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
COSUN ANNUAL REPORT 2014
ROYAL COSUN
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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
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
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
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
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
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
ABOUT COSUN
3
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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 ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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COSUN ANNUAL REPORT 2014
‘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
COSUN ANNUAL REPORT 2014
‘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
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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.
COSUN ANNUAL REPORT 2014
15
REPORT
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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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COSUN ANNUAL REPORT 2014
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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 ANNUAL REPORT 2014
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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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.
COSUN ANNUAL REPORT 2014
SUIKER UNIE
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COSUN ANNUAL REPORT 2014
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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.
COSUN ANNUAL REPORT 2014
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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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.
COSUN ANNUAL REPORT 2014
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COSUN ANNUAL REPORT 2014
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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COSUN ANNUAL REPORT 2014
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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COSUN ANNUAL REPORT 2014
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 ANNUAL REPORT 2014
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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COSUN ANNUAL REPORT 2014
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.
COSUN ANNUAL REPORT 2014
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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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
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MANAGEMENT ISSUES
COSUN ANNUAL REPORT 2014
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
RISK RISK CONTROL MEASURE
• 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.
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MANAGEMENT ISSUES
COSUN ANNUAL REPORT 2014
RISK PROFILE
RISK CATEGORY: FINANCIAL MANAGEMENT
RISK RISK CONTROL MEASURE
• 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
RISK RISK CONTROL MEASURE
• 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.
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MANAGEMENT ISSUES
COSUN ANNUAL REPORT 2014
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
Breda, 12 March 2015
ROYAL COSUN
Districts
Members’ Council
Board
Executive Board
Youth Council
Supervisory Board
Members
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MANAGEMENT ISSUES
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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
Breda, 12 March 2015
REPORT OF THE SUPERVISORY BOARD
36
MANAGEMENT ISSUES
COSUN ANNUAL REPORT 2014
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.
ANNUAL ACCOUNTS 2014
38
COSUN ANNUAL REPORT 2014
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)
ANNUAL ACCOUNTS 2014
39
COSUN ANNUAL REPORT 2014
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
ANNUAL ACCOUNTS 2014
40
COSUN ANNUAL REPORT 2014
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR Notes 2014 2013
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)
ANNUAL ACCOUNTS 2014
41
COSUN ANNUAL REPORT 2014
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)
ANNUAL ACCOUNTS 2014
42
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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
ANNUAL ACCOUNTS 2014
43
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
44
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
45
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
46
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
47
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
48
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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.
ANNUAL ACCOUNTS 2014
49
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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
ANNUAL ACCOUNTS 2014
50
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
51
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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.
ANNUAL ACCOUNTS 2014
52
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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.
ANNUAL ACCOUNTS 2014
53
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
54
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
55
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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.
ANNUAL ACCOUNTS 2014
56
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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).
ANNUAL ACCOUNTS 2014
57
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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).
ANNUAL ACCOUNTS 2014
58
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(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
ANNUAL ACCOUNTS 2014
59
COSUN ANNUAL REPORT 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
60
COSUN ANNUAL REPORT 2014
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)
ANNUAL ACCOUNTS 2014
61
COSUN ANNUAL REPORT 2014
COOPERATIVE PROFIT AND LOSS ACCOUNT
FOR THE FINANCIAL YEAR Notes 2014 2013
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
ANNUAL ACCOUNTS 2014
62
COSUN ANNUAL REPORT 2014
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
ANNUAL ACCOUNTS 2014
63
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
(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
ANNUAL ACCOUNTS 2014
64
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
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.
ANNUAL ACCOUNTS 2014
65
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
(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.
ANNUAL ACCOUNTS 2014
66
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
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
ANNUAL ACCOUNTS 2014
67
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
(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
ANNUAL ACCOUNTS 2014
68
COSUN ANNUAL REPORT 2014
NOTES TO THE COOPERATIVE ANNUAL ACCOUNTS
(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
Breda, 12 March 2015
OTHER INFORMATION
69
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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
COSUN ANNUAL REPORT 2014
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.