In October 2015, Tereos, along with its partners SUEZ and

the SEVEDE (Syndicat d’Elimination et de Valorisation

Energétique des Déchets de l’Estuaire – the association for

the removal and energy recovery of estuary waste), launched

a new 3-kilometer steam network that runs between the

Ecostu’air energy recovery unit and the Tereos starch facility in

Lillebonne. A remarkable illustration of circular economy and

local partnership, this network uses the energy from recycling

the household waste of almost 130 communities to generate

“green” steam, which is replacing energy made from fossil fuels

and which meets 70% of the factory’s energy needs.

OCTOBER 2015

THE PRICE OF SUGAR BEET: TEREOS MAKES A COMMITMENT

The results of the 2015

campaign were presented

to cooperative growers

at the general meetings,

along with the Group’s

strong commitment to boost

sugar beet income after 2017,

as Tereos committed to a

guaranteed minimum price

of €25 per tonne of sugar

beet for the 2017 and 2018

campaigns. This

commitment is based on

a target of over 18 million

tons of sugar beet harvested

over a 130-day campaign

period. Tereos was the fi rst

sugar group to commit to

guaranteeing a minimum

price.

INCREASE IN THE QUANTITY

OF SUGAR BEET FOR THE 2017 CAMPAIGN

20%

FEBRUARY 2016

VEGETABLE PROTEINS: PILOT INDUSTRIAL PLANT CONSTRUCTED IN MARCKOLSHEIM

As part of its “G en Vie” project, Tereos announced the launch

of a pilot industrial plant at its site in Marckolsheim for producing

vegetable protein products. G en Vie, which won the World

Innovation Competition in April 2015, will enter a new

development phase by beginning to distribute its products

in January 2017, to an initial test market of mass catering

companies in France and Germany.

APRIL 2016

24

ONE STEP AHEAD

P.8

TIME FOR ACTION

P.20-31

A COMPETITIVE,

DIVERSIFIED AND

INTERNATIONALIZED GROUP

CO MPET IT IV ENESS

INT ERNAT IO NA L

DEV ELO PMENT INNOVAT IO N

P.32


P.4 6


units to be fitted with high-efficiency gas boil-

ers and high-performance methanization units,

and secondly through process changes that

contribute to energy savings. All of this means

that Tereos now has the most competitive

energy mix in France.

In Brazil, Tereos’ energy performance is such

that it produces more than it actually needs:

the Group therefore sends any surplus energy

to local electricity companies.

DEVELOPING INTERSECTORAL SYNERGIES

Looking to implement synergies between the

different agricultural sectors is a fully integrated

part of Tereos’ cooperative mission.

For Tereos, the end of quotas in 2017 means the

possibility of increasing the volumes processed

in its factories in order to reduce production

costs and benefit from the renewed freedom to

export. In order to fully benefit from this lever-

age, the company has to become more com-

petitive in terms of both industry and agriculture.

MAKING CAMPAIGNS LONGER

The quest to become more competitive begins

downstream, at the agricultural stage. Produc-

ing an increased and improved output is one of

the key challenges to powering the production

units over the longer term. This is achieved by

extending sugar beet campaigns in France

beyond 130 days in order to allow for a produc-

tion increase from 15 to 18 million tons of sugar

beet. A reduction in sugar production costs by

better using the processing capacities of sugar

refineries is at stake.

INCREASING ENERGY EFFICIENCY

Energy is an important optimization factor in

which Tereos has been investing since 2012,

firstly through a substantial five-year invest-

ment plan, which has allowed for production

A GROUPTHAT IS INCREASINGLY COMPETITIVE

AS MARKETS CONTINUE TO OPEN UP IN THE COMING MONTHS AND YEARS, COM-PETITITVENESS WILL, MORE THAN EVER, BE THE KEY PERFORMANCE FACTOR. FOR TEREOS, COST CONTROL AND THE CONSTANT SEARCH FOR PRODUCTIVITY GAINS ARE MAJOR DEVELOPMENT DRIVERS IN THIS CONTEXT.

IN ENERGY CONSUMPTION

SINCE 2011

‑15%

26

ONE STEP AHEAD

P.8

TIME FOR ACTION

P.20-31

Unloading sugar beet at the Tereos site in Boiry.


P.32


P.4 6


requirements. This is the objective of the Maxi-

sucre plan, which began in 2015. It mobilizes

the industrial capacities of factories, particu-

larly the ability to produce more sugar or more

ethanol depending on demand. Storing syrup

between campaigns will increase flexibility

between the production of sugar and ethanol

during the campaign, depending on the mar-

kets, and thus add value to the produce. With

these investments, each year Tereos will be

able to allocate 200,000 tons of syrup for the

production of sugar and ethanol.

This dynamic is demonstrated by Tereos’ part-

nerships with cooperatives in Haussimont and

Vic-sur-Aisne. These joint ventures gave rise to a

French cooperative that now represents 40% of

national starch production. Investing in indus-

trial facilities, increasing growing areas and

production, and implementing synergies at

regional level have all contributed to creating

the conditions to maximize opportunities

and increase the price of cooperative growers’

produce.

Becoming more competitive also means

becoming more flexible and being able to bet-

ter control production in order to meet market

INCREASED FLEXIBILITY FOR ADAPTING

BETTER TO MARKETS

“Our performance plans have proven

to be effective and have created

encouraging prospects for our business

activities. We will continue to develop

these plans and extend them to all

our business units.”

Yves Belegaud,

European Regional Director

As part of the Maxisucre plan,

Tereos invested in the construction

of syrup tanks in three French

refineries. Construction began on

the first of these tanks in Chevrières

towards the end of 2015. In 2016,

the factories in Escaudoeuvres

and Connantre will be equipped

with vacuum mixers aimed

at boiling the syrup until molasses

are formed.

SYRUP TANKS BUILT

IN THREE FACTORIES

During the 2015 sugar beet

campaign, mesh doors were

installed at the rear of

transportation units in order to

maximize the weight loaded onto

each vehicle and reduce fuel

consumption. This measure brought

about fuel savings of 120,000 liters.

These doors will be fitted to 25%

of the truck fleet in 2016 and 50%

of the fleet by 2018.

SAVINGS MADE

ON TRANSPORT AND FUEL

OF FUEL SAVED

120,000 l

Tereos is operating in a market environment

where its competitors are primarily regionally

based. The Group, however, is able to use the

strength of its international presence and the

synergies this allows it to put in place.

INCREASINGLY OPEN MARKETS

Market liberalization in Europe, growth in

global consumption, and a change in global

eating habits are some of the factors that offer

major development opportunities for an inter-

national and multichannel group such as

Tereos. Its complete and diversified range

meets the wide ranging industrial needs of the

food industry but also those of sectors such as

pharmaceuticals, cosmetics, energy, chemi-

cals and animal nutrition. With its global pres-

ence, the Group is able to respond closely to

these needs by limiting the exposure to

exchange rate fluctuations and making its

logistics and supply chains more secure.

EUROPE: TEREOS ENJOYS

A PRIVILEGED LOCATION

With the end of quotas and a structural excess

of 2 to 3 million tons, Europe will move from an

importer to an exporter of sugar. With the bulk

of these surpluses being concentrated in

France. In these circumstances, the interna-

tional nature of Tereos is a real asset to enhance

such export opportunities.

A GROUP WITH A STRONGINTERNATIONALIZATION REMIT

TEREOS IS PREPARING FOR THE FUTURE BY CONTINUING TO STRENGTHEN ITS INTER-NATIONAL PRESENCE. ITS STRONG POSITION IN SOUTH AMERICA, AFRICA AND ASIA ALLOWS IT TO SUPPORT ITS CUSTOMERS IN MANY AREAS AND TERRITORIES BEYOND THE BORDERS OF EUROPE.

FOR SUGAR WORLDWIDENo. 3

FOR ETHANOL IN EUROPENo. 1

FOR STARCH IN EUROPENo. 3

28

ONE STEP AHEAD

P.8

TIME FOR ACTION

P.20-31

INTERNATIONALLY: GROWING MARKETS

UNITED KINGDOM: NEW OUTLETS

Competition with other European producers,

which is already fierce, is expected to increase

in the coming years with the prospect of the

ending of quotas. With European prices

increasingly correlated to world prices, Tereos

will need to continue strengthening its export

sales. With the creation of Tereos Commodi-

ties, Tereos provides its customers with a qual-

ity offer, as a result of its controlled and

sustainable supply chain, to support them on

the markets where they are growing; more-

over, since its creation, Tereos Commodities

has strategically set up offices located close to

its main markets: in France, Switzerland, Singa-

pore, India, Brazil and Kenya.

Thanks to its geographical location in northern

France, Tereos benefits from rapid access to

the main export ports. It is also able to load

directly large amounts of sugar in containers

from its Escaudoeuvres plant, which is situ-

ated in close proximity to wide canals and

then, a little further on, has access to the Seine

Nord Canal.

In 2015, and to further strengthen its European

positions, Tereos acquired the British sugar dis-

tributor Napier Brown. This acquisition signifi-

cantly strengthens the position of Tereos on a

strategic market for French producers. This

development will allow Tereos to offer its cus-

tomers an expanded range of products and a

first-rate logistics service in the United King-

dom. With Napier Brown, Tereos will have

300,000 additional tons, which is the equiva-

lent of 2 million tons of sugar beet.

“With Tereos Commodities, we support

our customers on the markets where they

operate by supplying quality products,

originating from a controlled and

sustainable supply chain.”

Alexandre Luneau,

Strategic Marketing Director

Starch facility at Cigading, in Indonesia.


P.32


P.4 6


which, in turn, is used as an energy source in the

facilities, based on the principle of a circular

economy. Tereos is constantly seeking innova-

tions to enhance the value of agricultural raw

commodities, which contributes to improving

the economic balance across the entire value

chain, from the farmer to the consumer.

DEVISING FOOD SOLUTIONS

FOR THE FUTURE

In 2050, there will be nine billion of us on this

planet. To ensure that we all have access to

quality food, we will need to develop new

ingredients and foodstuffs. It is for this reason

that Tereos is developing new products based

on plant proteins, reflecting the “G en Vie” proj-

Innovation at Tereos covers six strategic areas,

ranging from agriculture to health and nutri-

tion and also including energy production.

Health and nutrition is one of the mainstays of

the Group’s R&D. In this area, Tereos aims to

make ingredients available to consumers and

manufacturers to allow them to develop a

personalized diet, tailored to nutritional and

functional requirements specific to the differ-

ent stages of life. These products meet the

demand for strong segmentation and spe-

cialty products in developed countries, par-

ticularly in terms of the elderly. They also fulfill

the needs of emerging countries by providing

access, in sufficient quantities, to safe and

quality products in line with local tastes.

ADDING VALUE TO AGRICULTURAL

RAW COMMODITIES

Today, in the Group’s plants - which are genu-

ine bio-refineries - more than 99% of the

incoming agricultural material is used in a

“food first, no waste” rationale. The sugars,

starches, proteins are extracted and processed

for food use. The remaining products - fibers,

bran, molasses, etc. - are sold for animal feed

or used as fermentation feedstock. In this case,

the residue - called “vinasse” - is also used via a

methanization process to produce biogas

DEVISING SOLUTIONSFOR THE FUTURE

TEREOS IS A FORWARD-LOOKING COMPANY AND ENDEAVORS TO ANTICIPATE CHANGES ON THE MARKET, IN DIETARY HABITS, AND ENERGY, AND ENVIRONMENTAL TRENDS, TO SUPPORT THE DEVELOPMENT OF ITS CUSTOMERS. INNOVATION IS THE PRIMARY DRIVER OF THIS SHARED DEVELOPMENT.

R&D CENTERS5

EXPERTS145

30

ONE STEP AHEAD

P.8

TIME FOR ACTION

P.20-31

ect for which the Group was awarded the

Global Innovation Prize in 2015. In 2016, this

project achieved a major milestone following

the construction of an industrial pilot facility at

the Marckolsheim site for a first test-market

composed of operators from the catering

industry in France and Germany.

Bioethanol, a biofuel incorporated into petrol,

reduces greenhouse gas emissions by around

60% compared to petrol, and offers an overall

energy balance that is two times higher. Pro-

duced from agricultural substrates and resi-

dues, it is a major area of research and

development for Tereos. The Group is there-

fore committed to several research projects

with its partners, such as Futurol, backed by a

consortium of 11 operators. This project aims to

develop a bioethanol production process from

cellulosic biomass. The industrial prototype

will be developed at Tereos’ facilities at Bucy-

le-Long.

The Group is also working in partnership with

Michelin on the Biobutterfly project whose

objective is to develop non-fossil butadiene to

manufacture tires. Finally, Tereos introduced in

France the ED95 biofuel in conj unction with

the manufacturer Scania. As it is composed of

95% bioethanol, CO2 emissions are reduced by

approximately 70% compared to a diesel

engine, with significantly fewer fine particles

emitted.

DEVELOPING ADVANCED BIOFUELS

“Promoting plant proteins is a key

challenge for meeting the food needs

of tomorrow.”

Anne Wagner,

R&D Director at Tereos

Examples

of the use

of starch.

P.32


P.4 6


T IME FOR

A CT ION

across all of its activities. Convinced that

having a competitive advantage will

be even more important in the future,

with increasingly open markets, Tereos

is striving to improve its performance

continuously in all areas: agricultural,

industrial, and commercial. This trend

translates into multi-year action plans

in each of the Group's entities.


T IME FOR

RELAT IONS HIPS

THANKS TO THE POLICIES IMPLEMENTED

BY THE GROUP FOR SEVERAL YEARS,

TEREOS IS NOW HIGHLY COMPETITIVE

In view of a 7% reduction in the sugar-beet

growing areas and the difference in yield com-

pared with the previous campaign, this year’s

campaign lasted for 105 days compared with

118 days for the previous year.

When the quotas end in September 2017, the

rise in processed volumes will mean that cam-

paigns will last for over 130 days. The year 2016

will mark an important fi rst step, with an

expected 9% increase in growing areas.

The performance achieved through the 2015

campaign was excellent. The average yield, 89

tons of sugar beet per hectare, was higher

than the French average. The sugar content,

which reached 18.3%, was the highest for the

last three years. However, due to the wide-

spread drought in 2015, differences in yields

were reported between regions, with yields

ranging from 80 to 98 tons per hectare.

Thanks to the excellent performance of indus-

trial tools, production at the Tereos sugar refi n-

eries in France came out at an equivalent of 2.4

million tons of sugar.

In France, Tereos has nine sugar refi neries

located at the heart of one of the most

competitive areas in Europe for sugar beet,

close to major consumption centers and

extremely well positioned logistically

to export to the main markets in Europe

suffering from a sugar shortage.

SUGAREUROPE

FRANCE

34

ONE ST EP A HEA D

P.8 P.20

T IME FOR A CT ION

2.4 Mt EQV

“The objective of ‘Cap Excellence’

is to contribute signifi cantly to

the €100 million of recurring operational

gains projected by the Group over

the 2015-2018 period.”

Olivier Leducq, Director of Tereos Sugar France


P.4 6



P.32- 45

MAJOR OPERATIONAL GAINS IN ALL AREAS

INCREASING PRODUCTION

WITH MAXISUCRE

INCREASING EXPORT SALES

In order to achieve a continuous improvement

in performance, in February 2015 Tereos

launched the "Cap Excellence" plan; all the sites

and management of Tereos Sucre France have

committed to this plan. This plan - primarily

focused on progress - includes optimizations

and structural improvements in the areas of

agricultural performance, industrial productiv-

ity and logistics effi ciency.

For example, we have carried out major work to

optimize stocks of staple products to ensure

that speedy turnover rates will allow us to halve

stock levels. The objective of "Cap Excellence" is

to contribute signifi cantly to the €100 million of

recurring operational gains projected by the

Group over the 2015-2018 period.

The Maxisucre plan started in 2016 and will con-

tinue in 2017. It is designed to support a 20%

growth in production over the 2017-2018 period.

It will increase the fl exibility of factories to con-

trol the production of sugar and ethanol more

effectively and will therefore take greater

advantage of market trends.

The Maxisucre plan will also contribute to

enhancing the geographical position of Tereos'

French sugar refi neries.

Sugar intended for export produced in these

ideally situated refi neries can easily reach the

major port hubs in northern France and Europe.

Finally, a packaging and shipping unit with a

capacity of 500,000 tons per year will be estab-

lished at the Escaudoeuvres facility, located in

northern France.

Crystallization of sugar at Boiry, in France.

SUGAR PRODUCED

BY THE SUGAR REFINERIES

OF TEREOS IN FRANCE

ON COURSE FOR 2017

In the Czech Republic, Tereos is fully committed to an agricultural competitiveness plan to prepare for the post-2017 period.

The campaign, lasting 107 days on average,

helped produce more than 250,000 tons of

sugar and 80,000 m3 of ethanol, despite diffi cult

weather conditions. Rainfall in the country was

actually 30% lower than the previous year, which

had an impact on crop yields.

Automated straw-cover techniques, designed to

protect sugar beet from frost, were rolled out

successfully during this campaign: more than

300,000 tons of sugar beet were therefore able

to be kept in very good conditions while they

were being stored in the fi elds.

During the 2015-2016 period, Tereos TTD also

strengthened its economic performance by

improving industrial productivity, logistics

and energy performance. The creation of three

new centers dedicated to quality, the environ-

ment and procurement will help strengthen this

trend towards continuous improvement in

performance.

CZECH REPUBLIC

During the last campaign, the Ludus sugar factory confi rmed its good performance at both an agricultural as well as an industrial level. And the raw sugar refi nery became fully operational in the spring of 2016.

After operating for three years within the Group,

the Ludus sugar refi nery confi rmed its very

strong operational performance. In total, the

transformation of 200,000 tons of sugar beet

produced nearly 40,000 tons of sugar. Standing

at 53 tons per hectare, the per hectare/yield has

increased over the last three years, particularly

through the agronomic advice the Tereos

teams have given to farmers. However, the

heavy periods of rain, which were a feature of

the year and produced conditions conducive to

parasites, did not affect yields.

To meet the needs of a market suffering a struc-

tural shortage of sugar and to complete its offer

between the campaigns, a raw sugar refi ning

business started operating in May 2016. The fac-

tory has also obtained quality approvals from

major international clients, which has allowed it

to expand its business portfolio.

OF SUGAR BEET PROCESSED IN THE CZECH REPUBLIC

2.4 Mt

ROMANIA

36

ONE STEP AHEAD

P.8 P.20

TIME FOR ACTION

At the top: Kojetin distillery, in the Czech Republic. Above: Ludus refnery, in Romania.


P.4 6



P.32- 45

SUGARINTERNATIONAL

only are they able to meet their own energy

needs, but it has also allowed them to sell 800

GWh of bioelectricity back to the public grid.

Despite the economic recession following sev-

eral years of strong growth, the Brazilian agri-

culture sector is doing very well. The retail

price of sugar and ethanol has increased dra-

matically since the summer of 2015, up nearly

40%. Export sales have been boosted by a

favorable exchange rate. The domestic mar-

ket, however, has remained stable.

To maintain and develop its performance on the

Brazilian market, throughout the course of 2015

Tereos was involved in several projects to opti-

mize its industrial, logistical and commercial

processes.

In terms of its industrial effi ciency, Tereos

CONSOLIDATING THE MODEL

A STRATEGIC

LOCATION

Brazil, which has the most competitive

production costs in the world, is the world's

largest producer and leading exporter of

sugar.

Tereos has been established in the country for

15 years and is now one of the leaders in this

market. Tereos Guarani, the Group’s Brazilian

sugar subsidiary, has seven sugar factories in

the State of São Paulo, the most successful

sugar-cane region in Brazil. Tereos has become

the third largest Brazilian sugar producer and

enjoys a close relationship with its 1,200 sug-

ar-cane suppliers, adding value to 300,000

hectares of cultivated crops.

In 2015, Guarani processed nearly 20 million

tons of sugar cane into 1.4 million tons of sugar

and around 700,000 m3 of ethanol. The

energy produced by the sites means that not

BRAZIL

38

ONE ST EP A HEA D

P.8 P.20

T IME FOR A CT ION


P.32- 45

recorded strong growth in operational perfor-

mance thanks to signifi cant productivity gains

in its industrial and agricultural equipment. On

a commercial level, greater fl exibility has

allowed Tereos to increase the production of

ethanol in line with a more favorable regula-

tory environment compared to the one pre-

vailing in recent years, both in terms of

blending rates as well as the level of taxation

levied on petrol.

Finally, Tereos will continue to modernize

its two plants within the scope of the existing

system.

Revenue from bagasse-energy stabilized in

2015 with the adoption of a new calculation for-

mula adapted to the context of the island. It

also replaces sugar-cane biomass - a key issue

in the economic challenges facing the island of

Réunion. In fact, sugar cane is the second larg-

est source of renewable energy on the island

and is a key element in terms of its energy

self-suffi ciency.

REVIEWING REVENUE

FROM BAGASSE-ENERGY

COMMITTING TO THE FUTURE

With the best campaign in six years,

the island's production recorded

an excellent performance that will carry

it forward into the future.

Overall, with nearly 1.9 million tons of crushed

cane sugar, production recorded its best per-

formance in terms of volume since 2009 and is

putting 2014 – a year marked by drought –

behind it. The year 2015 also saw a re-balancing

of the two sugar-cane regions: Le Gol (in the

south-west of the island) and Bois-Rouge (in

the north-east of the island), as both areas

recorded increased tonnages. Sugar produc-

tion reached almost 200,000 tons, with record

fi gures for specialty sugars at Le Gol, which pro-

duced over 45,000 tons. The sugar content,

although slightly down compared with last

year, nevertheless remained above 13%.

The new agreement, which was signed for a

period of seven years, between government,

farmers and manufacturers, clearly demon-

strates the intention to develop the sugar-cane

sector over the coming years.

Under this new agreement, the State has

agreed to aid to be given to the sector; growers,

in turn, will increase annual sugar-cane produc-

tion and increase yields in irrigated areas.

2015-2021 SUGAR-CANE AGREEMENT

RÉUNION


P.4 6


TANZANIA

KENYAMOZAMBIQUE

AN EXCEPTIONAL CAMPAIGNTereos operates in Tanzania in partnership with the Mauritian company Alteo.

The campaign, which started in mid-June 2015

and ended in mid-March 2016, lasted for over

200 days. It was characterized by excellent

agricultural performances with a production

volume of more than 900,000 tons of sugar

cane, and fi eld yields of over 150 tons per hect-

are. These results are all the more remarkable

as poor weather conditions, with alternating

periods of low and heavy rainfall, prevailed

during the period between campaigns.

A SOLID PERFORMANCETereos has been established for 10 years in Mozambique, in Marromeu, on the edge of the Zambezi River.

With almost 500,000 tons of crushed sugar

cane and 50,000 tons of sugar produced, the

results of the 2015-2016 campaign were down

compared with the previous year, partly due to

particularly adverse weather conditions (incred-

ibly severe rainy season followed by seven

months of total drought). Despite this, industrial

performance remained steady and major

rebuilding work and investment are underway

at both an industrial and agricultural level, spe-

cifi cally to improve irrigation.

A NEW SETUPWith the acquisition of a majority stake in the Kenyan company Transmara Sugar Company Limited (TSCL), again alongside its Mauritian partner Alteo, Tereos has strengthened its presence in East Africa.

Given Kenya's demographic and economic

growth, sugar consumption is experiencing

strong growth there and far exceeds domestic

production. While consumption is expected to

increase from 850,000 tons to 1.4 million tons of

sugar by 2025, production will peak at 700,000

tons, thereby increasing the already existing

shortfall.

In 2015, the crushing capacity of TSCL stood at

600,000 tons over more than 300 days of har-

vest. In 2016, the daily industrial capacity will

almost double to 4,000 tons of sugar cane per

day, with a capability of processing around 1 mil-

lion tons per year.

The sugar refi nery processes the sugar cane pro-

duced by 8,000 independent growers and adds

value to the harvest produced from 12,000 hect-

ares. In order to contribute to the sustainable

development of the local sugar industry, Trans-

mara has also initiated agricultural support pro-

grams for farmers and is developing the road

infrastructure.

40

ONE STEP AHEAD

P.8 P.20

TIME FOR ACTION

A CHANGING MARKET

Tereos, which operates eight starch

facilities in France, Belgium, Spain, Italy

and the United Kingdom, is one of the

leaders of the European starch market.

Over the past year, Tereos extracted nearly

250,000 tons of plant protein and more than

450,000 m3 of alcohol. In a European market

that has remained generally stable over the last

few years in terms of volume and which has

seen high volatility in the price of raw materials,

Tereos has implemented major initiatives in the

area of innovation and has committed to ambi-

tious programs to improve performance.

However, the markets of Eastern Europe offer

more favorable prospects for growth. In this

area, the economy is more dynamic and the

emergence of new eating habits is boosting the

sales of sweeteners. In terms of starch products,

sales rose slightly in late 2015 and early 2016,

EUROPE

continued


P.4 6



P.32- 45

STARCHAND

SWEETENERS

notably due to a surge in demand in the paper

and cardboard sector.

Across all the business activities of Tereos,

improving the reliability and extraction of yields

remains a primary goal.

To develop new sources of growth, the starch

and sweeteners business is counting on spe-

cialty products, able to meet the new needs

of its industrial customers. The specifi c aim is

to support the growth of new products

designed by the food industry, by providing

solutions to nutritional profi les tailored to

consumer expectations. This development

work illustrates the ability of Tereos to develop

innovative and complementary solutions

through its combined know-how in both the

sugar and starch sectors.

INTEGRATED SOLUTIONS

FOR THE FOOD INDUSTRY

DEVELOPMENT OF PLANT PROTEINS

After winning the world competition for inno-

vation in 2015 for its "G en Vie" project, this year

Tereos has continued to develop this project

and started constructing an industrial pilot,

which is due to start up in the fall of 2016. With

this pilot, Tereos will be able to test the first

markets fully in several European regions.

A VIRTUOUS COMPETITIVE APPROACH

A performance plan, Score 2018, has also been

launched. Its objective is to improve perfor-

mance with greater efficiency and productiv-

ity levels. The plan covers various areas such as

industrial performance, business strategy and

management of margins, logistics and pur-

chasing. Score 2018 is another major compo-

nent of the projected €100 million of recurring

operational gains projected by the Group over

the 2015-2018 period.

STRENGTHENING THE STARCH SECTOR

Three years after taking over the Haussimont

potato starch mill (in Marne), we have now cre-

ated a truly French potato starch cooperative,

which is now facing brighter prospects for the

future.

With the addition of the Vic-sur-Aisne cooper-

ative, we have made significant moves to

increase the growing areas in order to extend

the length of the starch campaign and reduce

manufacturing costs. Moreover, production

rates at the plant have risen by more than 15%

in two years. In 2017, production at the plant

will increase twofold and, consequently, it will

record the best performance at European level

in terms of the length of the campaign. Finally,

the development of specialty starches pro-

vides interesting prospects both for the Euro-

pean market as well as for exports.

The Nesle, Lillebonne and Marckolsheim sites have been ISO 50001 certified. The external auditor highlighted a number of strengths, such as internal communication and increasing awareness, various energy consumption monitoring tools and the integration of the energy management system into the quality system.

CERTIFICATION: THREE NEW

ISO 50001 SITES

42

ONE STEP AHEAD

P.8 P.20

TIME FOR ACTION

The Tereos starch facility at Aalst, in Belgium.


P.4 6



P.32- 45

BRAZIL

INVESTMENTS BEARING FRUIT

Since 2011, Tereos has been processing

cassava at its Palmital site, in the State

of Sao Paulo. Since 2013, it has also hosted

a corn starch facility. The sharp increase

in activity at these two starch facilities

is a key factor in Tereos’ development

on the Brazilian market.

Overall, the Palmital site transformed more

than 200,000 tons of cassava and corn into

high quality starch products over the 2015-2016

period. Representing a 15% rise in volumes

compared with those reported over the previ-

ous year. In addition, this activity has also helped

Tereos to increase its market penetration sig-

nifi cantly, with a 25% increase in the number of

customers over the year. The year also saw the

expansion of the cassava business at an agricul-

tural and industrial level. Tereos now operates

30% of cultivated areas in partnership with

farmers in the Vale Paranapanema region, sup-

ported by the applied research from the

Campinas Agronomic Institute. At an industrial

level, improvements have also been imple-

mented, resulting in increased production

capacity, higher yields and a reduction in water

consumption.

While the corn starch facility has generated

a healthy operational performance in terms

of yield and energy consumption, it also

received FSSC 22000 certifi cation (food safety)

in July 2015.

Palmital starch facility in Brazil.

ONE ST EP A HEA D

P.8 P.20

T IME FOR A CT ION


P.32- 45

At the start of 2014, Tereos acquired

Redwood, the only corn starch facility

in the country, in partnership with the FKS

group, the leading Indonesian sugar refi ner.

The facility, located in the port of Cigading –

the country 's leading port for bulk in the north-

east of Java – extends over a 14-hectare site and

has an annual crushing capacity of more than

300,000 tons of corn. From the agricultural

raw material, the site produces starch, glucose,

maltodextrine, thereby meeting the food

needs of the leading economy in South Asia,

with a population of 250 million inhabitants.

CHINA INDONESIA

SHARP RISE

Since 2010, China has become the leading

consumer and the top global importer of

starch.

It was in this promising context that the Group

decided to expand into this major market, in

partnership with the Wilmar group.

In the south of the country, the Dongguan

starch facility, where production started up in

March 2015, has a crushing capacity of

500,000 tons per year. The wheat starch pro-

duced by this facility has particularly valuable

properties, especially as it can be used for noo-

dles - a market experiencing strong growth.

Since October 2015, the production of alcohol,

glucose syrup, fructose and plant proteins has

supplemented the production of native starch.

In the north of the country, close to the best

corn production areas, the Tieling starch facil-

ity has an annual crushing capacity of

700,000 tons of corn. Since its takeover in 2013,

and thanks to the investments made, Tieling

has become one of the most advanced facili-

ties both in terms of the technology used as

well as in terms of the quality of its products.

Over the past year, the production of maltose

syrup, fructose, and crystalline dextrose has

supplemented the production of native starch.

Starch facility at Cigading, in Indonesia.


P.4 6


TIME FOR

RELATIONSHIPS

T IME FO R

PERFORMA NCE

T IME FOR

COMMIT MENT

TEREOS MAINTAINS RELATIONSHIPS

WITH NUMEROUS STAKEHOLDERS.

The Group is an important partner

of the agricultural world. It supports

the development of its industrial clients

by providing solutions to the design

or expansion of their product lines.

It shares its own know-how and common

expertise with its collaborators.

It offers reliable and innovative local

brands to consumers.

of agricultural raw materials. Tereos has a close

relationship with 18,000 farmers, including

12,000 cooperative growers. Moreover, Tereos

has for many years now maintained partner-

ships with cereal cooperatives, such as Boor-

malt, the malt subsidiary of Axéreal, with

which the group shares the same vision of the

industry.

AGRICULTURAL

WORLD

ACT ING WITH A V ISION OF THE INDUSTRY

Tereos increases the value of produce from a

range of agricultural crops such as sugar beet,

potatoes, cassava, wheat, corn and sugar cane.

The Group is involved at every level, upstream

to downstream, from production and process-

ing to marketing.

In all the countries in which it is located, the

Group is an important partner for its suppliers

CONTROLLING THE ENTIRE VALUE CHAIN

As a cooperative group, Tereos has always maintained a close relationship with its cooper-

ative growers and agricultural suppliers. The Group supports the agricultural world in

increasing the value of its produce and in seeking new outlets.

48

ONE ST EP A HEA D

P 8 P 20

T IME FOR A CT ION

Organized in May 2015 at the

campus at the Institut polytechnique

de Lasalle Beauvais (Polytechnic

Institute of Lasalle Beauvais), the

Carrefour de l’innovation [Innovation

Crossroads] brought together nearly

300 cooperative growers

on the subject of sugar beet

competitiveness. Five hundred

cooperative growers attended

the event in 2016. It dealt with

issues such as working the soil

and planting techniques, and

offered conferences and agronomic

workshops at the demonstration

platform at Marquion, in Pas-de-Calais.

SHARING AGRONOMIC

INNOVATION

IN BRAZIL,

THE HARVESTING OF SUGAR CANE

IS 99% MECHANIZED

4 9 T EREOS - A NNUA L REPORT 201 5-201 6

P 32



P 46-55

A PARTNERSHIP APPROACH

BRAZIL: INCREASING

AGRICULTURAL PERFORMANCE

The cooperative growers also benefit from

advice and the R&D in which the Group invests:

agronomic advice, research into new varieties

and promotion of good agricultural practices.

Whether they are partners or suppliers, Tereos

helps them develop more sustainable and

innovative agricultural practices through the

many trials and experiments carried out each

year by its agronomic services. The results are

then shared widely. Tereos also provides sup-

port to its agricultural suppliers to obtain certi-

fications that add value to their operations and

production.

In Brazil, with the “Guarani em Campo” pro-

gram created in 2012, numerous measures

have been introduced to make agronomic

information and innovations more compre-

hensible and accessible (precision farming:

using drones for mapping, variable rate pro-

cessing) to increase agricultural performance.

This involves holding technical meetings on a

regular basis and also establishing partner-

ships with producer cooperatives, etc.

consolidation of all the Group's activities in

a single brand enhances the visibility of one

of the most complete and innovative portfo-

lios in the sector. This is in order to meet

the needs of customers representing a num-

ber of industrial sectors, with a presence on

international markets.

Tereos offers its industrial clients 400 bench-

mark products that meet the needs of diverse

business sectors: food (animal and human),

pharmacy, perfumery, stationery, chemistry and

energy.

Tereos meets all of its customers’ needs in a

transparent and homogeneous fashion. The

A SINGLE BRAND

FOR AN EXTENDED RANGE

In partnership with industry, Tereos works alongside them closest to their markets to support

their international development by consistently providing them with quality products and

services throughout the world.

CUSTOMERS

OF DEDICATED PRODUCTS AND SERV ICES

50

ONE ST EP A HEA D

P 8 P 20

T IME FOR A CT ION

PRODUCTS DEVELOPED

FOR SPECIFIC NEEDS

FROM PRODUCTS TO SERVICES

The Research & Development Department at

Tereos develops products in response to the

specific needs of customers. This applied R&D,

produced in a laboratory, goes as far as creat-

ing reduced-scale production lines to test the

industrialization capacity. The applied R&D

center, located in Marckolsheim (France), was

specifically designed to work for and with cus-

tomers in such areas. It covers all sectors, from

human consumption to animal nutrition, as

well as pharmacy, cosmetics, paper and corru-

gated cardboard. More than 100 client proj -

ects are developed and tested there each year.

Tereos also develops related services in areas

such as risk management, for example. To help

its customers better protect themselves

against the negative effects associated with

the volatility of agricultural raw materials,

Tereos offers them various solutions involving

either a cap or limiting the variation in prices

over a given period. These tools are adapted to

different market situations and can be

adj usted to the specific needs of our custom-

ers, in terms of the level of coverage, length of

protection and share of protected purchases.

In 2015, Tereos launched the first

edition of its awards for excellence

to recognize the value of the

expertise of its European suppliers.

Trophies were awarded during

the first seminar for Tereos

suppliers. This dual initiative

illustrates the Group's desire

to develop long-term relationships

with its main suppliers.

Four suppliers were recognized

in four key areas: quality and safety,

innovation, CSR and project

management.

EXCELLENCE AWARDS

FOR SUPPLIERS

51 T EREOS - A NNUA L REPORT 201 5-201 6

P 32



P 46-55

development of individual efficiency and the

preparation of performance reviews.

New subjects will be offered during the course

of 2016, to cover operational and behavioral

aspects.

The aim of the Tereos Academy’s digital plat-

form is to highlight local training initiatives. A

library containing the Group's expertise is also

set to be rolled out in 2016, to promote the

sharing of good business practices.

For the second year, Tereos has re-launched its

annual online performance review. It involves

the 2,500 managers of the Group, who prepare

an individual assessment and evaluate the level

of achievement of their objectives. A full assess-

ment will then be carried out on their needs in

terms of training and career development

opportunities. The data are then analyzed by

ENHANCING TALENT MANAGEMENT

EMPLOYEES,

DEVELOPING TALENT

One year after launching the Tereos Academy,

its in-house training program, Tereos is strength-

ening its HR offer to provide each employee

with the means to develop his or her skills to

allow them to meet the challenges of tailoring

and increasing skills.

The Group is committed to ensuring that all

employees undergo at least one training

course each year. In 2015, Tereos specifically

launched the Tereos Academy to respect this

commitment. The Academy offers dis-

tance-learning and classroom-based training

programs. One year after its launch, more than

5,100 employees have enrolled and have

access to its programs.

Many modules are available, ranging from rais-

ing awareness to Tereos’ ethical charter, to the

THE TEREOS ACADEMY

IS NOW IN OPERATION

The Tereos group has 24,000 employees worldwide. The major challenge consists

of continuing to develop the skills and promotion opportunities for all employees

and to speed up the emergence of a common culture and conduct.

52

ONE ST EP A HEA D

P 8 P 20

T IME FOR A CT ION

continued

From June 2016, all of the

employees of the Group in France

will be sent a customized social

assessment statement to their

home address. This document will

summarize all remuneration

and social benefits received over

the course of a year. This initiative

is a first for Tereos. It will first be

sent to the 3,500 employees

working within France; after this,

the action will then be extended

to the entire Group.

FIRST INDIVIDUAL SOCIAL

ASSESSMENT


P 32



P 46-55

To promote this process, the Group has defined

shared principles for conduct, both on a col-

lective and an individual level. The manager

plays a central role in this system, as he/she is

the person who guarantees such conduct is

adhered to. A system to reduce the numbers

and train managers – via the Tereos Academy

– will be gradually rolled out during the course

of 2016.

Tereos creates jobs in the various professions

and territories where it operates. Due to the

wide range of its geographic locations, the size

of its facilities, the diversity of its businesses

and its sustained external growth strategy,

the Group provides excellent career opportuni-

ties for candidates, internally and externally,

both for inexperienced as well as more experi-

enced staff. The Group is increasing its visibility

as a recruiter through partnerships with profes-

sional social networks, through

the human resources teams and used by

"career committees", which is a new system

put in place to match current and future

requirements for skills with employees pos-

sessing the necessary abilities. Action plans

are then defined to promote internal mobility,

whether operational or geographic.

For an international group such as Tereos, the

sharing of common principles of conduct and

actions is a key challenge. In fact, the Group's

management is convinced that the conduct of

all employees is an essential component for

achieving its strategic objectives. To contribute

fully and effectively, each contributor must, at

his or her own level, have the necessary profes-

sional skills while at the same time be able to

adapt to new situations and environments. In

other words, they must be able to combine

operational excellence with an ability to adapt.

RECRUITMENT: AN ONGOING TREND

CONDUCT: A SHARED

AND COMMON FOUNDATION

AROUND THE WORLD

54

ONE ST EP A HEA D

P 8 P 20

T IME FOR A CT ION

a policy of active links to educa-

tional institutions – mainly in the area of com-

merce and engineering – and through the

recruitment of staff under work-study schemes,

professional development contracts and as

trainees.

Present in 16 countries, the Group prefers social

dialog on a local and ongoing basis. In 2015-

2016, this dialog resulted in the signing of 47

collective agreements to adapt and improve,

where appropriate, the legal provisions in force

locally. This social dialog occurs at each level of

the Group: in establishments, involving plant

executives and their HR managers, and in the

business and Group divisions via dedicated

bodies facilitating social dialog.

A DRIVE TOWARDS ONGOING SOCIAL

DIALOG

continued

Tereos aims to offer all employees,

regardless of their job or place of

employment, the same requirements

in terms of risk prevention in the

workplace. In 2015, in addition to

continuing on-site safety training

programs, new initiatives were being

rolled out. In France, all the sites of

Tereos Sucre France spent one day

on a specific safety event based

on practical workshops focusing

on identifying and anticipating risk.

In Spain, three factories – Zaragoza,

Selby and Saluzzo – were awarded

the annual safety prize from Starch

Europe.

SAFETY: STRONGER

ENGAGEMENT

PermanentsSeasonal contracts

and other contracts

TOTAL general 15,351 8,437

Central functions

Sugar Europe

Starch and Sweeteners

International Sugar

Agricultural activities

199 6

France 1,748 673

Czech Republic 434 168

Romania 170 62

United Kingdom

126 3

Other countries 33 0

TOTAL sugar beet

2,511 906

Europe 1,354 106

Brazil 241 3

Indonesia 302 28

TOTAL cereals 1,897 137

Indian Ocean 479 297

Brazil 3,048 427

Africa 652 378

TOTAL sugar cane

4,179 1,102

6,565 6,286

24,000 EMPLOYEES

The packaging is also used to provide informa-

tion on the progress made by the brand in

terms of sustainable development. For exam-

ple, a description of the Group's actions to

reduce its carbon footprint is displayed along-

side the traditional recipe.

Whitworths Sugar is the brand belonging to

Tereos Napier Brown in the United Kingdom.

After its 2012 repositioning around the promise:

"Happiness is Whitworths project", the brand

has since been highly successful among con-

sumers, resulting in a sharp growth of its super-

market sales. Its market share is currently 20%.

In February 2016, Whitworths Sugar received

the Design Effectiveness Award, which rewards

commercial successes as a result of reposition-

ing its packaging.

The new packaging, launched at the end of

2015, aims to bring consumers closer to farm-

ers. Adorned with a French fl ag, the packaging

of the sugar now shows photographs of sugar

beet growers who are also members of the

cooperative.

WHITWORTHS SUGAR: A “HAPPY” BRAND

BÉGHIN SAY IS INFORMING CONSUMERS

ABOUT SUSTAINABLE DEVELOPMENT

Consumers know about Tereos through seven brands, which are well established locally.

In common with the Tereos brand, these brands also guarantee quality and innovation.

TEREOS’ 7 CONSUMER BRANDS

BÉGHIN SAY LA PERRUCHE BLONVILLIERS

GUARANI TTD

BOURBON WHITWORTHS SUGAR


P 32



P 46-55

CONSUMERSLOCAL BRANDS

T IME FOR

RELAT IONS HIPS

TIME FOR

COMMITMENT

RESULTS

SES PARTIES PRENA NTES.

fournisseurs et consommateurs : Tereos

FOOD, ENERGY, CONSERVATION

OF RESOURCES, RELATIONSHIPS

WITH COMMUNITIES: these issues are

at the heart of today's societal and

environmental challenges. They represent

the key to a sustainable future. They are

also at the heart of Tereos' business activities.

It is for this reason that the Group is

committed to each of these issues, which

are broken down into two complementary

objectives: strengthening its contribution

as a responsible operator and contributing

to the company's long-term performance.

To improve its impact on communities and the environment, Tereos has defi ned and implemented a comprehensive Corpo-rate Social Responsibility (CSR) strategy structured around 5 pillars to which the group is committed, covering all of its activities.

THE 5 PILLARSOF COMMITMENT

As a cooperative group, Tereos maintains very strong links with the agricultural world, both in France, where farmers are its cooperative growers, as well as around the world, where they operate as suppliers of raw materials.

Overall, the Group adds value to around 1 mil-lion hectares of agricultural land through its processing of sugar beet, sugar cane, cereals, potatoes and cassava.

To promote sustainable agriculture, which combines both impressive yields and environ-mentally-friendly agricultural practices, Tereos bases its various activities on demanding and recognized practices and certifi cations such as SAI (Sustainable Agriculture Initiative), Bonsucro (certifi cation demonstrating a com-mitment to environmentally and socially responsible sugar cane production), ISCC (International Sustainability and Carbon Certi-fi cation), and even 2BSvs (biomass biofuel, sustainability voluntary scheme).

As a major industrial operator present in many sectors – food, pharmaceuticals and cosmet-ics, energy, etc. – Tereos is seeking to drive its growth and development while reducing its impact on the environment.

For this, it pays particular attention to the energy performance of its plants and to con-trolling anything it releases/discharges into the water and air.

By making the most of the resources it pro-cesses, the Group is fully integrating the prin-ciples of a circular economy which allows it to limit its environmental impact by reducing its emissions of greenhouse gas and increas-ing its use of renewable energy, while at the same time improving industrial and commer-cial performance.

OF THE PROCESSED RAW MATERIALS WERE CERTIFIED/EVALUATED AS

SUSTAINABLE IN 2015 COMPARED WITH 17% IN 2014

48%OF THE ENERGY USED

AT THE TEREOS FACILITIES IS FROM RENEWABLE SOURCES

46%

SUSTAINABLE AGRICULTURE

POSITIVE LOGISTICS AND INDUSTRY

58

P 32


P 20

TIME FOR ACTION

To respond to global food challenges, it is essential to produce suffi cient quantities. It is also important to ensure the security and quality of this production.

Tereos works on a daily basis to provide excel-lent products to its clients and end consumers, in terms of quality, origin and production onditions.

To this end, the Group obtains supplies directly from more than 18,000 farmers located close to its processing plants. The Group also seeks excellence in its industrial processes through the implementation of quality management and food safety standards (i.e. ISO 9001, ISO 22000 and FSSC 22000), as well as rolling out training programs to achieve the goal of a zero-accident rate.

As a processor of agricultural raw materials, Tereos has solid roots in the areas in which it operates and actively contributes to the ongo-ing economic development of the local com-munities.

The Group maintains a strong bond with agri-culture and its local environment: sugar beet, sugar cane, potatoes and cassava are pur-chased directly from the producers, in the vicinity of industrial establishments. In Europe, cereals are supplied through partner cooper-atives or storage organizations, with a prefer-ence for short distances.

As a major employer, particularly in rural areas, Tereos is committed to promoting qual-ifi ed employment and training for its employ-ees, thus contributing to the development of the economic and social fabric. The Group has also committed to various programs to sup-port local populations.

The diversity of the Tereos raw materials and its industrial processes offer several hundreds of items, providing its agro-industrial clients with solutions appropriate to their various markets and to the changing needs of consumers.

Tereos invests in R&D and helps its customers develop new recipes in order to continuously improve the nutritional composition of foods, while preserving their taste, texture and proper storage properties.

Tereos is therefore involved in major research projects similar to the Improve research plat-form, which aims to increase the percentage of plant proteins in food.

OF TEREOS SITES HAVE ONE OR MORE CERTIFICATIONS

RELATING TO FOOD QUALITY AND SAFETY

84%PRIORITY LOCAL DEVELOPMENT

PROGRAMS: HEALTH, EDUCATION, ENVIRONMENT

3OF THE TOTAL R&D BUDGET

DEDICATED TO RESEARCH INTO NUTRITION AND HEALTH

48%

PRODUCT GUARANTEES

LOCAL DEVELOPMENT

NUTRITION AND HEALTH


TIME FOR COMMITMENT

P 56- 67P 46

TIME FOR RELATIONSHIPS

the food supply chain. It is a unique platform

that now includes 80 members who share the

same vision of sustainable agriculture: one that

is kinder to the environment and more effec-

tive on a social and economic level.

In addition to actively participating in the wor-

king group on the sustainability of sugar beet

since its creation in 2013, in May 2015 Tereos

SUSTAINABLE

AGRICULTURE

TEREOS STRENGTHENS ITS COMMITMENT

THE SUSTAINABLE AGRICULTURE

INITIATIVE (SAI) PLATFORM

The SAI platform is a not-for-profit

association that provides tools,

advice and an exchange network to promote

more sustainable supply chains and agricultu-

ral practices. Its operations rely on the involve-

ment and collaboration of all stakeholders in

To promote sustainable agriculture, combining both impressive yields and environmental-

ly-friendly agricultural practices, Tereos bases its various activities on demanding and

recognized certifications such as the SAI and Bonsucro initiatives.

Sugar cane feld

in Brazil.

60

P 32


P 20

T IME FOR A CT ION

strengthened its commitment to SAI by beco-

ming a member of SAI's Council. The group

then sent a self-assessment questionnaire, the

Farm Sustainability Assessment (FSA), to a

representative sample of 160 French coopera-

tive growers (sugar beet growers).

The results of the questionnaires, compiled in

December 2015, show that 100% of farmers

who carried out the self-assessment were clas-

sified as “silver” and “gold”. This approach has

been received with enthusiasm by cooperative

growers. The next step will be to define an

“We welcome the addition of Tereos in 2015. Its cooperative status, its close relationships with cooperative growers across the globe and its leading position in the sugar and starch industries make it a key partner in promoting sustainable agriculture more widely.”

Ulrike Sapiro, President of the SAI Platform and Director of Sustainability at the Coca-Cola Company

BETWEEN 2014 AND 2015, TEREOS’ BONSUCRO-

CERTIFIED SUGAR PRODUCTION IN BRAZIL

INCREASED BY

41%

OF COOPERATIVE GROWERS THAT CARRIED OUT

THE FSA SELF-ASSESSMENT WERE CLASSIFIED AS “SILVER”

AND “GOLD”.

100%

action plan for continuing progress, in collabo-

ration with producers and members of the SAI,

and to launch a wider roll-out of the approach

beyond France.

BONSUCRO

A non-profit organization,

Bonsucro brings together

sugar-cane producers, processors and associa-

tions. Its mission is to improve the social and

environmental impact of sugarcane, while

maintaining its economic viability. This certifi-

cation assesses, in particular, the agricultural,

industrial and environmental performance of

the sector, as well as the employees’ working

conditions.

Tereos’ Brazilian subsidiary began work on

obtaining its Bonsucro certification in 2011. The

first certification was obtained in 2013 for the

Cruz Alta and Severinia plants, followed by the

Vertente plant in 2014 and the Andrade plant

in 2015. Four of the seven Tereos plants in Brazil

are now Bonsucro certified and the Brazilian

subsidiary is already working on the certifica-

tion of the São José plant for 2016.


TIME FOR COMMITMENT

P 56- 67P 46


ANIMAL FEED

PRODUCTION SITE

CO-PRODUCTS from the processing of raw materials

RAW MATERIALS

FOOD INDUSTRY

Sugar beet, sugarcane, wheat, corn

WATER

STARCH ALCOHOL

ELECTRICITY BIOGAS BIOFUEL

ORGANIC SOIL CONDITIONER

ENERGY

ENERGY SURPLUS SUPPLIED TO GRID

ENERGY RECOVERY

AGRICULTURAL USE

WATER RECOVERY LOCAL AUTHORITY

SUGAR

CIRCULARECONOMYTEREOS MAKESTHE MOSTOF RESOURCES

Tereos’ production chain is part of a virtuous

processing cycle – more than 99% of the raw

material processed by Tereos is used. We use it

to produce sugar, plant proteins and starch for

human consumption, biofuels, products for

animal feed and energy. Following a circular

economy approach, the Group limits its envi-

ronmental impact, meaning fewer CO2 emis-

sions, lower fossil fuel consumption and fewer

wasted resources, while improving its indus-

trial and commercial performance.

OF AGRICULTURAL PRODUCTS USED

+99%

Throughout the sugar beet, sugarcane and cereal processing cycle, Tereos optimizes the products’ life cycle to obtain various food and energy products and co-products. The aim? To make the most of raw materials.

62

P 32


P 20

TIME FOR ACTION

ANIMAL FEED

PRODUCTION SITE

CO-PRODUCTS from the processing of raw materials

RAW MATERIALS

FOOD INDUSTRY

Sugar beet, sugarcane, wheat, corn

WATER

STARCH ALCOHOL

ELECTRICITY BIOGAS BIOFUEL

ORGANIC SOIL CONDITIONER

ENERGY

ENERGY SURPLUS SUPPLIED TO GRID

ENERGY RECOVERY

AGRICULTURAL USE

WATER RECOVERY LOCAL AUTHORITY

SUGAR


TIME FOR COMMITMENT

P 56- 67P 46


RENEWABLE ENERGY

A V IRTUOUS AND SUSTA INABLE MODEL

2016 saw the completion of the energy savings

plan launched in 2012 by Tereos in all of its

sugar beet refineries. This €100 million invest-

ment plan has decreased energy emissions by

15% and CO2 emissions by 20%. Renewables

now account for 46% of the energy mix consu-

med in the Group’s plants.

Due to its major economic and environmental impact, energy is a key concern for Tereos.

The Group pursues a dual strategy of reducing its consumption and increasing the share

of renewable energy used in its energy mix.

The sugar refnery in Gol,

Réunion.

GREEN STEAM FOR SUSTAINABLE

PRODUCTION

In Lillebonne, near Le Havre, France, Tereos takes

advantage of steam generated by a household

waste recovery unit operated by SEVEDE, which

covers 130 surrounding districts. Run by the

SUEZ group, this unit is adjacent to its produc-

tion site. The 330,000 MWh of green steam pro-

duced annually covers almost 70% of the Tereos

plant’s total energy needs.

P 32


P 20

T IME FOR A CT ION


T IME FOR COMMIT MENT

P 56- 67P 4 6


ELECTRICITY PRODUCED

BY COGENERATION

DIGESTERS FOR PRODUCING BIOGAS

In Brazil, Africa and the Indian Ocean, where it

produces and processes sugarcane, the Group

relies on cogeneration, which produces electri-

city from bagasse, the fibrous residue of cru-

shed sugar cane. It is burned in highly efficient

boilers and supplies the sites with steam and

energy. Any electricity not required by the plant

is then injected into the conventional grid, pro-

viding the electricity needed to run irrigation

systems and for the local population.

Tereos also uses by-products from these pro-

cessing procedures and waste for production

into energy, which is then used on its produc-

tion sites. By turning vinasse – from alcohol pro-

duction using sugar beet – into biogas using

digesters, Tereos significantly reduces its fossil

fuel consumption and CO2 emissions, with 50%

of distilleries’ energy needs being covered by

biogas.

This process has been used in particular at sites

in Artenay (France) and Dobrovice (Czech Repu-

blic) since 2014. The unit in Artenay processes

60% of the site’s vinasse (160,000 tonnes per

year), reducing CO2 emissions by 12,500 tonnes

a year. The digester in Dobrovice, installed in

September 2014, covers 80% of the distillery’s

energy needs for the season and reduces CO2

emissions by more than 6,000 tons a year.

The bagasse is used

to produce electricity.

OF ELECTRICITY CONSUMED

IN RÉUNION IS PRODUCED

FROM BAGASSE, WHICH IS USED

BY THE ISLAND’S TWO THEMAL

POWER PLANTS

12%

TEREOS PLAYS ITS PART

IN THE COMMUNITY

A global player in sugar operating in

16 countries on four continents, the

Tereos Group is committed to local

communities through its involvement

in programs relating to health, educa-

tion and the environment.

TEREOS STARCH

AND SWEETENERS

BRAZIL

GUARANI, TEREOS

SUGAR AND ENERGY

BRAZIL

Sport:

Professional integration:

partnership with an association

and its basketball team, made up of

young girls from disadvantaged back-

grounds.

training pro-

gram for young people from disadvan-

taged backgrounds prov ided by

volunteer Tereos Guarani employees in

partnership with the Pescar Foundation.

66

P 32


P 20

T IME FOR A CT ION

TEREOS SUGAR FRANCE

TEREOS STARCH

AND SWEETENERS

EUROPE

TEREOS TTD SUGAR

CZECH REPUBLIC

TEREOS

INDONESIA

TEREOS SUGAR

ROMANIA

TEREOS SUGAR

INDIAN OCEAN

TEREOS SUGAR

MOZAMBIQUE

Reforestation:

Energy:

Transport:

6,000 trees planted at

the Lillers site by pupils from a neigh-

boring school in partnership with the

ARBRE platform.

in Lillebonne, use of green

steam from processing the household

waste of 130 neighboring districts in

partnership with SEVEDE and SUEZ.

reduction in the number of

trucks on the road for transporting

sugar beet due to the construction of a

silo in the city of České Meziříčí.

Energy:

Learning:

Biodiversity :

Infrastructures:

transforming waste from the

starch facility in Cigading into green

energy through a tripartite partnership

with a cement factory and waste

collector.

open day and information

session on the different stages of sugar

manufacturing for 200 students in the

Ludus region. part icipat ion in a

Réunion harrier conservation program,

a bird of prey native to Réunion, with

the Réunion Society of Ornithological

Studies (Société d’Études Orni-

thologiques de La Réunion – SEOR).

renovation of the only

rural hospital and involvement in the

construction of a secondary school for

around 800 pupils in the Marromeu

region.67 T EREOS - A NNUA L REPORT 201 5 - 201 6

T IME FOR COMMIT MENT

P 56- 67P 4 6


RESULTS

CONSOLIDATED ACCOUNTS page 68

RESULTS BY ACTIVITY page 70

INCOME STATEMENT page 72

CONSOLIDATED BALANCE SHEET page 73

INCOME FROM SUGAR BEET page 74

CONSOLIDATED ACCOUNTSFOR THE GROUP

INCOME STATEMENT

The Group’s consolidated revenues stood at €4,201 million

in 2015/16, down €99 million (€4,300 million in 2014/15).

Revenues were up €56 million, or 1.3%, at constant

exchange rates, thanks to the growth of volumes sold, the

recovery of world sugar and Brazilian ethanol prices in the

second half of the fi nancial year, the integration of

Vertente, and despite the substantially lower average

2015/16 prices of both European quota sugar and starch &

sweeteners. Adjusted EBITDA (before price complements)

for the Group stood at €439 million in 2015/16, down

€14 million (€453 million in 2014/15), but up €26 million, or

5.7%, at constant exchange rates. It was affected by the

historically low levels of world and European sugar prices.

Overall the Group’s adjusted EBITDA margin was resilient,

at 10.5%, in line with the previous year.

The Group’s Net profi t stood at -€34 million(€17 million

last year).

68

CONDOLIDATED REVENUES (€M) ADJUSTED EBITDA (€M) CONSOLIDATED NET INCOME (€M)

20062007

2,177

20072008

3,586

20082009

3,309

20092010

3,529

20102011

4,409

20112012

2,555

20122013

4,920

20132014

4,697

20142015

4,300

20152016

4,201

20062007

259

20072008

358

20082009

440

20092010

596

20102011

752

20112012

519

20122013

794

2013 (1)

2014

703

20142015

453

20152016

439

2006 (2)

2007

197

2007 (3)

2008

196

20082009

76

20092010

150

20102011

237

20112012

182

20122013

246

20132014

176

20142015

17

20152016

-34

(1) Results provided on a pro forma basis to ensure proper comparison with 2015–2016 results, for which the EBITDA calculation method was adjusted.(2) Exceptional results linked to Guarani’s stock exchange flotation and the disposal of FBA shares.(3) Exceptional results linked to payments from the restructuring fund.

SEPTEMBER12 MONTHS

MARCH6 MONTHS

MARCH12 MONTHS

SEPTEMBER12 MONTHS

MARCH6 MONTHS

MARCH12 MONTHS

SEPTEMBRE12 MOIS

MARS6 MOIS

MARS12 MOIS

Adjusted EBITDA contributions from Sugar International

and Starch & Sweeteners increased compared to the

prior year, and helped to partly offset the further drop in

adjusted EBITDA from Sugar Europe.

Tereos achieved a significant improvement in adjusted

EBITDA in the second half of the 2015/16 year. It was 67%

higher than in H1 and 27% higher than in the same period

of the previous financial 6 year. This was due to the initial

benefits of the Group’s €100 million 3-year performance

improvement plan and the improvement of market

conditions in the second half of the year, with a recovery

of world sugar prices as well as Brazilian and European

ethanol prices, and lower cereal and energy prices. Ove-

rall, adjusted EBITDA in H2 2015/16 stood at €275 million

compared to €164 million in H1 2015/16 and €217 million

in H2 2014/15.

BALANCE SHEET

The balance sheet total stood at €6,282 million as at

March 31, 2016, down by €183 million compared to the

previous year, mainly due to the effect of the change in

the Brazilian real against the euro.

Cooperative share capital and consolidated shareholders’

equity totaled €2,577 million, down €201 million com-

pared to the previous fiscal year.

Net debt stood at €2,079 million as at March 31, 2016,

compared with €2,025 million as at March 31, 2015, with

the integration of Vertente’s net debt being partially off-

set by a positive exchange effect (appreciation of the euro

against the Brazilian real and US dollar). Excluding the

exchange effect and the integration of Vertente, the

Group’s net debt fell by €9 million compared to last year.

The net debt to adjusted EBITDA ratio, after adjustment

for seasonal working capital requirements, stood at 4.6x

as at March 31, 2016, compared with 4.1x as at March 31,

2015 and 5.3x as at December 31, 2015.


RESULTSBY ACTIVITY

SUGAREUROPE

THE TURNOVER OF SUGAR EUROPE IS DOWN BY 6%, from €1,876 million in 2014/15 to €1,760 million in 2015/16,

mainly due to average prices declining for the industry

quota and non-quota sugar (i.e., – 17% and – 8% respec-

tively compared to last year for Tereos Sugar France). The

turnover of Sugar Europe has also been impacted by a

drop in ethanol volumes in the Czech Republic (related to

the accidental production interruption in Dobrovice).

Overall, the operational performance was satisfactory, in

particular with high volumes of beet processed on a daily

basis (132,500 tonnes per day on average in France).

Adjusted EBITDA, before price complements, declined by

29%, from €205 million to €146 million, as a result of the

decline in the price of sugar which was partially offset by

higher average prices of ethanol, the reduction of indus-

trial and logistics unit costs (reduced transport costs of

beet, results of operational performance plans, reduction

of energy consumption) and the drop in the price of

energy.

INTERNATIONALSUGAR

THE TURNOVER FOR SUGAR INTERNATIONAL DECREASED BY 2%, from €1,089 million in 2014/15 to €1,066 mil-

lion in 2015/16. The turnover was impacted by slightly

lower overall volumes and lower average prices in Europe

(mainly concerning sales from Réunion Island), but has

also benefited from higher world sugar prices and etha-

nol prices in Brazil in the second half of the year (mainly

impacting positively the Group’s activities in Brazil). Ove-

rall, the turnover increased by 16% at constant exchange

rates, but the depreciation of the Brazilian Real in particu-

lar against the Euro led to a marginal decline of turnover

expressed in Euros.

The adjusted EBITDA of Sugar International increased by

20%, from €173 million in 2014/15 to €207 million in

2015/16 (an increase of 45% at constant exchange rate).

This is mainly due to the increase in sugar and ethanol

sales prices for our business in Brazil, resulting from the

recovery of world sugar prices and ethanol prices in Brazil

from August 2015, but also from the substantial improve-

ment in operational efficiency and cost control measures

in Brazil, both at agricultural and industrial levels. These

improvements more than offset the negative impact of

the decline in the price of sugar exported to Europe from

the Indian Ocean, and the low volumes harvested in

Mozambique.

70

STARCH AND SWEETENERS

THE TURNOVER OF STARCH AND SWEETENERS INCREASED BY 1%, from €1,489 million in 2014/15 to €1,509 million

in 2015/16. In Europe, despite rising production and sales

volumes, and the positive impact of the average market

price of ethanol over the year, turnover remained stable due

to strong pressure on prices in some segments of starch

products and in sweeteners, influenced by lower sugar

prices. In local currency terms, in 2015/16, turnover increased

significantly in Brazil (+ 26% at constant exchange rate)

thanks to a strong growth in volumes, but the depreciation

of the Brazilian Real against the Euro resulted in a stable

turnover expressed in Euros. Furthermore, the turnover of

Starch and Sweeteners benefited from the consolidation

over a full year in 2015/16 of the business acquired in Indone-

sia. Adjusted EBITDA increased by 17%, from €78 million in

2014/15 to €92 million in 2015/16. Despite the strong pressure

on margins on raw material cost for starches and sweete-

ners during the first half of the year, results were positively

impacted by volume growth, dropping energy and grain

prices, progressing productivity plans, improving ethanol

margins and a recovery of margins for starch products in the

second half of the year. The contribution clearly improved in

the second half of the year with an EBITDA 61% higher than

in the first half of 2015/16, and 114% higher than in the second

half of last year.

2015–2016 REVENUES

2015–2016 ADJUSTED EBITDA (BEFORE PRICE COMPLEMENTS)

36%STARCH AND SWEETENERS

42%SUGAR EUROPE

22%INTERNATIONAL

SUGAR

21%STARCH AND SWEETENERS

33%SUGAR EUROPE

46%INTERNATIONAL

SUGAR

71 TEREOS - RAPPORT ANNUEL 2015 - 2016

(IN € MILLION) 03/31/2016 03/31/2015

Revenues 4,201.0 4,300.2

Costs of goods sold - 3,425.6 - 3,494.7

Distribution costs - 384.8 - 396.6

Overheads - 288.5 - 265.6

Other operating income (expenses) - 2.7 - 13.0

OPERATING RESULT 99.5 130.3Financial expenses - 337.9 - 280.9

Financial income 234.6 170.2

FINANCIAL RESULT - 103.3 - 110.7Share of profit of associates 5.6 19.3

RESULT BEFORE TAXES 1.8 38.9Income tax - 36.2 - 21.6

NET RESULT 34.4 17.3For the Group share - 20.0 43.2

For minority interests - 14.4 - 25.9

CONSOLIDATED INCOME STATEMENT OF THE TEREOS GROUP

72

CONSOLIDATED BALANCE SHEET OF THE TEREOS GROUP AS AT MARCH 31, 2016

(IN € MILLION) 03/31/2016 03/31/2015

ASSETSGoodwill 1,105.0 1,115.4Intangible assets 105.2 116.6Biological assets 222.9 216.9Fixed assets 2,238.4 2,280.2Interests in associates 284.3 226.2Available-for-sale assets 45.0 47.7Other financial assets 108.2 100.2Non-current financial assets with related parties 15.5 16.0Deferred tax assets 147.0 167.4Current tax assets 0.5 0.6Other assets 1.9 3.6TOTAL NON-CURRENT ASSETS 4,274.0 4,290.8Stocks 958.6 1,037.3Customers 385.1 395.5Other current financial assets 215.8 285.0Current financial assets with related parties 19.1 20.2Current tax assets 37.4 33.6Cash and cash equivalents 380.5 389.2Other current assets 11.8 13.8TOTAL CURRENT ASSETS 2,008.3 2,174.7TOTAL ASSETS 6,282.2 6,465.5

LIABILITIES AND EQUITYAdditional paid-in capital 285.8 285.8Reserves and consolidated results 1,033.4 1,153.5GROUP EQUITY 1,319.2 1,439.2Minority interests 638.2 719.2CONSOLIDATED SHAREHOLDERS’ EQUITY 1,957.4 2,158.5Cooperative capital 619.2 619.2COOPERATIVE CAPITAL AND EQUITY 2,576.5 2,777.6Non-current financial debts 1,545.9 1,507.7Employee benefits 52.9 51.0Non-current provisions 12.1 20.7Deferred tax liabilities 27.4 25.6Current tax liabilities 0.0 0.0Other non-current financial liabilities 199.0 199.3Non-current financial liabilities with related parties 5.1 10.6Other non-current liabilities 20.3 15.0NON-CURRENT LIABILITIES 1,862.7 1,829.9Current financial debts 913.8 906.3Current provisions 8.8 3.2Other current financial liabilities 314.0 323.6Current financial liabilities with related parties 45.8 53.4Suppliers 528.3 527.5Current tax liabilities 4.5 4.8Other current liabilities 27.8 39.2CURRENT LIABILITIES 1,843.0 1,858.0Liabilities associated with assets held for sale 0 0TOTAL EQUITY AND LIABILITIES 6,282.2 6,465.5

Extract from the consolidated accounts of the Tereos Group, the consolidating company. The consolidated financial statements as at March 31, 2016 of the cooperative “Tereos” were prepared in compliance with the legislation and regulations applicable to the consolidation of the accounts of commercial companies and public undertakings.They are presented in accordance with the IFRS (International Financial Reporting Standards) as adopted by the European Union.The full version of these documents may be obtained upon request to Tereos’ registered office.

73 TEREOS - RAPPORT ANNUEL 2015 - 2016

SUGAR BEETREVENUE

Continuing on from the end of the 2013–2014 fiscal year, the

marketing year for the 2014 harvest remained poor in

terms of sugar, alcohols and ethanol. This weighed heavily

on cooperative growers’ income from sugar beet for the

2014–2015 production period, which stood at one of the

lowest levels for ten years.

SUGAR BEET REVENUE

In this context, total average income from sugar beet

totaled €2,383 per hectare. This income includes the base

price for sugar beet, income associated with the pulp

business, dividends and interest on shares. This amount

corresponds to an average price paid for each ton of deli-

vered sugar beet of approximately €25 per ton at 16%

sugar content. For the record, in 2013–14, income from

sugar beet totaled €2,755 euros per hectare.

ADDITIONAL REMUNERATION, DIVIDENDS

AND INTEREST ON SHARES

Unlike previous years, given the low marketing price

levels, price supplements on sugar beet for quota sugar

were not distributed. However, this year, remuneration

from share capital (dividends and interest on shares)

totaled 8.2%.

The dividend from the Group’s diversification activities

was paid to all cooperative growers for all their sugar

beet, sugar and alcohol.

In February 2016, this dividend represented €0.90 per ton

of sugar beet, a remuneration of 7.1% of share capital. In

addition, all sugar beet and alcohol received 1.1% interest

on shares, which corresponds to the maximum permitted

by the regulations over the period.

BREAKDOWN OF SUGAR BEET PURCHASED BY TEREOS IN 2014–2015 (IN %)

PRICE OF SUGAR BEET PURCHASED BY TEREOS IN 2014–2015 (IN EUROS PER TON), EXCLUDING DIVIDENDS

AND INCOME FROM PULP

AVERAGE INCOME FROM SUGAR BEET RECEIVED BY TEREOS GROUP COOPERATIVE GROWERS*

INCLUDING DIVIDENDS AND PULP INCOME (IN EUROS PER HECTARE)

(1) Contract work enabled us to transform 5% of contracted sugar beet into alcohol for the 2013 out-of-quota contract. Sugar beet for other uses and surplus sugar beet were paid at the price of sugar beet for quota sugar. The tonnage of residual surplus sugar beet was low (4%), as most of it was reprocessed to cover delivery deficits in other categories.

*Union Sucre Ethanol cooperative (excluding SDHF) until 2004–2005. All cooperatives since 2005–2006.(1) The SPS “sugar beet” price supplement is not included in this income.

5%SUGAR BEET

FOR OTHER USES

50%SUGAR BEET

FOR QUOTA SUGAR

4%SURPLUS

SUGAR BEET

5 %SUGAR BEET FROM CONTRACT WORK (1)

(OVERSEAS TERRITORIES)

8%SUGAR BEET FOR

THE 2014 CONTRACT

28%SUGAR BEET

FOR ALCOHOL

2,530

2,937

2,767

2,7373,071

2,447

2,380

2,3392,498

2,913

3,798 3,667

2,7552,383

20012002

20022003

20032004

20042005

20052006

2006 (1)

20072007 (1)

20082008 (1)

20092009 (1)

20102010 (1)

201120112012

20122013

20132014

20142015

26.04 25.67

21.8224.43

22.37

13.23

SUGAR BEET FOR QUOTA SUGAR

SUGAR BEET FROM CONTRACT WORK

(OVERSEAS TERRITORIES)

SUGAR BEET FOR ALCOHOL

SUGAR BEET FOR OTHER USES

SUGAR BEET FOR 2014 CONTRACT

SURPLUS SUGAR BEET

YIELD AT 16% SUGAR CONTENT

88.5 T/haSUGAR CONTENT

18.3%

WASTE TARE

9.2% net94% OF SUGAR BEET CLEANED

74

This annual report was published by the Tereos Communication Department

Photo credits: Patrick Bogner, Julien Bouillé (L’Union newspaper), Cherish pictures, Chico Carneiro, Fotolia, Jacques Grison, Thomas Lebon, Jean-Claude Moschetti, Ferdinando Ramos. Tereos, all rights reserved.

Design and production: Printing: this annual report was printed by IME on Cocoon Offset FSC-certifi ed recycled paper.

The printer is Imprim’Vert certifi ed; it is committed to taking specifi c, ongoing action to reduce polluting emissions, while saving natural resources.

TEREOS Annual Report 2015-16

Documents

Transcript of TEREOS Annual Report 2015-16