2014/2015 annual report - avebe · kpw area in lüchow and the stadex facility in malmö....

A N N U A L R E P O R T1

ANNUALREPORT

2014/2015

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Report on the 96th financial year of the Cooperative AVEBE U.A. in Veendam, to be issued at the General Members’ Meeting on 16 December 2015.


SUSTAINABLY BINDING AND BUILDING

The cooperative sets out to pay the member-shareholders an optimum potato price for the starch potatoes they deliver. We do this by sustainably adding value to as many components of the potato as possible. This is a precondition for our continuity from both a financial and ecological viewpoint.

Avebe is approaching its centenary. That is something we are proud of. There have been many changes in that century, but one thing has stayed the same: we are bursting with ambition. We want to remain attractive to starch potato growers both now and in the future. For that purpose we maintain close relationships with growers, customers, employees and our surrounding community.

Market orientation, innovation, sustainability and cost control form our strategic spearheads.

We believe that successful innovation of products and processes is vital to the cooperative’s continuity. We regard innovation not as a mandate but as a way of life. We constantly look for new ways of increasing our yields with fewer resources. More sustainably developing new potato varieties with better properties.

During this financial year we marked our history and future vision with a new trademark. We have reviewed our corporate identity and adapted it to the 21st century. We regard our new trademark as a symbol that we use to show where we are going, without losing sight of our roots. In terms of our results this financial year clearly shows that the course we have taken is the right one for a vital and sustainable Avebe.

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Introduction 3Contents 4Mission, Vision and Objective 5Composition of the District Board 6Indicators 7Report of the Supervisory Board 8Composition of the Board of Directors and the Supervisory Board 9Report of the Board of Directors 11 Financial results 12Review financial indicators 13Review of the financial year and investing in the future 14 Agro Commerce Operations Human Resource Management Research and development 17Risks and uncertainties 18CSR and sustainability 21Forecast of the Board of Directors 23

Financial statementsConsolidated balance sheet as at 31 July 2015 26Consolidated profit and loss account 28Consolidated cash flow statement 29Notes general 30Notes to the consolidated balance sheet 38Notes to the consolidated profit and loss account 43Balance sheet as at 31 July 2015 44Profit and loss account 46Notes to the balance sheet 47Notes to the profit and loss account 52Other information 53

Addresses 56

Colophon 57


MISSION, VISION & OBJECTIVE

We extract everything to be had

Company profile The cooperative Avebe is a globally operating company that delivers products based on potato starch and protein for food, but also for paper, building materials, textile, adhesives and animal feed applications. Avebe manufactures products and systems that are a perfect match for the processes of its customers. We offer new solutions that are in line with the current and latent wishes of the market and which ultimately lead to better end-products, higher yields and more efficiency. The company controls the entire chain. From the development of new potato varieties via the production of potato starch and protein to selling a wide range of products derived from them on the open market. During the financial year 2014/2015 Avebe employed over 1,300 people.

Objective Avebe sets out to achieve continuity and sustainability in the relationship with our members and customers. Our aim is to achieve an optimum payout price for the delivered potatoes. The cultivation of starch potatoes must remain as attractive for our members as possible. We set out to achieve this, with and for our clients, by consistently developing innovative products and services that meet their requirements. The starch potato is a natural raw product with unique properties. Potato starch, potato protein and other products derived from them form an important constituent in many foods. They are also used in technical products, such as paper, textile, adhesives and concrete. The starch potato also offers - with all its components - huge potential for expanding the range of products. Examples include more extensive bio-refinery, the extraction of as many high value substances as possible from biomass.

Mission Avebe sets out to achieve continuity. We extract everything to be had: Avebe assigns the right value to the richness of the starch potato. This enables us to discover significant application options. That way we create value for our members, customers, society and ourselves.

Strategy Avebe’s strategy is aimed at continuity, for today and tomorrow. We have translated this into Sustainably Binding & Building. Sustainably binding means connecting people, planet and profit together and entering into sustainable relationships. Sustainably building means working sustainably on a solid and future-proof cooperative with products that offer added value on the market.

We shape Sustainably Binding & Building on the basis of four pillars: 1. Market orientation 2. Innovation 3. Sustainability 4. Cost control

Business principles Avebe has developed and implemented a Corporate Governance Code. The code contains a set of business principles, covering subjects such as transparency, equality, labour and union relations, health, safety and the environment and anti-corruption measures. The full text is available at www.avebe.com.

Latest news Avebe’s website, www.avebe.com, provides up-to-date information about new products and developments at group level. AVEBE can also be followed on Twitter via the account @AVEBEGroup.

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NORTHG. Draijer, ChairmanD.D. BouwmanA.H. HouwingJ.A. KamphuisG.J. LaarmanA. PrinsH. van Rhee 1

S.P. SpanningaS. Wieringa, Vice-chairmanF. Wigchering

EASTK. Bakker, ChairmanD.P.J.R. BeulingP. Boonman J. Deuring J.A. HilveringH.W. KaiserJ.R. KunstH. Migchels L. Tammes, Vice-chairmanA.G. de Vries

CENTRALJ.R. Oosting, ChairmanF. DijksterhuisJ. Emmens, Vice-chairmanH. van der Horst 1

H. HouwingJ.R. de Jong 2

R.H. KunstR. OttenH.J. PrinsR.H. RoosjenB.F.J.M. van der Sterren

COMPOSITION OF THEDISTRICT BOARD

SOUTHH.G. Herbert, ChairmanP.J. EvenhuisJ.H. Kersten, Vice-chairmanM.J.H. KoopmanJ.H.P. LubbermanW.H. MeijerinkD.J. MeinenB. MichelA.J. van RoekelD. Woestenenk

KPWH.W. Giere, Chairman 3

C.H. Schulze, Chairman 4

C. BasedauH. DammannM. DralleO. GlüheD. Möller, Vice-chairmanH. SauckeS. SchwedtM. StrathusenVacancy 6

WESER-EMSM. Möllering, ChairmanR. Bruns, Vice-chairmanK.H. HoesenC. MöllerA. RöttgerH. SchulteB. SpeckenH. WeinansVacancy 5

Vacancy 6

1 appointed on 17.12.2014

2 stepped down on 17.12.2014

3 appointed as member of the Supervisory Board on 17.12.2014


5 vacancy on 12.12.2013

6 vacancy on 17.12.2014


INDICATORS

2014/2015 2013/2014 2012/2013 2011/2012 2010/2011 Consolidated unless otherwise indicated (in millions of euros where applicable)

Gross turnover 559.6 579.9 591.1 595.5 565.3Net turnover 521.1 540.7 550.0 554.1 525.1Operating result 17.6 15.1 20.0 50.4 36.9Interest expenses 7.2 7.6 7.3 5.6 8.4Cooperative result after taxation 11.8 8.3 11.4 32.1 19.8 Depreciation 23.6 25.8 25.2 24.3 22.7Investments fixed assets 45.3 24.8 41.1 43.4 35.9Group equity 199.6 195.0 192.3 191.5 178.8 Loan capital including provisions 230.6 200.3 244.0 244.1 211.4 Balance sheet total 430.2 395.3 436.3 435.6 390.2 Group equity as a % of balance sheet total 46.4% 49.3% 44.1% 44.0% 45.8%Net cash flow before financing activities -12.7 31.6 -5.3 -15.0 46.7Net debt 127.3 108.8 131.5 115.8 80.9

Personnel expenses 1) 94.7 94.1 91.4 95.1 100.2Average number of employees 1,314 1,311 1,308 1,352 1,361

Number of cooperative members 2,475 2,479 2,532 2,633 2,743 Number of shares issued 101,450 101,450 101,450 101,374 100,678 Performance price (EUR/ton) 2) 3) 78.41 75.07 77.36 76.94 67.32

1) Including movements in provisions.

2) The performance price comprises the payments for the delivered potatoes plus the net result divided by the

tonnage delivered by members on shares.

3) Calculated at a under water weight of 470 grams.

COMPOSITION OF THEDISTRICT BOARD

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REPORT OF THESUPERVISORY BOARD

The past year was characterised mainly by low prices for agricultural products. Despite this general trend Avebe has achieved a good performance price. Indeed, it is the best in our history.

The past year has been characterised mainly by low prices for agricultural products. There is a clear downward trend in prices for sugar, dairy products, grain and consumer potatoes. Despite this general trend Avebe has achieved a good performance price. Indeed, it is the best in our history. More market orientation, a good capacity utilisation level and a favourable exchange rate for the dollar have contributed to this favourable development.

There has been a clear rising trend in the average performance price over the past few years, without this being at the expense of the investment level. At 46 million euros, the total amount of replacement investments and investments in innovation can be described as substantial. The course we have taken is bearing fruit.

The Board of Directors and the Supervisory Board met on several occasions to discuss the 2015 update of the strategic plan “Binding & Building”. The key concepts of performance price and continuity, which are of paramount importance to a sales cooperative, have been further tightened up. A clear objective has been set for the 2018 performance price. Continuity is also anchored in focusing even more on investments, sustainability, foods and on the rollout of the protein strategy.

In the context of the above the Supervisory Board regards it as being important to ensure that personnel have the right competencies. We consider it vital to provide education and training courses and to appoint properly qualified people to key positions in the organisation.

The progress made with the safety policy at the production locations was once again a subject of discussion between the Board of Directors and the Supervisory Board this year.

We believe that good progress has been made in achieving the desired level. We have also made good inroads with reducing structural sickness absence and the number of incidents.

There was a large supply of raw materials during the year under review. Following two consecutive years of high prices on the connected potato markets, financial year 2014/2015 was characterised by low prices. The ABC procurement model for starch potatoes has therefore now been tested under various circumstances. The model has met expectations under these different circumstances.

In December 2014 and June 2015 the Supervisory Board paid a visit to the potato starch facility in the KPW area in Lüchow and the Stadex facility in Malmö. Enthusiastic employees gave us a detailed explanation of the various production aspects.

In the summer of 2015 the Members’ Council paid a visit to the KPW area in Germany. The Supervisory Board regards this as a welcome development from the perspective of strengthening mutual relations.

During the past year the Supervisory Board has considered its own performance with external assistance. It will use the findings to continue to optimise its performance.

During the Annual Meeting of 17 December 2014 Mr H.W. Giere was appointed as a member of the Supervisory Board for a period of four years. Mr W. Hilse stepped down by rotation at this meeting and was not eligible for reappointment. We are grateful to Mr Hilse, with his in-depth knowledge of European agricultural policy and German agriculture, for his years of devotion to Avebe.


ORGANISATION

At the end of financial year 2015 the Supervisory Board had nine members. Five of them are members of the cooperative. Six meetings were held during the financial year, three on location. One at the KPW location Lüchow, one at the Ter Apelkanaal location and one at AB Stadex in Malmö.

The Supervisory Board has three committees. They are the audit committee, the remuneration and appointments committee and the approvals and objections committee.

The audit committee comprises: K.A. de Graaf (chairman), C.H. van Dalen and G.H. Wichers. The committee met three times during the financial year. The external auditor attended on three occasions.

The remuneration and appointments committee comprises: J.W. Hoekman (chairman), H. Deuling (until 17 December 2014 W. Hilse), M. Veenendaal and F. Schepers. This committee held a total of two meetings during the year under review.

The approvals and objections committee held one hearing this year. The committee comprises H. Deuling (chairman), P. Poortinga, K.A. de Graaf and H.W. Giere (from 17 December 2014).

The Supervisory Board confirms that it has comprehensively discussed the financial statements, including their assumptions, notes and presentations, with the Board of Directors and that it is in agreement with the position taken by the Board of Directors. The Supervisory Board confirms that in view of the audit report, it approves the financial statements.

The auditor has issued an unqualified audit report dated 27 October 2015. The Supervisory Board proposes to the Members’ Council that the financially statements be adopted accordingly. The Supervisory Board approves the board of directors’ proposal concerning the appropriation of profits.

Finally, on behalf of the Supervisory Board I would like to thank all personnel and members for their efforts during the past financial year. Together we get the best out of Avebe.

For the Supervisory Board J.W. Hoekman, Chairman Veendam, 27 October 2015

BOARD OF DIRECTORS

STAFF DEPARTMENTS

AVEBE COMMERCE AVEBE OPERATIONS

AVEBE AGRO

BOARD OF DIRECTORSB.C. Jansen, Chairman and CEOE. Kraaijenzank, Vice-chairman and CFO

SUPERVISORY BOARDJ.W. Hoekman, ChairmanW. Hilse, Vice-chairman 1

F. Schepers, Vice-chairmanC.H. van DalenH. Deuling, Vice-chairman 2

H.W. Giere 3

K.A. de GraafP. PoortingaM. VeenendaalG.H. WichersJ.P. Russchen, Secretary

1 stepped down on 17.12.2014

2 appointed as vice-chairman on 17.12.2014


Composition of the Board of Directors and the Supervisory Board

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The strategy is bearing fruit. Progress is being made on all pillars and we can celebrate successes.The performance price has risen to 78.41 euros. The highest ever achieved by Avebe.

STRATEGY BEARING FRUIT, PROGRESS BEING MADE


REPORT OF THEBOARD OF DIRECTORS

In financial year 2014/2015 Avebe achieved a performance-based price of 78.41 euros a ton. This represents a year-on-year increase of 4.4% (75.07). The year ended with a cooperative profit of 11.8 million euros (financial year 2013/2014 8.3 million). The performance price was the highest ever achieved by Avebe.

Cultivation and membersThe combination of a successful harvest and a good performance price implies that Avebe was able to make a good contribution to its members’ income. This also demonstrates that Avebe’s strategy of marketing more and more high quality products is the right course to take.

Compared to wheat, the pivotal crop in Dutch arable farming, the competitive strength of starch potatoes has increased. The balance of starch potatoes is well over 900 euros higher than wheat.

Avebe has operated the ABC system since the abolition of the subsidies. This makes it possible to set lower prices for potatoes that are delivered in excess of the strategic A volume: the B and C volumes. This gives Avebe an instrument that it can use to gear the quantity of the delivered potatoes more accurately to the market demand. The system worked well during the financial year: approximately 89% of the volume was delivered under A-contract, approximately 9% under B-contract and 2% under C-volume.

The ample supply of potato starch led to clearly lower market prices for native starch. However the dollar exchange rate was favourable throughout the year.

Strategy and organisationDuring the second half of the financial year the management updated the strategy for 2013 - 2018. The essence of the strategy remains unchanged. The pillars of the strategy are market orientation, innovation, sustainability and cost control.

Progress has been made with improving safety, energy savings, reducing customer complaints and lowering costs.

Avebe has formulated a programme of concrete objectives for the sustainability pillar. Examples include an accident-free workplace, reduced energy consumption, fit & healthy employees, fewer transport kilometres and a higher volume yield per hectare.

Clear progress has been made on virtually all fronts. We are not yet satisfied with the results regarding the reduction of CO2 emissions; additional plans are being made for this purpose.

The two protein facilities at the Gasselternijveen location stand out when we consider the progress made with innovation. The decision to build these two protein facilities was made last year. The new Solanic® facility was taken into use at the beginning of the 2015 campaign. The facility for Protastar® is due for completion next year. These investments will enable Avebe to give substance to its aim of upgrading feed protein to food protein. In the years to come, we expect these investments to result in good returns in the form of a favourable contribution to the performance price. Work is now being done on new plans with the aim of continuing to develop the course we have taken.

At 46 million euros total investments over the past year clearly exceeded the level of depreciation.

Avebe is modernising at a fast rate in the area of Human Resources.

There is an atmosphere of optimism at Avebe. The organisation is self-confident, but we must guard against this leading to complacency.

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FINANCIALRESULTS

Improvement in the potato price and a positive result In financial year 2014/2015 AVEBE achieved a performance price of 78.41 euros a ton. The financial year was concluded with a cooperative profit of 11.8 million euros.

Performance price Approximately 93% of the performance price was paid out directly to the members; this was 95% in the previous financial year. The performance price was 75.07 euros a ton at that time. Through the proposed additional payment a further approx. 1.75 euros a ton of potatoes on fully-subscribed shares will be additionally paid out, taking the pay-out ratio to around 96%.

Financing The financing agreement that Avebe has made with the banks has been extended by one year. It is laid down in this agreement that the credit limit will be reduced by 1 million euros a quarter. With this credit reduction Avebe now has access to a line of credit totalling 214.6 million euros. Talks on the long-term financing will start at the beginning of 2016.

Result development The potato starch market is subject to strong fluctuations throughout the years. These fluctuations are caused by the size of the harvest in combination with economic and market conditions. Partly as a result of the favourable growth conditions for the potatoes for the 2014 harvest, the supply of potatoes exceeded the anticipated level. This situation took place throughout the entire starch potato industry in Europe. Selling prices showed a declining trend throughout the year as a result of this supply of potatoes being better than expected.

Net turnover fell by about 19.6 million euros compared to 2013/2014. This fall was caused by lower volumes and slightly lower average selling prices. The average sales prices for starch and starch derivatives fell by approximately 0.5% compared to last year.

The direct sales costs per ton rose slightly.

The costs of raw products and ancillary materials fell slightly in costs per ton of sold product. This reduction can be attributed to an altered mix of sold products.

The added value - operating income less raw products and ancillary materials - rose by 2.9 million euros. In relation to net turnover, the added value rose from 43.6% to 45.8%. The rise in added value was caused largely by an improvement in the sales mix.

Personnel expenses rose from 94.1 million euros in 2013/2014 to 94.7 million euros in 2014/2015. This rise was caused by changes to the collective bargaining agreement. The depreciation costs fell by over 12 million euros in the year under review. This reduction can be attributed in full to the absence of impairments.

The other operating costs rose in the financial year from 89.0 million euros to 101.4 million euros. This rise was caused mainly by the lack of toll production on one production line, higher maintenance costs and higher insurance charges.

These developments resulted in the operating result increasing as a percentage of turnover from 2.8% to 3.4%.

Balance sheet The balance sheet total rose in the financial year by 35 million euros to 430.2 million euros. This rise was caused by an increase in the fixed assets and stocks. The increase in the balance sheet total is reflected in the increased debts to banks and creditors and an increase in equity capital.Equity capital at the end of financial year 2014/2015 was 199.6 million euros compared to 195.0 million euros at year-end 2013/2014. This limited increase was caused by the addition of the net result for 2014/2015 to the other reserves following adjustment of the proposed profit appropriation and the repayment of some of the related share premium.


REVIEW FINANCIAL INDICATORS

Operating capital fell by 2.1 million euros to 157 million euros. This increase - on balance - in the operating capital can be attributed to higher stocks and short-term liabilities, with the increase in stocks surpassing the decrease in short-term liabilities. The interest-bearing debts rose from 110.1 million euros in the previous financial year to 128.8 million at the end of this reporting year.

Cash flow Gross operational cash flow in 2014/2015 was approximately 24 million euros lower than in the previous financial year. This is a consequence of a sharp fall in depreciation and an increase in the operating capital with the deduction of higher results and a decrease in the provisions.

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Cash flow from investment activities was approximately 20 million euros higher than in the previous financial year as a result of the higher investments during the financial year. Net operational cash flow therefore fell on balance by 44 million.

Cash flow from the financing activities was dominated in the year under review by payments to members in the form of a final payment, share premium return and the repayment of related share premium.

2014/2015 2013/2014 2012/2013 2011/2012 2010/2011 In millions of euros

Net turnover 521.1 540.7 550.0 554.1 525.1Added value 238.7 235.7 222.1 281.1 258.5Fixed expenses (salaries, social security 219.7 207.7 200.8 219.4 210.7charges, depreciation, other operating expenses) 1) Impairments 1.3 12.9 1.3 11.3 10.9Operating result 17.6 15.1 20.0 50.4 36.9Cooperative result after taxation 11.8 8.3 11.4 32.1 19.8

Cash flow Net operational cash flow before -12.7 31.6 -5.3 -15.0 46.7financing activities

Profit and loss account ratios(as a percentage of net turnover)Added value 45.8% 43.6% 40.4% 50.7% 49.2% Fixed expenses 42.4% 40.8% 36.7% 41.6% 42.2% Operating result 3.4% 2.8% 3.6% 9.1% 7.0%

Balance sheet ratios Solvency 46.4% 49.3% 44.1% 44.0% 45.8% Debt/EBITDA 3.0 2.1 2.8 1.3 1.1

Operating capital Nominal 157 155 164 168 118 As a percentage of net turnover 30% 29% 30% 30% 22%

1) Including movements in provisions.

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Agro

Commerce

The 2014 harvest year was a year of extremes. The conditions in part of Avebe’s work area were optimal, and an above-average starch yield per hectare was achieved. In other areas farmers had a lot of rainfall to contend with in the spring. In those areas the yield was clearly lower, and in some areas there was no harvest at all.

The quality of the potatoes was good on average and the starch content was slightly higher than the long term average. The members utilised most of their delivery capacity. The volume processed by Avebe was also ample.

In Dallmin there was an interim campaign following the end of this spring’s campaign. This extra processing period gave Avebe the chance to respond to the market demand for one of the special products. During this interim campaign the factory continued to run for a further 3 weeks, making a favourable contribution to Avebe’s results.

The 20-15-10 project was followed up in the 2014/2015 financial year. The purpose of the project is to improve the returns of starch potato farming. The number of groups was once again extended, also in response to the interest shown. In these study groups framers spend 3 years focusing on improving their returns with the assistance of Avebe specialists.

The year began with concerns about the availability of potato starch. Appropriate measures were taken to manage a potential deficit. A prudent commercial policy, driven mainly by volume during the first quarter of the financial year, assured an adequate supply for our regular customers.

Although the demand from Eastern Europe remained limited as a consequence of the political and economic instability in the region, the demand from Asia increased last year, which compensated for the moderate development in Europe.

The further restructuring of the marketing operation and the innovation-based approach has sharpened focus on the most important market segments and applications for which Avebe starch and protein can offer customers distinctive value. We are satisfied with the result and the business development teams are now focusing on new, promising applications.

Avebe has also concentrated on new opportunities in the market where synergy between protein and starch are expressed and offer unique added value in the food segment in particular.

It became clear during the implementation of the innovation-based strategy and following the end of the partnership with Ingredion that Avebe had to improve direct access to its global clientele. Avebe’s presence in North and South America and Asia has been strengthened for this purpose. This makes it possible to maintain close contact with local customers. The approach will be extended to the Middle East and Africa.

Avebe will thus be able to sufficiently protect existing markets and alternatives whilst at the same time meeting the growth objectives of the strategy plan.

REVIEW OF THE FINANCIAL YEAR &INVESTING IN THE FUTURE


Operations

Human Resources Management

Producing under safe conditions at the right costs and at the right quality was once again a spearhead for operations last year. Following an initial substantial reduction in the number of accidents, additional measures are now being taken to embed safe production in the organisation’s culture.

As well as reducing the number of incidents, the number of complaints has also been substantially reduced. This has been achieved on the one hand by restructuring the administrative processes and on the other by making structural changes to the management and method.

Avebe once again invested substantially in production during the year under review. The new facility in Gasselternijveen for the extraction of the Solanic® proteins is now approaching completion. The building and testing operations are proceeding according to plan. The facility is due to be taken into use during the 2015/2016 campaign.

The Foxhol location is being further adapted to improve efficiency. This is an example of Avebe clearly managing the basic processes and products on the basis of cost leadership.

The Stadex location in Sweden’s Malmö, like the facilities in Lüchow and Dallmin, is fully FSSC22000 certified. These facilities are being steered very much on the basis of quality: the facility is running virtually ‘100% first time right’. Stadex is now completely ready for further development in the higher segment of food ingredients.

Avebe constantly invests in its personnel. Sustainable employability occupies a central position. The aim is to ensure that employees are properly trained and are fit and healthy enough to do their jobs, both now and in the future.

We are actively meeting our obligations under the Participation Act. The options presented by ‘job carving’ at Avebe are being considered in partnership with the UWV Employee Insurance Board and the first employees with limited access to the employment market are due to be placed.

Work was also done on a talent management programme last year in the context of the careers policy. The talent and development options of employees are discussed and laid down in various management teams during ‘talent days’. Agreements on this are then made with employees in the interview cycle. This ensures that employees continuously develop and that the options for sustainable employability are increased. Career moves between departments and locations are encouraged. Last year also saw the implementation of the generic job classification system. The generic job classification system is a simplification of the job descriptions that had become outdated and were usually laid down in great detail.

Another way of promoting the development of young talent is the initiative taken to establish Avebe Young. In this network, intended for employees up to the age of 35, colleagues exchange ideas and become better acquainted with the various company divisions. Work is also done on personal development, and regular meetings are held between Avebe Young and members of the Executive Committee and senior management.

Health is another theme that is relevant to sustainable employment. A study was started at the Foxhol location last year in partnership with Groningen University. The study centres on the effects of night work on the physical and mental health of employees.

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We are achieving successes in the areas of product innovation, process innovation and agricultural innovation. That is making us more and more sustainable.

RESEARCH & DEVELOPMENT


RESEARCH &DEVELOPMENT

Regarding product innovation Avebe’s own research centre is focusing mainly on the development of new applications for existing protein and starch applications for the food industry. In this market Avebe’s products offer clear added value and there is space for innovation and development.

Process innovation focuses mainly on making production technology sustainable. New innovative techniques and processes make it possible to produce more cleanly and at a lower price. The focus is being placed mainly on energy consumption and water savings.

A closer look is also being taken at ways of further upgrading the remnant streams. This improves the returns of members and reduces the burden placed on the environment. The extraction of potato protein using a cold process is an example of a successful innovation project. This is currently being followed up with work on new applications originating from the remnant streams.

In the agricultural area innovation is centring on the development of new varieties that have to meet the disease resistance and yield requirements. For this purpose Avebe has its own cultivation and seed potato company, Averis.

The introduction of Avito, a variety with a greatly improved resistance to phytophtora, is a good example of these developments. The emphasis is currently being placed mainly on the crossing of resistances to new soil diseases that occur in the near vicinity. The latest technologies are used for the development of new varieties, but always on a traditional basis.

A new arrival is the method for ‘variety value determination’, which is intended to speed up the introduction of new varieties. Specialists at Avebe and Averis and members of Avebe are working together on the introduction of a number of varieties at a faster rate. This gives Avebe members access at an earlier stage to the latest varieties that are contributing to improving the returns in the field.

Innovation is one of Avebe’s four strategic key themes and can be broken down into product innovation, process innovation and agricultural innovation.

We are achieving successes in the areas of product innovation, process innovation and agricultural innovation. We are producing more efficiently and cleanly, growing better varieties. All aimed at achieving lower costs, a higher yield and a better price. Sustainability comes first

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RISKS & UNCERTAINTIES

Approach to risk management Pursuing the cooperative’s objectives and implementing the business activities involves certain risks for Avebe. Avebe sets out to identify these risks in good time, analyse them and manage and/or financially cover them effectively and efficiently. Risk management therefore forms a vital aspect of Avebe’s policy. The risk management process integrally identifies risks and renders them manageable.

The risk profiles of the various company divisions are periodically considered from the perspective of the strategic company objectives. Last year the focus was placed on the risk profiles of Agro/Averis, Commerce, Operations, HR and IT. Risk profiles have also been formulated at line management level at two locations.

Within the process described above the standardised methods and techniques are laid down in the Avebe risk management policy. This is a continuous process that is carried out by the risk coordinators and risk owners.

They share responsibility for assessing and weighing up existing and new risks and how they are managed. Risk management is gradually coming to form part of Avebe’s standard management process.

The risk management process will be set up even more effectively next year by strengthening the link between the process and the strategic company processes and the tactical and operational objectives derived from them. The company is also focusing sharply on the existence and operation of mitigating management measures within set processes in the supporting Avebe Integral Management System. In this system all operational processes are identified and linked to risks related to them. This is taken as a basis for designing new controls and measures and anchoring them in the Avebe processes.

Corporate Governance PolicyAvebe continued to implement its Corporate Governance policy in 2014/2015. The Management and Supervision (Public and Private Companies) Act and Sections 2:166 and 2:276 of the Netherlands Civil Code require a male-female ratio in the management and

supervision of organisations. Although it is not strictly compulsory for Avebe to comply with these laws, it does highlight the importance of a good division of men and women in its organisation. Approximately 17% of the senior management positions, including the Supervisory Board, are held by women. The Board of Directors and Supervisory Board will take these requirements into consideration when it makes new appointments.

Avebe has had a voluntary enforcement agreement with the tax office since 2010. Under this agreement, all Dutch tax issues are discussed with the tax authorities on the basis of transparency. Avebe is accredited by the Dutch Customs Administration for its locations and logistics centres in the Netherlands and has now received the AEOF certificate. AEO stands for Authorised Economic Operator. AEO is an initiative of the European Commission.

This certificate was also awarded by German customs to KPW GmbH and by Swedish customs to AB Stadex. AEO certification of the international supply chain forms part of that customs legislation and indicates that a certificate has been received both for ‘simplified customs procedures’ and for ‘security’. Safety in this context relates primarily to the procedures operated for the storage and transport of goods.

As in financial year 2013/2014, compliance workshops will again be held next year in the context of corporate governance. The internal codes were explained and discussed and subjects such as the cautious approach to accepting gifts, the whistle-blower’s scheme, the do’s and don’ts concerning contact with other market players will be covered during these workshops.

Financial information managementAvebe’s business information system SAP supports the business operations on the basis of the principle of ‘one data source’. That is beneficial to the uniformity and reliability of the figures and makes it possible to produce reports quickly. To increase decisiveness at operational level too, Avebe constantly works on enhancing financial awareness among the middle management. The business warehouse (a database for conducting analyses) is an important instrument for this. It provides easily accessible financial steering information at various levels of management.


That makes it possible to spot discrepancies more quickly, which also improves the quality of the reports. The internal audits are still being maintained in the context of risk management. Various internal audits have been carried out. Avebe takes out derivative financial instruments (such as forward exchange contracts, currency call options and interest swaps) exclusively from financial institutions that issue credit to Avebe.

Currency risk The policy is aimed at hedging currency positions related to buying and selling in foreign currency. Avebe uses futures contracts and currency call options as hedging instruments. It is not permitted to adopt speculative positions. Currency risks related to procurement and sales are hedged on the basis of the anticipated period in which they will take place.

Interest risk The purpose of the interest policy is to limit the risk of interest rate fluctuations. Avebe uses financial instruments (such as interest swaps) to extend the interest period or current liabilities.

Credit risk To diminish the credit risk on sales, Avebe has taken out credit insurance with a reputed party. Also, products are in principle sold by Avebe only to clients with a good credit rating. This rule can be deviated from in individual cases, but additional security will generally have to be obtained in those cases.

Energy and emission cost riskLiberalisation of the energy markets, and developments in the oil market in particular, have led to a considerable increase in the volatility of electricity and natural gas prices. To manage these volatility risks Avebe has policy frameworks in which positions in electricity and natural gas are hedged with futures contracts. When prices are lower we hedge a larger proportion of the anticipated demand for a longer term. When prices are relatively high, the level of hedging is smaller and for a shorter term. The part not hedged and any temporary surpluses are traded at spot market prices. Avebe is closely monitoring developments concerning the CO2 and NOx emission rights.

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Measurable progress has been made.

CSR & SUSTAINABILITY


CSR themes was reviewed during the strategy update for financial year 2014/2015. These themes were also compared to the starting points and outcomes of the CSR benchmark scan carried out in 2011/2012. It was established that the selected CSR themes - safety, energy, health & fitness, cultivation, logistics, market, water, systems and environment - are still relevant.

GRI reportAvebe aims to act in conformity with as many international standards for sustainability indicators as possible. The report system under the GRI (Global Reporting Initiative) will be used for the first time in financial year 2015/2016. Avebe is thus placing itself in line with the internationally accepted reporting method that is also used by Avebe’s customers.

Validation of cultivation recordsIn 2014/2015 Avebe made a start with collecting sustainability data from the cultivation records. This is being done on the request of customers who need information about the cultivation of the starch potato for their own sustainability reports. The data is collected in accordance with the international initiative SAI Platform (Sustainable Agricultural Initiative) by an independent institute. The results will be published in 2016.

A number of technical derivatives customers have asked to have the CSR performance measured on the basis of the Ecovadis standard, which is frequently used in the chemical sector. Avebe obtained ‘bronze’ status for this in 2014/2015.

CSR sounding board groupIn 2014/2015 the CSR theme was tested in a sounding board group of stakeholders from national and European politics, national, provincial and local administrators, our members and the knowledge institutes. The themes cultivation, experiences of sustainability for the food and non-food sector and the use of vegetable protein for food were discussed at three meetings.

Measurable progress was made in areas such as safety, health & fitness, energy savings and reducing transport kilometres in 2014/2015. The train connection Coevorden - Malmö was opened in 2015, which represents a reduction of approximately 500,000 road transport kilometres for international transport between the Dutch locations and Stadex. A lot of hard work has also been done on the other themes. There are a number of cases in which progress will not be clear until the longer term, as with communication with nearby residents and the theme “less water”.

It is clear that CSR is becoming increasingly important to our stakeholders. In 2014/2015 the use made by our customers of our ecological profiles (EPD) for starch derivatives doubled compared to the previous period. Our customers can use EPDs as a basis for calculating the environmental impact of their own products.

CSR & SUSTAINABILITY

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As well as innovative starch derivatives, a lot of work is being done on upgrading protein and adding value to remnant streams.

INNOVATION PROGRAMME BASED ON THE APPLICATION OF SUSTAINABLE VALUE


FORECAST OF THE BOARD OF DIRECTORS

Avebe is developing increasingly emphatically as a supplier of high quality food ingredients based on starch potatoes.

The innovation programme is based on sustainable added value.

As well as innovative starch derivatives, a lot of work is being done on upgrading protein and adding value to remnant streams. New technology also occupies a prominent position on the agenda, especially new drying techniques that call for less energy.

Safety at work forms the basis of our approach. We have made good progress with this, but we want to take bigger steps. Our working methods are being considered in every possible way in order to minimise risks.

The planned investment level totals 41 million euros. About half of this is earmarked for investments in innovations.

The number of job positions will fall slightly owing to the investment programme. On the other hand, new jobs will be created, especially in the food technology area. The total planned number of jobs is approximately 1,300.

The growing season of this year’s campaign was very changeable. The image was dominated by hot weather and heavy rainfall. The campaign got off to a difficult start owing to the weather conditions. It is now clear that the harvest will be much lower than in the previous campaign. There were also extreme weather conditions in the south of Europe.

Avebe intends to profile itself as a true agrarian cooperative. The key aspect is the performance price, which reflects both the income of the members and investment in the company’s future.

Plenty of attention is being paid to transparent communication with all stakeholders.All Avebe employees have a role to play in pursuing the strategy: the joint efforts of all employees are therefore vital to achieving the company’s strategic aims.

For the Board of Directors,

B.C. JansenE. Kraaijenzank

25 A N N U A L R E P O R T

FINANCIAL STATEMENTS2014 / 2015All amounts in the tables in thousands of euros unless otherwise stated.

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ASSETS

31-7-2015 31-7-2014 RefFixed assetsIntangible fixed assets 946 969 2 Tangible fixed assets Buildings and land 34,514 35,350 3 Plant and machinery 103,100 75,397 Other tangible fixed assets 3,721 4,410 Assets under construction 45,516 51,554 186,851 166,711

Fixed assets Other participating interests 1 1 4investments Other loans 12 11 13 12 Current assetsStocks Starch 56,362 49,430 Derivatives 78,976 71,050 By-products 5,031 5,973 Other stocks 24,307 21,523 164,676 147,976

Receivables Trade debtors 61,722 69,061 Participating interests - 17 Taxation and social security contributions 2,722 110 Other debtors 11,450 9,138 Prepayments and accrued income 345 69 76,239 78,395

Cash at bank and in hand 1,477 1,236

Total assets 430,202 395,299

CONSOLIDATED BALANCE SHEETAT 31 JULY 2015(after proposed profit appropriation)


LIABILITIES

31-7-2015 31-7-2014 Ref

Group equity Capital and reserves 199,550 195,025 5 199,550 195,025

Provisions Reorganisation 3,271 5,669 6 Deferred taxation 679 795 Pensions 2,163 2,343 Other 10,717 8,744 16,830 17,551 Current liabilities Banks 125,932 107,156 7 Trade creditors 53,966 46,118 Current account members 2,839 2,917 7 Pensions 2,833 1,359 Other debts 22,248 18,946 8 Accruals and deferred income 6,004 6,227 213,822 182,723

Total liabilities 430,202 395,299

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2014/2015 2013/2014 Ref Gross turnover 559,573 579,949 9 Direct selling costs 38,504 39,262 Net turnover 521,069 540,687 Movement in stocks of finished goods 13,916 -19,798 Capitalised production 1,413 826 Other operating income 3,199 6,284 10 18,528 -12,688 Total operating income 539,597 527,999 Raw materials and consumables 300,946 292,257 Salaries and wages 71,533 70,082 11 Social security charges 23,135 23,987 Depreciation and other impairments 24,930 37,602 12 Other operating expenses 101,405 88,984 Total operating expenses 521,949 512,912 Operating result 17,648 15,087 Revenues of securities 2,087 1,967 Interest and similar income 90 21 Interest expense -7,258 -7,598 Balance of financial income and expenses -5,081 -5,610 Result on ordinary activities 12,567 9,477 before taxation Taxation -798 -1,173 13 Result on participating interests - 35

Cooperative result after taxation 11,769 8,339

CONSOLIDATEDPROFIT AND LOSS ACCOUNT


2014/2015 2013/2014 Ref

Operational Cooperative result after taxation 11,769 8,339cash flow Adjustments for: Depreciation and other impairments 24,930 37,602 12

Movement in Movement in stocks -16,700 24,348working capital Movement in receivables 2,156 1,636 Movement in current liabilities 11,021 -13,012 -3,523 12,972 Additions to provisions 3,029 1,431 Withdrawals from provisions -3,676 -4,159 Movement in provisions -647 -2,728 6

Gross operational cash flow 32,529 56,185

Fixed assets Investments in fixed assets -45,292 -24,832 2 3cash fkow Disposals of fixed assets 105 204 3 Other movements in financial fixed assets -1 -1 4 -45,188 -24,629Net operational cash flowbefore financing activities -12,659 31,556

Financing Final payment to members -2,970 -4,185 17cash flow Movement in loans from member-suppliers -78 -530 Repayment of share premium -1,522 - 17 Return on share premium -894 -903 17 Payments to certificate holders - - 3,938 Others 333 362 17 -5,131 -9,194Net cash flow -17,790 22,362 Exchange and conversion differences -745 -251Movement in net debt -18,535 22,111

Total net debtNet debt to banks at 1 August 105,920 128,031Movement in net debt 18,535 -22,111Net debt to banks at 31 July 124,455 105,920

CONSOLIDATEDCASH FLOW STATEMENT

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ACCOUNTING POLICIES

OBJECTIVE

The objective of Avebe U.A. is to meet the needs of its members in accordance with the contracts entered into with the enterprises they conduct or have conducted for that purpose. Avebe U.A. sets out to achieve this objective by processing raw materials into starch and other products.

CONSOLIDATION POLICIES

The consolidation includes the financial data of Avebe U.A. together with its group companies and other legal entities over which it can exert dominant control or which it centrally manages. Group companies are legal entities in which Avebe U.A. can exert direct or indirect dominant control because it holds the majority of the voting rights or is able in any other way to control their financial and operational activities. This includes potential voting rights that can be directly exercised on the balance sheet date. The group companies and other legal entities over which Avebe U.A. can exert dominant control or which it centrally manages are included in full (100%) in the consolidation. The share of third-parties in the equity capital and the results are stated separately. Intercompany transactions, intercompany profits and mutual receivables and debts between group companies and other legal entities included in the consolidation are eliminated if the results are not achieved through transactions with third-parties outside of the group. Unrealised losses on intercompany transactions are also eliminated other than in cases where a special devaluation has taken place. The valuation principles of group companies and other legal entities included in the consolidation have been altered where necessary to place them in line with the Group’s valuation principles.

CASH FLOW STATEMENT

The cash flow statement is drawn up using the indirect method. The net debt in the cash flow statement consists of debts to banks less the cash at bank and in hand. Cash flows in foreign currency

are converted at an estimated average exchange rate. Exchange rate differences affecting financial resources are stated separately in the cash flow statement. Receipts and expenditure from interest, received dividends and profit taxation are shown under the cash flow from operational activities. Paid dividends are shown under the cash flow from financing activities. Transactions in which no cash flows in or out, including financial leasing, are not shown in the cash flow statement.

During the financial year a switch was made to the direct method for the items under cash flow from financing activities. The comparative figures from the previous financial year have been adjusted accordingly.

FOREIGN CURRENCY

FUNCTIONAL CURRENCY

The items in the financial statement of the group companies are valued on the basis of the currency of the economic setting in which the group company primarily pursues its activities (the functional currency). The consolidated financial statements are drawn up in euros; this is both the functional and the presentation currency of Avebe U.A..

CONVERSION OF FOREIGN CURRENCY

Assets and liabilities denominated in foreign currency are converted at the prices on the balance sheet date. Transactions denominated in foreign currency are converted at the price on the transaction date. Exchange rate differences arising from the conversion are charged to the result. Assets and liabilities of foreign participating interests are converted at the rate on the balance sheet date; the items in the profit and loss account are converted at the average exchange rate for the financial year. Exchange rate differences related to converting the equity of foreign participating interests and loans to or debts of participating interests in the nature of equity are charged to capital and reserves as statutory reserve.

NOTES GENERAL

1


AFFILIATED PARTIESAffiliated parties are defined as all legal entities over which predominant control, joint control or significant control can be exerted. Legal entities that are able to exert dominant control are also deemed to be affiliated parties.

VALUATION POLICIES AND RESULT RECOGNITION

COMPARISON WITH THE PREVIOUS YEAR

The principles used to determine the results remain unchanged compared to last year.

GENERAL

The (consolidated) financial statements have been compiled in compliance with the statutory provisions of Title 9, Book 2 of the Netherlands Civil Code and the firm requirements of the Directives Governing Annual Reports and Financial Statements as issued by the Annual Reporting Council. Assets and liabilities are generally valued at the acquisition or manufacturing price or the current value. If no specific valuation principle is stated, valuation takes place at the acquisition price. References are given in the balance sheet, the profit and loss account and the cash flow statement. These references are made to the explanatory notes.

ESTIMATES

To apply the principles and rules for drawing up the financial statements, the management of Avebe U.A. has to form a judgement on various matters and to make estimates that could be of paramount importance to the amounts shown in the financial statements. If necessary to providing the insight required by Article 2:362, paragraph 1, of the Netherlands Civil Code, the nature of these judgements and estimates, including the underlying assumptions, is given in the note to the relevant financial statement items.

INTANGIBLE FIXED ASSETS

Intangible fixed assets are valued at their acquisition price, less depreciation. Account is taken of impairments, which are entered if the book value of the asset (or the cash-flow generating unit to which the asset belongs) is higher than its realisable value. To establish whether there is any impairment on intangible fixed assets, reference is made to the section on impairments.

Research and Development expenditure Expenditure on research into new products and new production techniques is accounted for as costs. Development expenditure is only capitalised if it is incontrovertibly demonstrated that an identifiable asset has been created that will yield a future economic benefit for Avebe U.A..

Goodwill Goodwill resulting from acquisitions is capitalised at the acquisition price and depreciated over the anticipated useful economic life up to a maximum of twenty years.

Goodwill is calculated as the difference between the acquisition price and the share in the value of the capital and reserves according to the valuation principles operated by Avebe U.A., taking into account market value, reorganisation costs and corresponding taxation. Internally created goodwill is not valued by Avebe U.A..

Software Software is valued at the acquisition price less depreciation based on the anticipated useful economic life. Software is depreciated over a period of five years.

TANGIBLE FIXED ASSETS

Tangible fixed assets are valued at the acquisition price, plus accompanying costs or the price of manufacture less depreciation. No amortization is applied to land. Governmental subsidies granted for investments are deducted from the acquisition price. Annual straight-line depreciation is based on the

32

estimated useful life, which is twenty-five years for buildings and ten years for plant and machinery. Other tangible fixed assets are depreciated over five years or less, depending on the type of asset. Spending on major maintenance is accounted for as expenses in the year in which it occurs. Spending on major maintenance on assets that have been fully depreciated is capitalised and depreciated according to the depreciation period for the type of asset in question provided that the maturity is extended.

FIXED ASSETS INVESTMENTS

Participating interests in group companies and other participating interests in which significant influence is exerted are valued using the net asset value method. Significant influence is considered to be present if a shareholding of more than 20% is held. The net asset value is calculated on the basis of the same principles applied for these financial statements; in cases where there is not enough information about the participating interests to apply those principles, the valuation principles of the participating interest in question are applied. Participating interests that yield a negative valuation result according to the net asset value method are valued at nil. In cases where Avebe U.A. stands surety in full or in part for the debts of participating interests in the situation described above, or has resolved to enable the participating interests to pay its debts, a provision is created for that purpose. Participating interests over which no significant influence can be exerted are valued at their acquisition price or their fair value if lower. The receivables under the fixed assets investments comprise issued loans and other receivables. These receivables are initially valued at their fair value. These loans are then valued at the amortised cost price. If there is any discount or premium when the loans are issued, this is charged to or from the result as part of the effective interest during the term of maturity. Transaction costs are also incorporated in the initial valuation and charged to the result as part of the effective interest. Impairments are deducted from the profit and loss account.

IMPAIRMENTS

Avebe U.A. ascertains on each balance sheet date whether there are indications that an asset could be subject to a special downward value adjustment. If such indications are present, the realisable value of the asset is established. If it proves impossible to ascertain the realisable value of the individual assets, the realisable value of the cash flow generating entity to which the asset belongs is ascertained instead. A special downward valuation is applied if the book value of an asset is higher than its realisable value; the realisable value is the higher of the sale value and the going-concern value. The sale value is calculated with the aid of the active market. In cases where there is a lack of clarity about market data and/or future cash flows, the book value of assets is set at zero. A special downward valuation loss is charged directly as a loss to the profit and loss account. If it is established that impairments shown in the past no longer exist or have decreased, the increased book value of the asset in question is not set higher than the book value that would have been calculated if no impairment had been shown for the asset.

A discount rate based on the current long term market risk is used to determine the value in use when converting cash flows into net present value. For financial instruments the company carries out an assessment on each balance sheet date to establish whether there are any objective indications for impairments on a financial asset or a group of financial assets. If there are objective indications of impairments the company determines the extent of the loss based on the impairments and immediately incorporates this in the profit and loss account.

STOCKS

Raw materials and consumables are valued at their acquisition price as calculated on a ‘first-in, first-out’ basis, less a provision for obsolescence or, if applicable, at their lower realisable value. Starch, derivatives and by-products are valued at cost price, if necessary less a provision for obsolescence


or, if applicable, at their lower realisable value. The realisable value is the estimated selling price less the directly attributable selling costs. The share of the potatoes included in the overall cost price is based on the long-term average procurement price of the pivotal wheat crop. The fixed-cost mark-up incorporated in the cost price is based on a standard production level for each financial year.

RECEIVABLES

Receivables are valued at the fair value of the consideration upon being processed for the first time. Trade receivables are valued at the amortised cost price after being processed for the first time. If the receivable is deferred on the basis of an agreed extended payment term, the fair value is based on the cash value of the anticipated receipts and interest income is written to the profit and loss account on the basis of the effective interest rate. Provisions for bad debt are deducted from the book value of the receivable. Other securities shown under the receivables are valued at their fair value.

CASH AT BANK AND IN HANDCash at bank and in hand consists of cash, bank credits and deposits with a term of less than twelve months. Current accounts at banks are shown under debts to banks under current liabilities. Cash at bank and in hand is valued at its face value.

REVALUATION RESERVE

The revaluation reserve relates to unrealised exchange results on net investments in foreign group companies and issued loans, as well as realised and unrealised exchange results on forward exchange contracts concluded to hedge the exchange risk on the aforementioned investments and loans.

PROVISIONS

General Provisions are formed for legally enforceable or actual commitments existing on the balance sheet date for which it is likely that an outflow of resources will be required and the level of which

can be reliably estimated. The provisions are valued at the best estimate of the amounts needed to settle the commitments on the balance sheet date. In the absence of statement to the contrary, the provisions are valued at the nominal value of the expenditure that will probably be required to meet the commitments.

Reorganisation The reorganisation reserve relates to the estimated costs of reorganisation plans incurred before the end of the financial year and approved by the Supervisory Board concerning certain sections of the organisation, which have been communicated before the financial statements were drawn up.

Deferred taxationDeferred taxation is calculated on the basis of the difference between the fiscal valuation of the assets and liabilities and the commercial book value at the end of the financial year at the applicable tax rates. Active and passive deferred taxation can be offset within the same fiscal unit. Deferred tax claims are included if it is likely that future profits will be available to compensate losses and offset options. Deferred tax claims are shown under the fixed assets investments and deferred tax commitments under the provisions.

Pensions Dutch pension schemes are subject to the provisions of the Dutch Pensions Act and the compulsory, contractual or voluntary premiums are paid to pension funds and insurance companies by Avebe U.A.. The premiums are shown as personnel expenses as soon as they are payable. Prepaid premiums are shown as prepayments and accrued income if this leads to a refund or to a reduction in future payments. Premiums not yet paid are shown in the balance sheet as a commitment. Avebe U.A. has processed all pension schemes in accordance with the obligation approach. The premiums payable over the reporting year are included as a charge. Changes to the pension provision are also processed in the profit and loss account. The amount shown as the pension liability is the best estimate of the not yet financed amounts required to settle the relevant commitments on the balance sheet date.

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Pension schemes of foreign subsidiaries that are comparable with how the Dutch pension system is organised and operated are also processed according to the obligation approach. For foreign pension schemes that are not comparable a best estimate is made of the commitment on the balance sheet date, based on an actuarial valuation method generally accepted in the Netherlands.

Other The other provisions pertain to the provision for anniversary bonuses; demolition costs and other liabilities and risks that are related to the operational activities. The anniversary bonuses are accrued on a straight-line basis over the 15 years preceding the anniversary. The provision for demolition charges is based on the anticipated costs of the planned demolition of buildings and machinery during the next 5 years. The other provisions are formed for commitments and risks related to the business operations and are shown at their face value.

LIABILITIES

Liabilities are valued at the fair value upon being processed for the first time. Transactions charges that can be directly attributed to the acquisition of the liabilities are included in the valuation upon being processed for the first time. After being initially processed liabilities are valued at amortised cost price, which is the amount received taking account of premium or discount and less transaction costs. The difference between the book value determined and the ultimate repayment value is incorporated in the profit and loss account as an interest charge based on the effective interest rate during the estimated term of the debts.

LEASING

Lease contracts in which a large proportion of the advantages and disadvantages of ownership are not borne by Avebe U.A. are shown as operational leasing. Commitments based on operational leasing are processed on a straight-line basis in the profit and loss account over the term of the contract.

RESULT RECOGNITION

General The result is determined as the difference between the realised value of the delivered goods or services and the costs and other expenses over the year. The proceeds of transactions are shown in the year in which they were realised.

Sale of goodsProceeds from the sale of goods are entered as soon as all important rights and risks related to the ownership of the goods have been transferred to the buyer.

Net turnoverNet turnover is the proceeds of goods supplies less discounts, etc., freightage and tax on sales, following the elimination of Group transactions.

Operating resultThe operating result consists of net sales, personnel expenses, depreciation costs, the costs of outsourced work and other external costs.

Raw materials and consumablesThis concerns the costs of raw materials and consumables of the sold products, or the costs of obtaining the sold products. The costs of raw materials and consumables are calculated on the basis of the FIFO (first-in, first-out) method. The amount shown under this item for the purchase of starch potatoes is based on the campaign price plus the bonuses and plus or less the effect of the calculation of the potato component in the finished product.

Personnel expensesWages, salaries and social security charges are shown in accordance with the employment conditions in the profit and loss account to the extent that they are payable to employees.

Exchange rate differencesExchange rate differences arising on settlement or conversion of monetary items are shown in the profit and loss account in the period in which they arise unless hedge accounting is applied.


Interest income and expenseInterest income and expenses are shown in proportion to time, taking account of the interest rate and the relevant assets and liabilities. The transaction expenses on borrowings are taken into account for the incorporation of interest expenses.

DividendsReceivable dividends on participating interests and securities not valued at net asset value are shown as soon as Avebe U.A. has obtained the rights to them.

TAX ENTITY

Avebe U.A. forms a tax entity for corporation tax with its 100% Dutch participating interests. Under the standard conditions the company and its affiliated subsidiaries are jointly and severally liable for the tax payable by the consortium and its incorporation within the tax entity. The parent company settles on the basis of the subsidiaries taxable results with due observance of the assignment of the benefits of the tax entity to the various group companies forming part of it.

TAXATION

Taxation on the operating result for each country is calculated over the result before taxation in the profit and loss account, taking account the losses from previous financial years that can be offset against tax (if not included in the deferred tax receivables) and exempted profit components, and following the addition of non-deductible costs. Changes in tax rates are also taken into account when determining deferred tax assets and deferred tax liabilities. Tax adjustments are processed within the tax entity in Avebe U.A..

RESULT ON PARTICIPATING INTERESTS

This item shows the profit on the other participating interests.

GOVERNMENT SUBSIDIES

Subsidies on investments in tangible fixed assets are deducted from the relevant asset and included

as part of the depreciation in the profit and loss account.

FINANCIAL INSTRUMENTS

The treasury activities, including currency and interest management and the financing of the group and its operating companies, are centrally coordinated from the Netherlands. The policy approved by the Board of Directors is aimed at hedging currency positions related to buying and selling in foreign currency. Currency call options and currency futures contracts are predominantly used as hedging instruments. It is not permitted to adopt speculative positions. Derivative financial instruments (such as futures transactions, currency call options and interest swaps) are taken out exclusively from financial institutions that issue credit to Avebe U.A..

When shown for the first time in the balance sheet derivatives are shown at their fair value; the subsequent valuation of derivatives depends on whether what underlies the derivative is listed. If what underlies the derivative is listed, the derivative is shown at its fair value. If what underlies the derivative is not listed, the derivative is shown at its cost price or lower market value. The method used to show changes to the value of derivatives depends on whether hedge accounting is applied with the derivative.

Avebe U.A. applies hedge-accounting. Records are kept as soon as a hedge relationship is entered into. Avebe U.A. periodically establishes the effectiveness of the hedge relationship by carrying out a test.

This can be done by comparing the critical features of the hedge instrument with those of the hedged position, or by comparing the change in the hedge instrument’s fair value and the hedged position.

Conversion hedging Avebe U.A. hedges the exchange risks on net investments in foreign group companies and issued loans by means of forward exchange contracts.

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These forward exchange contracts are subject to cost price hedge accounting, with exchange differences being incorporated in the revaluation reserve for the effective component of the hedge relationship. The non-effective component of the hedge relationship is accounted for directly in the profit and loss account.

Transaction hedging Positions not shown in the balance sheet are hedged by means of options and forward contracts. Avebe applies cost-price hedge accounting for these derivative financial instruments. Hedge instruments are not revalued until the hedged position has been incorporated in the balance sheet. For the options, the difference between the cash price applicable when the derivative is concluded and the forward price at which the derivative will be settled is capitalised and will be amortised over the term of the contract. The non-effective component of the hedge relationship is accounted for directly in the profit and loss account. Paid option premiums are capitalised under trade receivables and amortised over the term of the options contract. The amortisation costs of the option premium are shown in the profit and loss account under gross turnover. Forward contracts are valued at the price applicable on the balance sheet date. Profits or losses on derivative instruments used to hedge positions not shown in the balance sheet are deferred until the time at which the profits or losses on the hedged positions are accounted for in the profit and loss account.

Interest risk hedging Avebe U.A. operates cost price hedge accounting for the interest swaps used to ensure that the interest paid on variable interest-bearing credit facilities are converted into fixed interest. The non-effective component of the change of value in the interest swaps is accounted for in the profit and loss account under the financial income and expenses.

Currency risk Currency risks related to procurement and sales are hedged on the basis of the anticipated period in which they will take place. Currency risks based on investments in foreign group companies established

outside of the euro region are also covered by means of financial instruments in the currency of the country where the foreign group company is established.

Interest riskThe purpose of the interest policy is to limit the risk of interest rate fluctuations. Avebe U.A. uses financial instruments (interest swaps) to convert the interest on short-term debts into a fixed interest rate.

Credit risk Avebe U.A. has taken out credit insurance with a reputed insurance company to mitigate its sales credit risk. Sales are for the most part made to customers who meet the credit worthiness requirements. This rule can be deviated from in individual cases, but additional security will generally have to be obtained in those cases.

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Fixed Assets

Intangible fixed assets Movements in the value of the intangible fixed assets over the year under review are as follows:

Book value at 31 July 2014 969 Investments 921Depreciation -424Permanent impairments -520 -23 Book value at 31 July 2015 946

Purchase price at 31 July 2015 3,848

Software is amortized over five years.

Tangible fixed assetsMovements in the value of the tangible fixed assets over the year under review are as follows: Plant Other Assets Buildings and tangible under and land machinery fixed assets construction TotalBook value at 31 July 2014 35,350 75,397 4,410 51,554 166,711Investments 1,652 47,548 1,202 -6,031 44,371 Exchange differences -48 -85 - -7 -140 36,954 122,860 5,612 45,516 210,942

Book value of disposals -105 - - - -105Permanent impairments -20 -736 -48 - -804Depreciation -2,315 -19,024 -1,843 - -23,182 -2,440 -19,760 -1,891 - -24,091

Book value at 31 July 2015 34,514 103,100 3,721 45,516 186,851

Purchase price at 31 July 2015 100,327 526,555 42,097 45,516 714,495

Based on developments in the potato starch market and price developments in the energy market, some of Avebe U.A.’s assets have been devalued in previous years to their realisable value.

NOTES TO THE CONSOLIDATED BALANCE SHEETAT 31 JULY 2015

2

3


Fixed assets investments

31-7-2015 31-7-2014A Other participating interests 1 1B Other loans 12 11 13 12The term of these items is longer than 1 year.

Movements of these items are as follows: A BBook value at 31 July 2014 1 11 Movements in capital - 1 Book value at 31 July 2015 1 12

StocksThe stocks valued at a lower realisable value had a book value of EUR 3.5 million on the balance sheet date.

ReceivablesAll receivables have a remaining term of less than one year. A provision for bad debt has been deducted from the trade receivables. The receivable related to tax and social security premium relates in full to the VAT.The fair value of the other receivables approaches the book value owing to their short-term character.

A sum of EUR 7.4 million under the other receivables item, as other effects, includes the remaining 40% of the shares of Meelunie B.V.. Hoogwegt Groep B.V. has stipulated an option to buy these shares. The option can be exercised from 1 January 2013 to 31 December 2015. Under the contract the shares are valued at their net asset value on 31 July 2015.

Cash at bank and in handCash at bank and in hand consists of cash, bank credits and deposits with a term of less than twelve months. Current accounts at banks are shown under debts to banks under current liabilities. Cash at bank and in hand is valued at its face value.The cash at bank and in hand are placed at the free disposal of the Cooperative.

Group equity

Capital and reservesFor notes on the group equity reference is made to the non-consolidated financial statements.

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ProvisionsThe provisions are long-term unless otherwise stated.Movements in the provisions over the year under review are as follows:

Deferred Reorganisation taxation Pensions Other TotalBalance at 31 July 2014 5,669 795 2,343 8,744 17,551Movements charged to the -76 -96 227 2,974 3,029profit and loss accountWithdrawals -2,322 - -353 -1,001 -3,676Exchange differences - -20 -54 - -74Balance at 31 July 2015 3,271 679 2,163 10,717 16,830

The current part of the provisions amounts to 4.3 million euros.

Pensions provisionThe pension commitments in the Dutch entities relate to payable premiums for a number of closed groups of (former) employees.

The coverage ratio of Stichting Pensioenfonds Avebe on 31 December 2014 was 114.9%.

Based on the administration agreement with the pension fund and the pension agreement with the employees, there are no extra commitments in the context of extra payment, back service commitments, extra administration charges, extra pension claims, losses on individual value transfers. Neither are there any reimbursement undertakings concerning interest, profit appropriation or gains on individual value transfers in the favour of Avebe U.A..

The provisions for the foreign companies relate to a ‘reserve deficit’ and schemes for which undertakings have been given. This concerns commitments to be financed in the future. The amount involved in this is EUR 1.8 million (last year EUR 1.6 million).

Other provisions The movements in other provisions were as follows:

Anniversary Demolition bonuses costs TotalBalance at 31 July 2014 2,833 5,911 8,744Movements charged to the profit and loss account 1,087 1,887 2,974Withdrawals -299 -702 -1,001Balance at 31 July 2015 3,621 7,096 10,717

The anniversary bonuses are provided for in the internal scheme for that purpose. The anniversary provision is accrued on a straight-line basis over 15 years.

The provision for demolition costs is formed for the anticipated costs of the planned demolition of a number of buildings and machines at Avebe locations in the Netherlands in the next 5 years.

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Current interest-bearing liabilities 31-7-2015 31-7-2014Current liabilities banks 125,932 107,156Current account members 2,839 2,917Total interest-bearing current liabilities 128,771 110,073

Avebe U.A. has a credit facility for a total sum of EUR 214.6 million with its principal bankers under the following agreements: • Minimum solvency of 30%, and • A maximum net Debt/EBITDA ratio of 3.5. On the balance sheet date Avebe U.A. had met all of the conditions.

Specific rules for calculating the ratios have been agreed with the banks. The credit facility can be broken down as follows: • A three-year committed line of EUR 78.6 million on which EUR 1 million is repaid each quarter, with a final payment

of EUR 74.6 million on 26 November 2016. • A current account line of EUR 136 million, including a guarantee line of EUR 6 million. The term of the current credit facility runs until 26 November 2016, which is confirmed annually.

Other debts This item includes a debt to members of EUR 6.8 million (previous year EUR 5.4 million). The debt to members is made up as follows:

31-7-2015 31-7-2014 Final payment to members 4,350 2,970Return on share premium 894 913Repayment of share premium 1,522 1,522Repayment of certificates 19 28 6,785 5,433

The other debts and accruals and deferred income have a term of less than one year. The fair value of the other debts approaches the book value owing to their short-term character..

Off-balance sheet commitments Avebe U.A. has furnished the following security to the banks: mortgage on the immovable property in the Netherlands and Germany; pledging of stocks and receivables. These securities remain in place.

The long-term commitments relating to operational lease and rental agreements amount to 31.6 million euros, 5.7 million of which matures within one year. A sum of EUR 15.2 million which matures within five years and a sum of EUR 10.7 million which matures after more than five years. Guarantees have been issued for EUR 464,000.

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It has been agreed in the context of the sale of the Meelunie B.V. shares that the goodwill paid, or part of it, will be repaid to the purchasing part if certain conditions concerning profitability are not met. Since these conditions are currently expected to be met, the valuation is not shown in the balance sheet. The maximum amount that this could involve is EUR 1 million.

Avebe has entered into commitments in the amount of EUR 4.2 million in the context of current investments.

Assets not disclosed in the balance sheet. In the context of the sale of the shares in Meelunie B.V. a call option has been granted to Hoogwegt Groep B.V. to take over the remaining 40% of the shares between 1 January 2013 and 31 December 2015. Avebe U.A. may receive an additional sum of goodwill under certain conditions, but whether they will be met is as yet uncertain. This amount is not valued in the balance sheet.

In 2008 Avebe U.A. was allocated, free of charge, a certain number of emission rights concerning the annual emission of CO2 for the period 2008-2012. These emission rights are freely negotiable and can also be used by Avebe U.A. after the stated period. The actual emission and the emission rights obtained are reviewed retrospectively each year. If the actual emission exceeds the emission rights, additional purchase and penalty clauses will come into effect. Avebe U.A. expects the actual emission to be lower than the available emission rights and has not valued the current surplus of emission rights.

Financial instruments The ‘notional amounts’ given in the statement below are the underlying values for which contracts have been entered into for financial instruments. The market values indicate how much will be paid to or received from independent counterparties in exchange for the termination of the contracts on the balance sheet date without any further obligations. This market (actual) value of the instruments reflects the unrealised result upon revaluation of the contracts at the exchange rates on the balance sheet date.

notional market amount value Forward exchange contracts 17,275 -45Currency call options 48,024 785Interest rate swaps 80,000 -14,554

The fair values given above have been calculated by external parties on the basis of the market information available and generally accepted valuation methods.

All of the hedge instruments held by Avebe U.A. on 31 July 2015 are entirely effective, no fair value changes are shown in the profit and loss account.

Avebe has taken out Interest Rate Swaps (IRS) in order to convert the interest on short-term debts into a fixed interest rate. The IRS contracts have been entered into for a total sum of 80 million euros, and mature in 2019.


Gross turnoverThe breakdown of gross turnover by sales category is as follows: 2014/2015 2013/2014 Starch 133,105 139,098Derivatives 365,415 385,306By-products 61,053 55,545 559,573 579,949

Breakdown of gross turnover by geographical regions: 2014/2015 2013/2014European Union 57% 58%Rest of Europe 3% 3%Rest of the world 40% 39% 100% 100%

Other operating incomeThe other operating income is made up as follows: 2014/2015 2013/2014Insurance payment - 1,841Result on assets sold - 1,609Commissions, seed potatoes and others 3,199 2,834 3,199 6,284

PersonnelThe average number of people employed during the financial year averaged 1,314 (previous year 1,311). Of this number, 296 (previous year 292) working outside of the Netherlands. The social security charges include EUR 12,367,000 (previous year EUR 12,927,000 ) in pension charges. The salaries item includes a sum of EUR 130,000 as a payable crisis levy. This levy is charged in full to Avebe U.A..

Depreciation and other impairmentsThis item comprises the following components: 2014/2015 2013/2014Depreciation tangible fixed assets 23,182 25,378Permanent impairments 1,324 12,912Depreciation intangible fixed assets 424 443Depreciation negative goodwill - -1,131 24,930 37,602Auditor’s feesDe in rekening gebrachte honoraria bestaan uit de volgende componenten: 2014/2015 2013/2014 Audit of the financial statements 222 220Other auditing activities 15 8Non-audit services 15 10 252 238TaxationThe corporation tax burden of EUR 0.8 million charged to the result is the balance of taxation paid and payable abroad and movements in relation to deferred taxation. The remaining offsettable losses and the temporary differences (totalling EUR 54.7 million, previous year EUR 56.9 million) between the business-economic financial statements and the tax return have not been valued owing to the uncertainty about future offset options. That is why the tax burden is different from the nominal tax rate.

NOTES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT

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ASSETS

31-7-2015 31-7-2014 RefFixed assetsIntangible fixed assets 547 447 Tangible fixed assets Buildings and land 27,410 27,658 Plant and machinery 96,379 68,633 Other tangible fixed assets 2,462 2,967 Assets under construction 23,183 44,965 149,434 144,223

Fixed assets Participating interests in group companies 70,457 72,123investments Loans to group companies 88,358 75,858 158,815 147,981Current assetsStocks Starch 37,286 37,828 Derivatives 67,573 63,641 By-products 3,513 1,639 Other stocks 16,584 17,129 124,956 120,237

Receivables Trade debtors 54,197 63,501 Participating interests - 711 Taxation and social security contributions 1,835 - Other debtors 191 213 Prepayments and accrued income 392 166 56,615 64,591

Cash at bank and in hand 108 77

Total assets 490,475 477,556

BALANCE SHEETAT 31 JULY 2015(after proposed profit appropriation)

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LIABILITIES

31-7-2015 31-7-2014 Ref Capital and reserves Share capital 23,029 23,029 Share premium account 31,700 33,222 Other reserves 144,821 138,774 199,550 195,025 Provisions Reorganisation 3,271 5,619 Pensions 400 700 Other 10,218 8,387 13,889 14,706

Current liabilities Banks 155,448 136,320 Trade creditors 42,553 39,685 Group companies 49,856 66,784 Current account members 2,839 2,917 Pensions 2,363 835 Taxation and social security contributions - 414 Other debts 18,634 15,488 Accruals and deferred income 5,343 5,382 277,036 267,825

Total liabilities 490,475 477,556

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2014/2015 2013/2014 Ref

Gross turnover 550,878 566,334 Direct selling costs 49,848 49,731 Net turnover 501,030 516,603 Movements in stocks of finished goods 5,264 -19,558 Capitalised production 832 827 Other operating income 640 3,348 6,736 -15,383 Total operating income 507,766 501,220 Raw materials and consumables 320,311 315,096 Salaries and wages 55,124 53,747 Social security charges 18,057 18,954 Depreciation and other impairments 19,410 24,482 Other operating expenses 81,098 69,231 Total operating expenses 494,000 481,510

Operating result 13,766 19,710 Interest and similar income 378 334 Interest expenses -7,246 -7,429 Balance of financial income and expenses -6,868 -7,095 Result on ordinary activities 6,898 12,615 before taxation Taxation -87 -1 Result on participating interests 4,958 -4,275

Cooperative result after taxation 11,769 8,339

PROFIT AND LOSS ACCOUNT

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GeneralThe same principles are operated for the valuation of the result for the corporate financial statements and for the consolidated financial statements. Reference is made for the principles to the explanatory notes on page 30 and further. Notes to the balance sheet items below are given if they are different from the amounts shown in the consolidated balance sheet.

Intangible fixed assetsMovements in the value of the intangible fixed assets over the year under review are as follows:

Book value at 31 July 2014 447 Investments 921Depreciation -301Permanent impairments -520 100Book value at 31 July 2015 547

Purchase price at 31 July 2015 3,219

Tangible fixed assetsMovements in the value of the tangible fixed assets over the year under review are as follows:

Plant Other Assets Buildings and tangible under and land machinery fixed assets construction TotalBook value at 31 July 2014 27,658 68,633 2,967 44,965 144,223Investments 1,558 43,215 914 -21,782 23,905 29,216 111,848 3,881 23,183 168,128

Book value of disposals -105 - - - -105Permanent impairments -20 -736 -48 - -804Depreciation -1,681 -14,733 -1,371 - -17,785 -1,806 -15,469 -1,419 - -18,694

Book value at 31 July 2015 27,410 96,379 2,462 23,183 149,434

Purchase price at 31 July 2015 66,692 387,118 28,262 23,183 505,255

Fixed assets investments 31-7-2015 31-7-2014A Participating interests in group companies 70,457 72,123 B Loans to group companies 88,358 75,858 158,815 147,981

NOTES TO THE BALANCE SHEETAT 31 JULY 2015

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Movements of these items are as follows: A BBook value at 31 July 2014 72,123 75,858 Loans issued - 12,500Share in net result 4,958 -Exchange differences 453 -Dividends received -7,077 -Book value at 31 July 2015 70,457 88,358

The following companies under included under the heading ‘participating interests in group companies’: Holding in %

A.B Stadex Malmö 100.00Avebe America Inc. Princeton 100.00Avebe Asia Pacific Holding B.V. Veendam 100.00Avebe Belgium N.V. Antwerpen 100.00Avebe European Sales Centre GmbH Meerbusch 100.00Avebe (Far East) PTE Ltd. Singapore 100.00Avebe Food Investments B.V. Veendam 100.00Avebe France S.A. Evry 100.00Avebe (Shanghai) Co Ltd Shanghai 100.00Avebe Italia S.r.l. Milan 100.00Avebe Japan Co. Ltd. Yokohama 100.00Avebe Kartoffelstärkefabrik Prignitz/Wendland GmbH Dallmin 100.00Avebe Nederland B.V. Veendam 100.00Avebe Nisasta Sanayii ve Ticaret Limited Sirketi Izmir 100.00Avebe North America Inc. Dover 100.00Avebe S.A. Barcelona 100.00Avebe UK Ltd. Goxhill 100.00Averis Saatzucht GmbH Visbek 100.00Averis Seeds B.V. Veendam 100.00B.V. Livadia Veendam 100.00GFL Anlagen KG Lüchow 100.00GFL mbH Lüchow 100.00Solanic B.V. Veendam 100.00v.o.f. Hunzestroom Gasselternijveen 100.00v.o.f. Dobbestroom Ter Apelkanaal 100.00


Capital and reserves Share capital number of shares Balance at 31 July 2014 en 31 July 2015 101,450 23,029

During the financial year 6,366 shares were transferred to other shareholders with the approval of the Board of Directors. All issued shares have been fully paid up. The company has 57 shares under its own management.

Share premium accountBalance at 31 July 2014 33,222Repayment from proposed profit appropriation 2014/2015 -1,522 Balance at 31 July 2015 31,700

The share premium comprises two components: A free share (EUR 19.5 million, previous year EUR 19.5 million) and a share that is related to the issued shares (EUR 12.2 million, previous year EUR 13.7 million). When the share is transferred the related share premium will also go to the new owner.Under the following conditions a maximum of 10% a year of the premium related to the shares can be repaid by Avebe U.A. to the members:• If the Debt/EBITDA ratio is a maximum of 3.5; and• The solvency ratio is at least 40%.These conditions are otherwise only taken into consideration following the processing of the dividend on the share premium and the normal final payment.

The deposited share premium qualifies for a share premium dividend of 6% if:• The result after taxation is more than EUR 2 million;• The Debt/EBITDA ratio is a maximum of 3.5; and• The solvency ratio is at least 40%.

Revaluation reserveLegal reservesBalance at 31 July 2014 -Exchange rate result hedging financial fixed assets -1,264Exchange differences on net investments in foreign group companies 453Transfer from other reserves 811Balance at 31 July 2015 -

Other reservesBalance at 31 July 2014 138,774Transfer to the revaluation reserve -811Cooperative Result 2014/2015 11,769Return on share premium -894Final payment to members 2014/2015 -4,350 6,525Exit fee received and others 333Balance at 31 July 2015 144,821

The balance of the statutory reserve exchange differences in the other reserves is minus EUR 8,553,000.

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ProvisionsThe provisions are long-term unless otherwise stated.Movements in the provisions over the year under review are as follows:

Reorganisation Pensions Other TotalBalance at 31 July 2014 5,619 700 8,387 14,706Movements charged to the profit and loss account -26 -121 2,829 2,682Withdrawals -2,322 -179 -998 -3,499 Balance at 31 July 2015 3,271 400 10,218 13,889 The current part of the provisions amounts to 4.1 million euros.

Pension commitmentsThe pensions commitment is designated for:• Employees born before 1 January 1950; • A number of individual cases; and• A number of pensioners.

Other provisionsThe other provisions are specified as follows: Anniversary Demolition Total bonuses chargesBalance at 31 July 2014 2,476 5,911 8,387Movements charged to the profit and loss account 1,087 1,742 2,829Withdrawals -296 -702 -998Balance at 31 July 2015 3,267 6,951 10,218

The anniversary bonuses are provided for in the internal scheme for that purpose. The anniversary provision is accrued on a straight-line basis over 15 years.

The provision for demolition costs is formed for the anticipated costs of the planned demolition of a number of buildings and machines at Avebe locations in the Netherlands in the next 5 years.

Other debtsThis item includes a debt to members of EUR 6.8 million (previous year EUR 5.4 million). The debt to members is made up as follows:

31-7-2015 31-7-2014Final payment to members 4,350 2,970 Return on share premium 894 913Repayment of share premium 1,522 1,522Repayment of certificates 19 28 6,785 5,433

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Off-balance sheet commitmentsGuarantees have been issued for EUR 458,000. Of the issued guarantees, EUR 71,000 relates to consolidated participating interests.

Avebe U.A. forms a tax entity for corporation tax with a number of Dutch group companies stated in the financial statements. Under the standard conditions the company and its affiliated subsidiaries are jointly and severally liable for the tax payable by the consortium and its incorporation within the tax entity.

The long-term commitments relating to operational lease and rental agreements amount to 23.2 million euros, 4.6 million of which matures within one year. For EUR 5.8 the term is longer than 5 years. The remaining amount of 12.8 million euros matures within five years.

Avebe U.A. has entered into commitments in the amount of EUR 2.5 million in the context of current investments.

Declaration of liability Avebe U.A. has issued a declaration of liability for the subsidiaries included in the consolidation as provided for in Sec-tion 2:403 of the Netherlands Civil Code. The declaration of liability relates to Averis Seeds B.V. in Veendam and Solanic B.V. in Veendam.

In relation to its 50% participating interest in v.o.f. Hunzestroom and v.o.f. Dobbestroom, Avebe U.A. is jointly and severally liable for all debts of these general partnerships.

Assets not disclosed in the balance sheet.In 2008 Avebe U.A. was allocated, free of charge, a certain number of emission rights concerning the annual emission of CO2 for the period 2008-2012. These emission rights are freely negotiable and can also be used by Avebe U.A. after the stated period. The actual emission and the emission rights obtained are reviewed retrospectively each year. If the actual emission exceeds the emission rights, additional purchase and penalty clauses will come into effect. Avebe U.A. expects the actual emission to be lower than the available emission rights and has not valued the current surplus of emission rights.

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NOTES TO THEPROFIT AND LOSS ACCOUNT

Gross turnoverThe breakdown of gross turnover by sales category is as follows: 2014/2015 2013/2014 Starch 148,369 147,736 Derivatives 341,687 365,796 By-products 60,822 52,802 550,878 566,334

Breakdown of gross turnover by geographical regions: 2014/2015 2013/2014 European Union 61% 61% Rest of Europe 3% 3% Rest of the world 36% 36% 100% 100%

PersonnelThe average number of people employed during the financial year averaged 998 (previous year 1,000). The number of employees at year-end was 984 (previous year 987). The social security charges include EUR 10,819,000 (previous year EUR 11,672,000) in pension charges.

Depreciation and other impairmentsThis item in the profit and loss account comprises the following components: 2014/2015 2013/2014 Depreciation tangible fixed assets 17,785 18,570 Permanent impairments 1,324 5,576Depreciation intangible fixed assets 301 336 19,410 24,482

TaxationThe corporation tax burden of EUR 87,000 charged to the result is the balance of setoffs within the tax entity. The remaining offsettable losses and the temporary differences (totalling EUR 54.7 million, previous year EUR 56.9 million) between the business-economic financial statements and the tax return have not been valued owing to the uncertainty about future offset options. That is why the tax burden is different from the nomial tax rate.

Remuneration of Directors and members of the Supervisory BoardRemuneration for the Board of Directors amounted in 2014/2015 to EUR 1,515,000 (previous year EUR 1,528,000). Remuneration for the Supervisory board amounted to EUR 285,000 (previous year EUR 275,000).

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OTHERINFORMATION

Liability of the membersBy virtue of article 27 of the articles of association the obligation of members and former members of the cooperative to contribute to a deficient upon dissolution of the cooperative has been eliminated.

Appropriation of net resultAccording to article 23 of the articles of association, a credit balance is placed at the disposal of the general members’ meeting. In anticipation of this being adopted by the members’ council, the Board of Directors has proposed with the approval of the Supervisory Board to divide the cooperative result after taxation as follows:

Return on contractual share premium 894 Final payment to members 2014/2015 4,350 Addition to other reserves 6,525 11,769

The proposed profit appropriation has been incorporated in the 2014/2015 annual accounts.

Share premium reserveIn keeping with the board decision of 17 December 2009, a 10% share premium was repaid on the basis of the result and the balance sheet on 31 July 2015.This repayment of 1,522,000 has been incorporated in the 2014/2015.financial statements.

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To: the Members and the Supervisory Board of Avebe U.A.

Report on the financial statementsWe have audited the accompanying financial statements 2014/2015 as set out on pages 25 to 53 of Coöperatie Avebe U.A., Veendam, which comprise the consolidated and company balance sheet as at 31 July 2015, the consolidated and company income statement for the year then ended and the notes, comprising a summary of accounting policies and other explanatory information.

Management board’s responsibilityThe management board is responsible for the preparation and fair presentation of these financial statements and for the preparation of the directors’ report, both in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the management board is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’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 company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management board, 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.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of Coöperatie Avebe U.A. as at 31 July 2015, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

AUDIT REPORT BY THE INDEPENDENT AUDITOR


Report on other legal and regulatory requirementsPursuant 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 directors’ 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 directors’ 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.

Utrecht, 27 October 2015

PricewaterhouseCoopers Accountants N.V. P. Jongerius RA

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Avebe U.A.Postbus 159640 AA VeendamThe NetherlandsTel (31) 598 66 91 11Fax (31) 598 66 43 68E-mail [email protected]

EUROPEAvebe EUROPEAN SALES CENTRE GMBHPostfach 214540644 MeerbuschMollsfeld 340670 Meerbusch-OsterathGermanyTel (49) 21 59 52 240Fax (49) 21 59 52 411

AMERICAAvebe America Inc.101 Interchange Plaza Suite 101Cranbury, NJ 08512USATel. (1) 609 608 5353Fax (1) 609 662 4200

ASIA PACIFICAvebe (FAR EAST) PTE LTD.51 Bras Basah RoadManulife Centre # 04-06Singapore 189554Tel (65) 6238 2673Fax (65) 6238 0017

Avebe (SHANGHAI) CO., LTDC/O Thinkbridge Business Consulting Co.,Ltd.Unit 1702-1703 Shanghai Central SquareNo. 227 North Huang Pi Road, Shanghai 200003Shanghai 200003, ChinaTEL : (86) 21 6375 8318FAX : (86) 21 6375 8328

TURKEY/MIDDLE EAST/INDIAAvebe NISASTA LTD. STI.Atatürk Organize SanayiBölgesi10.008 Sokak No. 1735620 Çigli-IzmirTurkeyTel (90) 23 23 76 76 40Fax (90) 23 23 76 76 45

Avebe TAIWAN17 F/B, No. 167Dunhua N. RoadTaipei 10549TaiwanTel (886) 2 25477060

Avebe JAPAN CO. LTD.Crescendo Bldg. 3F3-4 Shin-Yokohama 2 ChomeKohoku-kuYokohama-Shi, Kanagawa 222-0033JapanTel (81) 45 478 1815Fax (81) 45 475 1830

ADDRESSES

WWW.AVEBE.COM


This annual report is a publication of Avebe Communication and is also available in German and Dutch.([email protected])

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2014/2015 annual report - avebe · kpw area in lüchow and the stadex facility in malmö....

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