Interrim report Q2 2011/12

Nordzucker AG Interim ReportFinancial Year 2011/2012 First Half-Year March 1 – August 31, 2011

Group figures and ratios

Nordzucker Half-Year Report 2011/2012

Group figures and ratios first half-year 2011/2012

Operating business H1 H1 2011/2012 2010/2011

Change absolute

Revenues

EUR m

900

914

-14

Total revenues

EUR m

584

467

117

Gross income

EUR m

306

299

7

EBITDA

EUR m

155

132

23

EBIT

EUR m

112

83

29

Net income

EUR m

73

34

39

Cash flow from operating activities

EUR m

291

398

-107

Investments in property, plant and equipment and intangible assets

EUR m

32

36

-4

Balance sheet as of August 31 H1 H1 2011/2012 2010/2011

Change absolute

Balance sheet total

EUR m

1,689

1,907

-218

Equity

EUR m

855

739

116

%

51

39

12

Debt capital

EUR m

834

1,168

-334

Financial liabilities

EUR m

222

431

-209

Cash and cash equivalents

EUR m

74

180

-106

Net debt (Cash and cash equivalents less financial liabilities)

EUR m

148

251

-103

Equity ratio

Structure figures Northern Europe Sugar factories Sugar refineries Central Europe Sugar factories Liquid sugar factories Bioethanol plants Eastern Europe Sugar factories Sugar refineries

H1 H1 2011/2012 2010/2011

Change absolute

5 2

5 2

– –

5 2 1

5 2 1

– – –

3 1

3 1

– –

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2

Facts and trends

Nordzucker Half-Year Report 2011/2012

|

Nordzucker facts and trends Contents The Management Team

4

Letter from the Management Board

5

Sites in Europe

6

Management Report

7

Earnings, net assets and financial position

7

Revenues and earnings

7

Balance sheet and cash flow

8

Sugar beet developments

9

Supplementary report

9

Outlook

9

Income statement

10

Statement of comprehensive income

10

Cash flow statement

11

Balance sheet

12

Statement of changes in shareholders’ equity

14

Financial calendar

15

Good result for the half-year In the first half of the 2011/2012 financial year, Nordzucker achieved revenues of EUR 900.3 million. Although less sugar was available than in the previous year, revenues were only slightly down on the first half of 2010/2011. Net income for the first half came in at EUR 72.6 million – more than twice the figure for the first six months of the previous period.

Campaign starts successfully This year’s processing phase started on 7 September – some two weeks earlier than in 2010.

As large quantities of beet are anticipated, processing is expected to last until the middle of January throughout the Group, with the exception of Finland.

The weather was good for beet growth and sugar content this year. In terms of sugar yields per hectare, we expect the harvest to far exceed the average seen in recent years, especially in Central Europe, Eastern Europe and Denmark.

3

The Management Team

Nordzucker Half-Year Report 2011/2012

Team at anthe dertop: Spitze: A Starkes strong team Mats Liljestam (born in 1959) ●

Chief Marketing and Sales Officer at Nordzucker AG

Dr Michael Noth (born in 1962)

Hartwig Fuchs (born in 1959)

Dr Niels Pörksen (born in 1963)

Axel Aumüller (born in 1957)

● Chief Financial Officer at Nordzucker AG

● Chief Executive Officer at Nordzucker AG

● Chief Agricultural Officer at Nordzucker AG

● Chief Operating Officer at Nordzucker AG

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4

Letter from the Management Board

Nordzucker Half-Year Report 2011/2012

Dear Shareholders, We finished the first half of the 2011/2012 financial year with a significant increase in earnings compared with the same period of the previous year. This was thanks to both good market conditions and the successful implementation of various cost-cutting measures at our factories and offices.

The acquisition of Nordic Sugar is paying off, the optimisation of our investment portfolio has eliminated a number of expenses, and we have succeeded in significantly reducing our level of debt.

On top of all that, we expect the beet harvest to be exceptionally good and produce a large amount of sugar this year and the campaign should last well into January. All in all, the prospects are extremely promising. Nevertheless, we still face some major challenges – including those arising from the consolidation of the European sugar market.

Meanwhile, discussions are well under way within the EU’s decision-making bodies regarding the extension of the sugar market regime post-2014/2015. Although we currently expect the regime to remain in place and also will actively lobby for this, we must be prepared for forthcoming and possible changes in the sugar market. We must not allow ourselves to become complacent in the light of our achievements: the consolidation of the sugar market is already continuing apace. One of our prime objectives is to keep safeguarding and strengthening our independence and our market position as the second strongest on the market.

To achieve this, we will keep consistently pursuing our initiative to enhance profitability over the next few years. We will also step up our joint efforts to integrate and internationalise our company.

Yours sincerely, Nordzucker AG The Executive Board

Hartwig Fuchs

Axel Aumüller

Dr Michael Noth

Mats Liljestam

Dr Niels Pörksen

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5

Sites in Europe

Nordzucker Half-Year Report 2011/2012

|

6

Sites in Europe

Headquarters Nordzucker D

1

Braunschweig

Head Office A

2

DK

3

Nordzucker Eastern Europe GmbH, Vienna Nordic Sugar, Køpenhavn

Sugar factories D

DK S

4

Clauen

5

Nordstemmen

6

Uelzen

7

Klein Wanzleben

8

Schladen

9

Nakskov

10

Nykøbing

11

Örtofta

FIN 12

Säkylä

LT

13

Kèdainiai

PL

14

Opalenica

15

Chełmża

SK

16

Trenčianska Teplá

D

17

Liquid sugar factory

Northern Europe 12 20

11

Groß Munzel 18

3

Liquid sugar factory Nordstemmen

9

19

13

10

Refineries S

19

15

Arlöv

FIN

20

Porkkala

PL

21

Chełmża

21

6 7 4 1 24 8 18

17

14

5

Eastern Europe

Sugar factories – non-consolidated

22

minority stake CZ

22

Dobrovice

23

České Meziříčí

Other locations D

24

fuel 21, Klein Wanzleben

23

Central Europe

16 2

Management report

Nordzucker Half-Year Report 2011/2012

Earnings, net assets and financial position Consolidated revenues

The half-year financial report of the Nordzucker Group as of 31

in EUR m

August 2011 has been prepared in accordance with the International Financial Reporting Standards (IFRS) adopted and published by

914

900

the International Accounting Standards Board (IASB). Supplementary provisions of German commercial law have been taken into account. The financial statements comply fully with IFRS and give a true and fair view of the net assets, financial and earnings position of Nordzucker AG and its consolidated subsidiaries as well as its associated companies and joint ventures. The consolidated financial statements of Nordzucker AG include all subsidiaries with their financial statements as of 31 August 2011, the only exception being

H1 2010/11

H1 2011/12

Norddeutsche Flüssigzucker GmbH & Co. KG due to its different financial year, which ends as of 30 June 2011. No changes have been made to the accounting methods used for the preparation of the consolidated financial statements as of 28 February 2011.

For more information please see the Notes section of the

Consolidated EBIT

2010/2011 Annual Report.

in EUR m

112

The production of sugar is a seasonal business. The production stage, from the beginning of September until the middle of Janu-

83

ary, is entirely in the second half of the financial year. This should be taken into consideration when interpreting the results of the first half-year.

In the 2010/2011 financial year, the company also disposed of H1 2010/11

H1 2011/12

its investments in the Hübner Group (December 2010) and the seeds business (September 2010). Earnings in the first half of the previous year were negatively affected by one-off expenses caused

by Hübner.

Revenues and earnings In the first half of the 2011/2012 financial year, the Nordzucker Group generated revenues of EUR 900.3 million, which was only slightly lower than the previous year’s total (EUR 914.0 million).

Prices were higher than in the previous year, which almost compensated for the fall in sales volumes. Overall, compared to the previous year, more sugar was imported and less of our own sugar sold. This drove up the cost of materials and services from EUR 167.4 million to EUR 278.0 million, while the reduction in stocks was comparably lower at EUR 317.6 million (previous year: EUR 449.0 million).

At EUR 81.2 million, personnel expenses remained roughly the same as in the previous year (EUR 81.4 million). Depreciation, amortisation and impairment totalled EUR 43.1 million, compared to EUR 48.9 million in the previous year; other operating expenses fell from EUR 100.7 million to EUR 80.3 million. The Hübner Group and the Hungarian subsidiary impacted on both items in the previous year.

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7

Management report

Nordzucker Half-Year Report 2011/2012

Consolidated net income in EUR m

73

The operating result (EBIT) of the Nordzucker Group totalled EUR 112.0 million in the first half of the 2011/2012 financial year, compared to EUR 83.1 million in the first half of the previous year.

Interest expense fell slightly, coming in below the previous year’s EUR 26.9 million at EUR 25.5 million. A new loan agreement

34

with much better terms was signed in June 2011. This initially led to negative one-off effects of approximately EUR 12.9 million.

However, interest expense will fall significantly in the second half H1 2010/11

H1 2011/12

of the current financial year due to both the new loan agreement and the repayment of the financial liabilities entered into for the purchase of Nordic Sugar.

Overall, consolidated net income for the period more than dou-

Consolidated balance sheet structure as of August 31, 2011 in EUR m 1,689

1,689

bled, amounting to EUR 72.6 million, compared to EUR 33.8 million in the same period of the previous year.

Cash flow and balance sheet The cash flow from operating activities totalled EUR 291.5 million

51% 65%

in the first half of the 2011/2012 financial year, compared to EUR 398.2 million in the same period of 2010/2011. The reduction in stock was considerably lower than in the previous year, which was the main reason for this development. Investment in property,

17% 18% Assets

31%

18%

plant and equipment remained almost unchanged at EUR 29.5 million, having stood at EUR 30.2 million in the previous year. Cash flow from investing activities totalled EUR -101.3 million, primarily

Equity &

as a result of the payment of the final instalment for the purchase

liabilities

of Nordic Sugar (EUR 73.6 million including interest), compared to a positive cash flow of EUR 14.9 million in the same period of

Non-current assets

Equity

Inventories

Non-current liabilities

Other current assets

Current liabilities

the previous year, due first and foremost to the sale of the Serbian investments. Cash flow from financing activities amounted to EUR -166.4 million, compared to EUR -346.6 million in the previous year. At the end of the first half, the Nordzucker Group had cash and cash equivalents of EUR 73.6 million.

The Nordzucker Group’s consolidated balance sheet total fell from EUR 1,907.0 million in the same period in 2010/2011 to EUR 1,688.5 million on the reporting date. This primarily resulted

Consolidated net debt

from the optimisation of the investment portfolio and the repay-

In EUR m

ment of the financial liabilities entered into for the purchase of Nordic Sugar.

251

148

The positive business developments prompted a rise in equity to EUR 854.6 million, compared to EUR 738.8 million in the previous first half. Together with the reduction in total assets, this increase led to an equity ratio of 50.6 per cent (previous year: 38.7 per cent).

H1 2010/11

H1 2011/12

The company was able to considerably reduce its net debt. It amounted to EUR 148.0 million, down from EUR 250.1 million one year earlier.

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8

Nordzucker Half-Year Report 2011/2012

Management report

|

The weather in 2011 has been perfect for beet growth and sugar formation. Plenty of sun in the spring followed by rainy summer months accelerated the beets’ early development and mass growth.

Supplementary report There have been no significant changes to the situation of the company for the current year since the reporting date of the interim financial statements.

Outlook The company recorded a pleasing result for the first half of 2011/2012 thanks to favourable market conditions. Falling sales volumes were offset by price increases in the quota sugar business. In light of the good market environment, the Group still anticipates that revenues will develop well in the current financial year. The price increases achieved on the market for the new sugar marketing year lead us to expect revenues will outstrip the previous year’s figure. However, it is likely that both European and global sugar markets will cool down in the medium term.

Lower interest payments and savings from the efficiency programme “Profitability plus” are having a positive impact on results. It is therefore currently to be expected that we will far exceed the previous year’s result and post outstanding figures.

9

Nordzucker Half-Year Report 2011/2012

Consolidated half-year financial statements

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10

Consolidated half-year financial statements Consolidated income statement for the period from March 1 to August 31, 2010, Nordzucker AG, Braunschweig

1/3/2011 - 31/8/2011 TEUR

1/3/2010 - 31/8/2010 TEUR

Change TEUR

Revenues

900,316

913,967

-13,651

Decrease in finished goods and work in progress

317,614

448,977

-131,363

Own work capitalised Total revenues Other operating income Cost of materials and services

1,406

1,865

-459

584,108

466,855

117,253

10,576

14,450

-3,874

278,010

167,447

110,563

Personnel expenses

81,182

81,401

-219

Depreciation of property, plant and equipment, amortisation and impairment of intangible assets

43,143

48,908

-5,765

Appreciation of intangible assets and property, plant and equipment Other operating expenses Operating result (EBIT)

0

319

-319

80,301

100,735

-20,434

112,048

83,133

28,915

Net interest a) Interest income and similar income b) Interest expenses and similar expenses

1,217

543

674

25,496

26,877

-1,381

-24,279

-26,334

2,055

Net income/loss from investments a) Net income/loss from associated companies and joint ventures accounted for under the equity method

0

0

0

3,779

1,684

2,095

3,779

1,684

2,095

a) Other financial income

3,637

12,223

-8,586

b) Other financial expenses

3,268

16,003

-12,735

369

-3,780

4,149

b) Other net income from investments

Other net financial income/loss

Net financial income/loss

-20,131

-28,430

8,299

Earnings before taxes

91,917

54,703

37,214

Income taxes

19,308

21,155

-1,847

Result shutdown/sale of operations Consolidated net income Consolidated net income attributable to minority interests Consolidated net income attributable to shareholders of the parent company

0

247

-247

72,609

33,795

38,814

2,234

2,002

232

70,375

31,793

38.582

Statement of comprehensive income Consolidated net income Currency conversion for foreign operations Net result of cash flow hedges Income taxes

72,609

33,795

38,814

-12,925

13,218

-26,143

-1,976

-1,611

-365

664

452

212

Other net income/loss after taxes

-1,312

-1,159

-153

Total net income/loss after taxes

58,372

45,854

12,518

2,234

1,997

237

56,138

43,857

12,281

Attributable to minority shareholders Attributable to shareholders of the parent company

Nordzucker Half-Year Report 2011/2012

Consolidated half-year financial statements

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11

Consolidated cash flow statement for the period from March 1 to August 31, 2011, Nordzucker AG, Braunschweig

1/3/2011 - 31/8/2011 TEUR

1/3/2010 - 31/8/2010 TEUR

Change TEUR

Earnings before taxes

91,917

54,702

37,215

Interest and similar income

-1,217

-543

-674

Interest and similar expenses

25,496

26,877

-1,381

Net depreciation, amortisation and impairment on non-current assets

43,143

48,737

-5,594

0

0

0

12,202

-7,163

19,365

-2

-2

0

0

0

0

Depreciation, appreciation on financial investments Changes in non-current provisions Other non-cash expenses Net loss/income from associated companies Earnings from discontinued operations

0

247

-247

Changes in finished goods and work in progress

317,614

448,977

-131,363

Changes in current provisions

-18,094

18,054

-36,148

-543

827

-1,370

-33,160

-53,255

20,095

-126,075

-116,601

-9,474

Proceeds on disposal of non-current assets Changes in inventories, trade receivables and other assets not attributable to investing or financing activities Changes in trade payables and other liabilities not attributable to investing or financing activities Interest received in the financial year Interest paid in the financial year Taxes paid in the financial year Cash flow from operating activities Proceeds on disposal of property, plant and equipment Payments for investments in property, plant and equipment Proceeds on disposal of intangible assetss Payments for investments in intangible assets Proceeds on disposal of financial assets Payments for investments in financial assets Proceeds from the sale of consolidated companies and other business unit Payments for the acquisition of consolidated companies and other business units Cash flow for investing activities Payments to shareholders (dividends) Proceeds from borrowing

1,217

543

674

-9,566

-24,092

14,526

-11,439

867

-12,306

291,493

398,175

-106,682

3,290

2,777

513

-29,457

-30,183

726

0

3,889

-3,889

-2,327

-5,952

3,625

4

4,590

-4,586

-3

-230

227

834

40,000

-39,166

-73,637

0

-73,637

-101,296

14,891

-116,187

-22,879

-1,342

-21,537

40,552

22,625

17,927

Loan repayments

-184,036

-367,836

183,800

Cash flow from financing activities

-166,363

-346,553

180,190

Changes in cash and cash equivalents

23,834

66,513

-42,679

Cash and cash equivalents at the beginning of the period

50,289

113,942

-63,653

Cash from the acquisition of consolidated companies and other business units Additions through mergers/other changes Cash and cash equivalents at the end of the period

0

0

0

-497

-184

-313

73,626

180,271

-106,645

Nordzucker Half-Year Report 2011/2012

Consolidated half-year financial statements

|

Consolidated balance sheet as of August 31, 2011, Nordzucker AG, Braunschweig

Assets

28/2/2011 TEUR

31/8/2011 TEUR

31/8/2010 TEUR

Intangible assets

179,897

174,910

184,177

Property, plant and equipment

906,056

887,017

914,247

8,516

8,022

8,713

Non-current assets Fixed assets

Investment property Financial investments Shares in associated companies and joint ventures accounted for under the equity method Other financial investments

3,838

3,838

8,409

20,477

20,474

18,088

24,315

24,312

26,497

1,118,784

1,094,261

1,133,634

32

0

628

1,530

1,442

1,676

1,562

1,442

2,304

Receivables and other assets Financial assets Other assets

Deferred taxes

5,383

4,283

8,448

1,125,729

1,099,986

1,144,386

Raw materials, consumables and supplies

40,836

60,864

48,241

Work in progress

17,981

82,588

75,859

533,205

141,927

139,811

592,022

285,379

263,911

155,897

182,868

187,689

28

32

284

Current assets Inventories

Finished goods and merchandise

Receivables and other assets Trade receivables from external companies Receivables from related parties Current income tax receivables

39

1,501

14,711

Financial assets

21,061

9,035

19,759

Other current assets

35,730

36,056

26,120

212,755

229,492

248,563

50,289

73,627

180,271

855,066

588,498

692,745

826

27

69,892

855,892

588,525

762,637

1,981,621

1,688,511

1,907,023

Cash and cash equivalents Assets held for sale

12

Nordzucker Half-Year Report 2011/2012

Consolidated half-year financial statements

|

Consolidated balance sheet as of August 31, 2011, Nordzucker AG, Braunschweig

Shareholders‘ equity and liabilities

28/2/2011 TEUR

31/8/2011 TEUR

31/8/2010 TEUR

Subscribed capital

123,651

123,651

123,651

Capital reserves

127,035

127,035

127,035

Retained earnings

471,569

520,077

416,583

54,983

40,747

31,586

777,238

811,510

698,855

41,497

43,066

39,903

818,735

854,576

738,758

134,117

133,036

131,509

19,218

30,723

33,819

275,892

188,959

407,664

Shareholders‘ equity

Other comprehensive income Equity attributable to shareholders of the parent company Minority interests

Non-current provisions and liabilities Provisions for pensions and similar obligations Other provisions Financial liabilities Liabilities towards related parties

5,500

5,500

5,500

Other financial liabilities

1,447

1,362

1,783

Other liabilities

23,763

22,179

25,162

Deferred taxes

160,015

152,722

158,150

619,952

534,481

763,587

Current provisions and liabilities Provisions for pensions and similar obligations

5,277

5,277

5,268

Other provisions

53,051

34,868

52,222

Financial liabilities

87,880

32,667

22,698

Current income tax liabilities

27,444

35,609

28,437

215,187

104,896

105,996

Liabilities towards related parties

12,313

12,689

11,056

Other financial liabilities

87,457

12,900

84,560

Other liabilities

54,325

60,548

70,948

542,934

299,454

381,185

0

0

23,493

1,981,621

1,688,511

1,907,023

Trade payables

Liabilities from discontinued operations

13

Consolidated half-year financial statements

Nordzucker Half-Year Report 2011/2012

|

Consolidated statement of changes in shareholders’ equity for the consolidated quarterly financial statements as of August 31, 2011, Nordzucker AG, Braunschweig

Equity attributable to shareholders of the parent company TEUR

Minority interests TEUR

Total equity TEUR

19,521

654,501

89,498

743,999

Subscribed capital TEUR

Capital reserves TEUR

Other Retained comprehensive earnings income TEUR TEUR

123,651

127,035

384,294

Currency effects

0

0

31,793

0

31,793

2,002

33,795

Fair value adjustment

0

0

0

12,064

12,064

-5

12,059

As of 01/3/2010

Total earnings recognised directly in equity

0

0

31,793

12,064

43,857

1,997

45,854

Dividend payment

0

0

0

0

0

-1,346

-1,346

0

0

496

1

497

-50,246

-49,749

As of 31/8/2010

Others

123,651

127,035

416,583

31,586

698,855

39,903

738,758

As of 01/3/2011

818,735

123,651

127,035

471,569

54,983

777,238

41,497

Currency effects

0

0

70,375

0

70,375

2,234

72,609

Fair value adjustment

0

0

0

-14,237

-14,237

0

-14,237

Total earnings recognised directly in equity

0

0

70,375

-14,237

56,138

2,234

58,372

Dividend payment

0

0

-22,219

0

-22,219

-786

-23,005

Others

0

0

352

1

353

121

474

123,651

127,035

520,077

40,747

811,510

43,066

854,576

As of 31/8/2011

Shareholders‘ structure Nordzucker AG EUR 123.7m share capital

Nordzucker Holding Aktiengesellschaft 76.2 %, EUR 94.3m

Union-Zucker Südhannover GmbH 10.8 %, EUR 13.4m

Nordharzer Zucker AG 7.8 %, EUR 9.7m

Direktaktionäre 5.2 %, EUR 6.3m

14

Important dates

Financial calendar Publications 14 October 2011

Publication of the Q2 Interim Report 2011/2012

13 January 2012

Publication of the Q3 Interim Report 2011/2012

10 July 2012

Annual General Meeting of Nordharzer Zucker Aktiengesellschaft

11 July 2012

Annual General Meeting of Nordzucker Holding AG

12 July 2012

Annual General Meeting of Nordzucker AG

Online publications The following publications can be downloaded from www.nordzucker.de: • Annual Report • Interim reports • Statement of compliance • Sustainability Report

Nordzucker AG KĂźchenstraĂ&#x;e 9 38100 Braunschweig Germany Telephone: +49 (0)531 2411 0 Fax: +49 (0)531 2411 100 info@nordzucker.de www.nordzucker.de Corporate Communications Klaus Schumacher Telephone: +49 (0)531 24 11 366 pr@nordzucker.de Investor Relations Bianca Deppe-Leickel Telephone: +49 (0)531 2411 335 ir@nordzucker.de Shares register Claus-Friso Gellermann Telephone: +49 (0)531 24 11 118 aktien@nordzucker.de

Printed copies of this Interim Report for the Nordzucker Group are also available in German.

Alternatively, the report can be downloaded in German or English from the internet under www.nordzucker.de from the download center as a PDF.