ANNUAL REPORT 2014 - Cosun

ROYAL COSUN

COSUN ANNUAL REPORT 2014

Royal Cosun

Van de Reijtstraat 15, 4814 NE Breda

P.O. Box 3411, 4800 MG Breda

The Netherlands

Telephone +31 (0)76 530 32 22

Fax +31 (0)76 530 33 03

Internet www.cosun.com

E-mail [email protected]

Entered in the Trade Register of the Chamber of Commerce

for the Southwest Netherlands under number 20028699.

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

inconsistencies between the English and the Dutch version, the latter

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

Sustainability Report. The reports are also available at

www.annualreport-cosun.com.

ANNUAL REPORT 2014

ABOUT COSUN

1


ROYAL COSUN


ABOUT COSUN

Addresses 2

Profile 3

Business model 4

Locations 5

KEY FIGURES 6

COOPERATIVE ISSUES

Report of the cooperative 8

Members and shares 9

REPORT

Letter from the Chairman and the Chief Executive Officer 10

Financial performance 12

Prospects 14

Corporate social responsibility 15

COSUN AT WORK

Innovation and development 17

Suiker Unie 18

Aviko 20

Sensus 22

SVZ 24

Duynie group 26

Cosun Biobased Products 28

MANAGEMENT ISSUES

Risk profile 29

Corporate governance 33

Report of the Supervisory Board 34

Board, Supervisory Board, Executive Board and Works Council 36

ANNUAL ACCOUNTS 2014

Consolidated balance sheet 38

Consolidated profit and loss account 39

Consolidated cash flow statement 40

Notes to the consolidated annual accounts 41

Cooperative balance sheet 60

Cooperative profit and loss account 61

Notes to the cooperative annual accounts 62

OTHER INFORMATION

Independent auditor’s report 69

Provisions in the Articles of Association governing profit appropriation

71

CONTENTS


ABOUT COSUN

2

ADDRESSES

AVIKOP.O. Box 8

7220 AA Steenderen

The Netherlands

Tel.: +31 (0)575 45 82 00

Fax: +31 (0)575 45 83 80

www.aviko.com

[email protected]

SENSUSP.O. Box 1308

4700 BH Roosendaal

The Netherlands

Tel.: +31 (0)165 58 25 00

Fax: +31 (0)165 56 77 96

www.sensus.com

[email protected]

SVZP.O. Box 9535

4801 LM Breda

The Netherlands

Tel.: +31 (0)76 504 94 94

Fax: +31 (0)76 504 94 00

www.svz.com

[email protected]

DUYNIE GROUPP.O. Box 86

2400 AB Alphen aan den Rijn

The Netherlands

Tel.: +31 (0)172 46 06 06

Fax: +31 (0)172 47 34 06

www.duynieholding.com

[email protected]

SUIKER UNIEP.O. Box 100

4750 AC Oud Gastel

The Netherlands

Tel.: +31 (0)165 52 52 52

Fax: +31 (0)165 52 52 55

www.suikerunie.com

[email protected]

COSUN BIOBASED PRODUCTSP.O. Box 3411

4800 MG Breda

The Netherlands

Tel.: +31 (0)76 530 32 22

www.cosunbiobased.com

COSUN FOOD TECHNOLOGY CENTERP.O. Box 1308

4700 BH Roosendaal

The Netherlands

Tel.: +31 (0)165 58 28 10

Fax: +31 (0)165 55 13 52

www.cosun.com

ROYAL COSUNP.O. Box 3411

4800 MG Breda

The Netherlands

Tel.: +31 (0)76 530 32 22

Fax.: +31 (0)76 530 33 03

www.cosun.com

[email protected]

ABOUT COSUN

3


PROFILE

We produce a wide range of ingredients and intermediate

products from vegetable raw materials such as sugar beet,

potatoes, chicory, fruit and vegetables for the international food

industry. We also make products that are sold to consumers

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

and retail channels. We are increasingly developing ingredients

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

feed sector, develop building blocks for biobased chemicals and

produce bio-energy (green gas).

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

Aviko are the most widely known. They have traditionally

produced sugar and potato specialities respectively. Sensus

produces inulin from chicory. Inulin is a dietary fibre that

reduces the sugar and fat content of foodstuffs. SVZ processes

fruit and vegetables into concentrates and purees for the food

industry.

The Duynie group is a trader and distributor of animal feed and

develops advanced applications based on residual flows and

by-products from the food industry. Cosun Biobased Products

is a fledgling business specialising in the development and

production of functional green chemicals and materials based

on renewable vegetable raw materials. Its innovations are used

in a wide range of applications.

Royal Cosun has a joint research and development centre: the

Cosun Food Technology Centre (CFTC). In close collaboration

with the business groups that make up Cosun, CFTC improves

the use of agricultural raw materials, innovates process

technology, optimises energy management and, in cooperation

with customers, develops new products. CFTC also works with

a variety of institutions and universities in the Netherlands and

abroad.

Royal Cosun is an agro-industrial group that processes arable crops and other vegetable raw materials. Cosun is a cooperative of some 9,200 Dutch sugar beet growers. The cooperative has been processing its members’ sugar beet since 1899. Over the years we have added new activities to our portfolio, nearly all of them relating to agriculture or horticulture.

Turnover EUR 2,115 million 3,799 employees (FTE) 30 production facilities in 10 countries

10 million tonnes of vegetable

raw materials processed

9,211 members / shareholders

ABOUT COSUN

4


BUSINESS MODELMAXIMISING THE VALUE OF RAW MATERIALSOur commercial success depends on the value we extract from

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

process known as biorefinery. The challenge is to extract as many

components as possible at the same time.

Our core business is processing vegetable raw materials. We turn

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

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

converted into bio-energy and biobased products.

SALES MARKETS

Food industry

Livestockfarming

Chemicals

Energy

Sugarbeet

Potatoes

Chicory

Fruits andvegetables

Foodserviceand retail

CULTIVATION BIOREFINERY

ABOUT COSUN

5


Cosun CFTC Aviko Duynie group

Sensus Suiker Unie SVZ Cosun Biobased Products

LOCATIONS*

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

KEY FIGURES

6

COSUN ANNUAL REPORT 2014COSUN ANNUAL REPORT 2014

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

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

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

In millions of euros (unless stated otherwise) 2014 2013

FINANCIAL

Net turnover 2,115 2,166

Operating profit 110 172

Recurring EBITDA* 202 241

Net result 79 139

Cash flow from operating activities 172 177

Capital expenditure on fixed assets 112 101

Group equity 1,257 1,176

Group equity as a percentage of total assets 63 60

Average beet yield per hectare in the Netherlands (in euros) 4,354 4,917

Quota sugar beet price** 50.18 67.26

Members’ bonus 108 187

SOCIAL

Average number of employees*** 3,799 3,477

Sickness absence (%) 3.8 3.8

Number of lost-time accidents (per 1,000 employees) 24 30

ENVIRONMENT

Direct CO2 emissions (in tonnes per tonne of product) 0.22 0.21

Water consumption (in m3 per tonne of product) 2.3 2.4

Residual matter (in tonnes per tonne of product) 0.05 0.04

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

** Price in euros per tonne of beet with average sugar content and average extractability.

*** Average number of FTEs with a contract of employment with Cosun or a Cosun business group.

KEY FIGURES

7


59

2010 2011 2012 2013 2014

2,1152,1661,9451,7721,766

2,200

1,600

2,100

2,000

1,900

1,800

1,700

59

2010 2011 2012 2013 2014

202241270158160

300

0

250

200

150

100

50

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

59

2010 2011 2012 2013 2014

10818717911864

200

25

175

150

125

100

75

50

59

2010 2011 2012 2013 2014

4,3544,9174,8714,0383,082

5,000

0

4,000

3,000

2,000

1,000

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

2010 2011 2012 2013 2014

0.26

0.20

0.220.210.230.250.23

0.25

0.24

0.23

0.22

0.21

2010 2011 2012 2013 2014

4,000

3,000

3,7993,4773,7993,477

3,3963,396

3,5813,288

3,8283,203

3,800

3,600

3,400

3,200

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

Number of FTEs Number of FTEs (adjusted for divested activities)

8

COOPERATIVE ISSUES


REPORT OF THE COOPERATIVE

As well as its customary three meetings, the Members’ Council

held an extra meeting to discuss the implications of the end of

the EU sugar market organisation for Cosun. Cosun has fleshed

out the main points of its own sugar system; it will be worked

out in greater detail in 2015. The Betacal scheme was modified in

2014 to bring supply and demand into balance.

GOVERNANCEThe composition of the Board changed at the Annual General

Meeting of 4 June 2014, when Jos van Campen handed the

chairman’s gavel to Dirk de Lugt. Mr van Campen has retired

after 22 years on the Board. He was warmly praised for his

unstinting dedication and great value to the cooperative. Adrie

Bossers joined the Board as a new member. The composition of

the Supervisory Board was also changed. More information is

provided in the Report of the Supervisory Board on page 34.

Cosun has a Youth Council consisting of 16 enthusiastic

members who have set their sights on fulfilling management

functions at Cosun. The members of the Youth Council act

as ambassadors in their local districts and sections. They

are advised and coached by a member of the Board. This

investment in young management talent is paying off.

A member of the Youth Council was elected and took his

seat in the Members’ Council in 2014. Another Youth Council

member joined the Members’ Council in early 2015. Nearly

all Cosun’s directors and internal supervisors are men but the

situation seems to be changing. The Members’ Council has

counted three female members in 2015. The arrival of young

people and women matches our ambition of greater diversity in

the cooperative’s management structure.

If members have a conflict with the cooperative, they can seek

arbitration by means of the arbitration procedure of the Institute

for Agrarian Law. The arbitration committee is made up of an

external specialist in agrarian law and a number of experts, many

of them are former members of Cosun’s Members’ Council.

The arbitrators were reappointed for four years in 2014 and are

entirely independent of the cooperative. The committee has not

had to consider any cases in recent years.

MEMBER LOANSCosun introduced a programme in 2015 under which members

can grant the cooperative fixed-term loans at an attractive

rate of interest. The programme is open to all members who

received a payment in 2015 under the sugar beet delivery/

business termination (UB/BBU) regulations. As from 2016,

members can also lend a proportion of their final beet payment

to the cooperative under the same programme. The members’

loan programme entails the loan of a subordinated deposit

with a fixed term between two and five years. It gives Cosun

access to an additional source of finance and the members an

additional investment opportunity.

THE FUTURE OF BEET GROWINGThe 2016 beet campaign will be the last to be subject to the

European system of sugar production quotas. It will then be

possible to increase beet cultivation and sugar production in

the Netherlands. Any increase in cultivation will be based on

the current growing rights. Existing growers can increase their

output if they wish. The growing rights will rise in line with any

structural increase in sales opportunities.

The main points of the new sugar system were set out and

approved by the Members´ Council in 2014. Cosun intends

to introduce a manageable and future-proof system. One of

its pillars will be a minimum beet price to give growers more

assurance about what they will earn. It is of prime importance

that they can supply the factories with enough raw materials

to run at a profit. The final beet price will be determined by the

results of the business as a whole. There is a preference for a

new share system linked to the growing rights and duties. The

details will be worked out in 2015 and put to the Members’

Council for approval.

We again succeeded in realising a very high sugar beet yield per hectare in 2014. Sugar surpluses on both the European and the world market, however, exerted pressure on selling prices and thus on Suiker Unie’s results. The ending of the common European sugar market organisation is a cause of uncertainty but we are in an excellent position to pay our members a good price for their beet even after 2017.

9

COOPERATIVE ISSUES

COSUN ANNUAL REPORT 2014COSUN ANNUAL REPORT 2014

MEMBERS AND SHARES

AS AT 31 DECEMBER 2014 AS AT 31 DECEMBER 2013

DISTRICT / SECTIONNumber ofmembers

Number ofshares

Number ofmembers

Number ofshares

Zeeuwsch-Vlaanderen 742 8,907 746 8,928

Zeeland-Midden 642 7,884 646 7,921

Zeeland-Noord 350 4,673 357 4,676

Goeree-Overflakkee 222 3,616 223 3,634

West-Brabant 813 9,648 829 9,700

Zuid-Hollandse Eilanden 327 4,990 331 5,005

Holland-Midden 259 4,168 265 4,282

Kop van Noord-Holland 410 7,351 414 7,359

Oostelijk Flevoland 385 9,563 390 9,614

Noordoostpolder 622 9,781 638 9,898

Friesland 271 4,807 275 4,838

Groningen 1,052 20,637 1,053 20,551

Drenthe/Overijssel-Noord 994 22,623 1,028 22,845

Overijssel-Zuid/Gelderland 318 3,923 331 4,003

Oost-Brabant + Limburg (CSV COVAS) 1 28,061 1 28,045

Zuidelijk Flevoland 153 4,946 156 5,004

7,561 155,578 7,683 156,303

B-members CSV COVAS as at 1 May 2014/2013 1,650 1,698

TOTAL Cosun members 9,211 9,381

10

REPORT


10

REPORT


‘Cosun is heading

towards a couple of

turbulent years but

we are ready for

them. Our members

can continue to

rely on their

cooperative in

the future.’

Dirk de Lugt

LETTER FROM THECHAIRMAN AND THE CHIEF EXECUTIVE OFFICERAfter several years of high sugar prices, the market went sharply into reverse in 2014 and we were unable to match the exceptionally strong results achieved in the past two years. Nevertheless Cosun performed well in 2014. Despite the fall in sugar prices, the group still turned in a good profit and the members’ bonus was high.

We had anticipated the fluctuation in sugar prices. We expect more price swings in

the run up to 2017, when the EU common market organisation for sugar will come to

an end, and our results will come under pressure in the next two years.

Cosun’s other activities will not be able to make up for the expected fall in sugar

results but they will underpin the beet price we pay to our growers. Cosun is a

financially strong business and can weather a few lean years.

TRANSITIONWe see the coming years as a transitional period towards a new reality with even

larger price swings on the international sugar market. To absorb the impact on our

members wherever possible, we are making substantial investments in our profitable

activities, including sugar. And we will seize the opportunities presented by the

liberalisation of the market.

There are definitely opportunities. In a couple of years, we expect to be processing

even more sugar beet into sugar for food and non-food applications. We believe there

is a future for beet cultivation in the Netherlands and for Suiker Unie as a major player

in the European market. That is why we will continue to invest in the sugar chain. To

remain competitive we need a high yield per hectare and efficient sugar factories.

INVESTING IN THE FUTUREOur strategy is and will remain geared to further profitable growth in existing and

new activities that can extract even more value from our vegetable raw materials.

Aviko and Duynie, for example, made a number of smaller acquisitions in 2014 to

strengthen their operations.

11

REPORT


‘Our confidence in

the business’s growth

opportunities is

shown in the scale

of our investments.’

Robert Smith

Performance in many of our markets is determined by the cost price of our products,

not only sugar but also fries, inulin, fruit and vegetable puree, animal feed and starch.

Everything hinges on efficiency and optimisation. The group improves its performance

by optimising its production processes and the energy management programme cuts

energy consumption.

These programmes not only reduce our cost price but are also good for the

environment. We have invested an average of EUR 110 million in each of the past

three years to make our production processes and processing techniques more

efficient and effective.

In the sales markets for special sugars, potato specialities, inulin, vegetable colourings

and flavourings, added value is key. To generate this added value, our market strategy

is geared to working in collaboration with established and potential customers.

Collaboration with customers is even more important in the innovations we develop

from vegetable raw materials. We are investing in research and the development of

functional ‘green’ chemicals based on renewable, vegetable raw materials for use in

a wide range of applications. Cosun Biobased Products focusses on the development

of such new products and applications. If the trend towards a biobased economy

continues, Cosun can and will play a role in it.

Our mission and our core remain unchanged. The way we achieve our goals adapts to

the world around us. We keep what is good and what works, adapt what no longer

works and seek continuous innovation. We have been doing this for more than a

hundred years, a more robust foundation is unimaginable. We are prepared for the

turbulent years ahead. Our members can continue to rely on their cooperative. We

have every confidence in the future.

Dirk de Lugt Robert Smith

Chairman of the Board Chief Executive Officer

Breda, 12 March 2015

LETTER FROM THECHAIRMAN AND THE

CHIEF EXECUTIVE OFFICER

12

REPORT


FINANCIAL PERFORMANCE

RESULTSOperating profit including non-recurring items declined from

EUR 172 million in 2013 to EUR 110 million in 2014. Recurring

EBITDA (operating profit before depreciation and amortisation

and after adjustment for non-recurring items) fell less sharply,

down EUR 39 million to EUR 202 million (2013: EUR 241 million).

The bonus paid to members as part of the beet price was

42% lower at EUR 108 million (2013: EUR 187 million), but

still considerable. The members’ bonus is recognised in the

regular operating profit. The net profit came to EUR 79 million

(2013: EUR 139 million).

PERFORMANCE OF THE BUSINESS GROUPSSuiker Unie achieved slightly lower turnover on higher sales

volume than in the previous year. High sugar stocks prompted

a further decline in prices on both the European and the world

market. Quota sugar and export sugar prices were accordingly

weaker. Suiker Unie was still able to profit from higher prices

agreed in sales contracts concluded in 2013. A further fall

in sugar prices in the second half of the year, however, put

pressure on turnover and results.

For Suiker Unie, 2014 was a historically good year regarding

both the cultivation and processing of sugar beet. The average

sugar yield per hectare exceeded 15 tonnes. Although the

Dutch sugar factories have never processed so many beet

before, they performed excellently throughout the campaign.

The average number of beet processed each day was

exceedingly high. The campaign in the Netherlands lasted 135

days with about 6.6 million tonnes of beet being processed. In

Germany the quality of the raw materials deteriorated towards

the end of the campaign and processing was more problematic.

The campaign lasted longer than planned. In total, about 1.5

million beet were processed.

Aviko turned in a good result thanks to higher sales, better

utilisation rates at the factories and wider margins on lower

raw material costs. It also achieved a further increase in the

proportion of specialities. Aviko took a majority interest in a

specialities factory in southern Germany and in a fries factory in

China. Rixona (potato granules and flakes) also performed well in

2014. Sales remained unchanged but efficiency gains improved

the result. On balance, the Aviko group saw a sharp improvement

in its results in comparison with 2013.

Inulin producer Sensus achieved a higher turnover than in

2014 and grew faster than the market. Average selling prices

remained unchanged on 2013 but higher raw material costs

squeezed the result. A one-off item relating to the receipt of

an insurance payment for a claim made in 2013 had a positive

impact on the result. The good campaign also contributed to a

high utilisation rate.

SVZ’s results were comparable to those in 2013. Sales were

slightly higher but lower average selling prices led to a modest

decline in turnover. Changes in the product mix (relatively

more vegetables and less red fruit) strengthened the stability

of results. Demand for vegetable concentrates and purees was

firmer, as was demand for natural colourings.

The Duynie group performed well in animal feed despite price

weakness during the year. The high volume of by-products

available on the market put pressure on selling prices. Two

acquisitions (made in 2013 and 2014) were successfully

integrated into the group. Starch processor Novidon, however,

had a difficult year owing to fierce competition in wheat starch.

Competitors in the wheat starch industry have significantly

increased their production capacity in recent years, leading to a

surplus of wheat starch and pressure on prices in the sales market.

Cosun turned in a good result in 2014. At EUR 2,115 million, turnover was 2% lower than in 2013.Suiker Unie’s turnover and profit for the year were considerably depressed by the fall in sugar prices.Some compensation was found in the form of higher results from other activities. Operating profit came to EUR 110 million, considerably lower than in the record years of 2012 and 2013, but still a fine result.

13

REPORT


FINANCIAL INCOME AND EXPENSEDue to the limited volume of external debt, the total financial

expense came to EUR 4 million. This is slightly higher than in

the previous year on account of the non-recurring interest

income received on the 2001-2005 production levy in 2013.

Substantial investments were again made in 2014, in both

the beet processing capacity and the potato activities. In total

we invested approximately EUR 130 million, more than 140%

of depreciation. There was also a modest increase in working

capital. The increase in capital invested was funded from

operational cash flow.

A new EUR 400 million financing facility was agreed with a

banking syndicate in July 2014. A further tranche of the debt

payable to institutional investors will be repaid in 2015 and

a considerable amount is expected to be paid to members

under the sugar beet delivery/business termination (UB/BBU)

regulations.

TAX RATEThe effective tax rate was 6.9 percentage points higher at

25.8% (2013: 18.9%). The tax rate had been relatively low in

2013 on account of the advantageous rates for the settlement

of prior year taxable income, carry over losses and use of the

innovation box.

CASH FLOWCash flow from operating activities declined by EUR 5 million

from EUR 177 million in 2013 to EUR 172 million in 2014.

Despite the considerably lower operating profit, the decline

was limited by movements in provisions and lower growth of

working capital than in 2013. Cash flow was again more than

adequate to fund capital expenditure from our own resources in

2014. The healthy cash flow and liquidity positions put us in a

strong position to continue our strategy.

CAPITAL EXPENDITURECapital expenditure on fixed assets (including intangible

assets) amounted to EUR 112 million (2013: EUR 101 million).

Expenditure on the sugar activities was targeted chiefly at

increasing production capacity and making it more flexible.

Regular expansion investments were also made. Investments

were made in a diffusion tower and a thick juice storage tank.

Other investment projects related mainly to replacements

investments and limited capacity increases. In 2014 Aviko

acquired 60% of the shares of a German potato speciality

producer. It also entered into a joint venture in China.

BALANCE SHEETTotal assets increased by EUR 30 million to EUR 1,999 million,

due chiefly to capital expenditure exceeding regular

depreciation. The liquidity position improved by EUR 32 million

following the receipt of the remaining receivable from the

municipality of Bergen op Zoom relating to the sale of a former

production site. Group equity rose by EUR 81 million to

EUR 1,257 million (2013: EUR 1,176 million). Group equity as a

percentage of total assets increased to 63% (2013: 60%).

Thanks to the high cash flow from operating activities and

the healthy ratio of group equity to total assets, the group’s

financial position remains strong. We do not expect any

significant changes in this position in 2015, despite the

considerable payment we will probably have to make to

members under the UB/BBU regulations.

BEET PRICEThe members’ bonus totalled EUR 108 million and was paid

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

paid on 7% of the beet delivered above quota in the 2014

campaign. In the previous year members had received the quota

beet price on 5% of the surplus beet.

The basic price for quota beet of EUR 26.25 per tonne was

based on the EU minimum price and was unchanged on 2013.

The members’ bonus came to EUR 18.50 per tonne (2013: EUR

32.75), and was paid on more beet. On balance, the price paid

to members per tonne of quota beet with 16% sugar content

and an extractability rate of 87 came to EUR 44.75. The price

paid to members per tonne of quota beet with average sugar

content and average extractability was EUR 50.18. The average

price for the first 7% of surplus beet in 2014 was EUR 31.35

and that for the tranche between 7% and 15% was EUR 22.36.

At 15.1 tonnes, the average sugar yield per hectare was

considerably higher than in 2013 (13.2 tonnes). The average

financial yield per beet grower in the Netherlands came to EUR

4,354 per hectare. This is EUR 563 lower than in the previous

year but is still in the top three of the past ten years.

FINANCIAL PERFORMANCE

14

REPORT

PROSPECTSThe volatility of the price of agricultural products has a major

impact on Cosun’s results. The sharp fall in European sugar

prices in the second half of 2014 is only partly reflected in

Suiker Unie’s results for the year. However, it will lead to a sharp

drop in its results for 2015. Current market conditions are

completely different from those of two years ago, when there

was a sugar shortage in the EU and relatively high prices on

the world market. Despite the current low European prices, the

sugar activities will continue to turn a profit.

We expect Duynie’s results to improve in 2015 owing to a

recovery in the margin on starch activities. SVZ’s results will be

comparable to those for 2014, with a limited increase in sales.

We expect Aviko’s results to be slightly lower than in 2014,

provided raw material costs return to their customary levels.

Sensus’s results will be lower as selling prices will suffer from

greater competition.

Cosun will continue to invest in strengthening its market

position in various segments in the year ahead. We will invest

in both organic growth and strategic acquisitions, efficiency

improvements and innovation. We expect a modest increase in

the number of employees in line with the growth in activities.


15

REPORT


CORPORATE SOCIAL RESPONSIBILITYAs a cooperative and a group, Cosun is responsible for everything that happens within our business groups. How safe are working conditions? How do we use the raw materials, energy and water? How do we earn a living and what happens to the money?

Cosun creates added value and is a significant economic player:

• by converting raw materials into valuable products for our

customers;

• by making substantial payments to members, suppliers,

the government and financiers.

The figure shows the added value we create by selling our

products after the deduction of payments to suppliers for

products and services. In 2014, we created EUR 735 million.

Added value (amounts in millions of euros) 2014 2013

Net turnover 2,115 2,166

Other revenue and stock movements 42 50

Payments to suppliers of raw materials -/- 1,055 -/- 1,056

Payments to other suppliers -/- 367 -/- 329

Added value created 735 831

Employees (salaries) 251 217

Members (beet payments and members’ bonus) 283 360

Financers (interest) 4 -/- 1

Government (taxes) 27 33

Value created for stakeholders 565 610

Retained profit 79 139

Depreciation 91 82

Value created for reinvestment 170 222

Staff (salaries) 34%

Members (beet purchases and members’ bonus) 38%

Financiers (interest) 1%

Government (taxes) 4%

Retained profit 11%

Depreciation 12%

Value for reinvestment

Value for stakeholders

16

REPORT


PRIORITIESAs well as creating value for our stakeholders, principally the

members of the cooperative, we have identified four areas where

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

• optimising cultivation in recognition of our responsibility to

growers and the environment;

• optimising production processes with a view to maximising the

use of raw materials and conserving the environment;

• investing in staff skills and a safe working environment;

• respecting the interests of other stakeholders and being

accountable to them.

OPTIMISING CULTIVATIONSustainable cultivation realises the highest possible yield per

hectare with the least possible artificial intervention. New varieties

and modern processing techniques are good for the soil and

biodiversity. Soil conservation and biodiversity will be important

factors in the longer-term security of food supplies. Around and

above the fields biodiversity is seen in the variety and vitality of

the fauna and flora. We and our growers are therefore investing

in the further improvement, optimisation and sustainability

of cultivation. Cosun’s business groups are active participants

in many initiatives, such as the SAI platform for sustainable

agriculture, the Skylark Foundation for sustainable arable farming

and the Beet Cultivation and Biodiversity project.

OPTIMISING PRODUCTION PROCESSESOur factories need energy to process raw materials into

foodstuffs and intermediate products. Energy consumption

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

production processes: the lower the better. Cosun has set itself

the goal of reducing energy consumption per tonne of product

by 2% per annum. So far it has been successful. If the success

continues in the years ahead energy consumption will be 20%

lower in 2020 than it had been in 2010. We are also taking

measures to reduce our water consumption and the volume of

waste we produce.

INVESTING IN STAFFCosun wants to be a good employer that offers its employees a

safe and pleasant working environment. Safety at work remains

a priority. We must reduce the number of lost-time accidents

further, as well as the number of near accidents, incidents and

dangerous situations. In 2014 the number of accidents fell from

30 per 1,000 FTEs in 2013 to 24 per 1,000 FTEs. The goal is to

reduce the number to less than 17 in 2015.

In full time equivalents, the average number of employees at

Cosun increased from 3,477 to 3,799 as a result of acquisitions

by Aviko and Duynie. Aviko also increased the number of shifts at

some production sites.

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

deal of knowledge and experience. It is important that they

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

optimally deployable. We invest in our people by offering them

education and training. The average number of training days in

2014 was three per employee.

Sickness absence remained stable at 3.8%, which is below the

average for the food industry as a whole.

ACCOUNTABILITYMore and more companies are selecting their suppliers on the

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

major international customers set exacting standards. And they

want documentary evidence that Cosun´s business groups can

meet them. Sensus, for example, has been audited to Sedex

standards by an external bureau. Sedex is a global organisation

dedicated to driving improvements in responsible sourcing. It is

concerned not only with the products themselves but also with

their production.

Sensus scored very highly. It immediately addressed the areas for

improvement identified by the auditor. SVZ is also a member of

Sedex and was very positively reviewed by EcoVadis. Aviko is a

member of the Roundtable on Sustainable Palm Oil (RSPO).

Cosun’s Code of Conduct explains how we conduct ourselves

and what our responsibilities are, not only to each other but also

to our customers, business partners and society at large.

CARE FOR THE ENVIRONMENTLocal residents near the production sites are regularly informed

of the work we are planning to carry out. The investments at

the two sugar factories have led to more traffic, construction

work and, for some, a different view. The new cold store at

the Aviko site in Steenderen will have similar consequences for

local residents. Cosun recognises the importance of a good

relationship with its neighbours and takes account of them

wherever possible. This includes providing them with timely

information, minimising inconvenience and being a good

neighbour.

More information about our efforts and the results we have

achieved is available in Cosun’s Sustainability Report 2014 at

www.annualreport-cosun.com.

CORPORATE RESPONSIBILITY

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INNOVATION AND DEVELOPMENTMore than 70 professionals work at Cosun Food Technology

Centre (CFTC), the group’s shared research and development

centre. They include process technologists, chemical analysts,

food technologists, microbiologists and other specialists. They

carry out projects not only for existing operations but also to

develop more innovative products and applications based on

vegetable raw materials and residues. Innovation is at the heart

of all the projects. The projects are designed chiefly to cut costs

and boost the profitability of production processes.

The knowledge and experience of CFTC’s specialists are put to

good effect for the benefit of the entire cooperative. A method

developed for one business group to cut energy consumption,

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

The same is true of water treatment techniques that help the

businesses meet part of their energy requirement.

Cosun expects research and development to grow in

importance in the years ahead. It therefore decided to invest in

a new facility in 2014. CFTC and Cosun Biobased Products will

move into the Agro & Food Cluster Nieuw Prinsenland, next to

the sugar factory in Dinteloord, in 2016.

It will include a pilot plant to produce small batches of new

products and applications. Flexible workplaces will be created

for the staff, their colleagues at the business groups and

external parties taking part in the projects.

OPERATIONAL EXCELLENCEAll Cosun’s locations in the Netherlands work in accordance

with the Total Productive Maintenance (TPM) improvement

programme. In 2014 Aviko in Steenderen, Sensus in Roosendaal

and Suiker Unie were honoured with Excellence Awards. Other

sites are working towards this award or even to the Consistency

Award, a higher level within TPM. TPM is increasingly being

applied outside the production environment, for example at

Sensus Agro and CFTC. Locations outside the Netherlands

are also working more often with the method. Cosun has

appointed its own consultants to support and promote the

TPM programme. They advise the businesses and coach staff on

location.

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COSUN AT WORK


SUIKER UNIESUGAR AND SPECIALITIES

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After two exceptionally good years with high prices, sugar

prices fell sharply on both the world and the European markets.

Suiker Unie saw a sharp drop in its turnover and profit.

Global consumption increased by 2% during the year but was

outstripped by higher production levels and rising sugar stocks.

As a result, the world market price for white sugar weakened to

less than USD 400, the lowest level in the past five years.

The harvest was above the five year average in nearly all

European countries. The supply of surplus sugar was therefore

far higher than the demand. Despite the increased sale of

surplus sugar in 2014, some has had to be held over until the

next selling season. This surplus sugar will be classified as quota

sugar in 2015. The beet from which the sugar was produced

will be classed as the first quota beet to be supplied by the

growers in 2015. This means that the next campaign will be

far smaller and the area of sugar beet will be 18% lower. The

molasses market was good and Suiker Unie sold a high volume

of pulp.

RECORD CAMPAIGNIn many respects, 2014 was a record year, in both the

factories and the fields. Early sowing and high temperatures in

combination with many hours of sunshine and enough moisture

produced a good growing season. The autumn was also

favourable. With 91 tonnes of beet per hectare, the year saw

the highest yield per hectare ever. The sugar yield per hectare

in the Netherlands was 15.1 tonnes, approximately 12% higher

than the five year average. The price paid to members per

tonne of quota beet with average sugar content of 16.7% and

an average extractability rate of 91.2 was EUR 50.18 (2013:

EUR 67.26). Few problems were encountered while harvesting

and processing the sugar beet. A record number of beet were

processed during the 135 day campaign in the Netherlands.

Suiker Unie rented additional storage capacity to hold the large

stocks of sugar and thick juice it produced.

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COSUN AT WORK

In Anklam, Germany, Suiker Unie also produces bioethanol that

it sells as an admixture to fuel producers. In this region, the

harvest was above average too. The campaign lasted 155 days

and nearly 113,000 tonnes of sugar were produced. In addition,

nearly 117,000 tonnes of sugar in the form of thick juice were

produced. It will be converted into bioethanol and white sugar

during 2015. A deterioration in the quality of the beet due

to frost and heat after 20 December 2014 meant processing

volumes declined towards the end of the campaign.

IMPROVEMENTS IN PRODUCTION AND LOGISTICS INFRASTRUCTURESuiker Unie again invested a great deal in its factories in 2014.

It increased its diffusion capacity to cut energy costs and improve

the return on its raw materials. The improvements also enabled

Suiker Unie to increase its production capacity and thus process

the enormous supply of sugar beet without a hitch. In total, the

three factories in the Netherlands and Germany processed more

than 60,000 tonnes of beet a day during the campaign.

Suiker Unie took a new state-of-the-art storage and distribution

centre into operation in Puttershoek during the year. The new

distribution centre, built and managed by logistics service

provider Zijderlaan, is fully mechanised and automated. Sugar

products are transported from the production hall to the

storage hall 24 hours a day without human intervention.

Three computer controlled pallet cranes automatically store all

retail products that Suiker Unie makes in Puttershoek and in

Roosendaal. This produces a considerable saving on internal

transport kilometres and thus on CO2 emissions.

BASIS FOR ‘GREEN’ CHEMICALSAs well as being a foodstuff, sugar is a very practical

replacement for fossil raw materials that are used to produce

chemicals and materials. Together with its partners, Suiker

Unie is studying how sugar and residual flows can be used

in biobased applications. Suiker Unie does not produce these

applications itself but studies how it can produce the most

appropriate sugar specifications and so act as a raw material

specialist for manufacturers of ‘green’ chemicals. Against

this background, it supports a variety of studies and research

projects in this area.

The chemical and fermentation industries are not the only

parties to benefit from the development of applications based

on, for example, sugar beet; so do the growers and the sugar

industry. The projected growth in the market for these products

will create opportunities for higher beet and sugar volumes.

With its in-depth knowledge and experience of growing and

processing sugar beet, Suiker Unie can offer the green chemical

industry its expertise and excellent raw materials and widen its

sales opportunities.


SUIKER UNIE

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AVIKOPOTATO PRODUCTS AND SPECIALITIES

RECOVERY IN RESULTSAviko had a good year, with higher sales and far better results

than in 2013. The good potato harvest had a favourable

impact on the supply and cost of the raw material and thus on

sales. The good results were due in part to Aviko’s innovative

strength. The company creates growth opportunities, chiefly by

marketing products in the higher added value segment. Better

utilisation rates and further efficiency gains in the factories also

contributed to the higher profit.

EXPLOITING GROWTH OPPORTUNITIES IN THE MARKETWith the exception of Central and Eastern Europe, which

reported modest growth, European consumption of fries was

stable. Aviko also reported growth in the UK. The company

concentrated on casual diners, restaurants that have successfully

introduced a combination of fries and potato specialities.

Growth was also achieved outside Europe, where Aviko

concentrates on the foodservice segment. It performed

particularly well in South America, the Middle East and Asia,

especially in Japan. Asia offers interesting growth opportunities

in view of the rising purchasing power of the middle class and

the arrival and expansion of fast food chains.

SUCCESS THROUGH INNOVATIONAviko again booked success in the market for premium fries,

purees, gratins, hash browns, speciality snacks, meals and other

potato specialities in 2014. Aviko Oerfriet, a traditional chip,

was introduced in the Netherlands especially for cafeterias.

Two new products were launched for the retail channel: sweet

potato fries and sweet potato cubes. As sweet potato is rich in

fibres and the beta carotene antioxidant, it meets the growing

consumer demand for healthy food.

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STRONGER MARKET POSITION IN GERMANY AND AUSTRIAAviko strengthened its position in the south of Germany and

in Austria in 2014 by acquiring a majority interest in Amberger.

This Bavarian family-owned company produces fresh potato

products for the foodservice channel. The acquisition adds a

wide range of potato specialities, including regional specialities,

to Aviko’s range. European consumers are increasingly

demanding familiar brands and products.

STRONGER BASIS FOR FURTHER GROWTH IN CHINAIn China, Aviko had a good year too. Both the volume and

the quality of the potatoes were good. With consumption

increasing by more than 10% per annum, China is a major

growth market. With the emergence of a wealthy middle

class and the growth of local and international quick service

restaurants and convenience stores, sales of fries will rise

significantly in the years ahead. China is expected to assume

Japan’s position as the largest Asian market in a few years’ time.

Sales of potato flakes in China increased further during the

year. Aviko produces high quality flakes in Gansu for both local

and international customers. An alliance with the Minle County

public authorities has secured the supply of raw materials and

put Aviko in a stronger position to meet the growing demand

from large snack manufacturers.

In mid-2014, Aviko took a majority interest in SnowValley Food,

a fries manufacturer in the Chabei region in the northeast of

China.

The fries are sold in the local market under the Aviko, Diamond,

Tulip and Windmill brand names. Aviko is the first European

potato processor to produce fries in China.

Aviko and SnowValley are good matches for each other.

SnowValley has many years’ experience in propagating and

growing potatoes for fries. It also has good contacts with

the Chinese authorities. Aviko has a wealth of experience

processing potatoes into fries and marketing them. The two

companies have set themselves the target of processing more

than 100,000 tonnes of potatoes into fries by the end of 2015.

Aviko will also build a flake production line in the factory

in Chabei. Storage capacity will be increased to meet the

additional output.

RIXONAThe good potato harvest enabled Rixona to improve its results.

Profitability was boosted in 2014 by a wider margin and higher

production volume. The sales volume, however, was slightly

lower than projected because customers delayed their orders in

order to profit from less expensive contracts. The planned cost

savings were achieved and production costs were lower. Rixona’s

strategy is to grow in the foodservice market by prioritising ex-

ports to Asia. Aviko is studying the most favourable production

location for logistics purposes so that it can best serve its interna-

tional customers: at Rixona in the Netherlands or at Gansu Aviko

in China.


AVIKO

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SENSUSINULIN

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Sensus, a manufacturer of the functional food ingredient inulin,

can look back on a good year. Sales and turnover advanced.

Higher raw material costs, however, meant the result was on

balance lower.

In the European market, the growth in sales was due chiefly to

higher sales of infant formula based on milk powder for export

to Asia, particularly China. The other market segments showed

a mixed picture. A slight improvement in economic conditions,

however, enabled Sensus to carry out more innovative projects.

Most of the projects related to the trend to reduce sugar

content. Sensus worked on strengthening its product portfolio

during the year. New, sweeter inulin variants were developed.

By focusing such innovations on the confectionery and bakery

segments, Sensus intends to create a distinctive niche for itself

in the sugar reduction or replacement market for chocolate

products in the year ahead.

In southeast Asia, where Sensus concentrates on sales to

manufacturers of baby and infant food and manufacturers of

products for healthy gut flora, the market was flat. Performance

in counties such as Indonesia remained strong but sales in, for

example, Thailand were lower. The market came under pressure

from economic weakness and political unrest. On the American

market, sales of inulin were higher in the dairy segment. Greek

yoghurt varieties performed well and won a substantial share

of the dairy segment. Sensus has also identified opportunities

in this market for products with a higher fibre content and less

sugar. Sales of oligofructose in cereal bars were again slightly

higher, with new customers being added to the customer base.

EUROPEAN RECOGNITION OF INULINIn early 2014, the European Food Safety Authority (EFSA) gave

a positive opinion on the health benefits of oligofructose and

inulin.

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COSUN AT WORK SENSUS

When used as a sugar substitute, these additives can reduce

the amount of glucose absorbed by blood. The European

Commission has used this positive opinion to formulate the

final health claims that will be included in the EU register of

nutritional and health claims. The claim can then be used for

foodstuffs. Sensus believes this recognition will act as stimulus

for innovation.

SOCIAL AUDITSensus successfully underwent the Sedex Members Ethical

Trade Audit 4-pillar in 2014. This comprehensive social audit

examined Sensus’s performance as an employer, covering its

ethical standards on work and health. The audit helps Sensus

respond to the growing trend among its customers, especially

major international food manufacturers, of assessing their

own customers and suppliers on the basis of their social

responsibility. Sedex members can publish their audit reports in

the Sedex system, which is accessible to all Sedex members.

CHICORY CAMPAIGNThe chicory harvest for the year was relatively good. Growth

benefited from an early sowing season and a sunny autumn.

The yield per hectare was clearly above the average while just

as much chicory was contracted as in 2013. More chicory

was therefore processed than in the previous campaign. The

campaign ran smoothly with few incidents.

Sensus is continuing to deepen the relationship with its

growers. It is working with them on an improvement

programme to raise the return per field.

Two major investments were completed during the year.

In Roosendaal, additional storage capacity for liquid inulin

products was delivered and in Zwolle, where inulin powders are

produced, a new spray-dry plant was taken into operation and

capacity was increased.


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SVZFRUIT AND VEGETABLE PRODUCTS

SVZ turned in a stable result thanks to its strict management

of fluctuations in the price of raw materials and its effective

management of the product portfolio. In the past three

years, SVZ has concentrated on revitalising the business and

strengthening its production infrastructure. In 2014 it entered a

new phase with three strategic focuses: the market; a distinctive

proposition for customers (including service and innovation);

and quality and cooperation within SVZ.

STABLE RESULTSThe sharper focus on a distinctive market presence was

reflected in higher European sales in the added value segment

of fruit and vegetable purees and concentrates. SVZ has a

strong position in red fruit (raspberries, strawberries, cherries

and red currants) and in vegetables (carrots, pumpkins and

spinach). In Europe, the emphasis is on red fruit; outside Europe

it is on vegetable products. On an annual basis, SVZ processes

200,000 tonnes of fruit and vegetables into products that are

used in jams, fruit juices, lemonades, ice cream, dairy products

and baby products.

Sales were higher in Europe and stable in America. Following

several years of strong growth, the operation in America gave

priority to consolidating and strengthening cooperation with the

European SVZ organisation. The two businesses are organised

along the same lines and work to the same standards. We are

studying which location can offer international customers the

best logistics service: the American location on the west coast

or one of the European production locations. Thanks to this

integrated approach, SVZ can offer its customers the same high

quality all over the world.

In Japan, SVZ’s main sales market in Asia, sales of vegetable

concentrates (carrot juice, spinach juice, kale juice) were

unchanged. These products are sold chiefly to the beverages

industry. With a declining population, Japan is not a true

growth market but SVZ has identified growth opportunities in

other Asian countries.

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LESS VOLATILITY IN RAW MATERIALSPosition management, controlling the volatility of raw materials,

is an important part of SVZ’s strategy. Fruit prices are particularly

volatile and can have a strong bearing on results. To spread

the risk, SVZ processes a wide range of fruit and vegetables.

The proportion of vegetables increased during the year. SVZ

is working on a controlled growing programme that will

guarantee the quality and availability of red fruit by having

growers in the direct vicinity of the factories plant fruit bushes

as well as vegetables.

SEARCHING FOR DISTINCTIVE PRODUCTSSVZ’s market-based strategy includes a continuous search for

new products that match the specific demands of the market

and new trends. Some products are developed in cooperation

with customers. One of the innovations is a carrot that has

a very intensive colouring agent. It is being marketed by

KleurCraft. The carrot also produces a very clear concentrate

that SVZ offers as a replacement for apple or grape concentrate.

The low sugar content makes the concentrate very suitable for

the juice market, where there is a huge demand for healthy

products.

Although it is barely visible in the results, KleurCraft performed

well in 2014. KleurCraft is a specialist in natural food

colourings.

SVZ widened its portfolio in 2014 and strengthened its

marketing efforts. Stricter legislation has increased industry

demand for natural instead of synthetic food colourings. SVZ

has also invested in the factory in Poland to produce specific

colour concentrates.

SUSTAINABLE OPERATION IN THE SUPPLY CHAINIn addition to the quality of its service, SVZ owes its distinctive

position to the quality of its products and its control of the

supply chain. Sustainability is a strategic theme within the

business. SVZ is a link in the chain between growers and

the food industry. It efficiently connects growing, logistics,

processing and distribution. SVZ is a firm believer in a

sustainable agribusiness. Where possible, the harvests are

processed in the growing regions in Poland and Spain or in the

factory in America. The quality of the products is safeguarded

by the close cooperation between SVZ and the growers. SVZ

and the growers have set up projects for the natural control of

pests that damage the crops.

SVZ


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DUYNIE GROUP ANIMAL FEED, STARCH APPLICATIONS AND ENERGY PRODUCTS

Duynie group extracts value from the organic by-products of

the food industry. It buys large volumes of residual flows and

processes them into animal feed (DuynieBeuker), raw materials

for the pet food industry (Duynie Ingredients) or high value

starch applications for non-food sectors (Novidon). It also

supplies biomass as a raw material for energy generation and

water treatment products (AgriBioSource).

Raw material purchases were stable. Approximately 4.3 million

tonnes were purchased and processed in 2014. The group’s

overall turnover and profit were higher than in 2013, chiefly on

account of strong sales of animal feed, Duynie’s main activity.

STRONGER POSITION IN ANIMAL FEED MARKETWith the acquisition of Beuker in 2013, Duynie considerably

extended its animal feed activities and significantly strengthened

its position in the European market for moist animal feed.

The group further strengthened its position in the UK market by

acquiring James & Son, at the time the UK co-producing branch

of Agrifirm.

Laying a strong foundation for further integration, a sharper

focus and the design of a new organisational structure to match

the size and nature of the business were high on the agenda in

2014.

Its size and locations in several European countries have given

Duynie group a more stable basis for its turnover. Furthermore,

it is in a better position to serve its suppliers, often major

international companies. Duynie offers its customers a wide

range of products, thorough advice and optimal service.

Sales in the animal feed market were higher than in 2013.

Prices, however, were lower owing to the oversupply of

agricultural raw materials in the animal feed market. The good

harvests not only boosted supply but also led to an increase

in the volume of raw feed on the market, which squeezed

margins.

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PROGRAMME TO IMPROVE STARCH ACTIVITIESNovidon again had a difficult year with starch selling prices

depressed by a surplus of wheat starch. The company used

the year to bring its contract positions back into balance. At

the same time it launched an improvement programme in

the factories in the Netherlands, the UK, the Czech Republic

and Belgium. The quality of the products was improved and

the sales organisation was strengthened. The benefits of the

improvements, however, were not seen in the results for 2014.

The company has identified growth opportunities with a series

of high value products based on starch applications, such as

wallpaper paste, vegetable-based label adhesive for bottles and

drilling starch for the oil industry. The first adhesive for paper

bags was marketed during the year.

INNOVATION UNDERPINNING PRODUCT DEVELOPMENTDuynie is rising to the challenge of finding better and smarter

applications that generate value from organic residual flows.

Research and development are therefore of prime importance,

and not only in animal feed.

The group is a member of the Protein Competence Center

(PCC), an initiative of Wageningen University set up in 2014.

The PCC combines the research results and know-how of seven

food and feed businesses and six expertise centres. One of it

projects is to extract and process protein from crops and other

sources.

ENERGYBy-products that are less suitable for processing into animal

feed can nevertheless still be put to good use. Subsidiary

AgroBioSource (ABS) offers these by-products for energy

generation and water treatment products. The group’s ability

to process all the co-products delivered to it increases sales

openings and enables it to respond flexibly to changes in the

supply of by-products. In 2014 ABS was the first company

in the biogas sector to be awarded a Responsible Biomass

Certificate (RBC B2). The certificate attests that ABS’s biomass

products satisfy high and specific standards in all links of the

supply chain.

DUYNIE-GROUP

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COSUN BIOBASED PRODUCTSAPPLICATIONS IN THE BIOBASED ECONOMY

Cosun Biobased Products develops and manufactures

functional ‘green’ chemicals and materials based on renewable

vegetable raw materials for a wide range of applications. The

product range is still being developed but already includes a

biodegradable descaling agent, natural fibres that can be used

in industrial and consumer products, special sugars for use in

foodstuffs, cosmetics and personal care products, organic acids

and biobased chemical building blocks and softeners.

Cosun Biobased Products’ business model is based on

cooperation in a variety of areas, from research and product

development to patents and licences. The business develops

new processes, products and applications by sharing its own

knowledge and combining it with that of the other Cosun

business groups and third parties, such as research centres and

potential customers.

Cosun Biobased Products made further advances in its research

and product development activities during the year.

The company strengthened its commercial standing in 2014 by

increasing its customer base for Carboxymethyl Inulin (CMI), a

biodegradable descaling agent. CMI is used in detergents and

by the paper, sugar and oil industries to treat process water and

cooling water. The results of these efforts cannot yet be seen in

the turnover figures but will become more pronounced in the

years ahead.

One of the products developed in 2014 was BetaFib®. This

micro-cellulose fibre is made from vegetable residual flows. It

can be used in paints, liquid detergents and other applications

to ensure that all components remain properly mixed. Cosun

Biobased Products has produced small batches of BetaFib at

the pilot factory in Roosendaal and tested it with a range of

potential customers. Production will be scaled up and the

product will be brought to market in 2015.

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MANAGEMENT ISSUES


RISK PROFILE

RISK ANALYSISCosun recognises the importance of risk management to

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

periodically identify, analyse and evaluate potential material

risks with regard to both their likelihood and their impact. The

results of these analyses are used to define actions to mitigate

risk wherever possible. The progress made implementing these

actions is reported to the Executive Board. All business units also

assess the continued relevance of the risks.

We also periodically analyse and evaluate the risks and identify

those of greatest relevance to our strategic target.

RISK APPETITEOur risk management and internal control system seek the right

balance between effective and professional entrepreneurship on

the one hand and an acceptable risk profile on the other.

Cosun is active in a variety of agro-industrial markets in several countries and has to contend with strategic, operational, financial and compliance risks that are inherent in its activities. It seeks to control these risks where possible by means of a strategy to extract all the value from its raw materials for markets in which it is already active, by developing new product/market combinations, a targeted product/market strategy, operational excellence and a sharp focus on cooperation with growers, customers and suppliers, among the Cosun businesses themselves and with knowledge centres and educational institutions.


RISK MANAGEMENT STRATEGYOur internal control system is designed to:

• control the risks attaching to the business activities;

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

recognised as risks or had been considered immaterial;

• monitor the effectiveness and efficiency of business processes,

including administrative processes.

Responsibility

Primary responsibility for the internal control system lies with

the boards of management of the business groups themselves.

The Executive Board and the Board have final responsibility for

Cosun’s risk management and internal control systems.

Design

Cosun introduced a Code of Conduct several years ago. A

new version will be distributed to all the cooperative’s staff

and directors in 2015. A whistle blower scheme has also been

introduced to lower the threshold to report cases that might

conflict with the Code of Conduct.

RISK CATEGORY STRATEGIC PILLAR RISK APPETITE AND EXPECTED RETURN

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

return and payback.

Tactical/operational Operational excellence /cost control

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

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

tial risks.

Financial control & Compliance

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

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MANAGEMENT ISSUES

30

Cosun has a financial and control manual that contains detailed

guidelines on financial reporting and accounting. The business

groups’ financial managers report functionally to the Finance &

Control director.

Management

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

Detecting and pro-actively responding to risks and

opportunities are part of the operational planning procedure

and are considered in monthly and quarterly reports. The

results are discussed on a monthly basis at Executive Board

level and on a quarterly basis at Board and Supervisory Board

level.

• Risk management is an integral part of the operating plans and

budgets and the internal monthly management and financial

reports.

Monitoring

• The external auditor conducts an annual audit in order to

express an opinion on the consolidated annual accounts and

the businesses concerned. The external auditor is appointed by

the Members’ Council and reports primarily to the Supervisory

Board. The audit scope and depth are determined annually

in consultation with the Executive Board and the Supervisory

Board, whereby the minimum work required for the audit

opinion is extended to cover specific risks, business processes

or locations that the Supervisory Board or the Executive Board

believes should receive additional attention.

• The general managers and finance managers of all legal

entities in which Cosun has a majority interest sign a Letter

of Representation each year for the entities for which they

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

accordance with internal guidelines and with the rules arising

from legislation and regulations.

• Recommendations arising at every level from the external audit

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

Executive Board subsequently reports to the Board and the

Supervisory Board.

RISKSIn 2014 fluctuations in the purchasing price of agricultural

raw materials (potatoes, fruit, vegetables) fluctuated and the

selling prices of sugar, potato products and fruit and vegetable

products had a significant impact on Cosun’s results. Price

fluctuations on the raw material and selling markets may also

have a significant impact on Cosun’s results in the future.

RISK PROFILE

31

MANAGEMENT ISSUES


RISK PROFILE

The table below shows the main risks to our strategy and the measures we have taken to control them where economically

feasible.

RISK CATEGORY: STRATEGIC

RISK RISK CONTROL MEASURE

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

• Strong price fluctuations/fall in the sugar price.

• Growth targets in existing and new product/market combinations (biobased products).• Cosun is made up of several business groups. Its activities are spread across several raw materials and sales

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

sugar factories.• Continuous focus on improving the cultivation of sugar beet. The sugar yield per hectare of our growers

increased by about 14% in 2014.

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

• Offer added value through intensive cooperation with customers and product development.• Cost leadership relative to both direct and indirect competitors.

Main growth opportunities for further growth:• Growth of world population

and increased prosperity, also in emerging markets.

• Further development of the biobased economy.

• Acquisition opportunities.

• Spread of sales across different geographical markets and sales specifically targeted at growth markets.• Cooperation between Cosun Biobased Products and partners, knowledge centres and in strategic alliances to

develop new product/market combinations based on agricultural raw materials processed by the Cosun business groups.

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

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

• Transparency and clear information on nutritional value and sustainability of Cosun products.• Further development of innovative, tasty and safe food ingredients with functional added value.• Initiatives to enhance food safety in the supply chain in cooperation with customers and suppliers.

RISK CATEGORY: TACTICAL/OPERATIONAL


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

• Certification, track and trace system and HACCP procedures.

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

• This risk is inherent in Cosun’s campaign-related activities. Risks are controlled by means of position management.• Continuous focus on cost-efficient production to reduce energy consumption, transport and the use of packaging

materials, combined with long-term price and volume agreements.

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

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

• Production organisations are prepared to adapt their processes to changes in the quality of raw materials.• Cultivation support and advice from the group and industry associations for specific growing and weather

conditions (e.g. spraying and lifting advice for growers).

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

• Business continuity / disruption in the factory.

• Specific risk management programmes, investments, inspections and maintenance to prevent disruption.• Insurance: Cosun has several general group insurance programmes to cover product and other liabilities, fire,

consequential loss, etc. The consequential loss programme insures assets at appraised value plus an appropriate, tailored cover for consequential losses. The financial robustness of the insurers is periodically assessed. Depending on the size of the risk, cover is arranged with several insurers.

32

MANAGEMENT ISSUES


RISK PROFILE

RISK CATEGORY: FINANCIAL MANAGEMENT


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

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

• Financing and interest risks. • Cosun’s financial position is very healthy. At year-end 2014, the group had no net debt. Cosun arranged a five-year syndicated bank facility in 2014, with two options to renew the facility for a period of one year. Long-term financing consists of a US private placement comprising several long-term loans with remaining terms of between one and four years. The risk of interest rate fluctuations and the exposure to the US dollar part of the long-term loans are hedged in full by means of derivatives.

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

• Loans are spread wherever possible over a select group of counterparties with a short-term rating of at least A2 or equivalent. All Cosun businesses report their liquidity forecasts for the coming 12 months every month to reduce the risk of unforeseen liquidity shortages. This system was further improved during the year by means of a longer forecast horizon and an improvement in reporting functionality.

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

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

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

• The funding rate of Cosun’s pension fund at year-end 2014 was around 118%. As of 1 January 2014, the group is no longer obliged to make contributions if the pension schemes are underfunded. The social partners will consult each other to reach a solution if the schemes are underfunded. The funding rate of Aviko’s pension fund at year-end 2014 was around 106%. Should Aviko’s pension fund become underfunded, the social partners will consult each other to reach a solution.

RISK CATEGORY: COMPLIANCE


• Legislation and regulations. • Implementation of a generic Code of Conduct (for all members of staff).• Whistle blower scheme and external reporting opportunities for cases that do not comply with the Code of

Conduct via the Cosun Speak Up line (with active response to reports).• Observance of the corporate governance code for cooperatives (NCR code).• Annual signing of an internal Letter of Representation.

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

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

33

MANAGEMENT ISSUES


CORPORATE GOVERNANCE

Good employment practices, integrity, respect, oversight,

transparent reporting and accountability are the main elements

of Cosun’s corporate governance policy. Cosun endorses

and observes the code of conduct issued by the Netherlands

Cooperative Council for Agriculture and Horticulture.

GOVERNANCE MODELCosun has a traditional governance model. Control of the

cooperative lies with the members, in part through their

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

members of the cooperative; three members are not. Members

of the cooperative also form a majority on the Supervisory

Board so that the members have the deciding vote. The

external members of the Board and the Supervisory Board are

nominated and appointed in recognition of their expertise and

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

to the Chief Executive Officer.

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

responsibility for the development and implementation of the

policy of both the cooperative and the business groups that

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

external members and six members who are also members of

the cooperative.

SUPERVISORY BOARDThe Supervisory Board supervises the policy conducted by the

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

the Members’ Council on request and otherwise. Together

with the external auditor, the Supervisory Board examines the

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

members of the cooperative and two are external.

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

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

page 9 of this report). All Cosun’s district committees together

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

Members’ Council elects the members of the Board.

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

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

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

elects the members of the Supervisory Board. On a proposal

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

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

sparring partner for the Board. The Members’ Council has 60

members, all of whom are members of the cooperative.

YOUTH COUNCILThe Youth Council consists of 16 members and is the breeding

ground for management talent within the cooperative.

The members of the Youth Council represent candidate and

young members. In consultation with local district and section

managers, the Youth Council itself is responsible for succession

when necessary.

More information on corporate governance can be found on

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

Corporate Governance. The Code of Conduct for cooperatives

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

Dutch).

On behalf of the Board,

D.H. de Lugt

Chairman


ROYAL COSUN

Districts

Members’ Council

Board

Executive Board

Youth Council

Supervisory Board

Members

34

MANAGEMENT ISSUES


REPORT OF THE SUPERVISORY BOARD

The Supervisory Board met on six occasions in 2014, with two

meetings being held jointly with the Board. As is customary,

the Supervisory Board discussed and reviewed various progress

reports and the preliminary annual figures. It also paid a

great deal of attention to the plans for new activities and the

consequences of the sharp fall in sugar prices. In consultation

with the Board, it dealt with issues raised by members. The

Supervisory Board paid a working visit to HZPC and the farm of

one of the members of the Members’ Council.

ADVICE AND SUPERVISIONThe operating plans for 2015 - 2017 were discussed and

reviewed in detail. They present the new reality brought about

by the low sugar prices. Suiker Unie’s results, and with them

Cosun’s, fell on account of the rapid drop in sugar prices.

The results of the other activities are insufficient to make up

for the projected fall in sugar results. The Supervisory Board

critically reviewed the planned activities before approving them.

Particular attention was paid to the performance of Aviko

Rixona, Novidon and SVZ Rijkevorsel.

Special attention was also devoted to innovation and new

activities. A separate business group has been established.

It has already prepared a business plan. The saying ‘You have

to invest to reap the rewards’ is certainly true for this business

group. Its main tasks are to track down, analyse, evaluate

and select new activities that have the greatest potential. Its

working methods and procedures have been defined and

fleshed out. The Supervisory Board has asked to be kept abreast

of its performance and will actively question the findings and

progress during the quarterly reporting meetings.

Several issues affecting the members were discussed that

related to the ending of the sugar market organisation in 2017.

They included the membership structure and the system used to

set beet prices. These are issues that affect not only individual

members but also the collective membership, the cooperative.

Careful account must therefore be taken of all the interests

at play. Following a trialogue between the Board, Supervisory

Board and Members’ Council, preparations were started for the

changes that will come into effect in 2016.

FINANCIALCosun invests in its future and will continue to do so, even in

financially lean years. The financial position has been reviewed

and it has been decided to increase the lending capacity. The

Supervisory Board discussed the proposal at two meetings

and approved it. The Executive Board worked out a plan to

allow members entitled to a payment under the sugar beet

delivery/business termination (UB/BBU) regulations to open

a deposit account with the cooperative. This gives them an

alternative investment opportunity and keeps money within the

cooperative that would otherwise have left it. This investment

opportunity will also be offered in respect of the beet payments

as from 2016.

The auditor has examined the annual accounts for 2014

and issued an unqualified opinion on them. The audit was

completed smoothly thanks to the high quality of internal

reporting and the prompt answers given by our business groups

to questions about critical factors. The Supervisory Board is

therefore confident that the findings give a true and fair view of

Cosun’s financial condition. The Supervisory Board recommends

that the Members’ Council approves the annual report for

2014.

COMPOSITIONThe Annual General Meeting took the time to reflect on

the retirement of both the Chairman of the Board and the

Chairman of the Supervisory Board, Watze van der Zee. Watze

was rightly praised for the energy and dedication he has

displayed over 12 years, first as a member and then as the

Chairman of the Supervisory Board. The Members’ Council

elected Edwin Michiels to fill the vacancy. From among its ranks,

the Supervisory Board has elected Jakob Bartelds as Chairman

and Johan van Driel as Vice-Chairman. Wim Blijdorp remains

the Supervisory Board’s Secretary.

The Supervisory Board oversees the execution of Cosun’s policy. As an independent body, it advises the Board, the Executive Board and the Members’ Council on request and otherwise. The Supervisory Board evaluated its own performance in 2014 and set new priorities for its role as supervisor and adviser.

35

MANAGEMENT ISSUES


The Supervisory Board has reviewed its own performance and

wishes to make changes in three areas:

• widen rather than deepen its control function. Looking further

ahead, it wishes to set its own frameworks for long-term

development and gain a better feeling for the work of the

business groups by making more working visits;

• define the supervisory function more clearly on behalf of the

Members’ Council and act accordingly;

• further improve cooperation through team building within the

Supervisory Board.

A WORD OF THANKSThe Supervisory Board would like to compliment to the Board,

the Executive Board and all members of staff for the impressive

financial results for the year and to thank everyone who

contributed to them.

We have arrived in a turbulent period that will demand a great

deal of commitment and flexibility from all of us. As well as

the changes in our sector, we are also facing global tensions,

currency and oil price swings and sudden movements in interest

rates. They call for alertness. The Supervisory Board has every

confidence in the resilience and the future of our cooperative,

Cosun.

On behalf of the Supervisory Board,

J. Bartelds W.A. Blijdorp

Chairman Secretary


REPORT OF THE SUPERVISORY BOARD

36

MANAGEMENT ISSUES


BOARD, SUPERVISORY BOARD,EXECUTIVE BOARD ANDWORKS COUNCILBOARD Chairman D.H. de Lugt De Cocksdorp

Vice-Chairman G.M. van Tilburg Emmeloord

Deputy Vice-Chairman J.M.M. Megens Driebergen

Members A.J.B.P. Bossers Langeweg

B.R. van Doesburgh Loenen a/d Vecht

J.M. Klompe Wolphaartsdijk

Ms. G. Prins Nieuwkoop

J.A. Smid Dalerpeel

J.H.D. Voncken Eys

Secretary J.W.M.J. van Roessel

SUPERVISORY BOARD Chairman J. Bartelds Tweede Exloërmond

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

Secretary W.A. Blijdorp Middenmeer

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

Ms. J.P. Rijsdijk Leiderdorp

B.T. Visser Utrecht

EXECUTIVE BOARD Chairman R.P. Smith

Members I.H. Blankers director Sensus

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

Ms. A.E. ter Laak director SVZ

A.J. Markusse director Suiker Unie

P.H. Merckens director Aviko

G.H. de Raaff director Cosun Biobased Products

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

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

CENTRAL WORKS COUNCIL Chairman A. Jansen Suiker Unie

Secretary C.W. van Agtmaal SVZ

Members H. Arfman Aviko

K.J. van Beek Sensus

A.C.J. van der Borst Suiker Unie

H.A.M. Flipsen Suiker Unie

S.C.A.M. Geerts Cosun

H. van de Haar Aviko

E.J. Sonneveld Duynie group

J.A.A. Stoopen CFTC

G.G.M. Wilmer Aviko

as at 31 December 2014

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


38


CONSOLIDATED BALANCE SHEET

Notes 31-12-2014 31-12-2013

ASSETS

Fixed assets

Intangible fixed assets (1) 137.2 148.3

Tangible fixed assets (2) 577.1 513.4

Financial fixed assets (3) 28.2 28.4

742.5 690.1

Current assets

Inventories (4) 605.8 585.4

Trade and other receivables (5) 280.4 355.3

Cash and cash equivalents (6) 370.5 338.2

1,256.7 1,278.9

Total assets 1,999.2 1,969.0

EQUITY AND LIABILITIES

Group equity

Capital and reserves (7) 1,230.5 1,158.5

Minority interests (8) 26.3 17.8

1,256.8 1,176.3

Provisions (9) 84.1 84.0

Non-current liabilities (10) 59.5 99.9

Current liabilities (11)

Current liabilities to credit institutions and liabilities of a financing nature 61.0 14.6

Other current liabilities, accruals and deferrals 537.8 594.2

598.8 608.8

Total equity and liabilities 1,999.2 1,969.0

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


39


CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE FINANCIAL YEAR Notes 2014 2013

Net turnover (14) 2,114.5 2,166.3

Changes in inventories of finished products 21.9 29.8

Other operating income (15) 20.5 20.2

Total operating income 2,156.9 2,216.3

EU levies (16) 11.0 10.8

Cost of raw materials and consumables (17) 1,337.8 1,416.4

Cost of outsourced work and other external costs (18) 351.0 312.5

Staff costs (19) 250.9 217.2

Amortisation and depreciation on intangible and tangible fixed assets 91.3 82.2

Other changes in the value of intangible and tangible fixed assets (20) 2.4 2.5

Other operating expenses 2.6 2.5

Total operating expenses 2,047.0 2,044.1

Operating profit 109.9 172.2

Interest receivable and similar income 4.2 10.6

Interest payable and similar charges -/- 7.8 -/- 10.1

Financial income and expense (21) -/- 3.6 0.5

Result from ordinary activities before taxation 106.3 172.7

Taxation (22) -/- 27.4 -/- 32.6

Share in results from participating interests 0.5 0.6

Result from ordinary activities after taxation 79.4 140.7

Minority interests -/- 0.3 -/- 1.4

Net result 79.1 139.3

(in EUR million)

CONSOLIDATED PROFITAND LOSS ACCOUNT


40


CONSOLIDATED CASH FLOW STATEMENT


Operating profit 109.9 172.2

Depreciation and amortisation 91.3 82.2

Other value adjustments 2.4 2.5

Changes in provisions (24) 3.9 -/- 11.2

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

(24)

-/- 18.1

-/- 43.0

Cash flow from business operations 189.4 202.7

Interest received (paid) -/- 5.9 1.0

Income tax paid -/- 14.5 -/- 25.3

Other movements 3.2 -/- 1.1

-/- 17.2 -/- 25.4

Cash flow from operating activities 172.2 177.3

Investments in (in)tangible fixed assets -/- 102.5 -/- 100.8

Proceeds from the sale of tangible fixed assets 0.8 1.2

Acquisitions of participating interests -/- 19.3 -/- 35.1

Cash flow from investing activities -/- 121.0 -/- 134.7

Gross distribution arising from Sugar Beet Delivery Payment Regulations (30) -/- 9.8 -/- 10.3

Changes in long-term receivables -/- 2.6 -/- 0.9

Changes in non-current liabilities (24) -/- 0.5 3.6

Changes in current liabilities to credit institutions and liabilities of a financing nature -/- 8.2 -/- 81.7

Cash flow from financing activities -/- 21.1 -/- 89.3

Changes in cash and cash equivalents 30.1 -/- 46.7

Cash and cash equivalents at the beginning of the year 338.2 379.6

Cash and cash equivalents at participating interests acquired 2.2 5.3

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

CONSOLIDATED CASH FLOW STATEMENT (in EUR million)


41


NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS

NOTES TO THE CONSOLIDATEDANNUAL ACCOUNTS

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

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

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

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

The activities are classified as follows:

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

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

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

(Cosun Biobased Products).

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

Civil Code. For the cooperative profit and loss account, Cosun has availed itself of the exemption available under Section 402, Book 2

of the Netherlands Civil Code.

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

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

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

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

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

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

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

interests has been filed with the Chamber of Commerce for the Southwest Netherlands.

ACQUISITIONS AND DIVESTMENTSThe following acquisitions took place in 2014:

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

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

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

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

The following acquisitions took place in 2013:

Aviko acquired 100% of the shares of Smalands Rotfrukter AB in Sweden on 31 January 2013. Duynie acquired 100% of the

shares of Beuker Vochtrijke Diervoeders B.V. on 19 June 2013.

The animal feed activities acquired of Jan Bakker at the end of 2013 were divested again in 2014. Otherwise, no significant

divestments were made in 2014 (and in 2013).

(in EUR million)


42



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

includes derivative financial instruments (derivatives).

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

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

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

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

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

ACCOUNTING POLICIES


43



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

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

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

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

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

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

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

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

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

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

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

financial instrument affects profit or loss.

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

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

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

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

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

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

expected transaction has taken place.

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

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

and the hedged exchange rate.

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

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

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

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

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

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

downward value adjustments.

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

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

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


44



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

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

manufacture of the asset in question.

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

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

capitalised if it extends the useful life of the asset.

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

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

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

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

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

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

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

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

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

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

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

value or lower market value, less selling costs.

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

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

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

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

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

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

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

lower net realisable value.


45



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

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

collectability of receivables.

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

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

from the equity in the cooperative annual accounts.

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

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

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

under receivables.

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

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

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

paid.

PENSIONS AND OTHER DEFERRED EMPLOYEE BENEFITSDutch pension plans

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

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

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

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

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

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

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

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

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

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

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

Foreign pension plans

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

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

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

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

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


46



Other deferred employee benefits

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

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

PROVISIONSA provision is recorded when:

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

• An estimate can be made reliable.

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

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

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

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

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

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

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

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

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

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

obligation.

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

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

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

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

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

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

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

there is no continuing management involvement with the goods.

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

consumables.


47



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

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

valued at cost).

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

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

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

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

against future profits.

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

parties prepared to enter into a transaction.

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

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

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

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

disposed of are included in cash flow from investing activities.


48



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

GOODWILL OTHERINTANGIBLE

FIXED ASSETS

TOTAL

At cost as at 1 January 2014 246.0 29.2 275.2

Accumulated amortisation and other value adjustmentsas at 1 January 2014

105.9

21.0

126.9

BOOK VALUE AS AT 1 JANUARY 2014 140.1 8.2 148.3

Movements:

- Investments 1.3 1.5 2.8

- Amortisation -/- 12.3 -/- 2.1 -/- 14.4

- Other movements - 0.5 0.5

BOOK VALUE AS AT 31 DECEMBER 2014 129.1 8.1 137.2

At cost as at 31 December 2014 246.6 28.9 275.5

Accumulated amortisation and other value adjustmentsas at 31 December 2014

117.5 20.8 138.3

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

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

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

years.


49



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

LAND AND BUILDINGS

MACHINERYAND

EQUIPMENT

OTHER TANGIBLE

FIXED ASSETS

PREPAYMENTS AND IN

PRODUCTION

NOT USEDFOR

OPERATIONS

TOTAL

At cost as at 1 January 2014 338.5 946.8 63.6 10.4 7.0 1,366.3

Accumulated depreciation andimpairments as at 1 January 2014

181.3

621.0

50.3

-

0.3

852.9

BOOK VALUE AS AT 1 JANUARY 2014 157.2 325.8 13.3 10.4 6.7 513.4

Movements:

- Investments 17.9 85.9 5.5 - - 109.3

- Divestments -/- 0.1 -/- 0.6 -/- 0.1 - - -/- 0.8

- New in consolidation 23.8 11.0 1.0 - - 35.8

- Transfer -/- 0.4 2.0 0.9 -/- 0.8 - 1.7

- Depreciation -/- 11.1 -/- 64.6 -/- 4.7 - - -/- 80.4

- Other changes in value -/- 0.1 -/- 2.3 - - - -/- 2.4

- Exchange differences 0.2 0.3 - - - 0.5

BOOK VALUE AS AT 31 DECEMBER 2014 187.4 357.5 15.9 9.6 6.7 577.1

At cost as at 31 December 2014 380.8 1,036.8 65.7 9.6 7.0 1,499.9

Accumulated depreciation and impairments as at 31 December 2014 193.4 679.3 49.8 - 0.3 922.8

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

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

equipment and inventories is EUR 3.1 billion (2013: EUR 2.5 billion).

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

PARTCIPATING INTERESTS

RECEIVABLES FROM

PARTICIPATING INTERESTS

RECEIVABLES FROM

MEMBERS

DEFERREDTAX

ASSETS

OTHERRECEIVABLES

TOTAL

Balance as at 1 January 2014 4.7 0.8 6.3 10.0 6.6 28.4

Movements:

- Additions and issuances - 0.1 1.1 0.5 1.7 3.4

- Repayments and releases - - -/- 0.2 -/- 1.4 - -/- 1.6

- Movements in favour of/charged to the result - - 0.2 0.5 -/- 0.3 0.4

- Share in results of participating interests and dividend received

0.2

-

-

-

-

0.2

- Reclassified as short-term receivables - - -/- 2.6 - - -/- 2.6

BALANCE AS AT 31 DECEMBER 2014 4.9 0.9 4.8 9.6 8.0 28.2


50



PARTICIPATING INTERESTSThe participating interests relate, among other, to the non-consolidated interest in Eemshaven Sugar Terminal C.V., in Aviko

Kloosterboer Verpakkingen B.V. and in the Spanish potato specialities company Eurofrits, S.A. As significant control can be

exercised on these interests, they are stated based on net asset value.

RECEIVABLES FROM MEMBERSThe non-interest-bearing receivables from members (EUR 4.8 million) relate to the long-term portion of amounts still to be

deposited for issued shares (2013: EUR 6.3 million).

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

valuations. It is expected that EUR 2.2 million (2013: EUR 2.4 million) of this receivable will be recovered within one year.

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

EUR 2.4 million gross (2013: EUR 1.4 million).

OTHER RECEIVABLESOther receivables consist of long-term deposits with a duration from 1 up to 3 years and capitalised costs incurred for the

conclusion of a new financing agreement with a term of 1 to 4 years.

(4) INVENTORIES31-12-2014 31-12-2013

Land 8.8 6.0

Raw materials and consumables 56.7 64.7

Finished products and goods for resale 540.3 514.7

605.8 585.4

Of the inventories, EUR 13.9 million (2013: EUR 0.8 million) is stated at lower market value. The provision for obsolete

inventories amounts to EUR 6.1 million (2013: EUR 4.8 million). The land included in inventory relates to grounds being

developed for business park AFC Nieuw Prinsenland near Dinteloord.


51



(5) TRADE AND OTHER RECEIVABLES 31-12-2014 31-12-2013

Trade accounts receivable 220.9 224.2

Receivables from members 2.6 2.6

Income tax receivable 6.7 7.2

Other tax receivables 26.0 29.4

Other receivables, prepayments and accrued income 24.2 91.9

280.4 355.3

The decline in other receivables, prepayments and accrued income is attributable largely to the receipt of a receivable from the

municipality of Bergen op Zoom relating to the sale of a former site of Nedalco and the receipt of excessive prior-year production

levies paid.

(6) CASH AND CASH EQUIVALENTSAn amount of EUR 10.0 million (2013: EUR 10.6 million) is not available on demand. This mainly relates to the blocked deposits at

a Slovenian bank regarding the received restructuring aid at Tovarna Sladkorja Ormoz d.d. in liquidation.

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

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

2014 2013

Net result 79.1 139.3

Translation differences on foreign participating interests 2.8 -/- 2.3

Total result recognised by Cosun 81.9 137.0

(8) MINORITY INTERESTS2014 2013

Balance as at 1 January 17.8 17.9

Movements:

- Share in results 0.3 1.4

- Capital movements and change in consolidation 9.0 0.2

- Dividend paid to minority interests and liquidation distributions -/- 1.4 -/- 1.6

- Exchange differences and other movements 0.6 -/- 0.1

BALANCE AS AT 31 DECEMBER 26.3 17.8

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

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

B.V., Beuker Slovakia s.r.o., Agri Bio Source Europe B.V. and Martin Amberger Kartoffelverarbeitung Dolli-Werk GmbH & Co. KG.


52



(9) PROVISIONS31-12-2014 31-12-2013

Deferred tax liabilities 41.2 45.3

Restructuring and reorganization 0.5 1.4

Pensions and other deferred employee benefits 21.7 12.0

Other provisions 20.7 25.3

84.1 84.0

Of the provisions EUR 62.0 million (2013: EUR 75.6 million) is long term in nature.

Movements in provisions were as follows:

DEFERREDTAX

LIABILITIES

RESTRUCTURING AND

REORGANISATION

PENSIONS AND OTHER DEFERRED

EMPLOYEEBENEFITS

OTHERPROVISIONS

TOTAL

Balance as at 1 January 2014 45.3 1.4 12.0 25.3 84.0

Movements:

- Additions 2.1 - 11.0 8.8 21.9

- Withdrawals -/- 6.1 -/- 0.9 -/- 1.3 -/- 8.3 -/- 16.6

- Release to profit and loss account -/- 0.1 - - -/- 5.1 -/- 5.2

BALANCE AS AT 31 DECEMBER 2014 41.2 0.5 21.7 20.7 84.1

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

RESTRUCTURING AND REORGANISATIONThe provision for restructuring and reorganisation relates mainly to distributions and other expenses as a result of long-term

reorganisation plans at Suiker Unie.

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

Cosun Holding and for the employees of the business groups Suiker Unie, Sensus and Aviko are administered separately by the

business groups’ own pension funds.

COMPANY PENSION FUND ESTIMATED COVERAGEAS AT 31-12-2014

BASIS FEATURES PENSION SYSTEM31-12-2014

Pension fund Cosun 118.0 Average pay pension plan

Pension fund Aviko 105.9 Average pay pension plan

The company pension funds have conditional indexation for inactive employees.

The pension scheme for both company pension funds is based on a fixed contribution and average salary with conditional

indexation. The employer has guaranteed the accrual and indexation of the assets for the members of the Cosun Pension Fund to

the end of 2023 in so far as they cannot be funded from the contribution. The guarantee relates to indexation of up to 2% to the

end of 2016 and then lowered in steps.


53



The additional commitment for the guaranteed indexation as at 1 January 2015 is recognised as a provision.

Several other pension schemes, including the transitional arrangement plans at Cosun Holding, Suiker Unie and Sensus are

administered by insurance companies. A number of schemes have also been implemented within an industrial-sector pension

fund or own management (long service award and mortality schemes) by the company concerned. In the implementation of these

various schemes, local legal frameworks are taken into account and the regulations are carried out as described in the terms and

conditions of employment.

The main actuarial assumptions were:

2014 2013

Discount rate 2.0 % 3.5 %

Future salary increases 2.0 % 2.0 %

The mortality table used was the forecast for 2012-2062 of the Actuarieel Genootschap [Actuarial Association], corrected for

income class High-Middle.

On account of the indexation guarantee and the lower discount rate for the other schemes, the obligation increased in 2014.

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

disposal of soil tare and other risks amounting to EUR 20.4 million (2013: EUR 25.0 million). In addition, a provision of

EUR 0.3 million (2013: EUR 0.3 million) has been recorded for contractual risks, claims and fines.

The discount rate to discounting the future cash flows applied for is 2% for all terms (2013: 2% to 3.5%).

(10) NON-CURRENT LIABILITIES

31-12-2014 EFFECTIVEINTEREST RATE

31-12-2013 EFFECTIVEINTEREST RATE

Debts to credit institutions 4.9 3.7 % 2.8 5.1 %

Debts to institutional investors 31.0 5.1 % 71.0 5.1 %

Long-term derivatives - - 8.7 -

Negative goodwill 9.0 - 12.4 -

Lease obligation 14.6 - 5.0 -

59.5 99.9

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

interest.


54



DEBTS TO INSTITUTIONAL INVESTORSAmounts owed to institutional investors consist entirely of loans placed with Dutch, UK and US financial parties with a lump-sum

repayment in the years 2015 and 2018. The loans are denominated partly in euros (EUR 31.0 million) and partly in US dollars

(USD 55.0 million). The current portion of the debt payable in 2015 is included under current liabilities. Loans with a residual

term of two to five years amount to EUR 31.0 million (2013: EUR 71.0 million). Financing is provided based on certain financial

conditions agreed by the parties. All of these conditions are met.

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

acquired depreciable assets.

(11) CURRENT LIABILITIES31-12-2014 31-12-2013

Debts to credit institutions 11.8 14.2

Debts to institutional investors 45.3 -

Liabilities of a financing nature 0.5 0.4

Short-term derivatives 3.4 -

Total debts to credit institutions and liabilities of a financing nature 61.0 14.6

Payables to members 166.7 230.3

Payables to suppliers and trade creditors 166.6 184.5

Income tax payable 48.1 32.0

Other taxes and social security contributions payable 7.8 8.9

Other current liabilities and accruals 148.6 138.5

Total other current liabilities, accruals and deferrals 537.8 594.2

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

An interest rate swap has also been concluded to cover the interest risk on debts to institutional investors. Under cost price hedge

accounting, the book value of the interest rate swap is nil. The fair value of the interest rate swap at year-end 2014 was

EUR 0.3 million negative.

OTHER LIABILITIES ACCRUALS AND DEFERRALSIncome tax payable at year-end 2014 excludes approximately EUR 35 million (2013: nil) of income tax recoverable in 2015 and

2016 in respect of the sugar beet delivery/business termination (UB/BBU) regulations. This deduction is expected to be made on the

payment date and the UB/BBU payment will be charged net to other reserves.

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

to be paid.


55



(12) DERIVATIVE FINANCIAL INSTRUMENTS

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

financing contracts regarding group companies denominated in foreign currency is hedged by currency swaps. In accordance with

its treasury policy, Cosun neither holds nor issues derivatives for trading purposes. Margin calls are not applicable to derivative

financial instruments.

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

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

CONTRACTVOLUME

31-12-2014

BOOK-VALUE

31-12-2014

FAIR MARKETVALUE

31-12-2014

CONTRACTVOLUME

31-12-2013

BOOK-VALUE

31-12-2013

FAIR MARKETVALUE

31-12-2013

Forward exchange contracts and currency swaps:

US dollar 122.8 -/- 1.4 -/- 4.7 61.6 0.5 1.6

Pound sterling 53.8 -/- 0.4 -/- 1.3 81.2 -/- 0.2 -/- 1.5

Polish zloty 0.2 - - 7.8 -/- 0.1 0.1

Australian dollar 11.8 - 0.2 6.5 0.2 0.5

Swedish crown 2.7 - - 2.8 -/- 0.1 -/- 0.1

Canadian dollar -/- 0.1 - - -/- 0.7 - -

Czech Koruna 1.4 - - - - -

Russian ruble 2.2 - - - - -

TOTAL 194.8 -/- 1.8 -/- 5.8 159.2 0.3 0.6

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

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

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

to the total contract volume.

As in 2013, the forward exchange contracts and currency swaps have mainly a term shorter than one year. The contract volume

with a term longer than one year amounts to EUR 17.3 million (2013: EUR 4.9 million).

PRICE RISKBOOK VALUE

31-12-2014FAIR MARKET VALUE

31-12-2014BOOK VALUE

31-12-2013FAIR MARKET VALUE

31-12-2013

Commodity futures contracts - -/- 1.7 - -/- 0.1

As in 2013, the commodity future contracts have mainly a term shorter than one year.

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

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

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


56



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

CONTRACT VOLUME

31-12-2014

BOOK VALUE31-12-2014

FAIR MARKET-VALUE

31-12-2014

CONTRACT VOLUME

31-12-2013

BOOK VALUE31-12-2013

FAIR MARKET VALUE

31-12-2013

Currency and interest rate swaps concerning liabilities to institutional investors 48.7 -/- 3.7 -/- 3.7 48.7 -/- 9.6 -/- 8.5

Other interest rate derivatives 6.0 -/- 0.2 -/- 0.2 16.9 -/- 0.3 -/- 0.3

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

year amounts to -/- EUR 3.7 million (2013: nil).

The fair value of other interest rate derivatives maturing within 1 year amounts to nil (2013: nil).

(13) OFF BALANCE SHEET COMMITMENTS

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

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

pledges on receivables and mortgages on a number of properties.

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

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

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

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

estimated.

GUARANTEESCosun has given guarantees to third parties to an amount of EUR 29.6 million (2013: EUR 42.1 million).

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

from this amount to EUR 12.6 million (2013: EUR 12.4 million). The rental and lease instalments payable within one year amount

to EUR 3.8 million (2013: EUR 3.5 million). Instalments payable after five years amount to nil (2013: EUR 0.3 million). Contingent

investment liabilities amount to EUR 12.8 million (2013: EUR 13.7 million).


57



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

2014 % 2013 %

Sugar activities 904.2 42.8 1,003.0 46.3

Potato activities 730.6 34.5 707.1 32.6

Other activities 479.7 22.7 456.2 21.1

TOTAL 2,114.5 100.0 2,166.3 100.0

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

2014 % 2013 %

The Netherlands 714.8 33.8 867.0 40.0

Rest of the EU 1,119.4 52.9 1,035.5 47.8

Rest of Europe 38.4 1.8 40.3 1.9

North and South-America 112.7 5.4 109.2 5.0

Rest of the world 129.2 6.1 114.3 5.3

TOTAL 2,114.5 100.0 2,166.3 100.0

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

income are included under these revenues.

(16) EU LEVIESProduction levies are imposed by the EU to finance the sugar market regime. An amount of EUR 13.0 million was recognised in

2013 for production levies recoverable for the period 2001-2005.

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

Sugar beet purchases from members amounted to EUR 282.9 million (2013: EUR 360.2 million). This amount includes

EUR 107.7 million payable as members’ bonus (2013: EUR 187.2 million).

(18) COST OF OUTSOURCED WORK AND OTHER EXTERNAL COSTSThis expense item includes, among other things, rental costs, research costs, repair and maintenance costs, indirect energy costs,

transport costs, office expenses, selling expenses, insurance costs and IT costs, insofar as such expenses are charged by third

parties.

The total Research & Development costs, including staff costs, amounted to EUR 14.1 million (2013: EUR 12.5 million).


58



(19) STAFF COSTS 2014 2013

Wages and salaries 182.3 160.9

Social security contributions 32.7 27.9

Pension costs 35.9 28.4

250.9 217.2

NUMBER OF EMPLOYEESExpressed in full-time equivalents, the average number of employees at Cosun during the 2014 financial year was 3,799

(2013: 3,477). The employees were engaged in the following product groups (average number of employees):

2014 2013

Sugar activities 845 842

Potato activities 1,943 1,695

Other activities 1,011 940

TOTAL 3,799 3,477

Of whom employed outside the Netherlands 1,758 1,474

(20) OTHER CHANGES IN THE VALUE OF INTANGIBLE AND TANGIBLE FIXED ASSETSIn 2014 the impairment on tangible fixed assets amounts to EUR 2.4 million. The change in value in 2013 amounted to

EUR 2.5 million and related to goodwill.

(21) FINANCIAL INCOME AND EXPENSEFinancial income and expenses include interest on interest bearing receivables and debts.

(22) TAXATION ON RESULTS FROM ORDINARY ACTIVITIES The corporate income tax disclosed in the profit and loss account amounts to EUR 27.4 million (2013: EUR 32.6 million) on a result of

EUR 106.3 million (2013: EUR 172.7 million). The effective tax rate was 25.8% (2013: 18.9%). The difference from the nominal tax rate

can be specified as follows:2014 % 2013 %

Profit before taxation 106.3 172.4

Income tax based onDutch tax rates 26.6 25.0 43.1 25.0

Effect of foreign tax rates 1.5 1.4 0.3 0.2

Non-deductible charges / permanent differences -/- 0.2 -/- 0.1 1.1 0.7

Effect of change in valuation of tax losses, assets or temporarily differences 0.2 0.2

-/- 4.4 -/- 2.6

Adjustment for prior periods -/- 0.8 -/- 0.8 -/- 7.2 -/- 4.2

Other 0.1 0.1 -/- 0.3 -/- 0.2

Total tax burden 27.4 25.8 32.6 18.9


59



The adjustment to prior years in 2013 relates mainly to the outcome of the discussion between the Dutch and the U.S. tax

authorities on transfer pricing methodology to be used for one of the activities.

(23) FEES OF THE AUDITORThe following fees have been charged by Ernst & Young Accountants to the company, its subsidiaries and other consolidated

companies, as referred to in Section 2:382a (1 and 2) of the Netherlands Civil Code.

In the year 2014 the following fees were charged to the company:

ERNST & YOUNG ACCOUNTANTS LLP

OTHER ERNST & YOUNG NETWORK

TOTALERNST & YOUNG

Audit of the financial statements 0.2 0.3 0.5

Tax advisory services 0.1 0.2 0.3

TOTAL 0.3 0.5 0.8

In the year 2013 the following fees were charged to the company:

ERNST & YOUNG ACCOUNTANTS LLP

OTHER ERNST & YOUNG NETWERK

TOTALERNST & YOUNG

Audit of the financial statements 0.3 0.2 0.5

Tax advisory services - 0.3 0.3

TOTAL 0.3 0.5 0.8

(24) CASH FLOW STATEMENT Movements in the cash flow statement can be derived largely from the movements in the relevant balance sheet items. The balance

sheet movement and the cash flow statement movement of certain items are reconciled below:

WORKINGCAPITAL

PROVISIONS NON-CURRENTLIABILITIES

Balance as at 1 January 2014 346.5 -/- 84.0 -/- 99.9

Balance as at 31 December 2014 348.4 -/- 84.1 -/- 59.5

Balance sheet movements -/- 1.9 0.1 -/- 40.4

Adjustments for:

- Changes in consolidation -/- 0.5 -/- 0.3 -/- 2.8

- Changes in income tax -/- 16.6 4.1 -

- Release negative goodwill - - 3.6

- Reclassification 0.9 - 39.1

CASH FLOW -/- 18.1 3.9 -/- 0.5

The reclassification of long-term liabilities relates to the repayment obligation to institutional investors in 2015 and has been

recognised in current liabilities after deduction of the increase in long-term lease obligations.


60


COOPERATIVE BALANCE SHEET

Notes 31-12-2014 31-12-2013

ASSETS

Fixed assets

Intangible fixed assets (25) 85.0 92.6

Tangible fixed assets (26) 253.0 229.1

Financial fixed assets (27) 548.6 578.5

886.6 900.2

Current assets

Inventories (28) 323.0 312.9

Trade and other receivables (29) 286.8 262.7

Cash and cash equivalents 329.2 298.8

939.0 874.4

Total assets 1,825.6 1,774.6

EQUITY AND LIABILITIES

Shareholders’ equity (30)

Share capital 7.1 7.1

Share premium 53.5 53.6

Reserve for participating interests 5.3 4.3

Reserve for exchange differences 0.7 -/- 2.1

Other reserves 1,165.1 1,096.8

1,231.7 1,159.7

Provisions (31) 48.8 52.3

Non-current liabilities (32) 40.9 79.7

Current liabilities (33)

Current liabilities to credit institutions and liabilities of a financing nature 49.4 0.2

Other current liabilities, accruals and deferrals 454.8 482.7

504.2 482.9

Total equity and liabilities 1,825.6 1,774.6

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


61


COOPERATIVE PROFIT AND LOSS ACCOUNT


Cooperative result after taxation 39.9 86.6

Profit of participating interests after taxation 39.2 52.7

NET RESULT 79.1 139.3

APPROPRIATION OF PROFIT IN ACCORDANCE WITH ARTICLE 1OF THE SUGAR BEET DELIVERY PAYMENT REGULATIONS

Result of participating interests less dividends received 10.9 36.2

Cooperative result including dividends from participating interests 68.2 103.1

(after profit appropriation; in EUR million)

COOPERATIVE PROFIT AND LOSS ACCOUNT


62


NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS

NOTES TO THECOOPERATIVE ANNUAL ACCOUNTS(in EUR million)

GENERALInsofar as notes on items in the cooperative balance sheet and profit and loss account are not provided below, reference is made to

the notes to the consolidated balance sheet and profit and loss account.

ACCOUNTING POLICIES The cooperative balance sheet and profit and loss account are prepared using the same accounting policies as applied for the

consolidated balance sheet and profit and loss account.

(25) INTANGIBLE FIXED ASSETS Movements in intangible fixed assets were as follows:

GOODWILL OTHERINTANGIBLE

FIXED ASSETS

TOTAL

At cost as at 1 January 2014 174.6 5.6 180.2

Accumulated amortisation and other changes in valueas at 1 January 2014

85.4

2.2

87.6

BOOK VALUE AS AT 1 JANUARY 2014 89.2 3.4 92.6

Movements:

- Amortisation -/- 7.6 -/- 0.3 -/- 7.9

- Investments - 0.3 0.3

BOOK VALUE AS AT 31 DECEMBER 2014 81.6 3.4 85.0

At cost as at 31 December 2014 174.6 6.0 180.6

Accumulated amortisation and other changes in valueas at 31 December 2014 93.0 2.6 95.6


63



(26) TANGIBLE FIXED ASSETS Movements in tangible fixed were as follows:

LAND AND BUILDINGS

MACHINERYAND

EQUIPMENT

OTHER TANGIBLE

FIXED ASSETS

PREPAYMENTS AND IN

PRODUCTION

NOT USEDFOR

OPERATIONS

TOTAL

At cost as at 1 January 2014 125.7 341.2 10.1 9.6 5.2 491.8

Accumulated depreciation and otherchanges in value as at 1 January 2014 60.3 193.9 8.5 - - 262.7

BOOK VALUE AS AT 1 JANUARY 2014 65.4 147.3 1.6 9.6 5.2 229.1

Movements:

- Investments 13.3 50.4 1.3 - - 65.0

- Depreciation -/- 3.5 -/- 32.4 -/- 0.8 - - -/- 36.7

- Other changes in value -/- 0.1 -/- 2.3 - - - -/- 2.4

- Transfer - 0.4 -/- 0.4 -/- 2.0 - -/- 2.0

BOOK VALUE AS AT 31 DECEMBER 2014 75.1 163.4 1.7 7.6 5.2 253.0

At cost as at 31 December 2014 138.8 392.9 7.6 7.6 5.2 552.1

Accumulated depreciation and other changes in value as at 31 December 2014 63.7 229.5 5.9 - - 299.1

(27) FINANCIAL FIXED ASSETS 31-12-2014 31-12-2013

Participating interests in group companies 245.1 486.9

Receivables from group companies 290.6 78.6

Receivables from members 4.8 6.3

Deferred tax assets 0.1 0.2

Other receivables 8.0 6.5

548.6 578.5


64



Movements in financial fixed assets were as follows:

PARTICIPATINGINTERESTS IN

GROUP COMPANIES

RECEIVABLES FROM GROUP

COMPANIES

RECEIVABLES FROM

MEMBERS

DEFERREDTAX

ASSETS

OTHERRECEIVABLES

TOTAL

Balance as at 1 January 2014 486.9 78.6 6.3 0.2 6.5 578.5

Movements:

- Share in result of participating interests 40.1 - - - - 40.1

- Additions and issuances 19.6 214.3 1.1 - 1.8 236.8

- Repayments and releases -/- 275.0 -/- 2.3 - -/- 0.1 - -/- 277.4

- Dividend -/- 29.3 - - - - -/- 29.3

- Exchange results 2.8 - - - - 2.8

- Movements in favour of/charged to the profit and loss account - - 0.2 - -/- 0.2 -

- Reclassification to current - - -/- 2.8 - -/- 0.1 -/- 2.9

BALANCE AS AT 31 DECEMBER 2014 245.1 290.6 4.8 0.1 8.0 548.6

PARTICIPATING INTERESTS IN GROUP COMPANIESNedalco Alcohol GmbH & Co. KG in liquidation and Suiker Unie GmbH & Co. KG are subsidiaries and included in the consolidated

financial statements of Royal Cosun as of 31 December 2014. Nedalco Alcohol GmbH & Co. KG and Suiker Unie GmbH & Co. KG

in liquidation uses the exemption to prepare, audit and disclose the financial statement in accordance with section 264b German

Commercial Law.

RECEIVABLES FROM GROUP COMPANIESReceivables from group companies are mainly long-term loans granted to Cosun Holding B.V. (EUR 175 million), Aviko B.V.

(EUR 60 million), SVZ International B.V. (EUR 30 million) and Novidon B.V. (EUR 13 million).

RECEIVABLES FROM MEMBERSThe non-interest bearing receivables from members (EUR 4.8 million) relates to the market value of the long-term portion of

amounts still to be deposited for issued shares (2013: EUR 6.3 million).

OTHER RECEIVABLESThis concerns long-term deposits with a maturity of 1 to 3 years and costs related to the closure of a new financing agreement

with a term of 1 to 4 years.

(28) INVENTORIES31-12-2014 31-12-2013

Land 8.8 6.0

Raw materials and consumables 7.9 9.9

Finished products and goods for resale 306.3 297.0

323.0 312.9

The provision for obsolete inventories amounts to EUR 2.1 million (2013: EUR 1.5 million). The land included in inventory relates to

grounds being developed for business park AFC Nieuw Prinsenland near Dinteloord.


65



(29) TRADE AND OTHER RECEIVABLES 31-12-2014 31-12-2013

Trade accounts receivable 58.2 66.3

Receivables from group companies 205.0 151.9

Short-term portion of amount still to be paid up for issued shares 2.6 2.6

Income tax 0.1 0.2

Other tax receivables 11.2 11.3

Other receivables and accrued income 9.7 30.4

286.8 262.7

(30) CAPITAL AND RESERVES

ISSUED SHARE CAPITAL AND SHARE PREMIUM

SHARECAPITAL

SHAREPREMIUM

TOTAAL2014

TOTAL2013

Balance as at 1 January 7.1 53.6 60.7 60.7

Movements:

- Shares issued 0.3 0.8 1.1 1.3

- Shares redeemed and withdrawn -/- 0.3 -/- 0.9 -/- 1.2 -/- 1.3

BALANCE AS AT 31 DECEMBER 7.1 53.5 60.6 60.7

The total number of issued shares is 155,578 (2013: 156,303), with the nominal value amounting to EUR 45.40 per share. In 2014,

5,796 shares were issued and 6,521 shares were redeemed and withdrawn. Based on RJ 620, EUR 1.2 million

(2013: EUR 1.2 million) has been presented as liability in the consolidated annual accounts.

STATUTORY RESERVES, OTHER RESERVES AND RESULTS

RESERVE FOR PARTICIPATING

INTERESTS

RESERVE FOR EXCHANGE

DIFFERENCES

OTHERRESERVES

TOTAL2014

TOTAL2013

Balance as at 1 January 4.3 -/- 2.1 1,096.8 1,099.0 972.3

Movements:

- Profit appropriation - - 79.1 79.1 139.3

- Paid to members - - -/- 9.8 -/- 9.8 -/- 10.3

- Exchange differences - 2.8 - 2.8 -/- 2.3

- Transfer 1.0 - -/- 1.0 - -

BALANCE AS AT 31 DECEMBER 5.3 0.7 1,165.1 1,171.1 1,099.0

The net result 2014 of EUR 79.1 million has been added to the other reserves.

RESERVE FOR PARTICIPATING INTERESTSThe reserve for participating interests is that part of movements in equity that are not freely disposable as from the moment of

consolidation.


66



OTHER RESERVES On the basis of section 46 of the articles of association, payments take place to members and contracted parties. Effective from

January 2000, these payments are in accordance with the Sugar Beet Delivery Payment Regulations; previously the Cessation

of Business Regulations had been applicable. The payment amount depends on the average number of tonnes of sugar beets

delivered, the average cooperative result including the dividend from participating interests per tonne of sugar beet for the three

previous financial years, and a factor per campaign. Payments are deducted from the other reserves.

Until 2017 the payments will also be made based on the Cessation of Business Regulations, for which the amount depends on

the number of shares possessed by the members, the number of financial years that the shares have been in the possession of

the members, and the average cooperative result including dividend from participating interests per share for the three previous

financial years. The payment takes place from the moment business operations ceased, or after a delivery period of at least 30

consecutive campaigns at the moment the member uses the Cessation of Business Regulations or 2017 at the latest.

Some of the members are entitled to payment under the Beet Delivery Regulations in 2015 because they will have delivered sugar

in 15 successive campaigns. If every eligible member exercises this right, the gross payment in 2015 based on the cooperative’s

results including dividend received from participating interests for the period 2012-2014 would be approximately EUR 180 million

(net: approximately EUR 135 million, charged to other reserves). This amount includes that the members concerned are also

entitled to payment pursuant to the transitional rules.

The former CSM Suiker growers will be eligible to a payment under the Beet Delivery Regulations after delivering beet for a period

of ten years in 2016. If the amount accrued for these members is less than the admission fee (2007 capital contribution), the

members concerned will receive an additional payment for the difference between the beet delivery payment accrued up to that

moment and the admission fee paid, subject to the conditions of the membership application and the Beet Delivery Regulations.

If all eligible members exercise this right, the gross payment in 2016 based on the cooperative’s results including dividends from

participating interests for the period 2013-2014 will amount to approximately EUR 40 million (approximately EUR 30 million net

charged to other reserves). No account is taken of the cooperative’s results including dividends from participating interest for 2015.

If all members eligible to payment under the Cessation of Business Regulation and the Beet Delivery Regulation, the total payment

as at 31 December 2014 would amount to EUR 298.0 million (2013: EUR 273.5 million).

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

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

from the equity in the cooperative annual accounts.

31-12-2014 31-12-2013

Consolidated capital and reserves 1,230.5 1,158.5

Impact RJ 620 1.2 1.2

Cooperative capital and reserves 1,231.7 1,159.7


67



(31) PROVISIONS31-12-2014 31-12-2013

Deferred tax liabilities 26.6 30.4

Restructuring and reorganisation 0.4 1.2

Pensions and other deferred employee benefits 14.8 7.3

Other provisions 7.0 13.4

48.8 52.3

EUR 34.1 million (2013: EUR 45.8 million) of the provisions is long term in nature.

Movements in provisions were as follows:

DEFERREDTAX

LIABILITIES

RESTRUCTURINGAND

REORGANISATION

PENSIONSAND OTHER

DEFERRED EMPLOYEE

BENEFITS

PROVISION FOR PARTICIPATING

INTERESTS

TOTAL

Balance as at 1 January 2014 30.4 1.2 7.3 13.4 52.3

Movements:

- Additions from profit and loss account - - 8.3 7.3 15.6

- Release to profit and loss account - - - -/- 5.6 -/- 5.6

- Withdrawals -/- 3.8 -/- 0.8 -/- 0.8 -/- 8.1 -/- 13.5

BALANCE AS AT 31 DECEMBER 2014 26.6 0.4 14.8 7.0 48.8

(32) NON-CURRENT LIABILITIES 31-12-2014 EFFECTIVE

INTEREST RATE31-12-2013 EFFECTIVE

INTEREST RATE

Debts to institutional investors 31.0 5.1 % 71.0 5.1 %

Long-term derivatives - - 8.7 -

Lease obligation 9.9 - - -

TOTAL NON-CURRENT LIABILITIES 40.9 79.7


68



(33) CURRENT LIABILITIES

31-12-2014 31-12-2013

Liabilities of a financing nature 49.4 0.2

Payables to group companies 129.1 115.3

Payables to members 166.7 230.3

Payables to suppliers and trade creditors 36.5 54.4

Income tax payable 46.8 24.9

Other taxes and social security contributions payable 2.0 1.9

Other current liabilities and accruals 73.7 55.9

TOTAL OTHER CURRENT LIABILITIES AND ACCRUALS 454.8 482.7

SHORT-TERM DERIVATIVESShort-term derivatives include currency and interest rate swaps to hedge interest and exchange rate risk arising from liabilities to

institutional investors to an amount of EUR 3.4 million (2013: nil).

(34) OFF BALANCE SHEET COMMITMENTS

Several liability and guarantees

Cosun has given guarantees to third parties to an amount of EUR 31.0 million (2013: EUR 26.1 million).

Long-term financial commitments

Long-term unconditional commitments have been entered into in respect of rent and operating lease. The obligations ensuing

from this amount to EUR 4.6 million (2013: EUR 4.4 million). The rental and lease instalments payable within one year amount

to EUR 1.2 million (2013: EUR 1.2 million). Instalments payable after five years amount to nil (2013: EUR 0.3 million). Contingent

investment liabilities amount to EUR 11.4 million (2013: EUR 12.4 million).

(35) OTHER INFORMATION The remuneration, including pension costs as referred to in Section 2:383(1) of the Netherlands Civil Code, of members of

the Board amounted to EUR 0.8 million (2013: EUR 0.6 million) and that members of the Supervisory Board to EUR 0.1 million

(2013: EUR 0.1 million). The remuneration was charged to the result.

Board Supervisory Board

D.H. de Lugt J. Bartelds

G.M. van Tilburg J.L. van Driel

J.M.M. Megens W.A. Blijdorp

A.J.B.P. Bossers E.H.W.J.E. Michiels

B.R. van Doesburgh Ms. J.P. Rijsdijk

J.M. Klompe B.T. Visser

Ms. G. Prins

J.A. Smid

J.H.D. Voncken


OTHER INFORMATION

69


INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT To: the Supervisory Board of Coöperatie Koninklijke Cosun U.A.

Report on the financial statements

We have audited the accompanying financial statements 2014 of Coöperatie Koninklijke Cosun U.A., Breda, which the comprise

company and consolidated balance sheet as at 31 December 2014, the company and consolidated profit and loss account for the

year then ended and the notes, comprising a summary of the accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITYManagement is responsible for the preparation and fair presentation of these financial statements and for the preparation of

the management board report, both in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is

responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free

from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OTHER INFORMATION

OTHER INFORMATION

70


INDEPENDENT AUDITOR’S REPORT

OPINION WITH RESPECT TO THE FINANCIAL STATEMENTS In our opinion, the financial statements give a true and fair view of the financial position of Coöperatie Koninklijke Cosun U.A. as

at December 31, 2014 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to

report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in

accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b-h has

been annexed. Further we report that the management board report, to the extent we can assess, is consistent with the financial

statements as required by Section 2:391 sub 4 of the Dutch Civil Code.

Eindhoven, 12 March 2015

Ernst & Young Accountants LLP

Signed by drs. S.G.C. Seijkens RA

OTHER INFORMATION

71


PROVISIONS IN THE ARTICLES OF ASSOCIATION GOVERNING THE APPROPRIATION OF PROFIT The appropriation of the profit for the year is laid down in the Articles of Association (Article 42, paragraphs 1 and 2) as follows:

the Board shall determine what proportion of the cooperative’s profit for the year shall be added to reserves. Unless the Members’

Council resolves otherwise on the Boards’ recommendation, the amount remaining after the above addition shall be distributed

among those members who were A members or B members at the end of the financial year in question, or who had ceased to

be A members or B members during or at the end of that financial year; with regard to B members, the distribution shall be made

with due regard for the Membership Agreement and at the direction of the relevant C members in accordance with the quantity of

produce supplied to the cooperative in that financial year and in accordance with the method of payment stipulated in the Sugar

Beet Regulation.

PROPOSED PROFIT APPROPRIATION The net result for the 2013 financial year (EUR 139.3 million) is added to the other reserves, in accordance with the decision of the

Board on 12 March 2014.

The Board intends to decide that EUR 79.1 million be added to the other reserves.

The above has already been included in the cooperative’s 2014 annual accounts.

Documents

ANNUAL REPORT 2014 - Cosun