Management Report - Nordzucker AG
Management Report - Nordzucker AG
Management Report - Nordzucker AG
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Annual <strong>Report</strong> 2003/2004<br />
<strong>Nordzucker</strong> <strong>AG</strong>
Corporate Structure and Locations<br />
<strong>Nordzucker</strong> <strong>AG</strong><br />
<strong>Nordzucker</strong> GmbH & Co. KG,<br />
Braunschweig/Germany<br />
100%<br />
<strong>Nordzucker</strong> InnoCenter GmbH,<br />
Braunschweig/Germany<br />
100%<br />
Syral –<br />
Marckolsheim<br />
FRANCE<br />
Germany<br />
Güstrow<br />
Uelzen<br />
Clauen<br />
Berlin<br />
Wierthe<br />
Munzel<br />
Braunschweig<br />
Klein Wanzleben<br />
Nordstemmen<br />
Schladen<br />
Amino – esparma –<br />
Frellstedt Osterweddingen<br />
Hübner-Medopharm –<br />
Ehrenkirchen<br />
Sugar International<br />
Wielkopolski Cukier S.A.,<br />
Opalenica/Poland<br />
99,65%<br />
Pomorski Cukier S.A.,<br />
Chelmza/Poland<br />
99,71%<br />
Považský Cukor a.s.,<br />
Trencianska Teplá/Slowakia<br />
95,20%<br />
Szolnoki Cukorgyár Rt.,<br />
Szolnok/Hungary<br />
98,10%<br />
Mátravidéki Cukorgyárak Rt.,<br />
Hatvan/Hungary<br />
94,98%<br />
Szerencsi Cukorgyár Rt.,<br />
Szerencs/Hungary<br />
92,79%<br />
Cukrovary TTD a.s.,<br />
Dobrovice/Czech Republic<br />
33,54%<br />
Opalenica<br />
Dobrovice*<br />
Ceské Meziřici*<br />
Prague<br />
CZECH REPUBLIC<br />
^<br />
^<br />
Trnava<br />
Chelmza<br />
Warsaw<br />
POLAND<br />
Bratislava<br />
Trencianska Teplá<br />
SLOWAKIA<br />
HUNGARY<br />
as May 2004 *not consolidated<br />
Budapest<br />
Business Development<br />
Szolnok<br />
<strong>Nordzucker</strong> Spezial GmbH,<br />
Braunschweig/Germany<br />
100%<br />
SweetGredients GmbH &<br />
Co. KG, Nordstemmen/<br />
Germany 50%<br />
Syral S.A.,<br />
Marckolsheim/France<br />
Szerencs<br />
50%<br />
NPE Natur Pharma<br />
Ernährungsprodukte GmbH,<br />
Bielefeld/Germany 98%<br />
Anton Hübner<br />
GmbH & Co. KG,<br />
Ehrenkirchen/Germany 100%<br />
Medopharm Arzneimittel<br />
GmbH & Co. KG,<br />
Freiburg i. Br./Germany 100%<br />
Norddeutsche Zucker-Raffinerie<br />
GmbH,<br />
Frellstedt/Germany 50%<br />
Amino GmbH,<br />
Frellstedt/Germany<br />
50%<br />
esparma GmbH,<br />
Osterweddingen/Germany<br />
100%<br />
S.A. Bioproducts Ltd.,<br />
Durban/South Africa<br />
40%
The Group at a Glance<br />
Sales, including market regulation levies<br />
tm<br />
Depreciation of property, plant and equipment tm<br />
Staff costs<br />
tm<br />
Research expenditures<br />
tm<br />
Earnings before interest and taxes (EBIT)<br />
tm<br />
Net consolidated income<br />
tm<br />
Cashflow (DVFA)<br />
tm<br />
Equity capital<br />
tm<br />
Balance sheet total<br />
tm<br />
Investment in property, plant and equipment<br />
Staff on annual average (Sec. 267 Commercial Code)<br />
Beet farmers<br />
tm<br />
Beet processing<br />
hectares<br />
Sugar beet cultivation<br />
tonnes/day<br />
Sugar production<br />
Factories<br />
m tonnes white<br />
sugar values<br />
Financial Year in Key Words<br />
1997/1998<br />
984<br />
92<br />
104<br />
1<br />
19<br />
9<br />
80<br />
251<br />
1,052<br />
42<br />
1,956<br />
12,018<br />
165,425<br />
101,237<br />
1.39<br />
11<br />
1998/1999<br />
1,023<br />
91<br />
110<br />
1<br />
45<br />
21<br />
138<br />
269<br />
1,042<br />
52<br />
1,908<br />
11,561<br />
161,388<br />
100,939<br />
1.33<br />
11<br />
1999/2000<br />
1,007<br />
85<br />
100<br />
2<br />
44<br />
22<br />
75<br />
301<br />
1,026<br />
78<br />
1,994<br />
13,548<br />
181,142<br />
104,786<br />
1.45<br />
15<br />
2000/2001<br />
1,073<br />
87<br />
121<br />
3<br />
75<br />
36<br />
83<br />
262<br />
1,118<br />
67<br />
3,939<br />
18,504<br />
180,895<br />
113,614<br />
1.51<br />
17<br />
• Good campaign and second best operating result in <strong>Nordzucker</strong> <strong>AG</strong> history<br />
• Positive operating results in Slovakia and the Czech Republic<br />
• Successful consolidation of Hübner-Medopharm and Syral S.A.<br />
• Pilot production of Tagatose in Nordstemmen<br />
• Closure of the Schleswig plant after the 2003 campaign<br />
• Integration of sugar sales<br />
• Further developments in the organisation structure<br />
• First capital increase from the authorised capital of 2002<br />
2001/2002<br />
1,184<br />
83<br />
125<br />
3<br />
99<br />
55<br />
148<br />
300<br />
1,108<br />
54<br />
4,052<br />
17,081<br />
180,117<br />
107,425<br />
1.33<br />
16<br />
2002/2003<br />
1,146<br />
77<br />
127<br />
4<br />
66<br />
26<br />
100<br />
296<br />
1,023<br />
65<br />
3,475<br />
16,466<br />
201,658<br />
120,958<br />
1.49<br />
19<br />
2003/2004<br />
1,254<br />
86<br />
141<br />
4<br />
62<br />
23<br />
107<br />
330<br />
1,125<br />
65<br />
3,758<br />
17,028<br />
208,882<br />
131,307<br />
1.70<br />
17
<strong>Nordzucker</strong><br />
The <strong>Nordzucker</strong> group, one of the major producers of foodstuffs in the European<br />
Union, together with its beet farmers are reliable suppliers of sugar and other<br />
sweeteners, as well as products that are, in particular, intended for the feed industry.<br />
Constant expansion of the <strong>Nordzucker</strong> product and service portfolio and the<br />
required adjustment of all business activities to the expectations of industry and trade,<br />
as well as those of the consumer, offer shareholders attractive returns on their invested<br />
capital and farmers fair payment for their beets.<br />
All operational activities are strictly focused on the specific requirements and expectations<br />
of external and internal customers, supported by <strong>Nordzucker</strong>’s integrated<br />
processes and a creative and flexible workforce. The criteria against which compliance<br />
with these requirements are measured are reliability, speed and the costs involved.<br />
The guiding principles for each employee are the achievement of reasonable and<br />
long-term profits, the continuous generation of internal growth, and an increase of the<br />
company’s market shares in its sphere of business.<br />
The German Corporate Governance Code as well as compliance with all relevant<br />
laws and regulations, a high level of food and feed quality and safety, responsible utilisation<br />
of resources, continuous reduction and prevention of environmental pollution,<br />
industrial safety and health protection are all integral elements of <strong>Nordzucker</strong>’s activities.<br />
Error prevention and avoidance are in this context given particular priority.<br />
The management assesses and evaluates all business activities as well as corporate<br />
efficiency on a regular basis to initiate the required adjustments and thus safeguard<br />
customer and shareholder satisfaction. The supervisory board surveys the operating<br />
results and progress of business activities at defined intervals.<br />
A qualified, highly committed and motivated workforce, which is paid on the<br />
basis of performance, is the sound basis for a continuous improvement of all business<br />
operations and the long-term and systematic development of the company within a<br />
changing competitive situation.
Wir machen mehr daraus<br />
Managing Board <strong>Nordzucker</strong> <strong>AG</strong> (from left to right): Jens Fokuhl, Günter Jakobiak, Dr. Ulrich Nöhle<br />
Contents<br />
2 Foreword 6 <strong>Report</strong> of the Supervisory Board 10 <strong>Management</strong> <strong>Report</strong><br />
36 Annual Financial Statement 61 Committees 65 Glossary<br />
<strong>Nordzucker</strong> 2003/2004 1
Foreword<br />
Dr. Ulrich Nöhle, chairman of the<br />
Managing Board <strong>Nordzucker</strong> <strong>AG</strong><br />
2<br />
Despite a number of changes within the<br />
company itself, the extreme summer<br />
drought and intensive discussions on the<br />
sugar market regulations, the past financial<br />
year was a highly successful one for<br />
<strong>Nordzucker</strong> <strong>AG</strong>.<br />
The period under review started with<br />
the merger with Union-Zucker Südhannover<br />
GmbH. The integration of the<br />
Nordstemmen plant went according to<br />
schedule. This included internally reorganising<br />
the sugar distribution department<br />
from <strong>Nordzucker</strong> GmbH & Co KG<br />
to <strong>Nordzucker</strong> <strong>AG</strong> and carrying out a<br />
number of other changes required under<br />
company law.<br />
The decision to close down the<br />
Schleswig plant was taken in March.<br />
Naturally, this was accompanied by<br />
strong reactions of those immediately<br />
affected. The ensuing discussion primarily<br />
centred around the understandable questions<br />
of “how” and “why us, and why<br />
now”. The closure of this plant, the 21st<br />
closure within <strong>Nordzucker</strong>’s catchment<br />
area since 1990, was consistent with our<br />
underlying aim of continuously seeking<br />
to increase our competitiveness.<br />
Drilling in April proceeded under<br />
optimal weather conditions, and the beet<br />
seeds emerged well. With temperatures<br />
souring above 30 degrees centigrade for<br />
many weeks between May and August,<br />
grain growers experienced serious harvesting<br />
losses. Our beet farmers were<br />
watching “dormant” beet stands with<br />
growing concerns, while <strong>Nordzucker</strong> was<br />
preparing 17 sugar factories across<br />
Europe for the forthcoming campaign.<br />
The fact that high environmental standards<br />
are not just empty words for<br />
<strong>Nordzucker</strong> but are actually evident in<br />
our daily practice, is vividly demonstrated<br />
by the installation of the new steam dryer<br />
at the Clauen factory. Following Uelzen,<br />
Klein Wanzleben and Güstrow, this is the<br />
fourth plant which <strong>Nordzucker</strong> has<br />
equipped with this cost and resources<br />
saving technology.<br />
Following a number of heavy rainfalls<br />
in September, the campaign started on<br />
22 September a week later than originally<br />
planned. The results of some trial digging<br />
seemed at first difficult to believe, but it<br />
appears that the sugar beet is not only<br />
prominent because of its relative excellence<br />
compared to other arable crops; it<br />
is evidently also tolerant to heat. Beet<br />
and sugar yields showed highly pleasing<br />
results – a fact nobody would have dared<br />
to predict in the wake of the hot and dry<br />
summer.<br />
In the north of Germany, five factories<br />
ended their campaign just before Christmas<br />
with four factories completing theirs<br />
shortly after. I would like to take this<br />
opportunity to extend my personal and<br />
sincere thanks to the staff of the<br />
Schleswig factory for remaining fully<br />
committed to the very last day of the<br />
campaign, a campaign which ended<br />
without accident. In what must be an<br />
unfortunate twist of fate, this was the<br />
best campaign ever in the history of the
Schleswig plant. Good beet qualities in<br />
all the factories, no technical problems,<br />
and relatively low declassification are the<br />
key factors that brought about the second<br />
best operating results <strong>Nordzucker</strong><br />
<strong>AG</strong> has ever experienced.<br />
With the US dollar remaining weak,<br />
the world market price for sugar intensified<br />
its downward trend, implying low<br />
C-sugar yields. In Poland, however, we<br />
were clearly able to reduce losses, despite<br />
an equally negative trend in local sugar<br />
market prices. Outside the sugar sector,<br />
all our operating interests were in the<br />
black.<br />
Internally, there were also changes<br />
and achievements. In October, our quality<br />
and environmental management system<br />
was re-certified successfully and without<br />
any deviations in accordance with<br />
ISO 9001 and 14001. All in all this can be<br />
chalked up as sound affirmation of the<br />
high level of compliance we display with<br />
the requirements made on our products,<br />
on the systems and on the environment.<br />
Having carefully weighed up potential<br />
advantages and anticipated possible<br />
returns, our plans for the construction of<br />
a bioethanol plant were suspended at the<br />
end of 2003 for the foreseeable future.<br />
This now allows us to fully concentrate<br />
our efforts on the expansion of our core<br />
activities and competence in sweetening<br />
products. Our customers are calling for<br />
this orientation. It is in their laboratories<br />
that the foodstuffs for tomorrow’s markets<br />
are being produced. Thanks to the<br />
work of the <strong>Nordzucker</strong> expert teams<br />
constituted to provide product and technological<br />
support to our customers in<br />
industry, the development and distribution<br />
of new household sugar specialities,<br />
as well as the systematic intensification of<br />
our customer relations, we unswervingly<br />
sustained our course along this path in<br />
2003.<br />
Intensified external customer orientation,<br />
clear and process-oriented internal<br />
procedures and a staff leadership oriented<br />
towards measurable targets – all these<br />
elements in conjunction with a moderate<br />
and socially compatible streamlining of<br />
the workforce – also at <strong>Nordzucker</strong> headquarters<br />
– will strengthen our concentration<br />
on the essential business operations<br />
and ultimately our competitiveness. More<br />
than ever before, our actions are guided<br />
by the principles of reliability, speed<br />
and costs coupled with the challenges of<br />
creativity and flexibility.<br />
On 23 September 2003, the EU Commission’s<br />
so-called “options paper” on<br />
the proposed reforms of the sugar market<br />
regulations appeared in the Internet.<br />
The Commission’s intention of triggering<br />
a far-reaching discussion of the sugar<br />
market regulations and possible reforms<br />
was initiated. In the light of a predicted<br />
loss of at least 70,000 jobs in the EU<br />
sugar industry, accompanied by a<br />
37-percent drop in sugar prices, justified<br />
criticism was quickly voiced. It soon<br />
became clear that not only the European<br />
sugar industry would lose out on the<br />
pure price markdown-based alternative.<br />
Countries originally intended to profit<br />
<strong>Nordzucker</strong> 2003/2004 3
Foreword<br />
World sugar production and share of sugar traded<br />
on the world market (in m. tonnes raw sugar values)<br />
150<br />
100<br />
Beet and cane sugar production<br />
(worldwide in m. tonnes raw sugar values)<br />
World market exports based on origin<br />
(in m. tonnes raw sugar values)<br />
30<br />
20<br />
10<br />
0<br />
350<br />
250<br />
150.<br />
0<br />
1985<br />
Beet sugar<br />
39<br />
1990<br />
2002<br />
1995 2000 2002<br />
World market prices for sugar 1994 – 2004<br />
Cane sugar<br />
103<br />
Sugar traded on the<br />
world market<br />
Austraia<br />
Thailand<br />
Brazil<br />
EU<br />
White Sugar G/t fob<br />
White Sugar $/t fob<br />
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004<br />
Sources: White Sugar Exchange, London; International Sugar Organisation (ISO)<br />
4<br />
50<br />
0<br />
1994 1996<br />
World sugar<br />
production<br />
Of which,<br />
sugar<br />
traded on<br />
world<br />
market<br />
1998 2000 2002<br />
from a liberalised world trade would<br />
suffer similar market irritations, and the<br />
ACP and LDC countries soon started to<br />
call for “adequate EU sugar prices”. By<br />
March 2004 at the latest all sides saw<br />
that it would be difficult to implement<br />
the price markdown option favoured by<br />
the Commission. Now, the option “quotas<br />
for all” is up for discussion. Although<br />
mentioned in the original Commission<br />
paper, the Commission itself had not<br />
given serious thought to this option up<br />
to that point.<br />
However, it soon turned out that the<br />
option “quotas for all at acceptable<br />
prices” has aroused the lasciviousness of<br />
all players in the world sugar market.<br />
ACP, LDC, Mercosur, the producers of<br />
isoglucose, as well as Balkan countries are<br />
trying either to maintain or expand their<br />
quotas. Furthermore, Brazil, Thailand and<br />
Australia, who as the largest producers of<br />
surplus sugar are not entitled to any quotas,<br />
have brought an action before the<br />
WTO expressing doubt on the compatibility<br />
of European re-exports of ACP sugar<br />
and C-sugar exports with the principles<br />
of the WTO.<br />
It is as yet difficult to foresee the outcome<br />
of these discussions. The risk that<br />
“region-wide quota concessions to all”<br />
may herald the end of sugar beet cultivation<br />
in Europe is clearly evident for everyone.<br />
However, this is something nobody<br />
– not even the most adamant critics of<br />
the market regulations – really wants.
In talks in recent months with politicians<br />
of the European Parliament, as well<br />
as with members of the Bundestag and<br />
Land Parliaments, we have expressed our<br />
concerns that the sugar market regulations<br />
may be abandoned all too easily. All<br />
political parties have made it quite clear<br />
that they fully appreciated our position.<br />
We are determined to continue to use all<br />
our arguments in favour of maintaining<br />
sugar beet cultivation in the EU, and we<br />
will defend our interests in a matter-offact<br />
and politically adequate manner,<br />
which is exactly what the other sugar<br />
producers outside the EU are doing: protecting<br />
their own interests. However, it is<br />
not only important to stave off superficial<br />
financial interests, but to call on the other<br />
sugar producing countries to gradually<br />
introduce comparable social and environmental<br />
standards.<br />
Nevertheless, we should not harbour<br />
any illusions as to the long-term<br />
prospects: even though it may be a very<br />
slow process, the world market will be<br />
deregulated step by step. More and more<br />
tariff and non-tariff trade barriers will<br />
come down, and we will have to face the<br />
challenge of increasing competition.<br />
For all of us – beet farmers and sugar<br />
producers alike – this can only mean that<br />
we must have the best seed stock, the<br />
most efficient methods of cultivation, the<br />
most rational harvesting and the bestpriced<br />
sugar production methods, but<br />
also that we meet our customers’<br />
requirements on time, quantity, true to<br />
specifications and at low cost. Our beet<br />
farmers as well as our staff have to be<br />
well trained and as competent in their<br />
jobs as possible. In their actions and<br />
thoughts they have to be forward looking<br />
and goal-oriented, they need to be<br />
able to react flexibly<br />
and on constant lookout for alternatives.<br />
Then – and only then – will there<br />
be no need for us to be concerned at all<br />
about an increasingly liberalised world<br />
market.<br />
This is what will guide our joint<br />
efforts! Supported by the full commitment<br />
of our staff and the confidence of<br />
our shareholders, we will continue to<br />
successfully nurture <strong>Nordzucker</strong> along<br />
this path.<br />
<strong>Nordzucker</strong> 2003/2004 5
<strong>Report</strong> of the Supervisory Board<br />
6<br />
The financial year 2003/2004 was<br />
characterized by an ongoing discussion<br />
of the changes taking place in EU<br />
agricultural policy, and, in particular, by<br />
the decision to close down the Schleswig<br />
factory at the end of the 2003 campaign,<br />
and also by the bioethanol decision.<br />
In the period under review, Goetz<br />
von Engelbrechten vacated his position<br />
on the <strong>Nordzucker</strong> <strong>AG</strong> managing board,<br />
which he had chaired for many years,<br />
and assumed his new function in the<br />
company’s supervisory board. The<br />
<strong>Nordzucker</strong> <strong>AG</strong> supervisory board is greatly<br />
obliged to Goetz von Engelbrechten,<br />
who is credited for having developed<br />
<strong>Nordzucker</strong> <strong>AG</strong> from an important<br />
regional sugar producer to the second<br />
largest group in Europe with global activities.<br />
His successor to the post of the<br />
chairman of the <strong>Nordzucker</strong> <strong>AG</strong> managing<br />
board, Dr. Ulrich Nöhle, took office<br />
on 5 September 2003. The supervisory<br />
board is convinced that with the joint<br />
efforts of Dr. Ulrich Nöhle and his colleagues<br />
on the managing board,<br />
<strong>Nordzucker</strong> <strong>AG</strong> will continue to develop<br />
for the common good of its shareholders,<br />
and in particular the beet growing farmers<br />
and its staff.<br />
In a total of nine meetings, the supervisory<br />
board was informed of the business<br />
and strategic development of<br />
<strong>Nordzucker</strong> <strong>AG</strong>, as well as of any major<br />
events and transactions. The supervisory<br />
board members exercised their advisory<br />
functions for the <strong>Nordzucker</strong> <strong>AG</strong> managing<br />
board and their supervisory functions<br />
for the company’s management. In this<br />
regard it was provided with regular and<br />
detailed information on the corporate<br />
and business policy, corporate strategy,<br />
company management, as well as the<br />
financial development of <strong>Nordzucker</strong> <strong>AG</strong><br />
and transactions of major importance by<br />
the <strong>Nordzucker</strong> <strong>AG</strong> managing board. All<br />
matters subject to the approval of the<br />
supervisory board were submitted to the<br />
board for its decision.<br />
The supervisory board members were<br />
in a process of constant deliberation on<br />
the options presented by the EU commission<br />
for reform of the European sugar<br />
market regulations, as well as the consequences<br />
the current WTO negotiations<br />
may entail for the north German sugar<br />
industry. The supervisory board fully<br />
endorses the aim put forward by the<br />
managing board of maintaining the competitive<br />
strength of <strong>Nordzucker</strong> <strong>AG</strong> in an<br />
evolving market. Concentration on sugar<br />
as our core activity, and the expansion of<br />
this core activity, our competence in the<br />
sweetening sector, including the production<br />
of alternative sweeteners, as well as a<br />
strict expenses discipline, were elements<br />
that were discussed in detail. All corporate<br />
efforts are directed at safeguarding,<br />
and increasing, the earning power of our<br />
company on a long-term basis.<br />
The supervisory board intensively<br />
discussed the factory structure. The most<br />
decisive resolution adopted in the year<br />
under review was the one concerning the<br />
closure of the Schleswig plant after the<br />
2003 campaign. At the same time it was<br />
pointed out that no further closures are<br />
intended up to, and including, the 2005<br />
campaign. One board member had<br />
brought an action before the regional<br />
court of Braunschweig, appealing against<br />
the resolution of the board of 19 March<br />
2003 to close the factory. Additional
information furnished by the managing<br />
board dispelled any doubts that had<br />
persisted among the supervisory board<br />
members, and the action was dropped.<br />
In August, the bioethanol issue was<br />
up for intensive discussion at two supervisory<br />
board meetings. Having carefully<br />
weighed up all aspects, the supervisory<br />
board spoke against the construction of<br />
a bioethanol plant.<br />
In line with its rotational policy, the<br />
supervisory board dealt with the<br />
<strong>Nordzucker</strong> <strong>AG</strong> investment programme.<br />
A matter of special deliberation was our<br />
commitment in eastern Europe. The<br />
supervisory board called an extraordinary<br />
meeting, at which the managing board<br />
presented detailed background information<br />
on the losses incurred in Poland. In<br />
addition, the supervisory board visited<br />
the Hungarian sugar factory of Szerencs to<br />
obtain first-hand impressions of operation.<br />
The compliance declaration under the<br />
German Corporate Governance Code has<br />
been revised by the managing and supervisory<br />
boards for agreement with the<br />
latest version of that code. For details of<br />
the <strong>Nordzucker</strong> compliance declaration<br />
of 24 February 2004, reference is made to<br />
www.nordzucker.de/info/compliance as<br />
well as to page 58 of this annual report.<br />
At the beginning of the year 2004,<br />
the German supervisory board agency<br />
(Deutsche Agentur für Aufsichtsräte) in<br />
Berlin, was commissioned to review the<br />
efficiency of the work done by the supervisory<br />
board. In his report, the examiner<br />
noted: “The business management<br />
and supervision of <strong>Nordzucker</strong> <strong>AG</strong> are<br />
directed at safeguarding the core activities<br />
in the sugar sector in the long<br />
run. All decision-making processes and<br />
controlling are based on the principles<br />
of good Corporate Governance. The<br />
<strong>Nordzucker</strong> <strong>AG</strong> supervisory and managing<br />
boards have addressed this objective<br />
in a perfectly systematic and proactive<br />
manner.”<br />
At a closed session in February 2004,<br />
the supervisory board deliberated on the<br />
strategic development of <strong>Nordzucker</strong> <strong>AG</strong>.<br />
A major item on the agenda of that<br />
meeting was the competence in sweetening<br />
products as a strategic concept.<br />
Supervisory Board Committees<br />
In the period under review, the audit<br />
and finance committee convened four<br />
times. Items on the agenda of these<br />
meetings, at which the auditing firm was<br />
also represented, were the review and<br />
approval of the financial and consolidated<br />
statements, the nomination of the auditors<br />
for the financial year 2003/2004,<br />
their remuneration, the audit assignment,<br />
the review of the auditor’s independence,<br />
risk management, as well as internal<br />
revision.<br />
The personnel committee convened<br />
for two meetings, at which it primarily<br />
dealt with managing board matters.<br />
These included, in particular, the target<br />
catalogue for the managing board, and<br />
the determination of the variable compensation<br />
for the board members.<br />
The supervisory board received regular<br />
reports of the committee meetings.<br />
Financial Statement<br />
The auditors and tax consultants<br />
Lang und Stolz KG, Braunschweig, which<br />
the general meeting had nominated as<br />
<strong>Nordzucker</strong> 2003/2004 7
<strong>Report</strong> of the Supervisory Board<br />
8<br />
auditors for the financial statement, were<br />
given the audit assignment by the supervisory<br />
board.<br />
The consolidated financial statement<br />
presented by the managing board, the<br />
<strong>Nordzucker</strong> <strong>AG</strong> financial statement as of<br />
29 February 2004, as well as the management<br />
report (which was presented as<br />
a joint report for the group and<br />
<strong>Nordzucker</strong> <strong>AG</strong>) were audited by the<br />
auditors together with the accounting<br />
data, and were certified without reservation.<br />
Representatives of the auditing firm<br />
attended the supervisory board and<br />
finance committee meetings convened to<br />
approve the balance sheet, and they<br />
presented and explained the audit report<br />
to the supervisory board.<br />
Following a final review, the supervisory<br />
board approved the financial and<br />
consolidated statements presented by<br />
the managing board. The financial statement<br />
of <strong>Nordzucker</strong> <strong>AG</strong> was thus adopted.<br />
The proposal presented by the managing<br />
board for appropriation of the net<br />
income was approved.<br />
News and Personalities<br />
At the supervisory board meeting of<br />
5 September 2003, Henning Hansen-<br />
Hogrefe was re-elected chairman of the<br />
<strong>Nordzucker</strong> <strong>AG</strong> supervisory board. Lothar<br />
Wrede and Jürgen Seidel were elected<br />
deputy chairmen. In 2002, Gunold Fischer<br />
had already been elected deputy chairman<br />
of the supervisory board for a fiveyear<br />
term.<br />
At the same meeting, Dietrich<br />
Hauschildt-Staff was elected chairman of<br />
the audit and finance committee.<br />
The term of office of the supervisory<br />
board members Gerhard Becker (Klein<br />
Bünstorf) and Ernst von Lüneburg (Essenrode)<br />
expired at the end of the general<br />
meeting on 5 September 2003. New<br />
supervisory board members elected by<br />
the 2003 general meeting are Goetz von<br />
Engelbrechten and Jürgen Seidel as<br />
shareholders’ representatives.<br />
The employees’ representative in the<br />
supervisory board had been elected by<br />
the <strong>Nordzucker</strong> <strong>AG</strong> staff in 2002. Birgit<br />
Pitsch (Langenhagen) vacated her position<br />
in the <strong>Nordzucker</strong> <strong>AG</strong> supervisory<br />
board as of 3 January 2004, because of<br />
the new function she had assumed for<br />
the union of workers in the foodstuffs,<br />
semi-luxuries and catering trades (NGG).<br />
Her successor is Manfred Tessmann<br />
(Vienenburg).<br />
We thank all the retiring board members<br />
for their commitment and their<br />
constructive support given to the company<br />
and the managing board during the<br />
past years. We are convinced that the<br />
new supervisory board members will<br />
contribute in the same manner to the<br />
successful work done by this body.<br />
The supervisory board expresses its<br />
thanks to the managing board as well as<br />
the <strong>Nordzucker</strong> staff for their valuable<br />
personal commitment.<br />
The Supervisory Board<br />
Braunschweig, 25 May 2004<br />
Henning Hansen-Hogrefe<br />
Chairman of the Supervisory Board
„Magyarország hamarosan<br />
érzékelni fogja az Európai<br />
Unióba történő belépés<br />
előnyeit. A magyarok szorgalmasak,<br />
aktívak és jól<br />
képzettek. Elismerésre méltó<br />
tagjai lesznek az EU-nak. Az<br />
Uniós belépés gazdasági biztonságot<br />
és új fejlődési<br />
lehetőségeket hoz számunkra.<br />
A <strong>Nordzucker</strong> szerencsi gyárának<br />
alkalmazottjaként<br />
lehetőségem nyílik személyes<br />
álmaim megvalósítására is.”<br />
“Hungary will soon be enjoying the<br />
benefits of its EU membership. The<br />
Hungarians themselves are hardworking,<br />
active and well-trained,<br />
and they will become highly accepted<br />
members of the EU. Membership<br />
will bring us economic security and<br />
new opportunities for development.<br />
As a member of the team at the<br />
<strong>Nordzucker</strong> plant in Szerencs I will<br />
also be able to realise my own<br />
personal dream”<br />
Zoltán Tóth<br />
Technology Manager<br />
Szerencs Plant, Hungary<br />
<strong>Nordzucker</strong> 2003/2004 9
<strong>Management</strong> <strong>Report</strong><br />
Group<br />
Sugar production in m. tonnes (white sugar value)<br />
1.80<br />
1.60<br />
1.40<br />
1.20.<br />
0<br />
1.39<br />
1.33<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Turnover (in t billion)<br />
1.20<br />
1.10<br />
1.00<br />
0.90.<br />
0<br />
0.98<br />
1.02<br />
1.45<br />
1.01<br />
1.51 1.49<br />
1.07<br />
1.33<br />
1.18<br />
1.15<br />
1.70<br />
1.25<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Annual surplus (in t million)<br />
80<br />
60<br />
40<br />
20.<br />
0<br />
9<br />
21<br />
22<br />
36<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Cash flow (in t million)<br />
160<br />
130<br />
100<br />
70.<br />
0<br />
138<br />
80 75<br />
83<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
<strong>Nordzucker</strong> <strong>AG</strong> dividend (in t million)<br />
40<br />
30<br />
20<br />
10.<br />
0<br />
8.9<br />
10.5<br />
12.2<br />
16.2<br />
55<br />
148<br />
29.8<br />
26<br />
100<br />
19.6<br />
23<br />
107<br />
22.5<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Structural and Organisational<br />
Changes<br />
Characteristic features of the financial<br />
year 2003/2004 include the takeover<br />
of the operations of Union-Zucker Südhannover<br />
GmbH, Nordstemmen, (Union-<br />
Zucker), effected by a transfer of assets,<br />
as well as the acquisition of three sugar<br />
factory companies in Hungary and an<br />
increase of the interest in Syral S.A.,<br />
Marckolsheim, from 36 to 50 percent.<br />
Union-Zucker Becomes Fourth Holding<br />
The takeover of the Union-Zucker operations<br />
was effected by an increase in the<br />
share capital to include Union-Zucker as<br />
the fourth holding company of<br />
<strong>Nordzucker</strong> <strong>AG</strong> and by the transfer of<br />
assets (the Nordstemmen sugar factory)<br />
as a contribution in kind. As a result, the<br />
present <strong>Nordzucker</strong> <strong>AG</strong> figures can only<br />
be loosely compared to those of the<br />
previous year. With the exception of<br />
turnover, the same can be said to apply<br />
to all group figures. Previous group<br />
turnover figures already accounted for<br />
Union-Zucker as part of the joint distribution<br />
organisation <strong>Nordzucker</strong> GmbH &<br />
Co. KG, Braunschweig.<br />
Expansion of Consolidation Scope<br />
The acquisition of a majority interest in<br />
three sugar factory companies in Hungary<br />
has expanded the basis of our consolidation<br />
and has affected the consolidated<br />
figures accordingly.<br />
With the 50-percent stake in Syral<br />
S.A., equity consolidation is taking this<br />
participation as part of the group equity
capital into consideration for the first<br />
time in the year under review.<br />
SweetGredients GmbH & Co. KG,<br />
Nordstemmen, (SweetGredients), was<br />
founded as a 50:50 participation<br />
between <strong>Nordzucker</strong> and the Danish<br />
food producer Arla Foods. In a pilot<br />
plant in Nordstemmen, SweetGredients<br />
produces the lactose-based sweetener<br />
Tagatose. In view of the participation<br />
ratio, proportional consolidation is used<br />
to include SweetGredients in the consolidated<br />
financial statement.<br />
Integration of Sugar Distribution<br />
As a result of the merger with Union-<br />
Zucker, <strong>Nordzucker</strong> <strong>AG</strong> has become a<br />
100-percent shareholder of the former<br />
distribution organisation <strong>Nordzucker</strong><br />
GmbH & Co. KG. To improve its customer<br />
and process orientation,<br />
<strong>Nordzucker</strong> <strong>AG</strong> has taken charge of sugar<br />
distribution, including the sales staff in<br />
Braunschweig (effective as from 1 January<br />
2004). <strong>Nordzucker</strong> GmbH & Co. KG<br />
has instead become a pure production<br />
organisation for liquid sugar and other<br />
products using plants in Groß Munzel<br />
and Nordstemmen. As is the case with<br />
crystalline sugar, these products are sold<br />
by <strong>Nordzucker</strong> <strong>AG</strong>.<br />
Zuckerinstitut Becomes <strong>Nordzucker</strong><br />
InnoCenter GmbH<br />
Furthermore, it has also been necessary<br />
to re-examine the legal form of the Institut<br />
für Technologie der Kohlenhydrate –<br />
Zuckerinstitut – e. V. The former incorporated<br />
society has now become a GmbH,<br />
a private limited company. Serving as<br />
the <strong>Nordzucker</strong> research centre, the<br />
Zuckerinstitut will in future bear the name<br />
<strong>Nordzucker</strong> InnoCenter GmbH. The computer<br />
centre (Rechenzentrum Zucker),<br />
the third organisation that had previously<br />
been used jointly, has now been integrated<br />
into <strong>Nordzucker</strong> <strong>AG</strong>.<br />
Organisational Changes<br />
Parallel to the changes that have taken<br />
place under the company law, <strong>Nordzucker</strong><br />
abandoned its division-based structure in<br />
favour of a more process-oriented organisation.<br />
These changes took effect in time<br />
with Dr. Ulrich Nöhle assuming his function<br />
as the new managing board chairman.<br />
In line with providing a coherent<br />
orientation of all <strong>Nordzucker</strong> activities<br />
towards markets and customers, the<br />
previous divisions Euroland, Diversification<br />
and Research & Development were<br />
dissolved in October 2003. Our German<br />
sugar activities are represented by<br />
<strong>Nordzucker</strong> <strong>AG</strong> (for the production of<br />
crystalline sugar and distribution) and<br />
<strong>Nordzucker</strong> GmbH & Co. KG (for the<br />
production of liquid sugar and similar<br />
products). International sugar activities,<br />
including our minority participation in<br />
Cukrovary TTD in Dobrovice in the Czech<br />
Republic, have as yet not been completely<br />
integrated into the <strong>Nordzucker</strong> process<br />
organisation. Until they are, they will<br />
remain under the control of the Sugar<br />
International division.<br />
As a result of these reorganisational<br />
measures, the figures shown for<br />
<strong>Nordzucker</strong> <strong>AG</strong> on the whole correspond<br />
to the figures of what used to be the<br />
<strong>Nordzucker</strong> 2003/2004 11
<strong>Management</strong> <strong>Report</strong> Group<br />
12<br />
Sugar Euroland division – with the addition<br />
of the Nordstemmen plant. As before,<br />
the international sugar activities are<br />
included in the Sugar International section<br />
of this report. Details on other participations<br />
(previously: Diversifications)<br />
are shown under Business Development.<br />
Closure of the Schleswig Plant<br />
Following detailed analyses aimed at<br />
achieving more efficient processing<br />
structures, the Schleswig plant was<br />
closed at the end of the 2003 campaign.<br />
<strong>Nordzucker</strong> thus opted for the most<br />
economically viable option available to<br />
reduce excess capacities.<br />
Bioethanol Plans and Filou<br />
Discontinued<br />
Against the background of intensified<br />
concentration on our core activities, we<br />
again carefully weighed up the framework<br />
conditions, opportunities and risks,<br />
and decided against constructing a<br />
bioethanol plant. All plans to this effect<br />
were suspended at the end of 2003. The<br />
federal government has in the meantime<br />
resolved that until 2009, bio fuels should<br />
come under an annually reviewed tax<br />
exemption scheme. <strong>Nordzucker</strong> sees this<br />
as a positive move. Since there is still no<br />
tariff protection for bioethanol or any<br />
regulation requiring the admixture of this<br />
kind of fuel, and in view of the forthcoming<br />
reforms of the sugar market regulations,<br />
the risks still outweigh the benefits<br />
of such a capital expenditure. The production<br />
and marketing of the cat litter<br />
Filou of Greenfox GmbH, which uses<br />
beet pulp as a stock material, has also<br />
been discontinued. Excellent properties<br />
make this cat litter an up-market product,<br />
but at the end of an adequate test<br />
phase it was not able to establish itself<br />
in the market.<br />
Operating Results<br />
The increase in the consolidated sales<br />
revenues to Euro 1.25 (1.15) billion in<br />
the financial year 2003/2004 is primarily<br />
due to the acquisition of three sugar<br />
factories in Hungary. Our activities in<br />
Poland, Slovakia and Hungary account<br />
for Euro 182 (115) million of our sales<br />
revenues.<br />
Sales and Proceeds<br />
Prices have remained relatively steady:<br />
sugar sales in Germany, Poland, Slovakia<br />
and Hungary were roughly those of the<br />
previous year. In Poland, with the sugar<br />
price at less than Euro 400 per ton, the<br />
market continued to be slack. Only<br />
shortly before the admission to the EU on<br />
1 May 2004, did prices start to rise again.<br />
Budget-price imports in particular from<br />
Poland in the spring of the year 2003<br />
produced sales problems and a slight<br />
drop in the prices fetched in Hungary.<br />
Results<br />
The consolidated annual surplus of Euro<br />
23.3 (26.4) million shown remains by<br />
Euro 3.1 million below that of the previous<br />
year. This drop is due to the fact that<br />
following revision of articles 298 and 308<br />
of the German Commercial Code (HGB),<br />
the special reserve with an equity portion<br />
is no longer effective. Under the revised<br />
regulations, the special item created<br />
in the past for assets write-downs, in
particular for the Klein Wanzleben factory,<br />
may no longer be shown in the consolidated<br />
balance sheet and has to be<br />
completely allocated to equity capital<br />
(60 percent) and tax reserves (40 percent).<br />
The favourable impact of the<br />
dissolution of the special reserve with an<br />
equity portion hence no longer applies<br />
for the group. Without the HGB revision,<br />
the consolidated surplus would clearly<br />
have exceeded last year’s results.<br />
Thanks to a very unproblematic<br />
campaign and a lower declassification –<br />
1.78 (7.12) percent – than in the previous<br />
year, the Euro 81 (63) million operating<br />
result of <strong>Nordzucker</strong> <strong>AG</strong> was the second<br />
best result in its history. The annual surplus<br />
rose to Euro 51 (46) million. This<br />
figure includes the non-recurrent additional<br />
expenditure of Euro 13 million<br />
incurred in connection with the closure<br />
of the Schleswig plant.<br />
Positive results of Euro 1.9 (1.6) million<br />
are also shown for Slovakia. Syral<br />
S.A, the producer of starch saccharification<br />
products, in which <strong>Nordzucker</strong> now<br />
holds a 50 percent stake, achieved its<br />
turnaround and completed the year<br />
Capital structure of <strong>Nordzucker</strong> <strong>AG</strong><br />
(in t million/percent)<br />
Nordharzer Zucker <strong>AG</strong><br />
9.5 t million 8.1 %<br />
Union-Zucker<br />
Südhannover GmbH<br />
12.4 t million 10.6 %<br />
Zucker-Aktiengesellschaft<br />
Uelzen-Braunschweig<br />
43.8 t million 37.3 %<br />
under review with a profit of Euro 1.6<br />
(- 8.4) million.<br />
Although the closure of three factories<br />
and reductions in the staffing level by<br />
about 40 percent to 806 employees on<br />
an annual average have much improved<br />
the cost structure in Poland, the unsatisfactory<br />
market situation produced a loss<br />
of Euro 11 (15) million. In Hungary, a<br />
decline in sales, primarily due to imports<br />
of Polish sugar, led to a negative result of<br />
Euro 3.6 million, despite the instigation<br />
of rationalisation measures. In the year<br />
under review, the Hungarian companies<br />
were consolidated for the first time,<br />
restricting meaningful comparisons with<br />
results from the previous year.<br />
Dividend<br />
Of the annual surplus of Euro 50.9 (45.8)<br />
million shown for <strong>Nordzucker</strong> <strong>AG</strong> for<br />
fiscal 2003/2004, Euro 28.4 (26.2) million<br />
are to be allocated to reserves to increase<br />
equity. An amount of Euro 22.5 (19.6)<br />
million is to be used towards paying out<br />
a dividend of Euro 0.49 per individual<br />
share certificate in line with the previous<br />
year.<br />
Public shareholders<br />
4.1 t million 3.5 %<br />
<strong>Nordzucker</strong> Holding <strong>AG</strong><br />
47.7 t million 40.5 %<br />
<strong>Nordzucker</strong> 2003/2004 13
<strong>Management</strong> <strong>Report</strong> Group<br />
Balance sheet structure<br />
<strong>Nordzucker</strong> Group<br />
(in t million )<br />
1,200<br />
1,000<br />
800<br />
600<br />
400<br />
200<br />
140<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
14<br />
0<br />
1,022.9<br />
19,6<br />
173.4 410.6<br />
378.9<br />
254.7<br />
470.6<br />
Other<br />
current<br />
assets<br />
338.0<br />
2002/03<br />
1,125.1<br />
22.5<br />
128.8 599.1<br />
462.6<br />
533.7<br />
191.4<br />
312.1<br />
2003/04<br />
Dividend<br />
Borrowings<br />
(short-term)<br />
Borrowings<br />
Stocks (medium- and<br />
long-term)<br />
Fixed assets<br />
Equity capital<br />
(share capital,<br />
reserves and<br />
60% special<br />
item)<br />
Investment (including<br />
borrowing) in financial assets<br />
(in t milion)<br />
Sugar International<br />
Business Development<br />
122.9<br />
102.3<br />
17.0<br />
34.0<br />
26.5<br />
15.0<br />
20.6<br />
2.0 7.5<br />
2001/02 2002/03 2003/04<br />
Financial Status<br />
Capital Increase – Withdrawal of the<br />
“Old” Direct Participation Shares<br />
In April 2003 we initiated the first capital<br />
increase of Euro 18 million from the capital<br />
authorised by the general meeting of<br />
12 September 2002. This was in addition<br />
to the capital increase of Euro 12 million<br />
resulting from the agreement concluded<br />
with Union-Zucker on the transfer of<br />
assets. These two capital increases mark<br />
an important step towards adjusting the<br />
equity base to the increasing requirements<br />
made by external creditors.<br />
As part of measures taken to increase<br />
capital, we have also offered the option<br />
of redeeming old direct participation<br />
shares at the original issue price.<br />
Redemption and withdrawal of these<br />
shares have reduced the equity capital by<br />
Euro 6 million.<br />
Balance Sheet Total and Equity Capital<br />
The consolidated balance sheet total<br />
has increased by Euro 110 million to Euro<br />
1.13 (1.02) billion as of 29 February<br />
2004. In the financial year 2003/2004,<br />
the equity capital shown rose by<br />
Euro 330 (296) million, which is primarily<br />
due to the altered manner of indicating<br />
the special reserve with an equity portion.<br />
This has to be seen against the<br />
background of initial consolidation, as a<br />
result of which goodwill (i.e. the difference<br />
between acquisition costs and our<br />
share in the equity capital shown) of<br />
about Euro 42 million was charged<br />
against the equity capital.<br />
As of 29 February 2004, the equity<br />
capital ratio amounted to 28 (33) percent.<br />
The fixed assets of Euro 534 (471)<br />
million are covered at a rate of 94 (125)<br />
percent by medium and long-term capital.<br />
As in previous years, capital expenditure<br />
for tangible and financial assets was<br />
financed from the Euro 107 (100) million<br />
cash flow, as well as from borrowings and<br />
from the capital increase.<br />
Capital Expenditure<br />
The Euro 65 million capital expenditure<br />
for tangible assets essentially concerned<br />
<strong>Nordzucker</strong> <strong>AG</strong>, as well as our plants in<br />
Poland, Slovakia and Hungary.<br />
The Euro 123 million capital expenditure<br />
for financial assets of <strong>Nordzucker</strong> <strong>AG</strong><br />
are accounted for by the acquisition and<br />
increase of our financial holdings in Hungary,<br />
Poland and Slovakia, as well as in<br />
Syral and SweetGredients.
„Die EU-Erweiterung sehe<br />
ich sehr positiv. Ein größerer<br />
Markt eröffnet auch für<br />
<strong>Nordzucker</strong> viele neue<br />
Chancen und kann für<br />
alle Beteiligten nur von<br />
Nutzen sein.”<br />
“The enlargement of the EU is a<br />
very positive thing. A larger<br />
market opens up many more<br />
opportunities for <strong>Nordzucker</strong><br />
and this can only be helpful for<br />
all involved.”<br />
Kerstin Berlin,<br />
Machine Operator<br />
Uelzen plant, Germany<br />
<strong>Nordzucker</strong> 2003/2004 15
<strong>Management</strong> <strong>Report</strong><br />
<strong>Nordzucker</strong> <strong>AG</strong><br />
Sugar yield <strong>Nordzucker</strong> <strong>AG</strong> * (in t/ha)<br />
10.00<br />
9.50<br />
9.00<br />
8.50.<br />
0<br />
16<br />
8.53<br />
8.63<br />
9.40<br />
10.06<br />
8.89<br />
8.67<br />
9.75<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Beet yield <strong>Nordzucker</strong> <strong>AG</strong> * (in t/ha)<br />
56<br />
53<br />
50<br />
47.<br />
0<br />
48.5<br />
52.6<br />
55.9<br />
53.4<br />
52.1<br />
55.5<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Campaign <strong>Nordzucker</strong> <strong>AG</strong> * (in days)<br />
90<br />
85<br />
80<br />
75.<br />
0<br />
79<br />
80<br />
92<br />
88<br />
90 89 89<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Processing rate <strong>Nordzucker</strong> <strong>AG</strong> * (in 1,000 tonnes of beet/day)<br />
110<br />
100<br />
90<br />
80.<br />
0<br />
101.2<br />
100.9<br />
87.5<br />
83.7<br />
81.5<br />
96.9<br />
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04<br />
Employees <strong>Nordzucker</strong> <strong>AG</strong> * (as of 30 Sept.)<br />
2,036<br />
2,000<br />
1,500<br />
1,000<br />
500.<br />
0<br />
49.9<br />
1,971<br />
1,639<br />
89.5<br />
1,568<br />
1,463<br />
1,440 1,560<br />
1997 1998 1999 2000 2001 2002 2003<br />
* 1997/98 to 2001/02 including Nordkristall GmbH and ZVM GmbH<br />
2003/04 including Union-Zucker plant in Nordstemmen<br />
Campaign employees<br />
Full-time employees<br />
In the 2003 campaign, <strong>Nordzucker</strong> <strong>AG</strong><br />
operated nine (eight) white-sugar factories<br />
in the federal states of Lower Saxony,<br />
Schleswig-Holstein, Sachsen-Anhalt, and<br />
Mecklenburg-Western Pomerania. These<br />
factories processed an average 97,000<br />
(81,000) metric tons of beets per day. In<br />
compliance with the supervisory board<br />
resolution of 19 March 2003, the<br />
Schleswig plant was closed after this<br />
campaign as a measure of reducing surplus<br />
capacities.<br />
Beet Cultivation, Sugar<br />
Production, and Operating Results<br />
In 2003, 10,750 (10,100) beet farmers<br />
cultivated sugar beets for <strong>Nordzucker</strong> <strong>AG</strong><br />
on a total of 155,000 (144,000) hectares.<br />
The larger area under beet cultivation<br />
resulted from the integration of the<br />
Union-Zucker crop area. After average<br />
yields in the two previous years,<br />
<strong>Nordzucker</strong> had an excellent beet harvest<br />
in 2003 with a total of 8.6 (7.4) million<br />
metric tons. The per-hectare yield was<br />
55.5 (52.1) tons, which at a sugar content<br />
of 17.6 (16.6) percent after the<br />
extremely dry summer of 2003 almost<br />
equalled the excellent crop yield of the<br />
2000 campaign.<br />
All values analysed confirmed a beet<br />
quality that exceeded the five-year average.<br />
The quality premium rose accordingly,<br />
and a total of Euro 6.2 million was<br />
distributed in the year under review. The<br />
2003 campaign was the second campaign<br />
in which bio-beets were cultivated.
These were processed in the Warburg<br />
factory of Südzucker under contract.<br />
The operating results rose to Euro 81<br />
(63) million. This distinct rise over the<br />
previous year’s figures is the result of an<br />
altogether unproblematic campaign, the<br />
high sugar content, and the lower quota<br />
sugar declassification. Despite the larger<br />
quantity, C-sugar proceeds by contrast<br />
remained below the previous year’s level,<br />
which is attributed to the marked drop in<br />
world market prices.<br />
Sales<br />
World Sugar Market<br />
Market analysts expect sugar production<br />
to amount to some 146 (149) million<br />
metric tons raw sugar value worldwide<br />
for the sugar production year 2003/2004<br />
(1 October to 30 September). The share<br />
of the EU sugar industry in this decline is<br />
about two million metric tons. Consumption<br />
is estimated to be about 143 (136)<br />
million metric tons.<br />
Against the background of the<br />
decreasing US dollar, the world market<br />
prices continued their downward trend in<br />
2003. At Euro 158 per metric ton of<br />
white sugar, October 2003 saw the lowest<br />
level since 1990. By mid-December<br />
2003, quotations rose slightly to Euro<br />
168 per metric ton. Although the US<br />
dollar continued to be weak, prices started<br />
to recover at the end of January 2004,<br />
and they reached a level of Euro 190 per<br />
metric ton by mid-March.<br />
European Union<br />
The 15 (17) million metric tons of sugar<br />
produced in the EU in the 2003 campaign<br />
remain some two million metric<br />
tons of sugar below the previous year’s<br />
production figure. This drop is attributed<br />
to the sugar yield, which because of the<br />
summer drought was clearly lower than<br />
in the previous year and only reached an<br />
average 8.8 (9.2) metric tons of sugar<br />
per hectare. Another factor is the restriction<br />
in beet cultivation in the EU, reducing<br />
the cultivated area by 6.8 percent to<br />
1.7 (1.8) million hectares. Only Denmark<br />
and Ireland report production figures<br />
above the previous year’s levels. Sugar<br />
yields were between 11.8 metric tons of<br />
sugar per hectare in France and 4.6 metric<br />
tons of sugar per hectare in Finland.<br />
To comply with WTO requirements,<br />
the EU Commission has decided to subsequently<br />
reduce the quota sugar production<br />
for 2003/2004 by approximately<br />
206,700 (827,000) metric tons (declassification).<br />
For <strong>Nordzucker</strong> this meant that<br />
about 19,000 (74,000) metric tons of<br />
quota sugar had to be converted into<br />
C sugar.<br />
<strong>Nordzucker</strong> <strong>AG</strong><br />
As a result of the integration of Union-<br />
Zucker, <strong>Nordzucker</strong> <strong>AG</strong> has considerably<br />
increased the sales of crystal sugar in the<br />
EU. In spite of increasingly competitive<br />
trading conditions, sales in 2003<br />
remained at the previous year’s level. In<br />
view of the substantial declassification in<br />
the 2002 campaign, far higher amounts<br />
of C sugar had to be marketed on the<br />
world market in the year under review.<br />
<strong>Nordzucker</strong> 2003/2004 17
<strong>Management</strong> <strong>Report</strong> <strong>Nordzucker</strong> <strong>AG</strong><br />
18<br />
To account for the unexpected high<br />
declassification in the previous year, we<br />
decided to cut quota sugar exports.<br />
Household Sugar<br />
For 2003, <strong>Nordzucker</strong> recorded highly<br />
satisfactory increases in household sugar<br />
sales over the last year’s figures. The<br />
increase is attributed to new customers,<br />
optimised measures, and the successful<br />
launch of new products. In the year<br />
under review we carried out the first<br />
category-management project – in cooperation<br />
with a trading firm – with excellent<br />
results. This move shows <strong>Nordzucker</strong>’s<br />
willingness to comply more directly with<br />
the requirements of its commercial<br />
clients.<br />
Liquid Sugar<br />
Liquid sugar sales have maintained the<br />
previous year’s level. Demand in the beverage<br />
industry for this product dropped<br />
after the deposit system on cans was<br />
introduced in Germany on 1 January<br />
2003. This drop was compensated for<br />
by peak demands in the extreme summer<br />
of 2003.<br />
Molasses<br />
Because of the weak standing of the US<br />
dollar and declining demands, the market<br />
for molasses saw a negative trend in<br />
the year under review. Favourable preliminary<br />
agreements allowed us to secure<br />
satisfactory prices in spite of this trend.<br />
However, altogether proceeds remained<br />
below the previous year’s results.<br />
Pellets<br />
The price increase in the feed market<br />
proved to be favourable for us. Because<br />
of the extreme summer drought, grain<br />
growers turned in a much poorer harvest.<br />
Pellets profited from rising prices<br />
for grain and expensive substitutes. Proceeds<br />
increased by one percent over the<br />
previous year.<br />
Human Resources<br />
As a result of the integration of the Nordstemmen<br />
plant as of 1 March 2003 and<br />
the takeover of the staff from both<br />
<strong>Nordzucker</strong> GmbH & Co. KG and the<br />
computer centre (Rechenzentrum Zucker),<br />
the staffing level of <strong>Nordzucker</strong> <strong>AG</strong> has<br />
risen to 1,559 (1,392) on an annual average.<br />
First measures have been taken to<br />
adjust the staffing level of the Nordstemmen<br />
plant to the normal <strong>Nordzucker</strong><br />
standard. These include an early retirement<br />
and pre-retirement part-time<br />
scheme, as well as conversion to threeshift<br />
operation during the campaign. In<br />
addition, we have proceeded with the<br />
early retirement and pre-retirement parttime<br />
schemes for the company as a<br />
whole to reduce the payroll as scheduled.<br />
The consolidated companies had a total<br />
of 3,758 (3,475) members of staff on<br />
their payroll.<br />
Closure of the Schleswig Plant<br />
The Schleswig plant was closed after the<br />
2003 campaign as resolved by the supervisory<br />
board on 19 March 2003. In keeping<br />
with our internal “alliance for work”<br />
agreed in 1997/1998, all 138 regular<br />
employees affected by the closure were
offered a job at one of the other<br />
<strong>Nordzucker</strong> locations. When their contracts<br />
have terminated, employees who<br />
have not taken up this opportunity can<br />
opt to attend a continuing education<br />
college for a period of up to one year to<br />
develop their knowledge and professional<br />
skills. Trainees who have started their<br />
traineeship at Schleswig have been given<br />
the chance to complete their training<br />
either at another <strong>Nordzucker</strong> location or<br />
with another employer in the Schleswig<br />
region.<br />
Staff Profit-Sharing Scheme<br />
In the year under review, the share rose<br />
to about Euro 1,650 (1,300) per employee<br />
of the <strong>Nordzucker</strong> <strong>AG</strong> workforce. This<br />
is calculated on the basis of the annual<br />
surplus achieved for the group. In the<br />
period under review, the effect of the<br />
reclassification of the special item was<br />
added to the consolidated annual surplus<br />
in determining the profit-sharing assessment<br />
basis. This is to prevent the<br />
<strong>Nordzucker</strong> staff from being adversely<br />
affected by the revised accounting regulations.<br />
Safety at Work/Health Protection<br />
At a total of 10 (15) accidents requiring<br />
reports in the year under review,<br />
<strong>Nordzucker</strong> remained by far below the<br />
average in this sector of industry. We also<br />
consistently pursue our goal of “zero<br />
accidents” and low sick leave levels. In<br />
view of an increasing percentage of accidents<br />
to and from the place of work in<br />
2003, one of our main activities was<br />
a road safety day which we organised<br />
together with the Sugar trade association<br />
at all <strong>Nordzucker</strong> locations.<br />
Brain Pool<br />
The <strong>Nordzucker</strong> brain pool was introduced<br />
in the year 2000. It is an instrument<br />
through which our employees continuously<br />
participate in the optimisation<br />
of in-company procedures. Proposals<br />
submitted in 2003 concerned improved<br />
safety at work and health protection as<br />
well as staff and customer satisfaction.<br />
Proposals also dealt with optimised production<br />
and maintenance processes.<br />
502 of a total of 1,109 proposals were<br />
rated positively. Implementation of staff<br />
proposals allowed <strong>Nordzucker</strong> to effect<br />
net savings worth about Euro 153,000<br />
in the year under review. The premiums<br />
paid out to the employees concerned<br />
amounted to Euro 65,000.<br />
Factory Group Work<br />
After the successful conclusion of the<br />
preparatory phase, group work during<br />
the maintenance period was launched<br />
at the Clauen plant in January 2004.<br />
The new work organisation scheme was<br />
developed under the “factory organisation”<br />
project and is to intensify staff<br />
integration as a means of improving the<br />
maintenance process. After the trial<br />
phase in the Clauen plant, the group<br />
work concept is to be implemented in<br />
the other factories beginning in 2005.<br />
The necessary preparations are already<br />
under way.<br />
Accidents requiring reports<br />
<strong>Nordzucker</strong> <strong>AG</strong> *<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2.<br />
0<br />
15<br />
15<br />
10<br />
2001/02 2002/03 2003/04<br />
*<br />
2001/02 incl. Nordkristall GmbH and ZVM GmbH<br />
*<br />
2003/04 incl. Union-Zucker plant Nordstemmen<br />
<strong>Nordzucker</strong> 2003/2004 19
<strong>Management</strong> <strong>Report</strong> <strong>Nordzucker</strong> <strong>AG</strong><br />
Trainees<br />
<strong>Nordzucker</strong> <strong>AG</strong> *<br />
150<br />
140<br />
130<br />
120<br />
110<br />
100<br />
90.<br />
0<br />
* 2001 incl. Nordkristall GmbH and ZVM GmbH<br />
* 2003/04 incl. Union-Zucker plant Nordstemmen<br />
20<br />
110<br />
121<br />
145<br />
30.09.2001 30.09.2002 30.09.2003<br />
Personnel Development<br />
To make sure that the company continues<br />
to operate successfully in the future,<br />
<strong>Nordzucker</strong> has to make increasingly<br />
higher demands on the qualifications of<br />
all its employees. Starting from the personnel<br />
development offensive of the past<br />
four years, the company is now concentrating<br />
on the individualisation of the<br />
qualification measures. A central aspect<br />
of the 2003 training scheme was the<br />
leadership issue. It includes the competence<br />
development programme for all<br />
senior and junior executive staff that was<br />
launched previously, as well as additional<br />
programmes for junior managers and<br />
foremen.<br />
Training<br />
Notwithstanding its scheduled staff cuts,<br />
<strong>Nordzucker</strong> is continuing its efforts to<br />
provide qualified training for young people.<br />
The integration of the Nordstemmen<br />
plant has increased the number of trainees<br />
to 145 (121) as of 30 September 2003.<br />
Our aim of employing ten percent<br />
trainees based on our regular workforce<br />
has thus been attained.<br />
In the year under review, we continued<br />
to develop the <strong>Nordzucker</strong> training<br />
standards. The syllabus for the technical<br />
and industrial training in the electrical<br />
and metal-working professions has been<br />
re-structured and included in the regular<br />
training programme. In 2003, we expanded<br />
our qualification programme for<br />
instructors by also including pedagogical<br />
elements.<br />
<strong>Nordzucker</strong> would like to thank all<br />
its employees for their commitment and<br />
for the successful work done. Particular<br />
thanks is due to the staff of the Schleswig<br />
plant. Despite the forthcoming closure<br />
of their factory, they showed a high level<br />
of commitment and flexibility and completed<br />
the campaign most successfully.<br />
We would also like to thank the members<br />
of the works council for their constructive<br />
and critical cooperation.<br />
Investment<br />
In the year under review, <strong>Nordzucker</strong> <strong>AG</strong><br />
invested Euro 35.7 (54.5) million primarily<br />
in the sugar factories of Clauen and<br />
Uelzen. Investments concentrated on the<br />
improved product and service quality,<br />
reduced energy requirements, and the<br />
implementation of the “dry beet yard”<br />
concept, as well as other environmental<br />
measures.<br />
Product and Service Quality<br />
The new dust arrester plant for white<br />
sugar installed in the service centre of<br />
the Wierthe sugar factory will help<br />
not only meet customer requirements<br />
and hygiene guidelines, it also maintains<br />
compliance with HACCP requirements.<br />
Equipment installed in the Nordstemmen<br />
plant for continuous colour measurement<br />
provides a complete and uninterrupted<br />
quality control chain in the bulk loading<br />
and pre-screening station of that plant.<br />
The Güstrow sugar factory has been<br />
equipped with a new bagging line using<br />
palettomats, which <strong>Nordzucker</strong> has<br />
developed in cooperation with the
Fraunhofer Institut für Produktionstechnik<br />
und Automatisierung. The automatic<br />
bagging station for 50-kilogram bags<br />
commissioned in Schladen will increase<br />
both safety at work and efficiency in the<br />
factory.<br />
Efficient Use of Energy<br />
In the Clauen factory, installation of a<br />
steam dryer with a water evaporation<br />
rate of 50 metric tons per hour has<br />
reduced energy requirements in the drying<br />
station by about 80 percent. The new<br />
system provides for uniform pellet drying<br />
during the entire campaign and saves<br />
the costs of the primary energy that had<br />
been used before. The Munzel factory<br />
has been equipped with a new boiler<br />
which generates the energy required in<br />
the liquid sugar plant. Since it can operate<br />
on the biogas produced in the factory’s<br />
waste water treatment plant, the<br />
use of fossil energy has been reduced. An<br />
additional vertical pulp press in the<br />
Nordstemmen sugar factory has helped<br />
reduce maintenance costs and energy<br />
requirements.<br />
Environment and Resources<br />
Conserving Production<br />
In the Uelzen plant, the expansion of the<br />
beet storage area and the reclaiming<br />
duct marks the completion of the third<br />
construction phase for the dry beet yard.<br />
Gentle handling of about 35,000 metric<br />
tons of beets safeguards beet supply to<br />
the factory at weekends. A new beet<br />
conditioning plant has also been installed<br />
in Uelzen. Since it has been encased for<br />
noise protection, the noise pollution level<br />
has been halved. Limited periods of contact<br />
between beets and washwater as<br />
well as four new flume water filters have<br />
much reduced the organic waste water<br />
load. In the Güstrow factory, the acidulation<br />
basins have been provided with<br />
covers, thus reducing odour emissions<br />
considerably. In the Schladen factory, a<br />
closed turbine cooling cycle has replaced<br />
a system for which well water had to<br />
be tapped. This has cut the cooling water<br />
requirements by more than half. The<br />
drives of the vertical pulp presses in the<br />
Nordstemmen factory have been encased<br />
to help reduce excessive noise exposure.<br />
Environment<br />
Our company policy and the environmental<br />
regulations that serve as a binding<br />
basis for the actions of our staff<br />
reflect the significance we attach to high<br />
quality standards in all fields.<br />
Certification<br />
The continuous improvement of environmental<br />
standards has been one of our<br />
central issues for many years. Since 1995,<br />
all the German <strong>Nordzucker</strong> locations<br />
have regularly taken part in the European<br />
Environmental <strong>Management</strong> and Audit<br />
System (EMAS II). In addition, they have<br />
obtained DIN ISO 9001:2000 and 14001<br />
certification. The annual factory audit<br />
was made in October 2003.<br />
In 2003 we subjected the <strong>Nordzucker</strong><br />
plants in Poland, Slovakia and Hungary<br />
to an environmental impact assessment<br />
for the first time. Adaptation of EU law is<br />
<strong>Nordzucker</strong> 2003/2004 21
<strong>Management</strong> <strong>Report</strong> <strong>Nordzucker</strong> <strong>AG</strong><br />
320<br />
300<br />
280<br />
260.<br />
0<br />
22<br />
under way in the new EU countries. EU<br />
limit value regulations have in the meantime<br />
been adopted in many areas.<br />
Setting the Pace for CO2-Emissions The sugar industry is the only sector of<br />
the food industry which is successfully<br />
participating in the climate agreement of<br />
the German industry. It has voluntarily<br />
committed itself to cut emissions by 41<br />
to 45 percent between 1990 and 2005.<br />
<strong>Nordzucker</strong> has reduced CO2 emissions<br />
Energy consumption <strong>Nordzucker</strong> <strong>AG</strong> (in KWh/tonne of beet)<br />
296<br />
306<br />
286<br />
281<br />
263<br />
274 273<br />
1997 1998 1999 2000 2001 2002 2003<br />
CO 2 emissions <strong>Nordzucker</strong> <strong>AG</strong> (in tonnes of CO 2/tonne of beet)<br />
0.088<br />
0.085 0.085<br />
0.082<br />
0.079.<br />
0<br />
0.087<br />
0.082<br />
0.083<br />
0.079<br />
0.082<br />
0.080<br />
1997 1998 1999 2000 2001 2002 2003<br />
Environmental investment Norzucker <strong>AG</strong> (in t million)<br />
40<br />
30<br />
20<br />
10.<br />
0<br />
4.7<br />
12.5<br />
7.8<br />
6.5<br />
18.3<br />
1997 1998 1999 2000 2001 2002 2003<br />
*<br />
1997/98 including Nordkristall GmbH and ZVM GmbH<br />
2003/04 including Union-Zucker plant Nordstemmen<br />
21.5<br />
31.3<br />
by 43.5 percent (German sugar industry:<br />
41.8) and is hence taking the lead in<br />
translating the Kyoto Protocol into practical<br />
action. But it is as yet not certain<br />
whether the measures taken to this effect<br />
will be accounted for in the national<br />
allocation plan of the Federal Environment<br />
Ministry. It could be that most<br />
of our pioneering measures will not be<br />
taken into consideration, and that early<br />
action and capital-intensive investment<br />
into the environment are subsequently<br />
penalised. <strong>Nordzucker</strong> has entered into<br />
discussions with the policy makers<br />
concerned to be able to contribute to<br />
constructive solutions.<br />
<strong>Nordzucker</strong> Environment <strong>Report</strong><br />
<strong>Nordzucker</strong> uses two channels to regularly<br />
document the results of its activities in<br />
the environmental sector: the environment<br />
report as well as factory-specific<br />
environment declarations. On this basis<br />
we maintain a constant dialogue with the<br />
relevant target groups, including authorities,<br />
associations and the interested public.<br />
Reduced Water Requirements<br />
Constant reduction of the amount of<br />
water supplied externally was an important<br />
issue again in the “International Year<br />
of Freshwater“ in 2003. Today, 85 percent<br />
of the water requirements of our factories<br />
are covered by the water contained in<br />
the beet cells. This can be achieved by<br />
using the water available several times<br />
and by closing water cycles. In Uelzen,<br />
a large water reservoir belonging to the
local irrigation association holding<br />
650,000 cubic metres of water was put<br />
into service in the past campaign. The<br />
pre-treated waste water from the Uelzen<br />
sugar factory is stored in that reservoir<br />
during the campaign and is available for<br />
agricultural irrigation during the vegetation<br />
period. Groundwater extraction is<br />
thus considerably reduced.<br />
Restoration of Former Sites<br />
Since 1984, <strong>Nordzucker</strong> and its predecessor<br />
organisations have restored a total<br />
area of 190 hectares previously used by<br />
13 sugar factories. This area is now under<br />
the care of municipalities, foundations<br />
or other bodies. In the next two years<br />
another 110 hectares from eleven abandoned<br />
sites will be handed over in a similar<br />
way.<br />
Last year, the restoration of abandoned<br />
sites was on the agenda of a public<br />
event organised in Meine, near Braunschweig.<br />
Environmental associations,<br />
politicians and the press were given a<br />
first-hand impression of the responsibility<br />
<strong>Nordzucker</strong> assumes when it comes to<br />
making inactivated factory sites available<br />
for new social and environmental uses.<br />
What used to be the factory premises<br />
is now the new centre of Meine, with a<br />
housing estate and shops. The former<br />
lagoons have become a habitat for rare<br />
bird species, and the lakes are now a<br />
recreation area for the local population.<br />
Research and Development<br />
The <strong>Nordzucker</strong> <strong>AG</strong> research and development<br />
functions are the responsibility<br />
of the <strong>Nordzucker</strong> InnoCenter GmbH,<br />
Braunschweig. Renamed, the company<br />
was previously the Institut für Technologie<br />
der Kohlenhydrate – Zuckerinstitut –<br />
e. V. With the development of new products<br />
and processes, the <strong>Nordzucker</strong><br />
InnoCenter supports <strong>Nordzucker</strong> in<br />
expanding its market position. Another<br />
key function of the centre is the provision<br />
of consultation services for <strong>Nordzucker</strong><br />
customers.<br />
In promoting successful industrial<br />
research in the sweetening sector,<br />
<strong>Nordzucker</strong> invests into the development<br />
of products and technologies, quality,<br />
and customers counselling. And in carrying<br />
out these measures, we continuously<br />
expand our own competence and also<br />
make use of effective research networks<br />
with external experts.<br />
Product Development<br />
In the past financial year, the product<br />
brown sugar was developed for market<br />
maturity to supplement the household<br />
sugar range. The <strong>Nordzucker</strong> line of<br />
products now also includes ‘Backträume‘<br />
baking flavours as well as a <strong>Nordzucker</strong><br />
table castor, for which application profiles<br />
have been developed. The formulations<br />
for the special brands dietary<br />
gelling fructose and bio gelling sugar as<br />
well as for ready-to-use sugar coatings<br />
have been optimised. The SweetGredient’s<br />
new sweetener Tagatose has also been<br />
<strong>Nordzucker</strong> 2003/2004 23
<strong>Management</strong> <strong>Report</strong> <strong>Nordzucker</strong> <strong>AG</strong><br />
<strong>Nordzucker</strong> InnoCenter GmbH<br />
24<br />
Analytical<br />
and<br />
Technical<br />
Chemistry<br />
Application<br />
Engineering<br />
optimised for use in chewing gums, and<br />
new formulations have been developed<br />
for comprimates and coated tablets. In<br />
2003, <strong>Nordzucker</strong>’s investment company<br />
Syral in Alsace also profited from the<br />
<strong>Nordzucker</strong> InnoCenter competence in<br />
application technology. Moreover, in<br />
collaboration with our customers we have<br />
developed mixtures of sweeteners and<br />
other formulations for specific markets.<br />
Application Support<br />
To be able to offer its customers in industry<br />
a comprehensive advisory service,<br />
<strong>Nordzucker</strong> has set up expert teams.<br />
Each team is responsible for a specific<br />
product category and consists of a key<br />
account manager (sales) as well as<br />
an applications engineer (<strong>Nordzucker</strong><br />
InnoCenter). Together they call on<br />
<strong>Nordzucker</strong> customers to discuss collaboration<br />
openings in product development,<br />
or to assist our customers with application-specific<br />
problems. In addition, our<br />
customers in industry can rely on our<br />
extensive logistics support in the technical<br />
field.<br />
Bioengineering<br />
and Organic<br />
Chemistry<br />
Energy and<br />
Process<br />
Engineering<br />
New<br />
Development<br />
for<br />
Innovative<br />
Utilization of<br />
Plants<br />
Technology and Quality<br />
The support provided by the <strong>Nordzucker</strong><br />
InnoCenter also covers technology and<br />
quality in production, a service which is<br />
available in connection with the production<br />
of sugar and such specialities as<br />
fondant or Tagatose. It is open to production<br />
facilities both at home and<br />
abroad. Quality assurance for laboratory<br />
analyses was instituted for the factory<br />
laboratories in Germany and in central<br />
and eastern Europe.<br />
New Fields for Innovative Use of Plants<br />
With ‘New Fields for Innovative Use of<br />
Plants’, the <strong>Nordzucker</strong> InnoCenter was<br />
assigned a new area of responsibility in<br />
2003. The main function of ‘New Fields’<br />
will be to establish and document the<br />
state of agricultural, economic, and technical<br />
knowledge on specific issues of<br />
renewable raw materials. Results will,<br />
in particular, be made available to our<br />
shareholders and beet farmers. ‘New<br />
Fields’ will as a first step address the possibilities<br />
of using biomass as a source of<br />
energy. This information is to assist our<br />
farmers in their decision taking process<br />
for possible commitments in renewable<br />
raw materials.
25<br />
”With Poland joining the EU, I would<br />
hope that unemployment among<br />
young people would fall and that<br />
training opportunities for them would<br />
rise – even internationally. Greater<br />
access to new technologies, which we<br />
have already witnessed with success<br />
here in our Opalencia plant, will<br />
certainly lead to an improvement in<br />
our standard of living as a whole.”<br />
Stanislaw Polus,<br />
Master Craftsman, packing station<br />
Opalencia plant, Poland<br />
„Od członkowstwa w UE oczekuję<br />
redukcji bezrobocia i nowych<br />
możliwosci kształcenia dla<br />
młodzieży – również międzynarodowo.<br />
Poprzez łatwiejszy dostęp do<br />
nowych technologii, które z sukcesem<br />
wdraężamy już w zakładzie w<br />
Opalenicy, poprawi się również w<br />
sumie nasz standard życia.”<br />
<strong>Nordzucker</strong> 2003/2004 25
<strong>Management</strong> <strong>Report</strong><br />
Shareholdings Sugar International<br />
Sugar International – Sugar yield (in t/ha)<br />
7.5<br />
7.0<br />
6.5<br />
6.0.<br />
0<br />
Sugar International – Beet yield (in t/ha)<br />
50<br />
45<br />
40<br />
35.<br />
0<br />
Sugar International – Campaign (in days)<br />
130<br />
100<br />
70<br />
40.<br />
0<br />
Sugar International – Processing rate<br />
(in 1,000 tonnes of beet/day)<br />
20<br />
15<br />
10<br />
5 .<br />
.0<br />
0<br />
54<br />
59<br />
18.3<br />
18.7<br />
77<br />
13.2<br />
120<br />
100<br />
5.4<br />
4.9<br />
93<br />
4.9<br />
Sugar International – Employees (as of 1 Nov.)<br />
57 47<br />
Poland Slowakia<br />
Hungary<br />
15.9 16.3<br />
Poland Slowakia<br />
Hungary<br />
2,047<br />
2,000<br />
1,762<br />
1,500<br />
1,533<br />
1,178<br />
1,000<br />
500.<br />
905<br />
601<br />
686 673<br />
Campaign employees<br />
0 Full-time employees<br />
Poland Slowakia<br />
Hungary<br />
26<br />
6.3<br />
7.4<br />
7.5<br />
2001 2002 2003<br />
6.7<br />
7.7<br />
6.6<br />
6.5<br />
6.1<br />
Poland Slowakia<br />
Hungary<br />
44.7<br />
42.9<br />
39.6<br />
49.8<br />
44.9<br />
39.6<br />
42.4<br />
38.7<br />
Poland Slowakia<br />
Hungary<br />
The division Sugar International coordinates<br />
the <strong>Nordzucker</strong> sugar activities<br />
abroad. In recent years, <strong>Nordzucker</strong><br />
has expanded its core activities in the<br />
accession countries in order to maintain<br />
its position in Europe through major<br />
market shares and to remain competitive<br />
in the long run. Following the acquisition<br />
of sugar factory companies in Poland,<br />
Slovakia, and – in the form of a minority<br />
participation – in the Czech Republic, we<br />
acquired three sugar factories in Hungary<br />
early in 2003.<br />
In the 2003 campaign, <strong>Nordzucker</strong><br />
operated eight (eight) sugar factories in<br />
Poland, Slovakia, and Hungary, which<br />
account for an average processing rate of<br />
34,000 (23,600) metric tons of beets per<br />
day. The total area of 54,000 (36,000)<br />
hectares yielded an average 41 (47) metric<br />
tons of sugar beets.<br />
Poland<br />
In Poland, <strong>Nordzucker</strong> holds a market<br />
share of just below nine percent. Since<br />
the government called a halt to any privatisation,<br />
it has been prohibited by law<br />
to acquire additional state-owned Polish<br />
factories. Whether or not the opportunities<br />
for new acquisitions in Poland will<br />
improve after the country’s EU accession<br />
remains to be seen.<br />
Reduced Losses<br />
Surplus production as a result of lacking<br />
export mechanisms and cash flow bottlenecks<br />
faced by the state-owned sugar<br />
company “Polski Cukier”, led to a sag in<br />
sugar prices in the year under review.<br />
Government bodies did not support<br />
attempts to export the surplus production.
The unfavourable situation in this market<br />
is affecting all the sugar producers in<br />
Poland, and <strong>Nordzucker</strong> continues to<br />
record unsatisfactory proceeds. In a situation<br />
of officially fixed beet prices, the<br />
rationalisation measures launched have<br />
helped to reduce losses significantly to<br />
Euro 11 (15) million.<br />
In view of a number of structural<br />
measures and the transition of the Polish<br />
sugar market to the scope of the EU sugar<br />
market regulations, we expect a balanced<br />
result for the accession year 2004.<br />
Concentration in Two Locations<br />
The closure of three factories after the<br />
2002 campaign has improved the capacity<br />
utilisation rate of the active factories<br />
considerably. In the year under review,<br />
the campaign covered a period of 77<br />
(59) days. Sugar production was stopped<br />
in the Krasiniec factory at the end of the<br />
2003 campaign. For the year 2004, we<br />
start from more than 90 campaign days<br />
in the factories Opalenica (Wielkopolski<br />
Cukier S.A) and Chelmza (Pomorski<br />
Cukier S.A.). Our activities in Poland<br />
are now concentrated according to<br />
schedule in these two companies, in<br />
which <strong>Nordzucker</strong> holds a stake of some<br />
99 percent each.<br />
In 2003, the capital expenditure in<br />
fixed assets amounted to about Euro 9.8<br />
(4.3) million. Most of this capital was<br />
invested in the Chelmza plant, which, in<br />
addition to general modernisation measures,<br />
plans to expand its silo capacities.<br />
Slovakia<br />
With the acquisition of the Tereos stake<br />
(previously Union SDA), <strong>Nordzucker</strong> has<br />
a 95 percent interest in Považský Cukor<br />
a.s. In the period under review, first steps<br />
were taken toward the merger of this<br />
company with its subsidiary Trnavský<br />
Cukrovar a.s. The consolidation into one<br />
company will be completed in 2004.<br />
Improved Results<br />
The 2003 sugar sales and prices were on<br />
the previous year’s level and show a slightly<br />
better result of Euro 1.9 (1.6) million.<br />
The capital expenditure in fixed assets<br />
amounted to Euro 2.4 (1.3) million and<br />
was concentrated on the Tepla plant,<br />
which is to also process the Trnava beets<br />
as from the year 2005.<br />
Hungary<br />
In the year 2003, <strong>Nordzucker</strong> acquired<br />
three sugar factories in Hungary from the<br />
French Béghin-Say group. The majority<br />
of the Béghin-Say group itself has been<br />
taken over by Tereos.<br />
Polish Sugar Imports Make Prices Drop<br />
Sugar imports from Poland triggered a<br />
decline in prices in Hungary in the first<br />
six months of 2003. Adequate protection<br />
for the Hungarian market was not<br />
re-established until after that half-year<br />
period so that the result is a negative<br />
Euro 3.6 million. Another factor influencing<br />
the company results were the necessary<br />
adjustments to the balance sheet<br />
regulations of <strong>Nordzucker</strong> <strong>AG</strong>.<br />
<strong>Nordzucker</strong> market share<br />
in Poland (in percent)<br />
9%<br />
2003<br />
<strong>Nordzucker</strong> market share<br />
in Slovakia (in percent)<br />
39%<br />
2003<br />
<strong>Nordzucker</strong> 2003/2004 27
<strong>Management</strong> <strong>Report</strong> Shareholdings Sugar International<br />
<strong>Nordzucker</strong> market share in<br />
Hungary (in percent)<br />
36%<br />
28<br />
2003<br />
2004 Campaign in Two Factories<br />
In adjusting the processing capacity,<br />
sugar production in the Hatvan plant was<br />
stopped after the 2003 campaign. Since<br />
measures to protect the Hungarian market<br />
from the outside was re-established in<br />
mid-2003 and since Hungary became<br />
an EU member in May 2004, we expect<br />
satisfactory operating results in 2004.<br />
The capital expenditure in fixed assets<br />
amounted to Euro 6.3 million in the<br />
financial year. This primarily went toward<br />
the completion of a white-sugar silo in<br />
Szolnok.<br />
Czech Republic<br />
Although the market in the Czech<br />
Republic remains difficult, Cukrovary<br />
TTD, in which <strong>Nordzucker</strong> continues to<br />
hold a 33.5-percent interest, turned in a<br />
satisfactory result in 2003. After the closure<br />
of the Mělnik factory at the end of<br />
the 2003 campaign, and after the accession<br />
of the Czech Republic to the EU, we<br />
expect the results to improve beyond the<br />
2003 result. As from 2004, Cukrovary<br />
TTD will concentrate on beet processing<br />
at the factories in Dobrovice and České<br />
MeziřiČi. The Dobrovice plant will be<br />
expanded in 2004 to a beet processing<br />
rate of 10,500 metric tons.<br />
Of the operating result of about Euro<br />
six million in the financial year (1 January<br />
2002 to 30 September 2003), a dividend<br />
of Euro three million was paid out in<br />
March 2004. The <strong>Nordzucker</strong> share of<br />
this amount is Euro one million, which<br />
will be shown as revenue in the financial<br />
year 2004/2005.<br />
Business development of Sugar International (in t million)<br />
Poland Slowakia Hungary<br />
2002 2003 2002 2003 2003<br />
Sales<br />
EBIT<br />
Net income (consolidated)<br />
Investment in tangible assets<br />
Employees (average of financial year)<br />
Equity capital<br />
<strong>Nordzucker</strong> participation<br />
77 72<br />
-8 -6<br />
-15 -11<br />
4 10<br />
1,254 806<br />
4 15<br />
71–100% 73–100%<br />
38<br />
3<br />
2<br />
1<br />
452<br />
13<br />
60%<br />
35<br />
4<br />
2<br />
2<br />
370<br />
24<br />
95%<br />
77<br />
1<br />
-4<br />
6<br />
688<br />
24<br />
92–100%
“I hope that my children will have better<br />
educational and professional prospects<br />
as EU citizens. <strong>Nordzucker</strong> and our<br />
factory at Teplá will profit from the<br />
dynamic business developments<br />
in eastern Europe; I’m sure of that.”<br />
Jarmila šumajová<br />
Human Resources<br />
Teplá plant, Slovakia<br />
„želám si, aby moje deti ako<br />
Európania mali lepšie podmienky<br />
pre vzdelávanie,<br />
lepšie šance nájst’ si<br />
zamestnanie. <strong>Nordzucker</strong> a<br />
závod v Trenćianskej Teplej<br />
budú profitovat’ z dynamického<br />
hospodárskeho rozvoja<br />
vo východnej Európe, v tom<br />
som si istá.“<br />
<strong>Nordzucker</strong> 2003/2004 29
<strong>Management</strong> <strong>Report</strong><br />
Shareholdings Business Development<br />
in t milion<br />
Sales<br />
EBIT<br />
Net income (consolidated)<br />
Investment in tangible assets<br />
Staff (average of financial year)<br />
Equity capital<br />
<strong>Nordzucker</strong> share (in percent)<br />
* Financial year ended on 30 Sept. each year<br />
2002/03 figures include Staral<br />
** Sub-group Amino (Amino GmbH, esparma<br />
GmbH, S.A. Bioproducts at equity)<br />
*** Including additions from merger<br />
30<br />
Hübner-Medopharm Syral* Amino**<br />
2002 2003<br />
2001/02 2002/03<br />
2002 2003<br />
30<br />
1<br />
1<br />
0<br />
229<br />
-4<br />
98%<br />
31<br />
2<br />
1<br />
1<br />
210<br />
-3<br />
98%<br />
The non-sugar shareholdings are<br />
coordinated within the Business<br />
Development division. The only exception<br />
is the Hübner-Medopharm group,<br />
which because of the 98-percent stake is<br />
fully consolidated. The 50-percent share<br />
holding Syral S.A. and the Amino group<br />
are accounted for in the group with their<br />
equity ratio. SweetGredients is accounted<br />
for on a pro rata basis (proportional consolidation).<br />
Hübner-Medopharm<br />
77<br />
-6<br />
-8<br />
9<br />
85<br />
45<br />
36%<br />
The main business of the group, in which<br />
<strong>Nordzucker</strong> holds 98 percent, is the production<br />
and marketing of natural food<br />
supplements, medical and cosmetic<br />
products. The main outlets for these<br />
products in Germany are health shops<br />
and dispensing chemists. Exports go to<br />
more than 30 countries.<br />
Satisfactory Sales and Exports<br />
The highly satisfactory development of<br />
the group continued in 2003. Although<br />
consumer reluctance also affected the<br />
168<br />
3<br />
2<br />
142***<br />
272<br />
44<br />
50%<br />
health shop sector in Germany with<br />
some delay, overall sales increased by<br />
some five percent.<br />
For the dispensing chemists sector, the<br />
seven-percent drop in sales reflects the<br />
strategy of reserving tight field service<br />
resources for customers with profitable<br />
minimum sales. Innovative products<br />
specifically developed for this sector<br />
will bring about an adjustment in 2004.<br />
Exports rose by six percent and have<br />
thus continued the favourable trend of<br />
previous years. The increase was not least<br />
due to new customers attracted in non-<br />
European markets.<br />
Modernisation Programme Completed<br />
Commissioning of the new filling and<br />
packaging plant for the core and USP<br />
product ‘Silicea’ in the spring of the year<br />
2004 completed the modernisation programme<br />
launched when Hübner was<br />
taken over.<br />
SweetGredients<br />
46<br />
3<br />
2<br />
3<br />
346<br />
13<br />
50%<br />
44<br />
2<br />
2<br />
2<br />
344<br />
18<br />
50%<br />
In line with the <strong>Nordzucker</strong> policy of<br />
developing its core activities in a changing<br />
market, <strong>Nordzucker</strong> founded the<br />
company SweetGredients in 2003. On
1 October 2003, the company, which<br />
<strong>Nordzucker</strong> is operating as a joint venture<br />
together with the Danish food<br />
producer Arla Foods Ingredients amba,<br />
was granted approval by the European<br />
Monopolies and Mergers Commission.<br />
SweetGredients is operating a pilot plant<br />
in Nordstemmen to optimise industrial<br />
Tagatose production and provide a basis<br />
for acceptance and potential analyses.<br />
The results will decide on the construction<br />
of a joint production plant in Denmark.<br />
In 2003, first sales were carried out<br />
in the USA. As expected, the financial<br />
year closed with a negative result of<br />
Euro 7.8 million, of which <strong>Nordzucker</strong><br />
will bear a contractually fixed 50 percent.<br />
Tagatose – Sweetener with<br />
Attractive Properties<br />
Tagatose is a prebiotic, tooth friendly<br />
sweetener produced from lactose, making<br />
it safe for diabetics. In addition to being a<br />
low-calorie product, it also has special<br />
flavour enhancing properties. Its low<br />
glycemic index makes Tagatose an interesting<br />
product for the “low carb campaign”<br />
currently widely advertised in the<br />
United States. Tagatose has already been<br />
listed as a marketable product in the US<br />
and in Korea, Australia and New Zealand.<br />
This is not expected to be the case for<br />
Europe before 2006.<br />
Syral<br />
In June 2003, <strong>Nordzucker</strong> increased its<br />
participating interest in the French producer<br />
of starch saccharification products,<br />
Syral S.A., Marckolsheim, from 36 to 50<br />
percent. At the same time, the whollyowned<br />
Syral subsidiary Staral S.A. – up to<br />
that point a supplier of primary products<br />
– merged with Syral. This has successfully<br />
finalised the integration of Staral S.A. into<br />
Syral. Due to this development, the figures<br />
shown do not compare with those<br />
of the previous year.<br />
Positive Results<br />
Despite a slight drop in prices, Syral was<br />
able to improve its share in the European<br />
market further for starch saccharification<br />
products in the year under review. After<br />
expansion of the Syral facilities in 2002,<br />
production has been stabilised and the<br />
utilisation ratio has been much improved.<br />
A distinct increase in market share is<br />
reported for maltodextrin and sorbite.<br />
Altogether, sales rose by more than ten<br />
percent as compared with the previous<br />
year. The percentage of up-market products<br />
in relation to total sales has risen<br />
disproportionately, and this has had a<br />
clearly positive effect on the operating<br />
results. In the year under review, Syral<br />
posted a positive result of Euro 1.6 million.<br />
Amino<br />
<strong>Nordzucker</strong> GmbH & Co. KG continues<br />
to hold 50 percent stakes in both Amino<br />
and Norddeutsche Zucker-Raffinerie<br />
GmbH in Frellstedt.<br />
Results on the Previous Year’s Level<br />
Amino uses large-scale chromatography<br />
to produce sugar raw juice, amino acids,<br />
betaines, and other ingredients from<br />
sugar beet molasses. Amino acids from<br />
molasses and other substances are<br />
<strong>Nordzucker</strong> 2003/2004 31
32<br />
cleaned to yield products of pharmaceutical<br />
quality, which are then sold on a<br />
global scale. As a result of the marked<br />
declassification for sugar in 2002, as well<br />
as a currency-related reduction of export<br />
income, turnover dropped by about five<br />
percent relative to the previous year, but<br />
lower raw material prices allowed the<br />
operating results to be maintained on the<br />
previous level.<br />
Amino’s wholly-owned subsidiary<br />
esparma GmbH,produces drugs for the<br />
sectors neurology, urology, pediatrics,<br />
and diabetics, in addition to pharmaceutical<br />
and cosmetic products. Despite the<br />
tight cost situation in the health care<br />
sector, turnover rose by eleven percent<br />
to more than Euro 18 million. Contract<br />
production and compounding of additional<br />
products allowed the economic<br />
performance to be improved significantly.<br />
Under the profit transfer agreement<br />
concluded with Amino, Euro 0.9 (0.6)<br />
million were transferred in fiscal 2003.<br />
For S. A. Bioproducts in South Africa,<br />
in which Amino holds 40 percent, the<br />
year 2003 was marked by a very good<br />
utilisation of production capacities and<br />
higher proceeds for feed amino acids, so<br />
that the financial year was a positive one.<br />
Pharmaceutical amino acid fermentation<br />
was also started successfully.<br />
Norddeutsche Zucker-Raffinerie<br />
GmbH purifies the sugar raw juice from<br />
Amino to produce liquid sugar and a<br />
number of specialised products. As a<br />
result of the declassification measures, the<br />
2002 turnover dropped by nine percent,<br />
while the operating result remained at<br />
the previous year’s level of Euro 0.4 million.<br />
<strong>Management</strong> <strong>Report</strong><br />
Risk <strong>Management</strong><br />
<strong>Nordzucker</strong> has developed a companywide<br />
system of early risk identification<br />
and constant risk monitoring, including<br />
analysing and avoidance strategies.<br />
Possible risks are monitored in close<br />
coordination with the process managers<br />
concerned, using the instruments risk<br />
management and group controlling.<br />
Opportunity/risk analyses are performed<br />
on the basis of predetermined threshold<br />
values to develop the required alternative<br />
action. Our group reporting and controlling<br />
system serves as a source of continuous<br />
and, if required, ad-hoc information<br />
for all our decision makers. Regular market<br />
analyses and analyses of the competitive<br />
situation enable <strong>Nordzucker</strong> to spot<br />
major changes at an early stage and to<br />
initiate adequate measures. Annual risk<br />
stock taking as well as the results of internal<br />
audits provide for the required adjustments.<br />
The risk management system was<br />
included in the annual audit, which confirmed<br />
the efficiency of the system.<br />
Market Risks<br />
The <strong>Nordzucker</strong> response to the market<br />
risks that follow from the intensifying<br />
concentration in the European food retail<br />
and sugar processing industries are extensive<br />
activities directed at customer retention.<br />
This includes the development of<br />
new products, as well as a high standard<br />
of product quality. The system of process<br />
and product certification performed
throughout the group documents the<br />
high significance <strong>Nordzucker</strong> attaches to<br />
quality production.<br />
Operating Risks<br />
The <strong>Nordzucker</strong> management system<br />
encompasses quality assurance, safety at<br />
work/health protection, and environmental<br />
management. To fully comply with<br />
our high internal standards and all legal<br />
requirements, auditing and certification<br />
is performed regularly on the basis of<br />
DIN EN ISO 9001 2000, DIN EN ISO<br />
14001, the EC environmental audit regulations<br />
761/2001 (EMAS II), as well as<br />
GMP 13 for feedstuffs. In 2003, the small<br />
packing locations were certified in compliance<br />
with the IFS Standard of the food<br />
trade.<br />
Financial Risks<br />
<strong>Nordzucker</strong> monitors carefully all currency,<br />
interest and liquidity risks. To safeguard<br />
liquidity, we are converting<br />
<strong>Nordzucker</strong> <strong>AG</strong> financing to a syndicated<br />
credit. At the same time we are preparing<br />
for <strong>Nordzucker</strong> <strong>AG</strong> rating and conversion<br />
of the accounting system for compliance<br />
with IFRS (International Financial <strong>Report</strong>ing<br />
Standards) and IAS (International<br />
Accounting Standards). This is to make<br />
sure that the requirements of external<br />
creditors can be fully met in the long run.<br />
To minimise currency risks we limit<br />
cash flows between our east European<br />
companies and <strong>Nordzucker</strong> <strong>AG</strong> to the<br />
absolute minimum. For the same purpose,<br />
the campaign and any investment<br />
programmes launched in Poland and<br />
Slovakia are financed locally. The loans<br />
raised for these purposes are increasingly<br />
Euro loans, since as from 1 May 2004<br />
both the sugar intervention prices and<br />
the beet prices are fixed in Euro.<br />
IT Risks<br />
<strong>Nordzucker</strong> applies the latest standards<br />
to safeguard the reliability of its EDP<br />
systems and data stocks. We also consistently<br />
use standard software and the<br />
same hardware throughout the company.<br />
This allows us to make use of innovative<br />
technology without any problems while<br />
rendering our complex EDP systems<br />
manageable.<br />
Political and Legal Risks<br />
The countries in which <strong>Nordzucker</strong> has<br />
either stakes or production facilities, and<br />
whose markets <strong>Nordzucker</strong> supplies with<br />
products became members of the European<br />
Union on 1 May 2004. Uncertainties<br />
remain with a view to the possible<br />
revision of the EU sugar market regulations<br />
as from the year 2006. Import<br />
options for the least developed countries<br />
in connection with the so-called EBA<br />
agreement are expected to have their<br />
repercussions, although the exact extent<br />
remains difficult to assess. Not certain are<br />
neither the outcome of the WTO negotiations<br />
nor of the complaint by Brazil,<br />
Thailand and Australia about EU tariffs<br />
(WTO panel). For the time being it is not<br />
possible to make an appraisal of the consequences<br />
this will have for <strong>Nordzucker</strong>.<br />
<strong>Nordzucker</strong> 2003/2004 33
<strong>Management</strong> <strong>Report</strong><br />
Outlook<br />
34<br />
Our chief objective for the year<br />
2004/2005 will be the consolidation<br />
of our operations as well as the<br />
strategic orientation of the company<br />
with the aim of consolidating our core<br />
activities in the long run. With the accession<br />
of ten new member states to the<br />
European Union on 1 May 2004, and the<br />
gradual coming into force of the EU<br />
sugar market regulations in these countries,<br />
it will be essential for us to proceed<br />
with the integration of our commitments<br />
in Poland, Slovakia and Hungary into<br />
the <strong>Nordzucker</strong> <strong>AG</strong> organisation. To be<br />
able to maintain the earning capacity of<br />
the company, we aim at a long-term and<br />
organic growth. We see growth potential<br />
for our core activities in the sugar sector,<br />
but also for a market- and customeroriented<br />
expansion of our competence<br />
in sweetening products. Starch saccharification<br />
products and Tagatose are first<br />
steps in this direction.<br />
EU Beet Cultivation and Sugar<br />
Production Must Remain Profitable<br />
Much of our attention is being directed<br />
at developments in the agricultural<br />
reforms that are at the present up for<br />
discussion. In addition to the agreed<br />
opening for imports from the least developed<br />
countries (LDC) and the WTO<br />
negotiations which are still pending, other<br />
uncertainties surround the legal action<br />
brought by Brazil, Thailand and Australia<br />
against certain sugar exports of the<br />
European Union (WTO panel). The<br />
European sugar industry together with<br />
politicians from all member states are<br />
called on to arrive at appropriate and<br />
reasonable solutions. Our joint efforts<br />
have to be directed at maintaining the<br />
profitability of beet cultivation and sugar<br />
production in the EU. While the EU<br />
Commission favoured price reductions<br />
and tariff protection in the beginning,<br />
there is now a tendency to prefer quotas<br />
for all involved. The first tentative decisions<br />
are expected for early 2005.<br />
Restructuring Programme in East<br />
Europe Due to be Finalised<br />
In March 2004 we decided to discontinue<br />
beet processing in the sugar factory<br />
Hatvan in Hungary. After the closure<br />
of the Trnava plant in Slovakia after the<br />
2004 campaign, our eight <strong>Nordzucker</strong><br />
factories in Germany, two sugar factories<br />
each in Poland and Hungary, as well as<br />
one factory in Slovakia provide a sound<br />
basis for competing for markets and customers<br />
in the expanded European Union.<br />
Much of the future developments will<br />
depend on the revised contents of the<br />
EU sugar market regulations.<br />
Changed Beet Flows 2004<br />
The closure of the Schleswig factory will<br />
reduce the overall processing capacity of<br />
<strong>Nordzucker</strong> <strong>AG</strong> to some 90,000 (97,000)<br />
metric tons of beets per day of the campaign.<br />
As with previous plant closures,<br />
this reduction will also affect the catchment<br />
area for the remaining factories.<br />
For this reason alone we expect the 2004
For this reason alone we expect the 2004<br />
campaign to be longer by about seven<br />
days for all the factories in the north of<br />
Germany.<br />
In view of the strong Euro, low world<br />
market prices for C sugar and molasses,<br />
as well as a satisfactory price level for<br />
pellets, we do not expect any significant<br />
changes for the proceeds situation in the<br />
financial year 2004/2005. Although all<br />
the EU accession countries start from a<br />
completely different set of circumstances,<br />
we assume that sugar prices will be<br />
harmonised within a relatively short time.<br />
In Hungary, adjustment expenditure<br />
after the closure of the Hatvan factory<br />
will reduce the result, but altogether we<br />
expect the consolidated annual surplus<br />
to rise after the negative results in eastern<br />
Europe have been overcome.<br />
After the close of the financial year<br />
2003/2004, there have been no incidents<br />
of decisive importance for the assets,<br />
finances and revenue of <strong>Nordzucker</strong> <strong>AG</strong><br />
and the group.<br />
Braunschweig, 3 May 2004<br />
The Managing Board
Annual Financial Statement <strong>Nordzucker</strong> <strong>AG</strong><br />
I. Balance Sheet<br />
36<br />
Assets<br />
A. Fixed Assets<br />
I. Intangible Assets<br />
Rights of use and similar rights<br />
II. Property, Plant & Equipment<br />
1. Land and buildings<br />
2. Technical equipment, plant and machines<br />
3. Other equipment, fixtures and fittings<br />
4. Advance payments and construction in progress<br />
III. Financial Assets<br />
1. Shares in affiliated companies<br />
–. Advance payments on shares in affiliated companies<br />
2. Loans to affiliated companies<br />
3. Investments<br />
4. Loans to companies in which an interest is held<br />
–. Security investments<br />
5. Other loans<br />
B. Current Assets<br />
I. Land Earmarked for Sale<br />
II. Inventories<br />
1. Operating supplies<br />
2. Finished goods and merchandise<br />
III. Receivables and Sundry Assets<br />
1. Trade receivables<br />
2. Receivables from affiliated companies<br />
3. Receivables from companies in which an interest is held<br />
4. Other assets<br />
IV. Other Securities<br />
V. Cash at Hand and Cash at Banks<br />
C. Prepaid Expenses<br />
I. Debt Discount<br />
II. Other<br />
–. Special loss account from reserves<br />
persuant to Section 17 para. 4 DMBilG<br />
29-02-2004<br />
in t thous<br />
4,007<br />
195,638<br />
156,694<br />
7,104<br />
4,955<br />
364,391<br />
129,951<br />
0<br />
25,834<br />
60,475<br />
11,590<br />
0<br />
354<br />
228,204<br />
596,602<br />
2,064<br />
13,782<br />
331,942<br />
345,724<br />
50,167<br />
27,397<br />
3,220<br />
13,538<br />
94,322<br />
472<br />
6,246<br />
448,828<br />
92<br />
18<br />
110<br />
0<br />
1,045,540<br />
28-02-2003<br />
in t thous<br />
1,280<br />
174,663<br />
149,696<br />
5,778<br />
9,357<br />
339,494<br />
26,136<br />
97<br />
32,192<br />
50,324<br />
12,102<br />
100<br />
481<br />
121,432<br />
462,206<br />
1,905<br />
11,308<br />
285,022<br />
296,330<br />
2,899<br />
57,429<br />
12,745<br />
18,202<br />
91,275<br />
376<br />
59,800<br />
449,686<br />
121<br />
38<br />
159<br />
2,004<br />
914,055
Liabilities<br />
A. Equity Capital<br />
I. Subscribed Capital (share capital)<br />
II. Capital Reserves<br />
III. Earnings Reserves<br />
1. Special reserve pursuant to Section 17, para. 4 DMBilG<br />
2. Other earning reserves<br />
IV. Net income<br />
B. Special Items<br />
I. Investment Grants for Fixed Assets<br />
II. Tax-Allowable Reserve<br />
(Value adjustment for plant and equipment<br />
due to special depreciation)<br />
C. Provisions<br />
1. Provisions for pensions and similar obligations<br />
2. Accrued taxes<br />
3. Other provisions<br />
D. Liabilities<br />
1. Due to banks<br />
2. Trade accounts payable<br />
3. Due to affiliated companies<br />
4. Due to companies in which an interest is held<br />
5. Other liabilities<br />
thereof for taxes: in t thous. 6,401 (previous year: in t thous. 4,482)<br />
thereof for social security: in t thous. 1,710<br />
(previous year: in t thous. 1,481)<br />
29-02-2004<br />
in t thous<br />
117,531<br />
112,833<br />
0<br />
103,059<br />
103,059<br />
25,503<br />
358,926<br />
7,524<br />
83,520<br />
91,044<br />
114,140<br />
19,874<br />
128,502<br />
262,516<br />
141,696<br />
152,869<br />
5,959<br />
10,383<br />
22,147<br />
333,054<br />
1,045,540<br />
28-02-2003<br />
in t thous<br />
101,765<br />
99,489<br />
2,004<br />
77,582<br />
79,586<br />
22,897<br />
303,737<br />
8,286<br />
94,253<br />
102,539<br />
99,580<br />
19,903<br />
121,839<br />
241,322<br />
92,773<br />
145,118<br />
4,827<br />
5,616<br />
18,123<br />
266,457<br />
914,055<br />
<strong>Nordzucker</strong> 2003/2004 37
Annual Financial Statement <strong>Nordzucker</strong> <strong>AG</strong><br />
II. Assets Analysis<br />
38<br />
In t thous<br />
Acquisition and<br />
Production Costs<br />
As 1 March 2003 Additions by<br />
asset transfer/<br />
accretion<br />
Additions<br />
I. Intangible Assets<br />
(Rights of use and similar rights) 4,191 875 3,247<br />
II. Tangible Assets<br />
1. Land and buildings 301,999 50,816 4,870<br />
2. Technical equipment, plant and machines 1,053,968 165,122 24,384<br />
3. Other equipment, fixtures and fittings 37,676 6,680 3,124<br />
4. Advance payments and construction in progress 9,357 1,538 3,312<br />
1,403,000 224,156 35,690<br />
III. Financial Assets<br />
1. Shares in affiliated companies 115,202 1,747 105,050<br />
–. Advance payments on shares in affiliated companies 97 0 0<br />
2. Loans to affiliated companies 33,282 1,909 7,650<br />
3. Investments 52,466 13 10,157<br />
4. Loans to companies in which an interest<br />
is held 12,102 0 0<br />
–. Security investments 100 0 0<br />
5. Other loans 483 94 0<br />
213,732 3,763 122,857<br />
Totals 1,620,923 228,794 161,794<br />
Write-ups with an effect on income (gains in value) were recorded for shares in affiliated companies<br />
(Tt 3,671). They were offset against accrued write-downs.
Accrued<br />
Write-downs<br />
Book value Depreciation<br />
Transfers Disposals As 29 Feb. 2004 As 29 Feb. 2004 As 29 Feb. 2004 As 1 Mar. 2003<br />
670 46 8,937 4,930 4,007 1,280 1,243<br />
729 12,745 345,669 150,031 195,638 174,663 15,002<br />
7,313 60,798 1,189,989 1,033,295 156,694 149,696 50,900<br />
33 3,449 44,064 36,960 7,104 5,778 2,703<br />
-8,745 507 4,955 0 4,955 9,357 0<br />
-670 77,499 1,584,677 1,220,286 364,391 339,494 68,605<br />
116 18,796 203,319 73,368 129,951 26,136 0<br />
-97 0 0 0 0 97 0<br />
0 17,007 25,834 0 25,834 32,192 438<br />
-19 15 62,602 2,127 60,475 50,324 0<br />
0 512 11,590 0 11,590 12,102 0<br />
0 100 0 0 0 100 0<br />
0 223 354 0 354 481 0<br />
0 36,653 303,699 75,495 228,204 121,432 438<br />
0 114,198 1,897,313 1,300,711 596,602 462,206 70,286<br />
<strong>Nordzucker</strong> 2003/2004 39
Annual Financial Statement <strong>Nordzucker</strong> <strong>AG</strong><br />
III. Statement of Income<br />
40<br />
1.<br />
2.<br />
3.<br />
4.<br />
5.<br />
6.<br />
7.<br />
8.<br />
9.<br />
10.<br />
11.<br />
12.<br />
13.<br />
14.<br />
15.<br />
16.<br />
–.<br />
17.<br />
18.<br />
19.<br />
20.<br />
21.<br />
22.<br />
Sales<br />
less market regulation levies<br />
Increase in finished goods<br />
Other own costs capitalised<br />
Other operating income<br />
Cost of materials<br />
a) Cost of raw materials and supplies and for<br />
goods purchased<br />
b) Cost of services purchased<br />
Personnel expenses<br />
a) Wages and salaries<br />
b) Social security, pensions and other benefit costs<br />
Depreciation on intangible assets, and plant and equipment<br />
Other operating expenses<br />
Income from participating interests<br />
Income from other securities and loanss<br />
Other interest and similar income<br />
Depreciation on financial assets<br />
Expenditure for assumption of losses<br />
Interest and similar expenses<br />
Profit form ordinary operations<br />
Write-down on special loss account from reserves pursuant to<br />
Section 17, para. 4 DMBilG<br />
Extraordinary income/extraordinary result<br />
Taxes on income<br />
Other taxes<br />
Net income<br />
Profit brought forward<br />
Transfers to other retained earnings<br />
Net consolidated income<br />
01-03-2003 –<br />
29-02-2004<br />
int thous.<br />
936,328<br />
79,653<br />
856,675<br />
41,795<br />
145<br />
55,716<br />
954,331<br />
614,013<br />
18,046<br />
632,059<br />
322,272<br />
75,114<br />
26,671<br />
101,785<br />
69,848<br />
65,008<br />
236,641<br />
85,631<br />
3,089<br />
1,088<br />
955<br />
438<br />
2,146<br />
6,375<br />
-3,827<br />
81,804<br />
2,004<br />
0<br />
27,880<br />
1,032<br />
28,912<br />
50,888<br />
15<br />
25,400<br />
25,503<br />
Previous year<br />
in t thous.<br />
863,310<br />
70,082<br />
793,228<br />
34,839<br />
147<br />
42,628<br />
870,842<br />
568,411<br />
21,620<br />
590,031<br />
280,811<br />
71,717<br />
21,035<br />
92,752<br />
65,673<br />
47,972<br />
206,397<br />
74,414<br />
2,553<br />
2,660<br />
3,865<br />
85,482<br />
1,347<br />
7,050<br />
-84,801<br />
10,387<br />
0<br />
90,432<br />
31,277<br />
3,010<br />
34,287<br />
45,758<br />
9<br />
22,870<br />
22,897
IV. Statement of Cash Flows<br />
Net income<br />
Changes in property, plant and equipment<br />
Changes in financial assets<br />
Changes in long-term provisions<br />
Profit from mergers<br />
Other expenditures/income with cash effect<br />
(amendments, special items, special loss account)<br />
Changes in finished goods<br />
Cash flow according to DVFA<br />
Changes in short-term reserves<br />
Result of disposals of property, plant and equipment<br />
Changes in inventories, receivables and other assets not assigned<br />
to investing and financing activities<br />
Changes in trade payables and other liabilities not assigned to investing<br />
and financing activities<br />
Cash flow from operating activities<br />
Proceeds from retirements of tangible assets<br />
Investments in tangible assets<br />
Investments in intangible assets<br />
Proceeds from retirements of financial assets<br />
Investments in financial assets<br />
Cash flow from investing activities<br />
Equity changes<br />
Dividend<br />
Changes in amortisation/borrowings<br />
Cash flow from financing activities<br />
Changes in cash and cash equivalents<br />
Cash and cash equivalents at the beginning of the period<br />
Additions through mergers/other changes<br />
Cash and cash equivalents at the end of the period<br />
in t mill.<br />
+50.9<br />
+69.8<br />
-3.2<br />
+8.8<br />
0.0<br />
-15.7<br />
-16.3<br />
+94.3<br />
-13.4<br />
+0.8<br />
+5.5<br />
-17.7<br />
+69.5<br />
+2.3<br />
-35.7<br />
-3.2<br />
+22.1<br />
-122.8<br />
-137.3<br />
+11.5<br />
-19.5<br />
+22.1<br />
+14.1<br />
-53.7<br />
+59.8<br />
+0.1<br />
+6.2<br />
Previous year<br />
in t mill.<br />
+45.8<br />
+65.5<br />
+84.5<br />
+5.1<br />
-90.4<br />
-18.0<br />
+6.5<br />
+99.0<br />
-20.4<br />
-1.9<br />
+86.2<br />
-81.9<br />
+81.0<br />
+4.0<br />
-54.5<br />
-0.5<br />
+15.8<br />
-34.1<br />
-69.3<br />
0.0<br />
-29.8<br />
-21.6<br />
-51.4<br />
-39.7<br />
+99.5<br />
0.0<br />
+59.8<br />
<strong>Nordzucker</strong> 2003/2004 41
Annual Statement <strong>Nordzucker</strong> Group<br />
I. Balance Sheet<br />
42<br />
Assets<br />
A. Fixed Assets<br />
I. Intangible Assets<br />
–. Rights of use and similar rights<br />
–. Goodwill<br />
II. Property, Plant & Equipment<br />
1. Land and buildings<br />
2. Technical equipment, plant and machines<br />
3. Other equipment, fixtures and fittings<br />
4. Advance payments and construction in progress<br />
III. Financial Assets<br />
1. Shares in affiliated companies<br />
–. Advance payments on shares in affiliated companies<br />
2. Investments<br />
3. Investments in affiliated companies<br />
–. Loans to companies in which an interest is held<br />
4. Loans to affiliated companies<br />
5. Security investments<br />
6. Other loans<br />
B. Current Assets<br />
I. Land Earmarked for Sale<br />
II. Inventories<br />
1. Operating supplies<br />
2. Unfinished goods<br />
3. Finished goods and merchandise<br />
4. Advance payments<br />
III. Receivables and Sundry Assets<br />
1. Trade receivables<br />
2. Receivables from affiliated companies<br />
3. Receivables from companies in which an interest is held<br />
4. Other assets<br />
IV. Other Securities<br />
V. Cash at Hand and Cash at Banks<br />
C. Prepaid Expenses<br />
I. Debt Discount<br />
II. Other<br />
–. Special Loss Account from Reserves<br />
pursuant to Section 17, para. 4 DMBilG<br />
29-02-2004<br />
in t thous.<br />
6,159<br />
0<br />
6,159<br />
238,858<br />
205,579<br />
10,668<br />
9,003<br />
464,108<br />
903<br />
0<br />
20,103<br />
30,394<br />
0<br />
11,591<br />
32<br />
432<br />
63,455<br />
533,722<br />
2,110<br />
22,133<br />
819<br />
437,454<br />
43<br />
460,449<br />
63,572<br />
59<br />
2,550<br />
28,428<br />
94,609<br />
472<br />
33,100<br />
590,740<br />
135<br />
523<br />
658<br />
0<br />
1,125,120<br />
28-02-2003<br />
in t thous.<br />
2,564<br />
7<br />
2,571<br />
199,711<br />
177,891<br />
8,829<br />
11,363<br />
397,794<br />
234<br />
97<br />
51,012<br />
6,153<br />
7,500<br />
4,602<br />
118<br />
547<br />
70,263<br />
470,628<br />
1,905<br />
17,213<br />
792<br />
358,838<br />
140<br />
376,983<br />
46,699<br />
66<br />
14,023<br />
34,233<br />
95,021<br />
376<br />
75,589<br />
549,874<br />
174<br />
183<br />
357<br />
2,004<br />
1,022,863
Liabilities<br />
A. Equity Capital<br />
I. Subscribed Capital (share capital)<br />
II. Capital Reserves<br />
III. Earnings Reserves<br />
–. Special reserve pursuant to Section 17, para. 4 DMBilG<br />
–. Other earning reserves<br />
IV. Adjustment Item for Currency Disparities<br />
V. Loss Brought Forward<br />
VI. Net Consolidated Income<br />
VII. Adjustment Item for Minority Interests<br />
B. Special Items<br />
–. Investment Grants for Fixed Assets<br />
–. Tax-Allowable Reserve<br />
(Value adjustment for plant and equipment due<br />
to special depreciation)<br />
C. Provisions<br />
1. Provisions for pensions and similar obligations<br />
2. Accrued taxes<br />
3. Other provisions<br />
D. Liabilities<br />
1. Due to banks<br />
2. Advance payments on orders<br />
3. Trade accounts payable<br />
–. Accepting drawn bills<br />
Issuing own bills<br />
4. Due to affiliated companies<br />
5. Due to companies in which an interest is held<br />
6. Other liabilities<br />
thereof for taxes: in t thous. 8,508 (previous year: in t thous. 9,214)<br />
thereof for social security: in t thous. 2,582<br />
(previous year: in t thous. 2,723)<br />
E. Deferred Income<br />
29-02-2004<br />
in t thous<br />
117,531<br />
112,833<br />
0<br />
75,145<br />
75,145<br />
-1,913<br />
1,878<br />
23,347<br />
4,983<br />
330,048<br />
7,524<br />
0<br />
7,524<br />
120,434<br />
54,175<br />
138,898<br />
313,507<br />
264,629<br />
756<br />
170,598<br />
0<br />
250<br />
10,383<br />
27,137<br />
473,753<br />
288<br />
1,125,120<br />
28-02-2003<br />
in t thous<br />
101,765<br />
99,489<br />
2,004<br />
61,098<br />
63,102<br />
624<br />
8,692<br />
26,357<br />
13,336<br />
295,981<br />
8,290<br />
94,253<br />
102,543<br />
106,385<br />
20,526<br />
135,244<br />
262,155<br />
161,384<br />
803<br />
164,890<br />
308<br />
990<br />
5,616<br />
28,193<br />
362,184<br />
0<br />
1,022,863<br />
<strong>Nordzucker</strong> 2003/2004 43
Annual Statement <strong>Nordzucker</strong> Group<br />
II. Assets Analysis<br />
44<br />
In t thous.<br />
Acquisition and<br />
Production Costs<br />
As 1 March 2003 Additions by asset<br />
transfer/accretion-<br />
Additions<br />
I. Intangible Assets<br />
1. Rights of use and similar rights 8,177 2,417 3,685<br />
2. Goodwill 53 0 0<br />
8,230 2,417 3,685<br />
II. Tangible Assets<br />
1. Land and buildings 364,011 66,870 11,308<br />
2. Technical equipment, plant and machines 1,159,116 195,895 35,562<br />
3. Other equipment, fixtures and fittings 49,690 7,905 4,615<br />
4. Advance payments and construction in progress 11,368 3,334 13,510<br />
1,584,185 274,004 64,995<br />
III. Financial Assets<br />
1. Shares in affiliated companies 519 867 2,038<br />
–. Advance payments on shares in affiliated companies 97 0 0<br />
2. Investments 60,931 -77 10,157<br />
3. Investments in affiliated companies 6,153 -18,164 3,773<br />
–. Loans to companies in which an interest<br />
is held 7,500 0 0<br />
4. Loans to affiliated companies 4,602 0 0<br />
5. Security investments 244 -7 4<br />
6. Other loans 1,903 46 167<br />
81,949 -17,335 16,139<br />
Totals 1,674,364 259,086 84,819<br />
Write-ups with an effect on income (gains in value) were recorded for intangible and tangible assets<br />
(Tt248) as well as for security investments (Tt45). They were offset against accrued write-downs.
Accrued<br />
Write-downs<br />
Book value Depreciation<br />
Transfers Disposals As 29 Feb. 2004 As 29 Feb. 2004 As 29 Feb. 2004 As 1 Mar. 2003<br />
1,608 192 15,695 9,536 6,159 2,564 2,114<br />
0 53 0 0 0 7 7<br />
1,608 245 15,695 9,536 6,159 2,571 2,121<br />
2,684 14,444 430,429 191,571 238,858 199,711 18,580<br />
11,712 65,447 1,336,838 1,131,259 205,579 177,891 62,776<br />
340 4,826 57,724 47,056 10,668 8,829 4,599<br />
-16,344 2,636 9,232 229 9,003 11,363 244<br />
-1,608 87,353 1,834,223 1,370,115 464,108 397,794 86,199<br />
568 2,108 1,884 981 903 234 294<br />
-97 0 0 0 0 97 0<br />
-40,989 44 29,978 9,875 20,103 51,012 0<br />
40,518 1,886 30,394 0 30,394 6,153 0<br />
-7,500 0 0 0 0 7,500 0<br />
7,500 511 11,591 0 11,591 4,602 0<br />
0 130 111 79 32 118 45<br />
0 330 1,786 1,354 432 547 0<br />
0 5,009 75,744 12,289 63,455 70,263 339<br />
0 92,607 1,925,662 1,391,940 533,722 470,628 88,659<br />
<strong>Nordzucker</strong> 2003/2004 45
Annual Statement <strong>Nordzucker</strong> Group<br />
III. Statement of Income<br />
46<br />
1.<br />
2.<br />
3.<br />
4.<br />
5.<br />
6.<br />
7.<br />
8.<br />
9.<br />
10.<br />
11.<br />
12.<br />
13.<br />
14.<br />
15.<br />
16.<br />
17.<br />
18.<br />
19.<br />
20.<br />
21.<br />
Sales<br />
less market regulation levies<br />
Increase (previous year reduction) in finished goods<br />
Other own costs capitalised<br />
Other operating income<br />
Cost of materials<br />
a) Cost of raw materials and supplies and for<br />
goods purchased<br />
b) Cost of services purchased<br />
Personnel expenses<br />
a) Wages and salaries<br />
b) Social security, pensions and other benefit costs<br />
Depreciation on intangible assets, and plant and equipment<br />
Other operating expenses<br />
Income from participating interests<br />
Profit from associated companies<br />
Income from other securities and loans<br />
Other interest and similar income<br />
Depreciation on financial assets<br />
Interest and similar expenses<br />
Profit form ordinary operations<br />
Write-down on special loss account from reserves pursuant to Section 17,<br />
para. 4 DMBilG<br />
Taxes on income<br />
Other taxes<br />
Net income<br />
Proportion of profit to non-group shareholders<br />
Net consolidated income<br />
01-03-2003 –<br />
29-02-2004<br />
in t thous.<br />
1,253,992<br />
81,425<br />
1,172,567<br />
37,812<br />
705<br />
54,307<br />
1,265,391<br />
824,128<br />
23,886<br />
848,014<br />
417,377<br />
106,668<br />
34,267<br />
140,935<br />
88,320<br />
126,449<br />
355,704<br />
61,673<br />
22<br />
1,698<br />
399<br />
1,281<br />
339<br />
13,928<br />
-10,867<br />
50,806<br />
2,004<br />
23,677<br />
3,011<br />
26,688<br />
22,114<br />
-1,233<br />
23,347<br />
Previous year<br />
in t thous.<br />
1,146,270<br />
70,083<br />
1,076,187<br />
1,770<br />
935<br />
49,479<br />
1,124,831<br />
721,957<br />
30,161<br />
752,118<br />
372,713<br />
99,619<br />
27,116<br />
126,735<br />
77,862<br />
96,492<br />
301,089<br />
71,624<br />
1,401<br />
327<br />
633<br />
4,895<br />
1,027<br />
12,000<br />
-5,771<br />
65,853<br />
0<br />
32,960<br />
4,645<br />
37,605<br />
28,248<br />
1,891<br />
26,357
IV. Statement of Cash Flows<br />
Net consolidated income<br />
(including share of profit of minority shareholders)<br />
Changes in property, plant and equipment<br />
Changes in financial assets<br />
Changes in long-term provisions<br />
Other expenditures/income with cash effect<br />
(amendments, special items, special loss account)<br />
Changes in unfinished and finished goods<br />
Cash flow according to DVFA<br />
Changes in short-term reserves<br />
Result of disposals of property, plant and equipment<br />
Changes in inventories, receivables and other assets not assigned<br />
to investing and financing activities<br />
Changes in trade payables and other liabilities not assigned to<br />
investing and financing activities<br />
Cash flow from operating activities<br />
Proceeds from retirements of tangible assets<br />
Investments in tangible assets<br />
Proceeds from intangible assets<br />
Investments in intangible assets<br />
Proceeds from retirements of financial assets<br />
Investments in financial assets<br />
Investments in the acquisition of consolidated companies<br />
Cash flow from investing activities<br />
Equity changes<br />
Dividend<br />
Payments to minority shareholders<br />
Changes in amortisation/borrowings<br />
Cash flow from financing activities<br />
Changes in cash and cash equivalents<br />
Cash and cash equivalents at the beginning of the period<br />
Additions through mergers/other changes<br />
Cash and cash equivalents at the end of the period<br />
in t mill.<br />
+22.1<br />
+88.1<br />
+0.3<br />
+8.1<br />
+0.5<br />
-12.3<br />
+106.8<br />
-22.4<br />
-1.4<br />
+26.0<br />
-21.8<br />
+87.2<br />
+6.5<br />
-65.0<br />
0.0<br />
-3.6<br />
+4.9<br />
-5.8<br />
-68.2<br />
-131.2<br />
+11.5<br />
-19.5<br />
0.0<br />
+9.3<br />
+1.3<br />
-42.7<br />
+75.6<br />
+0.2<br />
+33.1<br />
Previous year<br />
in t mill.<br />
+28.2<br />
+78.7<br />
+0.0<br />
+9.2<br />
-18.0<br />
+1.8<br />
+99.9<br />
-22.3<br />
-1.7<br />
+20.2<br />
-18.7<br />
+77.4<br />
+5.0<br />
-65.0<br />
+0.1<br />
-0.8<br />
+35.4<br />
-16.9<br />
-15.4<br />
-57.6<br />
0.0<br />
-29.8<br />
-0.1<br />
-32.2<br />
-62.1<br />
-42.3<br />
+114.1<br />
+3.8<br />
+75.6<br />
<strong>Nordzucker</strong> 2003/2004 47
Notes<br />
48<br />
1. General<br />
Both the annual and the consolidated<br />
statement for <strong>Nordzucker</strong> <strong>AG</strong> published<br />
29 February 2004 have been drawn up in<br />
accordance with accounting regulations<br />
governed by German commercial law.<br />
The provisions of the German Stock Companies<br />
Act have also been adhered to. The<br />
details presented below provide explanations<br />
on the two <strong>Nordzucker</strong> <strong>AG</strong> reports<br />
together; unless indicated otherwise, comments<br />
and statements apply to both.<br />
In the interest of clarity, legally required<br />
comments on items listed in the<br />
balance sheet and in the statement of<br />
income of the <strong>Nordzucker</strong> annual report<br />
are largely to be found in the Notes. The<br />
methods of classification and the principles<br />
of identification and valuation introduced<br />
last year are continued in this<br />
report. Should it prove necessary to<br />
depart from last year’s system, a separate<br />
explanation will be given.<br />
The statement of income is drawn up<br />
from all group companies in line with the<br />
total expenditure format.<br />
In the statement of income, EU sugar<br />
market regulations levies have been<br />
deducted from sales revenues to give<br />
greater informational value through the<br />
separate reduction of these transitory<br />
levies. The imposition of these levies<br />
bears no reflection on actual corporate<br />
performance.<br />
Comparing the figures in the annual<br />
report 2003/04 with the individual financial<br />
statements of the previous year, we<br />
can see that Union-Zucker Südhannover<br />
GmbH in Nordstemmen transferred nearly<br />
all assets and liabilities to book values<br />
in exchange for the granting of corporate<br />
status. Union-Zucker operated a sugar<br />
factory in Nordstemmen which will continue<br />
to be operational.<br />
Furthermore, and in connection with<br />
this, commercial operations which last<br />
year were processed by <strong>Nordzucker</strong><br />
GmbH & Co. KG were integrated into<br />
<strong>Nordzucker</strong> <strong>AG</strong> with effect from 1 January<br />
2004. In particular, inventories were transferred<br />
to <strong>Nordzucker</strong> <strong>AG</strong> from this date.<br />
As a consequence of the transactions<br />
carried out above and to facilitate a comparison<br />
between both annual reports of<br />
<strong>Nordzucker</strong> <strong>AG</strong>, the following changes<br />
are given for significant report items:<br />
Additions through fusion/merger,<br />
or integration of commercial operations<br />
(book value) for (in t million)<br />
Tangible assets 61.6<br />
Financial assets 2.8<br />
Inventories<br />
Accounts receivable<br />
30.3<br />
and other assets 10.2<br />
Special item 5.3<br />
Reserves<br />
Trade payables<br />
24.2<br />
and other obligations 59.8<br />
2. Currency Translation<br />
Currency receivables are translated at the<br />
bank’s selling rate on the date transacted<br />
or at a lower rate on the balance sheet<br />
date, currency obligations at the bank’s<br />
buying rate on the date transacted or at<br />
a higher rate on 29 February 2004.<br />
Assets and liabilities for foreign subsidiaries<br />
in the consolidated statement are<br />
translated at the middle rate on the<br />
balance sheet date, while items in the<br />
income statement are generally translated<br />
at the average middle rate for the<br />
year. Currency disparities arising from<br />
equity capital translations at the time<br />
recognition in the consolidated statement<br />
are treated as not affecting net
income and allocated to equity capital or<br />
the adjusting item for minority interests.<br />
3. Scope of Consolidation<br />
The companies to be consolidated include<br />
all subsidiaries in which we have a<br />
direct or indirect controlling interest<br />
following the principle of full consolidation,<br />
in as far as they are not of marginal<br />
significance. At the date of the <strong>AG</strong>’s<br />
report, financial statements of a total of<br />
15 German and 17 international companies<br />
were included. SweetGredients<br />
GmbH & Co. KG, Nordstemmen/<br />
Germany, Promyk Sp.z o.o.o, Przezmierowo/Poland,<br />
Szerensci Cukorgyár Rt.,<br />
Szerencs/Hungary, Mátravidéki Cukorgyárak<br />
Rt., Hatvan/Hungary, Szolnoki<br />
Cukorgyár Rt., Szolnok/Hungary all appear<br />
in the consolidated report for the<br />
first time. One German company was<br />
lost to accretion.<br />
The consolidated statement of Amino<br />
GmbH, Frellstedt/Germany as well as the<br />
financial statement of Norddeutsche<br />
Zucker-Raffinerie GmbH, Frellstedt/Germany<br />
are included in the consolidated<br />
statement, unamended in accordance<br />
with the equity method. Furthermore,<br />
the financial statement of Syral S.A.<br />
Marckolsheim/France was included in<br />
the consolidated statement also in accordance<br />
with the equity method.<br />
Due to their relative marginal significance<br />
in regard to the asset, financial and<br />
profit situation ten German and ten international<br />
companies were not included in<br />
the consolidated statement.<br />
The register of share ownership has<br />
been deposited at the Commercial<br />
Registry of the district court in Braunschweig<br />
under HRB 2936.<br />
4. Consolidation Methods<br />
In consolidating the companies involved,<br />
the following statements were incorporated:<br />
• one company reporting on<br />
29 February 2004<br />
• 30 companies reporting on<br />
31 December 2003<br />
• one company reporting on<br />
30 September 2003<br />
Transactions of particular significance for<br />
the asset, financial and profit situation of<br />
companies with a reporting date differing<br />
from the consolidated reporting date<br />
which were effected between the company’s<br />
own reporting date and 29 February<br />
2004 were taken into account.<br />
For fully consolidated companies and<br />
companies consolidated at equity, consolidation<br />
of investments was carried out in<br />
line with the book value method. This<br />
proportionally allocates acquisition costs<br />
relative to the group’s share of equity capital<br />
in the holding company at the time of<br />
first inclusion in the consolidated statement,<br />
or at the acquisition of this equity.<br />
In accordance with Section 309,<br />
para. 1, sentence 3 of the German Commercial<br />
Code, debit differences on the<br />
assets side are to be balanced against<br />
differences on the liabilities side and<br />
offset against other retained earnings.<br />
Differences identified in fully consolidated<br />
companies and companies consolidated<br />
at equity have developed as follows<br />
for the year under review:<br />
Asset side Liability side<br />
in t thous. in t thous.<br />
as 1 Mar. 2003 91,081 30,197<br />
Amendment 24,639 32<br />
as 29 Feb. 2004 115,720 30,229<br />
<strong>Nordzucker</strong> 2003/2004 49
Notes<br />
50<br />
Following the book value method (Section<br />
312, para. 1, No. 1 of the Commercial<br />
Code), equity consolidations for the<br />
subgroup statement of Amino GmbH,<br />
Frellstedt/Germany results in debit differences<br />
on the liabilities side of Tt * 3,618<br />
and for Nordeutsche Zucker-Raffinerie<br />
GmbH, Frellstedt/Germany of Tt 145.<br />
For Syral S.A., Marckolsheim/ France a<br />
debit difference on the assets side of<br />
Tt 19,910 (first consolidated reporting<br />
date, 1 October 2002).<br />
Interim results of non-marginal significance<br />
have been eliminated from the<br />
consolidated statement in line with Section<br />
304 Commercial Code. We have<br />
abstained from eliminating interim results<br />
of associated companies, according to<br />
Section 312, para. 5.<br />
Sales, expenditures and earnings,<br />
accounts receivable and obligations between<br />
fully consolidated companies have<br />
been zeroed out. There has been no<br />
charging of third-party debtor relations.<br />
The assets and liabilities of companies<br />
included transferred in the consolidated<br />
statement are uniformly balanced in line<br />
with the principles described below.<br />
5. Notes on Balance Sheet Items<br />
The intangible assets acquired for payment<br />
are shown at cost less straight-line<br />
depreciation, assessed in accordance with<br />
their standard estimated useful life.<br />
Tangible assets are shown at acquisition<br />
or production cost. In addition to<br />
directly attributable production costs,<br />
assets manufactured in-house are also<br />
assigned a costing supplement according<br />
to taxation-related valuation regulations.<br />
Interest attributable to the period of pro-<br />
* Tt = thousand Euros<br />
duction is not entered on the assets side.<br />
In as far as tangible assets have a<br />
limited useful life, they are depreciated at<br />
annual rates estimated to write off their<br />
costs over their estimated useful life. The<br />
useful life is assessed on the basis of fiscal<br />
regulations, as long as generally useable<br />
assets are affected.<br />
Scheduled depreciation – where<br />
allowed – principally follows the declining<br />
balance method of depreciation. We<br />
have also exercised the option of transferring<br />
from declining to straight-line<br />
depreciation. Further, for acquisitions<br />
made before 1 January 2004, we have<br />
drawn on directive 44 of the income tax<br />
regulations, which simplifies some depreciation<br />
procedures (full depreciation rate<br />
for assets acquired in the first six months<br />
of the year, half the rate for acquisitions<br />
made in the second half of the year). For<br />
acquisitions made after 31 December<br />
2003, depreciation is made proportionally<br />
in line with the new, changes regulations.<br />
The effects of this are of marginal significance.<br />
Low-valued assets are written off<br />
in full in the year of their acquisition and<br />
are entered as retirements after five years.<br />
Unplanned depreciation is effected using<br />
anticipated and sustained loss of value.<br />
In 2003/2004, <strong>Nordzucker</strong> <strong>AG</strong> posted Tt<br />
4,888 – the group Tt 6,852 – to such<br />
adjustments attached to lower values.<br />
In taking advantage of taxation concessions<br />
in Germany, in previous years we<br />
have carried out special write-downs in<br />
accordance with Section 4 of the development<br />
area law (for the new Bundesländer),<br />
Section 3 of the law promoting<br />
government aid to border regions,<br />
Section 6b of the income tax law (on<br />
transferring profit from sales) and direc-
tive 34 of the income tax regulations (on<br />
grants). These were shown as depreciation<br />
reserves on tangible assets in<br />
“special reserves”. Accordingly, the asset<br />
history sheet only shows scheduled and<br />
(in the case of lasting value losses)<br />
unplanned depreciation. In 2003/04, taxrelated<br />
special write-downs of Tt 1,130<br />
were carried out at <strong>Nordzucker</strong> <strong>AG</strong>,<br />
which were based on the transfer of hidden<br />
reserves in accordance with Section<br />
6b of the income tax law.<br />
In as far as they have not been attached<br />
lower values due to sustained loss of<br />
value in 2003/04 or in previous years,<br />
financial assets are valued at acquisition<br />
cost.<br />
Investments in associated companies<br />
in the individual financial statements<br />
concern interest-bearing and non-interestbearing<br />
loans.<br />
The development of the fixed assets<br />
of <strong>Nordzucker</strong> <strong>AG</strong> and of the group can<br />
be seen in the analysis of assets of pages<br />
38/39 and 44/45.<br />
Operating supplies and goods are<br />
valued at their average acquisition costs<br />
or the lower exchange or market price.<br />
Devaluation allowances are made for<br />
stock risks arising from lengthy storage,<br />
limited utilisation, etc.<br />
Sugar stocks from our own production<br />
listed under finished products are<br />
valued at production cost unless, following<br />
the principles of loss-free valuation<br />
for sugar or sugar by-products, it has<br />
been necessary to allocate a lower value<br />
in respect of the revenues received. In<br />
addition to directly attributable costs<br />
incurred in manufacture, production<br />
costs also comprise a proportion of overheads<br />
assigned to production and consumption-related<br />
depreciation. Fiscal<br />
regulations are applied in respect of<br />
calculating imputed costs. Interest<br />
attributable to borrowed capital is not<br />
included in the costs of production.<br />
‘Properties for sale’ includes certain<br />
undeveloped and developed real estate<br />
up for sale.<br />
Receivables are shown at their face<br />
value. Allowances for losses on individual<br />
receivables have been endorsed as bad<br />
debts. A lump-sum allowance is provided<br />
for the latent risk of default.<br />
‘Other assets’ primarily comprises<br />
reimbursements for out-of-pocket<br />
expenses and claims in connection with<br />
power generation. The item also includes<br />
receivables relating to claims submitted<br />
for tax rebates.<br />
With the exception of Tt 752 at<br />
<strong>Nordzucker</strong> <strong>AG</strong> and Tt 1,447 in the<br />
group, all accounts receivable have a<br />
remaining time of less than one year.<br />
The special loss account from reserves<br />
in pursuant to Section 17, para. 4<br />
DMBilG, the law on assessing capital<br />
values of items initially entered in deutschmarks,<br />
has been fully written off in this<br />
fiscal year. The similarly named reserves<br />
in the balance sheet were exhausted/<br />
closed in the current year.<br />
As of 29 February 2004, subscribed<br />
capital (capital stock) amounted to<br />
Tt 117,531, divided into 45,910,493<br />
registered individual share certificates with<br />
restricted transferability. In the year under<br />
review, in a capital increase from authorised<br />
capital 6,588,093 new shares were<br />
issued. The premiums received from this<br />
<strong>Nordzucker</strong> 2003/2004 51
Notes<br />
52<br />
capital increase of Tt 13,344 are shown in<br />
capital reserves. In accordance with Sections<br />
237 ff. of the Company Law, a total<br />
of 429,400 shares at a nominal value of<br />
t 1,099,264 were bought back at a price<br />
of t 14,83 per share. The book value difference<br />
of t 5,267,664.50 was offset against<br />
other retained earnings. At a nominal value<br />
of t 39,680.00, 15,500 company-owned<br />
shares were sold. This brought about a loss<br />
of t 353,914.29. Given the consent of the<br />
supervisory board, the managing board is<br />
authorised to increase capital stock<br />
t 46.3m (authorised capital). The net profit<br />
for the year contained a profit brought<br />
forward from the previous year of<br />
t 14,181.19.<br />
In the year under review, the special<br />
reserves in pursuant to Section 17,<br />
para. 4 DMBilG were allocated to other<br />
retained earnings.<br />
A resolution passed by the general<br />
meeting approved transfer of an additional<br />
Tt 3,340 from the <strong>Nordzucker</strong> <strong>AG</strong><br />
annual surplus of the previous year to<br />
other retained earnings. From this year’s<br />
annual surplus, Tt 25,400 was transferred<br />
to other retained earnings.<br />
Consolidated equity capital developed<br />
in line with table 1 below. The special<br />
item for investment grants concerned<br />
several benefits in the current and the<br />
previous year from individual support<br />
programmes.<br />
The amounts given in the table below<br />
for <strong>Nordzucker</strong> <strong>AG</strong> show the assets allowance<br />
listed as a special reserve and<br />
declared in accordance with Section 281<br />
Commercial Code which are subject to<br />
special depreciation.<br />
German source (in t mill.)<br />
Section 3 ZFRG 16,777<br />
Section 4 FördergebietsG 33,652<br />
Section 6b EStG 31,716<br />
Directive 35 EStR 798<br />
Sections 7b and 7d EstG, KonjVO 577<br />
83,520<br />
Both special items will be dissolved<br />
when the amounted depreciated under<br />
commercial law exceeds the values allowance<br />
under taxation law.<br />
For the first time in the consolidated<br />
statement, special items set aside in previous<br />
years in line with taxation regulations<br />
can no longer be transferred (Sec-<br />
Table 1<br />
Consolidated equity capital<br />
(in t thous.) 1 Mar. 2003 Capital Capital Difference Annual Dividend Sundry 29 Feb. 2004<br />
increase buy back result<br />
Subscribed capital (share capital) 101,765 16,865 -1,099 117,531<br />
Capital reserves<br />
Retained earnings<br />
99,489 13,344 112,833<br />
Special reserves (in accord. with Sec. 17, para. 2,004 -2,004 0<br />
Other retained earnings<br />
4 DMBilG)<br />
61,098 -5,268 -42,441 61,756 75,145<br />
63,102 -5,268 -42,441 59,752 75,145<br />
Adjustment item for currency disparities 624 -2,537 -1,913<br />
Loss brought forward -8,692 -19,543 26,357 -1,878<br />
Consolidated annual surplus 26,357 23,347 -26,357 23,347<br />
Adjustment item for minority interests 13,336 -1,233 -7,120 4,983<br />
295,981 30,209 -6,367 -42,441 22,114 -19,543 50,095 330,048
tion 308, para. 3 Commercial Code).<br />
They have been partially re-classified as<br />
reserves for deferred tax liabilities (depending<br />
on the tax rate for <strong>Nordzucker</strong> <strong>AG</strong>)<br />
with the remaining amount classed as<br />
retained earnings.<br />
Provisions have been set aside in line<br />
with reasonable commercial assessment<br />
and comprise all recognisable risks and<br />
uncertain liabilities.<br />
Provisions for pensions and similar<br />
obligations are founded on insurancerelated<br />
calculations based on an interest<br />
rate of 6% and the mortality tables from<br />
1998. They correspond fully with the<br />
going values.<br />
Tax provisions comprise unpaid taxes<br />
for 2003/2004 and for previous years as<br />
well as Tt 33,646 (consolidated) for<br />
deferred tax liability.<br />
Other provisions include the following<br />
amounts for <strong>Nordzucker</strong> <strong>AG</strong> and for<br />
the group:<br />
<strong>AG</strong> Group<br />
(in t thous.) (in t thous.)<br />
Market regulation levies<br />
Obligations to staff (including early retirement/<br />
78,278 78,278<br />
severance payments, residual leave) 33,882 39,310<br />
Deferred maintenance and repair<br />
Measures for re-cultivation and waste disposal,<br />
5,991 7,064<br />
removal expenses 3,261 3,337<br />
Entries for provisions for deferred<br />
maintenance and repairs have been carried<br />
out in accordance with Section 249,<br />
para. 1, sentence 2, No. 1 Commercial<br />
Code.<br />
Obligations are shown at their<br />
redemption value. In as far as the<br />
amount advanced by borrowings is<br />
below the redemption value, the difference<br />
is recorded in accrued items<br />
(discounts) and reduced in line with<br />
the redemption amount.<br />
<strong>Nordzucker</strong> 2003/2004 53
Notes<br />
<strong>Nordzucker</strong> <strong>AG</strong> Obligations (in t thous.)<br />
54<br />
The following schedules show the<br />
maturities of obligations:<br />
29 February 2004 With a remaining time of<br />
less than 1–5 more than<br />
one year years 5 years<br />
1. Due to banks 141,696 97,428 36,940 7,328<br />
2. Trade payables 152,869 152,869 0 0<br />
3. Due to associated companies<br />
4. Due to companies in which<br />
5,959 5,959 0 0<br />
we have an equity interest 10,383 10,383 0 0<br />
5. Other obligations 22,147 22,034 6 107<br />
333,054 288,673 36,946 7,435<br />
Group Obligations (in t thous.)<br />
29 February 2004 With a remaining time of<br />
less than 1–5 more than<br />
one year years 5 years<br />
1. Due to banks 264,629 218,781 38,520 7,328<br />
2. Deposits received 756 756 0 0<br />
3. Trade payables 170,598 170,575 23 0<br />
4. Due to associated companies<br />
5. Due to companies in which we have<br />
250 250 0 0<br />
an equity interest 10.383 10,383 0 0<br />
6. Other obligations 27,137 27,013 17 107<br />
473,753 427,758 38,560 7,435<br />
Obligations to banks amounting to<br />
t 61.4m for <strong>Nordzucker</strong> <strong>AG</strong> and t 81.0m<br />
for the group are secured by mortgages.<br />
The Polish sugar factories used some<br />
fixed and current assets as security for<br />
loans.<br />
Lenders to foreign holdings have<br />
been assured that we will provide for the<br />
solvency of these companies at all times<br />
and that monies will be made available<br />
to these companies – in relation to our<br />
participation – in as far as this may be<br />
necessary.<br />
Trades payables are subject to the<br />
standard property rights in supplying<br />
capital equipment and inventories. All<br />
other obligations are unsecured.<br />
6. Notes on Income<br />
Statement Items<br />
Sales of sugar from our own production<br />
account for 81.6% of <strong>Nordzucker</strong><br />
<strong>AG</strong> sales revenues (before deducting<br />
market regulation levies) and 88.5% of<br />
group sales revenues. Of <strong>Nordzucker</strong> <strong>AG</strong><br />
sales, 96.9% were effected in Germany,<br />
2.0% in EU countries and 1.1% in other<br />
countries. In comparison, 69.5% of<br />
group sales were attributable to sales in<br />
Germany, 13.6% to sale in middle and<br />
eastern European countries, 13.2% to EU<br />
countries and 3.7% to other countries.<br />
Other operating income for<br />
<strong>Nordzucker</strong> <strong>AG</strong> and the group is recognised<br />
in the items in Table 5.<br />
Social security, pensions and other<br />
benefits recognises Tt 12,220 (group:<br />
Tt 15,098) for pension provisions.<br />
Other operating expenditures for<br />
<strong>Nordzucker</strong> <strong>AG</strong> and the group contain<br />
the items in Table 6.<br />
Income from subsidiaries at<br />
<strong>Nordzucker</strong> <strong>AG</strong> contains Tt 3,073 from<br />
associated companies.<br />
Expenditures from profit transfer<br />
agreements at <strong>Nordzucker</strong> <strong>AG</strong> are related<br />
to the assumption of a loss from an<br />
existing agreement.<br />
Income from other securities and<br />
loans at <strong>Nordzucker</strong> <strong>AG</strong> contains Tt 711<br />
from associated companies.<br />
In other interest and similar income,<br />
Tt 416 (group: Tt 14) is accounted for<br />
by associated companies.<br />
Interest and similar expenditure at<br />
<strong>Nordzucker</strong> <strong>AG</strong> contains Tt 147 (group:<br />
Tt 7) which is accounted for by associated<br />
companies.
Taxes on income mainly fall on the<br />
profit from ordinary operations. Changes<br />
in special items at <strong>Nordzucker</strong> <strong>AG</strong> have<br />
led to an increase in this year’s taxation<br />
expenses. As a result, declared net income<br />
is roughly 25% higher at <strong>Nordzucker</strong> <strong>AG</strong>.<br />
The magnitude of this annual enhancement<br />
to profits – due in large to carrying<br />
out taxable write-downs in the past – will<br />
continue to decline in the coming years<br />
as these write-downs are proportionally<br />
dissolved over time. This no longer<br />
impacts the consolidated statement since<br />
the transfer of taxable special items is no<br />
longer permitted in a consolidated statement.<br />
7. Cash Flow<br />
Drawn up in accordance with the German<br />
accounting standard No. 2, the cash flow<br />
identifies the causes for changes in liquidity<br />
– based on cash and cash equivalents<br />
– at <strong>Nordzucker</strong> <strong>AG</strong> and for the group,<br />
and presents these on pages 41 and 47.<br />
Table 5 Other operating income<br />
<strong>Nordzucker</strong> <strong>AG</strong> Group<br />
Income from<br />
(in t thous.) (in t thous.)<br />
Retirements<br />
Dissolution of<br />
1,608 4,124<br />
Provisions 21,863 29,200<br />
Special item for investment grants 1,478 1,481<br />
Provision for fixed assets 17,196 0<br />
Table 6 Other operating expenditures<br />
<strong>Nordzucker</strong> <strong>AG</strong> Group<br />
(in t thous.) (in t thous.)<br />
Losses from retirements<br />
Write-downs and provisions<br />
2,420 2,719<br />
related to receivables 1,538 3,007<br />
Allocation to reserves 1,130 149<br />
<strong>Nordzucker</strong> 2003/2004 55
Notes<br />
56<br />
8. Major Holdings<br />
Direct and indirect Equity Result<br />
shareholding capital in t thous.<br />
in % in t thous.<br />
Sugar Division<br />
<strong>Nordzucker</strong> GmbH & Co. KG, Braunschweig 100 9,531 584<br />
Sugar International Division<br />
Poland<br />
<strong>Nordzucker</strong> Polska Sp. zo.o., Przeżmierowo 100 -290 -493<br />
<strong>Nordzucker</strong> Polska Spółka<br />
komandytowa Sp.zo.o., Przeżmierowo 100 -4,294 -4,472<br />
Pomorski Cukier S.A., Chełmża 100 5,771 -3,806<br />
Wielkopolski Cukier S.A., Przeżmierowo 100 9,643 -4,420<br />
Promyk Sp.zo.o., Przeżmierowo 100 11,286 143<br />
Slowakia<br />
Považský Cukor a.s., Trencianska Teplá 95 22,413 1,203<br />
Hungary<br />
Szerencsi Cukorgyár Rt., Szerencs 93 11,795 -1,544<br />
Mátravidéki Cukorgyárak Rt., Hatvan 100 20,764 -203<br />
Szolnoki Cukorgyár Rt., Szolnok 98 19,854 -1,293<br />
Czech Republic<br />
Cukrovary TTD a.s, Dobrovice 34 71,060 5,657 1<br />
Business Development Division<br />
Anton Hübner GmbH & Co. KG, Ehrenkirchen 98 6,206 790<br />
Medopharm Arzneimittel GmbH & Co. KG,<br />
Freiburg i. Br. 98 -3,139 515<br />
SweetGredients GmbH & Co. KG, Nordstemmen 50 9,251 -7,769<br />
Syral S.A., Marckolsheim/France 50 42,815 1,600<br />
Amino GmbH, Frellstedt 50 8,491 765<br />
Norddeutsche Zucker-Raffinerie GmbH, Frellstedt 50 2,459 374<br />
1 based on 1 Jan. 2002 to 30 Sept. 2003 (21 months)<br />
The figures presented here for the international<br />
subsidiaries follow local regulations<br />
and do not correspond to the<br />
results assessed under German law for<br />
group accounting.<br />
9. Sundry Information<br />
Members of the managing board and<br />
the supervisory board are listed on<br />
pages 61 and 62.<br />
9.1. Group Positions<br />
Managing board and managers<br />
Dr. Ulrich Nöhle<br />
Member of the managing board at<br />
• NORDZUCKER GmbH & Co. KG<br />
• <strong>Nordzucker</strong> InnoCenter GmbH<br />
• NORDZUCKER SPEZIAL GmbH<br />
Member of the advisory board/shareholder<br />
committee/administrative board at<br />
• NPE Natur Pharma<br />
Ernährungsprodukte GmbH<br />
• Amino GmbH<br />
• Norddeutsche Zucker-Raffinerie GmbH<br />
• esparma GmbH<br />
• Syral S.A.<br />
• SweetGredients GmbH & Co. KG<br />
Jens Fokuhl<br />
Member of the managing board at<br />
• NORDZUCKER GmbH & Co. KG<br />
• NORDZUCKER SPEZIAL GmbH<br />
Supervisory board position at<br />
• Cukrovary TTD a.s.<br />
Member of the advisory board/shareholder<br />
committee/administrative board at<br />
• NPE Natur Pharma<br />
Ernährungsprodukte GmbH<br />
• Amino GmbH<br />
• Norddeutsche Zucker-Raffinerie GmbH<br />
Günter Jakobiak<br />
Member of the managing board at<br />
• NORDZUCKER GmbH & Co. KG<br />
• <strong>Nordzucker</strong> InnoCenter GmbH<br />
Member of the advisory board/shareholder<br />
committee/administrative board at<br />
• NPE Natur Pharma<br />
Ernährungsprodukte GmbH<br />
• Amino GmbH<br />
• Norddeutsche Zucker-Raffinerie GmbH
Achim Fölster<br />
Member of the advisory board/<br />
administrative board at<br />
• NPE Natur Pharma<br />
Ernährungsprodukte GmbH<br />
• Syral S.A.<br />
• SweetGredients GmbH & Co. KG<br />
Dr. Gerd Jung<br />
Member of the managing board at<br />
• <strong>Nordzucker</strong> Polska Spółka<br />
komandytowa Sp. z o.o.<br />
• <strong>Nordzucker</strong> Polska Sp. z o.o.<br />
Supervisory board position at<br />
• Wielkopolski Cukier S.A.<br />
• Pomorski Cukier S.A.<br />
• Považský Cukor a.s.<br />
• Szerencsi Cukorgyár Rt.<br />
• Szolnoki Cukorgyár Rt.<br />
• Mátravidéki Cukorgyárak Rt.<br />
Dr. Thomas Künne<br />
Supervisory board position at<br />
• Považský Cukor a.s.<br />
• Trnavsky Cukrovar a.s.<br />
• Szerencsi Cukorgyár Rt.<br />
• Szolnoki Cukorgyár Rt.<br />
• Mátravidéki Cukorgyárak Rt.<br />
Werner Küster<br />
Member of the executive board at<br />
• Szerencsi Cukorgyár Rt.<br />
• Szolnoki Cukorgyár Rt.<br />
• Mátravidéki Cukorgyárak Rt.<br />
Member of the managing board at<br />
• <strong>Nordzucker</strong> Polska Spółka<br />
komandytowa Sp. z o.o.<br />
• <strong>Nordzucker</strong> Polska Sp. z o.o.<br />
Supervisory board position at<br />
• Wielkopolski Cukier S.A.<br />
• Pomorski Cukier S.A.<br />
• Povazsky Cukor a.s.<br />
Achim Lukas<br />
Member of the managing board at<br />
• Promyk Sp.z o.o.<br />
• <strong>Nordzucker</strong> Polska Spółka<br />
komandytowa Sp. z o.o.<br />
• <strong>Nordzucker</strong> Polska Sp. z o.o.<br />
Supervisory board position at<br />
• Wielkopolski Cukier S.A.<br />
• Pomorski Cukier S.A.<br />
• Považský Cukor a.s.<br />
• Szerencsi Cukorgyár Rt.<br />
• Szolnoki Cukorgyár Rt.<br />
• Mátravidéki Cukorgyárak Rt.<br />
Viera Rajniakova<br />
Supervisory board position at<br />
• Szerencsi Cukorgyár Rt.<br />
• Szolnoki Cukorgyár Rt.<br />
• Mátravidéki Cukorgyárak Rt.<br />
Dr. Dieter Wulbrandt<br />
Member of the managing board at<br />
• <strong>Nordzucker</strong> InnoCenter GmbH<br />
9.2. Corporate Governance Code<br />
The compliance declaration of the managing<br />
and supervisory boards has been<br />
adapted and revised in line with the<br />
latest version of the German Corporate<br />
Governance Code. The declaration of<br />
24 February, 2004 is published on the<br />
<strong>Nordzucker</strong> homepage<br />
www.nordzucker.de/22_english/ and is<br />
printed here.<br />
<strong>Nordzucker</strong> 2003/2004 57
Independent Auditor’s <strong>Report</strong><br />
58<br />
Declaration of <strong>Nordzucker</strong> <strong>AG</strong> concerning the German Corporate Governance Code<br />
in conformity with Article 161 of the German Company Law (AktG)<br />
The managing and supervisory boards of <strong>Nordzucker</strong><br />
<strong>AG</strong> Braunschweig have studied in detail the recommendations<br />
of the government commission “German<br />
Corporate Governance Code”, which the Federal<br />
Ministry of Justice notified in the official part of the<br />
Federal Bulletin of 4 July 2003. Both boards agree to<br />
the regulations set forth in that code. Even though<br />
the German Corporate Governance Code is not binding<br />
for <strong>Nordzucker</strong> <strong>AG</strong> as a company that has not<br />
sought stock exchange listing, <strong>Nordzucker</strong> <strong>AG</strong> has<br />
complied, and will comply, with the recommendations<br />
made in that code except for the following<br />
exclusions:<br />
1. The German Corporate Governance Code recommends<br />
in clause 3.8 that in effecting a Directors &<br />
Officers insurance (D&O insurance for short) the company<br />
arrange for an adequate own-risk clause. The<br />
D&O insurance <strong>Nordzucker</strong> <strong>AG</strong> has taken out does at<br />
the moment not provide any retention either for the<br />
managing board nor for the supervisory board.<br />
2. The German Corporate Governance Code recommends<br />
in clause 4.2.4 that the annex of the<br />
consolidated financial statement show the compensation<br />
for the members of the supervisory board with<br />
fixed allowance, profit-oriented elements and elements<br />
based on long-term incentives. These details<br />
should be shown in an individualized form. It has<br />
been agreed with the supervisory board that the company<br />
will refrain from such itemization.<br />
3. The German Corporate Governance Code recommends<br />
in clause 5.4.1 that an age limit be defined<br />
and considered for members of the supervisory board.<br />
<strong>Nordzucker</strong> <strong>AG</strong> has defined a limit of 65 years of age<br />
for candidates nominated as supervisory board members.<br />
In its board elections, the general meeting of<br />
5 September 2003 deviated from this principle in two<br />
cases by way of exception, because in view of their<br />
excellent abilities and experience, gained not least<br />
during long years as members of the executive bodies<br />
of <strong>Nordzucker</strong> <strong>AG</strong> and Union Zucker Südhannover,<br />
the two candidates concerned will be able to make<br />
valuable contributions to the work of the supervisory<br />
board of <strong>Nordzucker</strong> <strong>AG</strong>.<br />
4. The German Corporate Governance Code recommends<br />
in clause 5.4.5 that the compensation for the<br />
members of the supervisory board distinguish between<br />
committee chairman and committee members.<br />
Neither the chairman nor the members of the supervisory<br />
board committees receive any special compensation<br />
for their work in such committees.<br />
The German Corporate Governance Code also recommends<br />
in the aforementioned clause that the annex<br />
of the consolidated financial statement show the compensation<br />
for members of the supervisory board in an<br />
individualized form showing the different compensation<br />
elements. The company will refrain from such itemization.<br />
5. The German Corporate Governance Code recommends<br />
in clause 7.1.1 that interim reports be used as<br />
an instrument to inform shareholders and third parties<br />
in the course of the financial year. <strong>Nordzucker</strong> <strong>AG</strong><br />
intends to comply with this recommendation, by<br />
introducing IAS (International Accounting Standard)<br />
and IFRS (International Financial <strong>Report</strong>ing Standards)<br />
in 2005.<br />
Braunschweig, 24 February 2004<br />
<strong>Nordzucker</strong> <strong>AG</strong><br />
Dr. Ulrich Nöhle H. Hansen-Hogrefe<br />
Chairman of the Chairman of the<br />
Managing Board Supervisory Board
9.3. Sundry Details<br />
Remuneration for members of the<br />
managing board in the year under review<br />
total Tt 1,941. This is made up of a fixed<br />
and a variable component. The variable<br />
component is set by the personnel committee<br />
of the supervisory board and is<br />
dependent on goals set by the managing<br />
board being reached. This variable component<br />
should not exceed 40% of total<br />
remuneration. There are no option rights<br />
for board members.<br />
The supervisory board received total<br />
remuneration of Tt 514 based on the<br />
general meeting approving the dividend<br />
proposal. Remuneration of Tt 34 was<br />
paid to members of the advisory board.<br />
Pension obligation towards former<br />
members of the managing board in line<br />
with Section 6a of the income tax law<br />
was recognised at Tt 5,626. Remuneration<br />
amounted to Tt 419.<br />
In accordance with Section 267 Commerical<br />
Code, the following numbers of<br />
staff were employed (on annual average):<br />
<strong>Nordzucker</strong> <strong>AG</strong> Group<br />
Industrial staff 1,052 2,359<br />
White-collar staff 507 1,399<br />
Total 1,559 3,758<br />
For the limited commercial partnerships<br />
(with a private limited company as<br />
general partner)<br />
• <strong>Nordzucker</strong> GmbH & Co. KG,<br />
Braunschweig/Germany<br />
• Medopharm Arzneimittel GmbH &<br />
Co. KG, Ehrenkirchen<br />
• Anton Hübner GmbH & Co. KG,<br />
Ehrenkirchen/Germany<br />
we have submitted a request in compliance<br />
with Section 264b Commercial<br />
Code to exempt us from our duty to prepare<br />
financial statements in accordance<br />
with German law.<br />
We have provided short-term sureties<br />
amounting to Tt 2,434 to Avacon <strong>AG</strong>,<br />
Helmstedt/Germany.<br />
At the balance sheet date, we have<br />
purchase commitments of t 10m for the<br />
<strong>Nordzucker</strong> <strong>AG</strong> and t 11.2m for the<br />
group.<br />
In compliance with Section 20, para. 1<br />
of the German Stock Corporation Act,<br />
two companies, Zucker-Aktiengesellschaft<br />
Uelzen-Braunschweig, Uelzen/Germany<br />
and <strong>Nordzucker</strong> Holding <strong>AG</strong>,<br />
Braunschweig, have informed us that they<br />
hold an interest in our company.<br />
10. Net Income/<br />
Appropriation of Profits<br />
At the general meeting, the boards will<br />
recommend that from this year’s net<br />
income of<br />
t 25,502,664.01<br />
a dividend of<br />
t 0.49 per share,<br />
or t 22,496,141.57<br />
be paid, and that<br />
t 3,000,000.00<br />
be set aside as<br />
retained earnings, and t 6,522.44<br />
that be carried forward<br />
to new account.<br />
t 25,502,664.01<br />
Braunschweig, 29 April 2004<br />
The Managing Board<br />
Dr. Ulrich Nöhle<br />
Jens Fokuhl<br />
Günter Jakobiak<br />
<strong>Nordzucker</strong> 2003/2004 59
Independent Auditor’s <strong>Report</strong><br />
60<br />
Drawing on accounts provided, we<br />
have audited the annual financial<br />
statements of <strong>Nordzucker</strong> <strong>AG</strong>,<br />
Braunschweig together with the consolidated<br />
financial statements it has drawn up and<br />
its <strong>Management</strong> <strong>Report</strong> for both the company<br />
and the group for the business year<br />
1 March, 2003 to 29 February, 2004. The<br />
presentation of the documents in accordance<br />
with German commercial legislation<br />
and supplementary regulations in the Company’s<br />
Articles of Association are the<br />
responsibility of the Company’s management.<br />
Our responsibility is to express an<br />
opinion on the annual financial statements<br />
rooted in the accounts provided together<br />
with the consolidated financial statements<br />
it has drawn up and its <strong>Management</strong><br />
<strong>Report</strong> for both the company and the<br />
group based on our audit.<br />
We conducted our audit of the annual<br />
financial statements and the consolidated<br />
financial statements in accordance with<br />
Section 317 Commercial Code and German<br />
generally accepted standards for the<br />
audit of financial statements promulgated<br />
by the Institut der Wirtschaftsprüfer (IDW).<br />
Those standards require that we plan and<br />
perform the audit such that it can assessed<br />
with reasonable assurance whether the<br />
annual financial statements and the consolidated<br />
financial statements applying<br />
accepted accounting standards and the<br />
<strong>Management</strong> <strong>Report</strong> of the Company and<br />
the group relating to the asset, financial<br />
and profit situation are free of material<br />
misstatements. The evidence supporting<br />
the amounts an disclosures in the annual<br />
financial statements and the consolidated<br />
financial statements and the <strong>Management</strong><br />
<strong>Report</strong> of the Company and the group is<br />
examined on a test basis within the framework<br />
of the audit. The audit includes assessing<br />
the accounting principles used and<br />
significant estimates made by management<br />
as well as evaluating the overall presentation<br />
of the annual financial statements and<br />
the consolidated financial statements and<br />
the <strong>Management</strong> <strong>Report</strong> of the Company<br />
and the group. We believe that our audit<br />
provides a reasonable basis for our opinion.<br />
Our audit has not led to any reservations.<br />
In our opinion, the annual financial<br />
statements and the consolidated financial<br />
statements applying accepted accounting<br />
standards give a true and fair view of the<br />
asset, financial and profit situation of the<br />
Company and the group.<br />
The <strong>Management</strong> <strong>Report</strong> provides a<br />
suitable understanding of the Company<br />
and the group and suitably presents the<br />
risks of future development.<br />
Braunschweig, 11 May 2004<br />
Lang und Stolz KG<br />
Wirtschaftsprüfungsgesellschaft<br />
Steuerberatungsgesellschaft<br />
ppa. (Kisser) (Pethke)<br />
Certified Public Certified Public<br />
Accountant Accountant
Committees<br />
SUPERVISORY BOARD<br />
Shareholders’ Representatives<br />
Henning Hansen-Hogrefe<br />
Chairman<br />
Farmer, Ingeleben<br />
Jürgen Seidel<br />
Deputy Chairman<br />
Enginee, Gronau<br />
(from 5 September, 2003)<br />
Lothar Wrede<br />
Deputy Chairman<br />
Farmer, Salzgitter-Thiede<br />
Gerhard Becker<br />
Farmer, Klein Bünstorf<br />
(until 5 September, 2003)<br />
Goetz von Engelbrechten<br />
Farmer, Molzen<br />
(from 5 September, 2003)<br />
Dietrich Hauschildt-Staff<br />
Farmer, Steinbrück<br />
Eberhard Herweg<br />
Farmer, Roklum<br />
Rainer Knackstedt<br />
Farmer, Dedeleben<br />
Hans-Christian Koehler<br />
Farmer, Barum<br />
Ernst von Lüneburg<br />
Farmer, Essenrode<br />
(until 5 September, 2003)<br />
Claus Lütje<br />
Farmer, Rade<br />
Hans-Heinrich Prüße<br />
Farmer, Ahlten<br />
Employees Representatives<br />
Gunold Fischer<br />
Deputy Chairman<br />
Chairman of the Lower Saxony/Bremen<br />
region of the German foodstuffs, beverages<br />
and gastronomy union (NGG)<br />
Eckhard Bosse<br />
Master craftsman, Leiferde<br />
Klaus Fentzahn<br />
Mechanic, Güstrow<br />
Gudrun Gebensleben<br />
Technical employee, Wolfenbüttel<br />
Rolf Huber-Frey<br />
Economist, Freiburg<br />
Gunther Kenk<br />
Secretary of the Mecklenburg-West<br />
Pommerania region of the German<br />
beverages and gastronomy union (NGG),<br />
Ihlenfeld<br />
Dieter Paschwitz<br />
Master craftsman, Hohenhameln<br />
Birgit Pitsch<br />
Secretary of the Lower Saxony/Bremen<br />
region of the German foodstuffs, beverages<br />
and gastronomy union (NGG),<br />
Hannover<br />
(until 4 January, 2004)<br />
Jochen Steinhagen<br />
Beet <strong>Management</strong> North, Uelzen<br />
Manfred Tessmann<br />
Secretary of the South-East Lower Saxony<br />
region of the German foodstuffs, beverages<br />
and gastronomy union (NGG),<br />
(from 4 January, 2004)<br />
Wolfgang Wiesener<br />
Mechanic, Uelzen<br />
SUPERVISORY BOARD COMMITTEES<br />
Executive Committee<br />
Henning Hansen-Hogrefe<br />
Chairman<br />
Rainer Knackstedt<br />
Hans-Christian Koehler<br />
Hans-Heinrich Prüße<br />
Gunold Fischer<br />
Dieter Paschwitz<br />
Wolfgang Wiesener<br />
Auditing and Finance Committee<br />
Dietrich Hauschildt-Staff<br />
Chairman<br />
Hans-Heinrich Prüße<br />
Eckhard Bosse<br />
Employees Committee<br />
Henning Hansen-Hogrefe<br />
Chairman<br />
Lothar Wrede<br />
Dieter Paschwitz<br />
Wolfgang Wiesener<br />
Conciliation Committee<br />
Henning Hansen-Hogrefe<br />
Lothar Wrede<br />
Gunold Fischer<br />
Wolfgang Wiesener<br />
<strong>Nordzucker</strong> 2003/2004 61
Committees<br />
MAN<strong>AG</strong>ING BOARD<br />
Dr. Ulrich Nöhle<br />
Braunschweig<br />
(from 1 July, 2003)<br />
Chairman<br />
(from 5 September, 2003)<br />
Business Development<br />
Research and Development<br />
Marketing/Sales (Trade)<br />
Marketing/Sales (Industry)<br />
Goetz von Engelbrechten<br />
Molzen<br />
Chairman<br />
(until 5 September, 2003)<br />
Jens Fokuhl<br />
Wolfenbüttel<br />
Finance and Accounting<br />
IT<br />
Organisation<br />
Corporate Communication<br />
Sugar International<br />
Günter Jakobiak<br />
Hornburg<br />
Procurement<br />
Logistics<br />
Personnel and Social Affairs<br />
Production (National)<br />
Beet <strong>Management</strong> (National)<br />
62<br />
PROCESS MAN<strong>AG</strong>ERS<br />
Axel Aumüller<br />
Production (National)<br />
Gerald Dohme<br />
Corporate Communication<br />
Dr. Henrik Einfeld<br />
Beet <strong>Management</strong> (National)<br />
Achim Fölster<br />
Business Development<br />
Rüdiger Jaernecke<br />
Human Resources<br />
Dr. Gerd Jung<br />
Beet <strong>Management</strong> (International)<br />
Werner Küster<br />
Production (International)<br />
Achim Lukas<br />
Controlling/Co-ordination International<br />
Interests<br />
Dr. Ludwig Munzel<br />
Logistics<br />
Torsten Niemietz<br />
IT<br />
Manfred Rinderer<br />
Marketing/Sales (Trade)<br />
Henning Sander<br />
Procurement<br />
Sabine Scheil<br />
Organisation<br />
Michael Sprengel<br />
Finances and Accounting<br />
Manfred Steffen<br />
Marketing/Sales (Industry)<br />
Dr. Dieter Wullbrandt<br />
Research and Development<br />
<strong>AG</strong>RICULTURAL ADVISORY BOARD<br />
Hans-Jochen Bosse<br />
Chairman<br />
Ohrum<br />
Hans-Heinrich Philipps<br />
Deputy Chairman<br />
Kolenfeld<br />
Heinz-Jürgen Ahrberg<br />
Haverlah<br />
Friedrich Baxmann<br />
Hemmingen<br />
Friedrich Behnsen<br />
Seelze-Harenberg<br />
Heinrich Bernhards<br />
Algermissen<br />
Hartmut Bethge<br />
Groß Schwechten<br />
Helmut Bleckwenn<br />
Schellerten-Garmissen<br />
Hartmut Block<br />
Springe-Eldagsen<br />
Friedrich-Karl Bodin<br />
Natendorf<br />
Gerhard Borchert<br />
Brome<br />
Rolf Busse<br />
Hillerse<br />
Hubertus Eichblatt<br />
Kulpin<br />
Albert Ewers<br />
Northeim<br />
Konrad Fennel<br />
Heringsand<br />
Henning Gruß<br />
Wolfsburg<br />
Carl Graf von Hardenberg<br />
Nörten-Hardenberg<br />
Franz-Josef Harenberg<br />
Giesen<br />
Franz Hartmann<br />
Hildesheim<br />
Theodor Heesch<br />
Barlt
Heinrich Heimsoth<br />
Hassel<br />
Otto Henniges<br />
Bodensee<br />
Friedrich-Wilhelm Hering<br />
Gronau<br />
Walter Hildebrand<br />
Gröningen<br />
Burghard Hoberg<br />
Elze<br />
Henning Hornbostel<br />
Rehlingen<br />
Dr. Harald Isermeyer<br />
Vordorf-Eickhorst<br />
Jochen Johannes Juister<br />
Nordhastedt<br />
Eckhard Kiel<br />
Northeim-Hammenstedt<br />
Erich Kleuker<br />
Nordstemmen<br />
Adolf Knölke<br />
Gehrden<br />
Burkhard Köhler<br />
Hemmingen-Ohlendorf<br />
Christian Krending<br />
Lamspringe<br />
Gerd Künnecke<br />
Bad Salzdetfurth<br />
Lothar Lampe<br />
Drentwede<br />
Wilhelm Lauenstein<br />
Hohenhameln-Bründeln<br />
Paul Lütje<br />
Wasbüttel<br />
Heinrich Machtens<br />
Harsum<br />
Helmut Meyer<br />
Betheln<br />
Hans-Jürgen Nagel<br />
Eime<br />
Dr. Wolfgang Nehring<br />
Oschersleben-Beckendorf<br />
Gerd Nölcke<br />
Burgdorf-Hohenassel<br />
Hermann Oldemeyer<br />
Dreveskirchen<br />
Michael Pahlow<br />
Stralendorf<br />
Ottmar Pfaue<br />
Werlaburgdorf<br />
Henning Pferdmenges<br />
Bad Gandersheim-<br />
Hilprechtshausen<br />
Christoph Rabbethge<br />
Einbeck<br />
Siegfried Sander<br />
Einbeck<br />
Hans von Schaaffhausen<br />
Bockenem-Klein Ilde<br />
Andreas Scheffrahn<br />
Cramme<br />
Heinrich Schulze-Niehoff<br />
Duderstadt-Desingerode<br />
Fritz Segger<br />
Cremlingen<br />
Arthur Stolte<br />
Hohenhameln<br />
(from 20 November, 2003)<br />
Wolfgang Täger-Farny<br />
Groß Twülpstedt-Volkmarsdorf<br />
Wulf Sophus Theophile<br />
Neukirchen<br />
Wolfram Tute<br />
Northeim-Edesheim<br />
Konrad Vespermann<br />
Hoyershausen<br />
Friedrich-Gustav<br />
Warneboldt<br />
Sibbesse<br />
Hermann Waßmuß<br />
Elbe-Gustedt<br />
Archibald Wedde<br />
Bad Harzburg-Bettingerode<br />
Wilhelm Wedde<br />
Langelsheim-Bredelem<br />
Walter Wendt<br />
Achim-Seinstedt<br />
Frank Wiese<br />
Seehausen<br />
Jürgen Winter<br />
Bohlsen<br />
Klaus-Uwe Wißotzki<br />
Kröpelin<br />
Otto Zauer<br />
Jersleben<br />
The shareholders’ representatives<br />
in the supervisory board are also<br />
members of the advisory board.<br />
May 2004<br />
<strong>Nordzucker</strong> 2003/2004 63
<strong>Nordzucker</strong><br />
Recipes<br />
Borsch –<br />
Polish beetroot soup<br />
Butterhead Lettuce Salad<br />
Dubnice<br />
Hungarian Goulash<br />
‘Rote Grütze’ – red fruit jelly –<br />
with vanilla sauce 200g cream<br />
220g milk<br />
60g sugar<br />
1 halved vanilla pod<br />
3 egg yolks<br />
64<br />
1 large onion<br />
2 cloves of garlic<br />
1 leek<br />
1/2 celery root<br />
2 carrots<br />
700 beetroot<br />
2 tablespoon oil<br />
1 bay leaf<br />
1 tablespoon allspice<br />
2 litres stock<br />
salt, pepper<br />
1 tablespoon vinegar<br />
6 butterhead lettuces<br />
1 tablespoon salt<br />
1 tablespoon salad oil<br />
1 cup of wine vinegar<br />
1 tablespoon caster sugar<br />
1 level tablespoon salt<br />
liquid soup flavouring<br />
4 spoons cold water<br />
1 cup sour cream<br />
1 kg beef<br />
800g onions<br />
2 tablespoon paprika<br />
1 tablespoon wheat flour<br />
1/8 litre (125ml) boiling water<br />
salt, black pepper<br />
4 tablespoons puréed tomatoes<br />
^ ^<br />
1 cup creme fraiche<br />
375 g rhubarb<br />
750 g strawberries<br />
150 g sugar<br />
1 lemon (scrape off peel)<br />
1 vanilla pod<br />
1/8 litre (125 ml) white wine, or water<br />
20 corn flour<br />
Wash beetroot and boil it in the stock for ten<br />
minutes. Decant the stock into a separate<br />
container and quench beetroot in cold water.<br />
Peel and cut it into eight pieces. In hot oil, fry<br />
onion – cut into chunks, crushed garlic, leek,<br />
which you have cut into rings, and diced<br />
celery. Add finely chopped carrots, beetroot,<br />
bay leaf and allspice. Pour stock back into the<br />
pot and season with salt and pepper. Simmer<br />
at a low temperature for an hour. To pep up<br />
the aroma, you could add dried mushrooms<br />
soaked in water. Strain soup through a fine<br />
sieve and add vinegar. Don’t drown the wonderful,<br />
typical taste of the beetroot with the<br />
vinegar. Bring to the boil and serve.<br />
Clean the heads of lettuce and wash in cold<br />
water. Dry, place in a bowl and sprinkle with<br />
the salad oil. Shortly before serving, prepare<br />
the dressing by mixing the wine vinegar, caster<br />
sugar some drops of the soup flavouring, salt<br />
and cold water and pour over the lettuce.<br />
Allow to marinade for roughly five minutes.<br />
Finally, pour in the sour cream and serve.<br />
Wash the meat, cut into cubes and fry well.<br />
Dice the onions and add to the meat. Add the<br />
paprika and wheat flour, blanche with boiling<br />
water and season with salt and black pepper.<br />
Cook the mixture for one hour. Add the puréed<br />
tomatoes and cook for a further 30 minutes.<br />
^ ^<br />
Finally, stir in the creme fraiche and test for<br />
seasoning before serving.<br />
Cut the rhubarb into small chunks and parboil<br />
together with the sugar, lemon peel and vanilla<br />
pod in the wine/water. Add the strawberries<br />
cut into quarters and allow the mixture to<br />
simmer slowly. Stir the corn flour into three<br />
spoonfuls of water until it becomes smooth<br />
and then stir this into the simmering fruit<br />
mixture. Pour into a glass bowl and leave to<br />
cool. The classic way to serve rote grütze is<br />
with vanilla sauce.<br />
Bring a mixture of the milk, sugar and vanilla<br />
to the boil. Remove from the hotplate and<br />
allow to cool. Add the egg yolks whisked with<br />
some milk and warm the mixture up again. Stir<br />
steadily until the mixture becomes creamy. The<br />
sauce can be served warm or cold.
Glossary<br />
Finance<br />
Cashflow Net inflow of funds. Difference<br />
between receipts and spending expenses within<br />
one accounting period. For the sake of simplicity,<br />
the cash flow is determined on the basis of<br />
the annual surplus after tax, plus non-spending<br />
expenses, in particular depreciation and the<br />
changes in the long-term reserves. The cash<br />
flow is available to the company for investment,<br />
repayment of liabilities, and distribution of<br />
profits.<br />
Compliance Declaration Annual declaration<br />
made and published by the managing and<br />
supervisory boards of listed companies in<br />
accordance with article 161 AktG, stating the<br />
extent to which the company management<br />
complies with the recommendations of the<br />
Government Commission "German Corporate<br />
Governance Code" and which recommendations<br />
are not applied.<br />
German Corporate Governance Code<br />
(CGK) Statutes formulated in 2002 on the<br />
management and supervision of German companies<br />
listed at the stock exchange. The German<br />
Corporate Governance Code shows<br />
nationally and internationally accepted standards<br />
of responsible business management,<br />
which primarily aim at transparency and clarity.<br />
The code defines the responsibility of managing<br />
and supervisory boards, it sets forth or makes<br />
recommendations on how to protect the right<br />
of shareholders, and how executive and supervisory<br />
bodies should be filled and how their<br />
members should be remunerated. Non-listed<br />
companies are also recommended to comply<br />
with the Corporate Governance Code.<br />
EBIT (earnings before interest and taxes) This<br />
index is to supply information on the result of<br />
current operations. Since differences in capitalization<br />
are not accounted for the general interest<br />
rate level or tax rates are not considered. In<br />
this way it provides a better basis for comparing<br />
the operating success of companies across<br />
national borders. In particular international<br />
investors regard EBIT details as important<br />
figures.<br />
Equity Consolidation Assessment method for<br />
shareholdings in companies whose company<br />
and finance policy can be influenced decisively.<br />
Proportionate annual surplus or deficits of the<br />
associate company increase or decrease the<br />
book value of participations and affect the profit<br />
and loss account. Distributions and dividends<br />
decrease the book value of participations without<br />
affecting the profit and loss account.<br />
IFRS/IAS (International Financial <strong>Report</strong>ing<br />
Standards) or previously: IAS (International<br />
Accounting Standards) are accounting standards<br />
that render balance sheet and disclosure<br />
methods comparable on a global scale.<br />
Consolidation The group accounts are drawn<br />
up as if all group member companies formed<br />
one uniform company in law. All expenditures<br />
and earnings as well as all interim trade results<br />
and other transactions between the group<br />
members are eliminated by way of set-off<br />
(expense and result as well as interim result<br />
consolidation). Stakes held in group member<br />
companies are set off against their equity capital<br />
(capital consolidation), and all intra-group<br />
receivables and liabilities are eliminated (debt<br />
consolidation), because such legal relationships<br />
do not exist within a legal entity. Summation<br />
and consolidation of the remaining items of the<br />
annual accounts result in the consolidated<br />
balance sheet and the consolidated profit-andloss<br />
account.<br />
Rating Standardised assessment of the credit<br />
standing of a company by specialised agencies.<br />
Syndicated Credit Lending by several banks<br />
(syndicate) on the basis of standardised contract<br />
documentation and on the basis of identical<br />
terms and conditions.<br />
Glucose Also known as dextrose or grape<br />
sugar; widely used plant-based sweetener.<br />
The carbohydrate forms part of the family of<br />
monosaccharides and it is a structural element<br />
of starch, cellulose and glycogen. Glucose is<br />
industrially extracted from starch.<br />
Glycemic index Measuring unit for the rate<br />
in which the blood sugar level rises after the<br />
intake of foodstuffs containing carbohydrates.<br />
Isoglucose Sugar primarily produced from<br />
maize starch, which is used in beverages and<br />
fruit preserves. Isoglucose is subject to market<br />
regulations.<br />
Prebiotic are indigestible substances that<br />
affect the growth and the activity of microorganisms<br />
in the digestive tract and thus contribute<br />
to a healthy intestinal flora.<br />
Sorbitol E 420, Sugar alcohol that occurs, for<br />
instance, in rowan berries. Its structure is similar<br />
to that of glucose, from which it is produced in<br />
a technical process by the catalytic addition of<br />
water (hydration). Sorbitol has half the sweetening<br />
power of glucose and is an important<br />
sugar substitute for diabetics.<br />
Sucrose Scientific term for sugar; a disaccharide<br />
based on fructose and glucose. Texture,<br />
taste enhancement and keeping quality are<br />
properties which, in addition to its sweet<br />
flavour, make it an important sweetener.<br />
Sucrose is produced from sugar beets and<br />
sugar cane.<br />
Tagatose A sweetener similar to fructose,<br />
which is industrially produced from lactose.<br />
Tagatose provides virtually the same sweetness<br />
as sucrose (92 percent), but its energy content<br />
is much lower (1.5 kcal/g). Tagatose is tooth<br />
friendly, it has prebiotic properties and is suited<br />
for use by diabetics. Thanks to its flavour<br />
enhancing properties, it is an ideal sweetener<br />
for light beverages, sugar-free candies and<br />
chewing gum.<br />
Sugar and food terms<br />
Sugar industry<br />
Fructose Sweetener often found in fruit and A/B Quota Sugar sales volume assigned by the<br />
therefore also known as fruit sugar. In a chemi- EU with limited price and full sales guarantees.<br />
cally bound form it is contained in sucrose and At the same time the upper limit for sugar sales<br />
in inulin, which is dominant in chicories. Fruc- in the EU.<br />
tose is suited for use as a diabetic sweetener. It<br />
is industrially extracted from sucrose, inulin or<br />
starch. Fructose is subject to market regulations.<br />
C Sugar Sugar produced in excess of the A/B<br />
quota, which has to be sold on the world market<br />
at world market prices.<br />
Declassification Instrument used to cut back<br />
the EU sugar quotas for compliance with the<br />
WTO requirements of limiting the value and<br />
volume of subsidised sugar.<br />
LDC/EBA ‘Least developed countries’ / ‘Everything<br />
but arms‘. Both terms relate to the EU<br />
resolution of 2001, according to which the<br />
49 least developed countries in the world may<br />
import any goods except arms into the EU free<br />
of any duty. Sugar falls under a special transitional<br />
arrangement which will expire in 2009.<br />
Production Levy Levy paid by beet farmers<br />
and sugar producers to finance utilization losses<br />
if quota sugar, which cannot be marketed in<br />
the EU, has to be exported.
Glossary<br />
Supplementary Levy Levy that may be<br />
imposed in addition to the production levy.<br />
WTO (World Trade Organisation) Multinational<br />
organisation located in Geneva, in which<br />
146 member states negotiate world trade<br />
liberalisation on an intergovernmental level. As<br />
a result of the so-called Uruguay Round talks,<br />
the subsidies for quota sugar which may be<br />
exported from the EU were limited in terms of<br />
both volume and value.<br />
WTO Panel Body set up by the WTO for the<br />
settlement of disputes. Member states may<br />
request a panel under the dispute resolution<br />
mechanism to examine whether obligations<br />
under the WTO agreements have been violated.<br />
In 2003, Brazil, Thailand and Australia challenged<br />
the EU sugar exports. A first report of the<br />
trade experts nominated as panel members is<br />
expected for September 2004.<br />
<strong>Nordzucker</strong><br />
Business Development <strong>Nordzucker</strong> coordinates<br />
its shareholdings outside the sugar sector<br />
under the title Business Development.<br />
Category <strong>Management</strong> (CM) Distributor/<br />
manufacturer process of managing product<br />
categories as strategic business units with the<br />
aim of jointly increasing sales and jointly reducing<br />
costs.<br />
Customer Relationship <strong>Management</strong> (CRM)<br />
Systematic handling of customer relations with<br />
the aim of increasing customer retention and<br />
customer satisfaction.<br />
Process Manager Relates to members of the<br />
first management level below the managing<br />
board.<br />
‘New Fields’ New field of action of the<br />
<strong>Nordzucker</strong> InnoCenter GmbH. ‘New Fields’<br />
collects and documents information on selected<br />
issues in connection with renewable raw materials,<br />
which is made available to <strong>Nordzucker</strong> as<br />
well as its shareholders and beet farmers.<br />
Process-Oriented Organisation Company<br />
operations structure introduced in autumn<br />
2003. It describes all processes from the customer<br />
to the supplier and subjects them to<br />
continuous improvement.<br />
<strong>Nordzucker</strong> InnoCenter GmbH The<br />
company is the result of a change of name and<br />
was previously the Institut für Technologie der<br />
Kohlenhydrate – Zuckerinstitut – e.V. It takes<br />
care of the research and development functions<br />
of <strong>Nordzucker</strong> <strong>AG</strong>.<br />
Sugar International Under the division Sugar<br />
International, <strong>Nordzucker</strong> coordinates its sugar<br />
activities in Poland, Slovakia and Hungary.<br />
Certification, Quality Assurance and<br />
Consumer Protection<br />
EMAS II (‘Eco <strong>Management</strong> and Audit<br />
Scheme’). Voluntary system used by the EU as<br />
an environmental management instrument<br />
and to promote environmental action.<br />
GMP 13 (‘Good Manufacturing Practice 13’).<br />
Dutch standard of quality control for feedstuffs<br />
of non-resident suppliers.<br />
HACCP (‘Hazard Analysis Critical Control<br />
Point’). System of self-regulation for food plants<br />
to protect against health risks that may be<br />
involved with the production, handling, processing,<br />
transport and marketing of foodstuffs.<br />
HACCP is often integrated in quality management<br />
systems based on the DIN EN ISO 9000<br />
series of standards.<br />
IFS Standard (‘International Food Standard’).<br />
Used for the assessment of suppliers of private<br />
brands as a means of safeguarding food safety<br />
and consumer protection.
Contact<br />
<strong>Nordzucker</strong> <strong>AG</strong><br />
Küchenstraße 9<br />
D-38100 Braunschweig<br />
Phone +49 (0) 531 24 11-0<br />
Fax +49 (0) 531 24 11-100<br />
info@nordzucker.de<br />
www.nordzucker.de<br />
Investor Relations<br />
Susanne Dismer-Puls<br />
Phone +49 (0) 531 24 11-321<br />
ir@nordzucker.de<br />
Shares<br />
Wilhelm Just<br />
Phone +49 (0) 531 24 11-160<br />
aktien@nordzucker.de<br />
Public Relations<br />
Tanja Schneider-Diehl<br />
Phone +49 (0) 531 24 11-314<br />
pr@nordzucker.de<br />
Beet Cultivation<br />
Dr. Wolf-Gebhard Oppermann<br />
Phone +49 (0) 531 24 11-174<br />
anbauberatung@nordzucker.de<br />
Product Information – Consumer Services<br />
Marcus Fuchs<br />
Phone +49 (0) 531 24 11-441<br />
vielfalt@nordzucker.de<br />
Online Publications<br />
Annual <strong>Report</strong> www.nordzucker.de/info/gb2003-04<br />
Compliance Declaration www.nordzucker.de/info/compliance<br />
Environmental <strong>Report</strong> www.nordzucker.de/info/umwelt<br />
Diary<br />
General Meeting<br />
6 September 2004, 10.00 a.m. Union-Zucker Südhannover GmbH, Berghölzchen Hildesheim<br />
7 September 2004, 10.00 a.m. Zucker-<strong>AG</strong> Uelzen-Braunschweig, Stadthalle Braunschweig<br />
8 September 2004, 10.00 a.m. <strong>Nordzucker</strong> Holding <strong>AG</strong>, Stadthalle Braunschweig<br />
9 September 2004, 10.00 a.m. Nordharzer Zucker-<strong>AG</strong>, Stadthalle Braunschweig<br />
10 September 2004, 10.00 a.m. <strong>Nordzucker</strong> <strong>AG</strong>, Stadthalle Braunschweig