Annual Report 2002/03

Transcription

1 Annual Report 20/

2 AGRANA Beteiligungs-Aktiengesellschaft h Contents Key data Highlights during the financial year 3 Preface by the Chairman of the Board of Management 4 The company s boards and officers 9 The AGRANA share 10 The structure of the AGRANA Group 11 Consolidated Group Report 20/ 13 Economic conditions 14 Financial condition and profit position 18 Report on the Group s principal subsidiaries 19 AGRANA Zucker und Stärke AG 19 AGRANA Marketingund Vertriebsservice Ges.m.b.H. 22 AGRANA Internationale Verwaltungsund Asset-Management AG &Co KG 26 The environment 32 Research and development 34 Staff and social report 36 Outlook for 20/04 37 Consolidated Financial Statements for 20/ applying IAS 41 Consolidated Income Statement 42 Consolidated Cash-Flow Statement 43 Consolidated Balance Sheet 44 Consolidated Equity Statement 45 Consolidated Non-Current Assets Summary 46 Notes to the Consolidated Financial Statements 48 Group interests 75 Auditors Report 77 Key data 78 Annual Financial Statements for 20/ applying RLG 79 Balance Sheet 80 Income Statement 81 Auditors Certificate 82 Proposal regarding profit appropriation 83 20/ 2001/ 2000/ / / / / /96 Corporate data IAS IAS IAS IAS IAS RLG RLG RLG Revenues mn Profit from operating activities mn Profit before income tax mn Profit from ordinary activities mn Consolidated earnings for the year mn Net cash from profit applying IAS mn applying RLG mn Investments mn Staff 3,916 4,463 4,753 5,290 4,506 2,555 2,812 3,004 EBIT margin 1 % ROS % Equity ratio % Performance on the stock exchange High Low Close Earnings per share applying IAS applying HGB (ÖVFA) Dividend per share Dividend yield % P/E ratio (close) Stock-market capitalization (close) mn Balance-sheet data Share capital mn Non-current assets mn Equity mn Balance-sheet total mn Supervisory Board s Report 84 Important addresses 87

3 h Annual Report of AGRANA Beteiligungs-Aktiengesellschaft for the financial year from 1 March 20 through 28 February 20

4 The sweet side of Hungary Az ideális nő? Csábító, akár a süteményei. Koronás Cukor az Agrana csoport márkája. Az élet édesen teljes.

5 h AGRANA Beteiligungs-Aktiengesellschaft Highlights during the financial year Good harvests and campaign results despite extreme weather conditions. Revenues grow by 3.9 per cent, profit from operating activities increases by 5.9 per cent and consolidated earnings for the year advance by 47.6 per cent. Earnings on starch operations in Austria outstrip the previous year s good result by 3.9 per cent. 58 per cent of profit from operating activities is generated in Central and Eastern Europe. The European Union votes in favour of enlargement. AGRANA acquires the Deuring maize starch and dextrose factory in Hörbranz, Vorarlberg Province. Danish fruit juice and fruit juice concentrates manufacturer Vallø Saft A/S is acquired in April 20. The AGRANA share has been listed as an ordinary share in the Prime Market segment on the Vienna stock exchange since 7 October 20. During the 20/ financial year, the AGRANA share gains 37 per cent to close at ( 46 on 30 April 20). Dividend proposal of 1.80 per share for the 20/ financial year (previous year: 1.30). 3

6 Preface by the Chairman of the Board of Management h Left to right: Johann Marihart, Walter Grausam, Klaus Korn. Dear Sir or Madam, Results The AGRANA Group closed its 20/ financial year with another increase in revenues and earnings. That was in part a consequence of the 14-month financial years of our AGRANA International companies, whose balance-sheet dates were brought into line with the Consolidated Group s balance-sheet date (last day of February). Revenues grew by 3.9 per cent to 875,700 thousand and profit from operating activities was 5.9 per cent up on the year at 80,500 thousand. Consolidated earnings for the year advanced by 47.6 per cent to 65,400 thousand. In view of those successes, we have added a bonus to the distribution proposal that will be made to the General Meeting of Shareholders, taking it up to 1.80 per share, as against 1.30 per share last year (i.e. increase of 38.5 per cent). 4

7 h AGRANA Beteiligungs-Aktiengesellschaft The AGRANA share Although the stock markets were in a slump, the AGRANA share won a lot of ground and continued to perform strongly even at prices that exceeded 45 for the first time. It showed a price gain of 55 per cent in the 12 months from the beginning of the 20/ financial year (= 1 March 20), resulting in a P/E ratio of 7.6 and a dividend yield of 4 per cent. Besides the development of AGRANA s earnings in recent years, that upward trend was undoubtedly also partly attributable to the listing of our share in the Prime Market segment on the Vienna stock exchange since 1 January 20. Only ordinary shares can be admitted to the Prime Market segment. That requirement was satisfied by the conversion of our shares pursuant to a resolution of the General Meeting of Shareholders in 20 and an amendment to our Articles of Association in October 20. We are delighted that the AGRANA share was able to prove its solidity precisely in a period of global weakness in the stock markets. Prevailing conditions Enlargement of the European Union The signing of the EU Treaty of Accession in Athens made AGRANA s vision of 1990 a certainty. Our strategic investments in our core sugar and starch segments in Central and Eastern Europe will now become investments within the EU Single Market. Quotas granted in the sugar and isoglucose sectors exceeded our expectations, providing an important foundation for the future success of our AGRANA International Division. AGRANA is thus ideally prepared to seize the opportunities and meet the challenges created by the European Union s enlargement within the market segments that are of immediate relevance to our enterprise. Agricultural reform in the EU The European Commission s proposals for a fundamental reform rather than a midterm review of Agenda 2000 had a particularly big impact on AGRANA in the potato starch segment. The European Commission has in principle acknowledged the specific regional problems that exist in the potato starch segment with its proposal of a 50 per cent partial decoupling of direct payments from production, but it has not gone far enough. 5

8 AGRANA Beteiligungs-Aktiengesellschaft h The world trade round (WTO) The proposals of the European Commission and the WTO regarding agricultural trade particularly concern sugar. Despite the delayed implementation of the proposals over six years, the called for reduction in safeguard measures harbours the risk of a decline in sugar and beet prices at the same time as curtailed export opportunities. World market prices The world market price of sugar followed an interesting path. The global stock markets crisis increased investment in safe havens like commodities, so although production substantially exceeded worldwide consumption, sugar prices held steady or even increased. The predicted drop in prices has not transpired to date because the war on Iraq and OPEC policies have pushed the price of oil well above the US$ 25 mark, in turn prompting Brazil the world s biggest sugar exporter to replace 25 per cent of its gasoline with alcohol distilled from sugar. Consequently, Brazilian sugar exports have remained static despite a good harvest. As expected, sugar imports from the Balkans have become a problem. We can only hope that the European Commission will take the necessary steps to limit those imports. AGRANA International Our administrative preparations for the CEEC accessions are currently in full swing. The negotiated quotas now need to be incorporated into intertrade agreements and national sugar market regimes. The principal focus of our attention during the 20/ financial year was Romania. The start-up of the maize starch factory and simultaneous discontinuation of sugar production in Tandarei, the merger of the Buzau and Tandarei sugar factories (a crucial step forward in the restructuring process) and the enlargement of our market share to 163,000 metric tons per annum all contributed to a significant improvement in our results in Romania. We continued to develop and enhance our sugar-branding concept with great success, and we systematically extended the product line in a number of countries. Our investments in Eastern Europe are focusing increasingly on means of protecting the environment such as sewage treatment plants and energy-saving technologies. 6

9 h AGRANA Beteiligungs-Aktiengesellschaft Austria Starch 20 was a year of floods that affected roughly 800 hectares out of a total of 44,600 hectares under beet and, above all, led to a harvest loss of 20,000 metric tons of potatoes (which was 10 per cent of the contracted total). As a result, we only filled 84 per cent of our EU potato starch quota. That notwithstanding, revenues in the starch segment were 8 per cent up on the year, leading to a repeat of the previous year s outstanding results despite depressed prices during the second half of 20/. Because of the weather, the maize harvest was lengthy, which made it possible to process large amounts of wet maize. Our processing plant has been running at full capacity and we are now gradually increasing capacities from 750 to 1,000 metric tons of maize a day. The current focal point of our specialities philosophy is the construction of a new drum drying line for our starch refining operations. The acquisition of the maize starch factory of the Deuring corporation in Hörbranz has given us the smaller production lines we need to make special products. Sugar High precipitation during the summer of 20 had a positive overall effect on beet yields, more than making up for areas lost because of flooding. The per-hectare yield of 68.5 metric tons of beet resulted in a harvest of over 3 million metric tons of sugar beet. It was processed into 457,000 metric tons of sugar in a campaign lasting 83 days. As a result of declassification (a flexible cut in the EU quota) in October 20, 364,200 metric tons of total sugar production was quota sugar and the remainder (nearly 93,000 metric tons) was C sugar for export. Our processing throughput and efficient energy usage led to another reduction in costs, partially offsetting the deteriorating state of the market. We continued our efforts in the special products segment by putting the betaine extraction plant into service. 7

10 AGRANA Beteiligungs-Aktiengesellschaft h Outlook Dear shareholder, The next few years will be a time of economic challenges. We will face and master those challenges in the spirit and style of our consistent actions to date. Economic conditions are key and critical, but our strategic, technical, qualitative and economic standing are such that we can move into the future with optimism. We will do so with the necessary transparency in a commitment to proper corporate governance, and we will make the requisite arrangements in optional areas. Strategically, the new financial year will see a decisive reorientation. We intend to continue to grow even now that we have developed the starch division and largely completed the implementation of our strategy for expansion in Central and Eastern Europe. Our strengths lie in the refining of agricultural raw materials into high-quality intermediate products for the industrial sector. Following the acquisition of Denmark s Vallø Saft A/S, we also intend to bring our Group s strengths to bear in the fruit concentrates and preparations segment. At this point, we would like to thank all those who do business with us, our shareholders and the supervisory bodies for the trust they have placed in our company and in its management. In addition, we would like to express our thanks to all our staff, whose dedication, skills and zeal have helped us to achieve our goals and our good results under challenging market conditions. That same dedication, motivation and zeal will remain an important part of achieving our corporate goals in the future. Yours faithfully, Johann MARIHART 8

11 h AGRANA Beteiligungs-Aktiengesellschaft The company s boards and officers Supervisory Board Christian KONRAD Vienna Chairman Rudolf MÜLLER Ochsenfurt Vice-Chairman Ferdinand GASSAUER-FLEISSNER Vienna Vice-Chairman Board of Management Johann MARIHART Limberg Chairman Walter GRAUSAM Vienna Klaus KORN Ochsenfurt Hans-Jörg GEBHARD Eppingen Erwin HAMESEDER Mühldorf Christoph KIRSCH Weinheim/Bergstrasse Hermann SCHULTES Zwerndorf Richard SCHWAIGER Aiterhofen Staff Council delegates Ernst HERZIG, Breitenfurt Harald TOTH, Leopoldsdorf Peter VYMYSLICKY, Leopoldsdorf Erich WEISSENBÖCK, Gmünd 9

12 AGRANA Beteiligungs-Aktiengesellschaft h The AGRANA share The AGRANA share stood at at and it stood at 1, points on 30 April the beginning of the 20/ financial 20. year. It reached a high of on Since 1 January 20, the AGRANA share 7 February 20 and a low of has been traded in the Prime Market segment on the Vienna stock exchange. To on 15 April 20. It closed the financial year at on 28 February 20, be a part of the Prime Market segment, giving a gain during the financial year issuers must observe stricter standards of 36.6 per cent. On 30 April 20, the of transparency, quality and disclosure AGRANA share stood at 46. The company s market capitalization totalled of the Austrian Börsegesetz (stock ex- than those laid down in the provisions 43,500 thousand at the end of the change act). Since only ordinary shares financial year. are admitted to this segment, the decision made by the ordinary shareholders Over the same period, the Austrian Traded Index of liquid continuously traded stocks at the 15 th Ordinary General Meeting of (AT) fell by 4.9 per cent from 1, AGRANA Beteiligungs-AG on 12 July 20 points (1 March 20) to 1, points, to convert the 1,500,000 non-voting AGRANA share versus the AT 1 March 20 1 March 20 AGRANA AT 1 March April 20 bearer preference shares into voting ordinary shares was a prerequisite for admission to the segment. During the subsequent meeting of the company s preference shareholders, they expressed their consent to the conversion by setting aside their preferred dividend rights. The corresponding amendment to the Articles of Association was recorded in the companies register as of 1 October 20, and the AGRANA share has been listed as an ordinary share in the Vienna stock exchange s Prime Market segment since 7 October 20 under security code (ISIN: AT ). Besides the Prime Market segment on the Vienna stock exchange, the AGRANA share is also listed in the Präsenshandel segment on the Frankfurt stock exchange and on the Stuttgart stock exchange. Investor and public relations AGRANA had a stand at the Gewinn Fair in Vienna in October 20. In addition, we provided information about the Group s business development on a regular up-to-the-minute basis in numerous press releases, at a press conference held to present the Annual Financial Statements in June 20, and during one-toone meetings with the media. Events, publications & dividends calendar for 20/04 (provisional) Publication of results for the 20/ financial year 23 May 20 General Meeting of Shareholders 10 July 20 Dividend ex-day and dividend pay-day 15 July 20 Publication of results for Q1 20/04 14 July 20 Publication of results for H1 20/04 13 October 20 Gewinn Fair October 20 Publication of results for Q1 Q3 20/04 16 January 2004 Outpayment to shareholders The Board of Management and the Supervisory Board will be recommending that the General Meeting of Shareholders on 10 July 20 approve the distribution of a dividend of 1.30 per share plus a bonus of 0.50 per share, making a total of 1.80 per share. 10

13 h AGRANA Beteiligungs-Aktiengesellschaft The structure of the AGRANA Group AGRANA Beteiligungs-Aktiengesellschaft Österr. Rübensamenzucht Ges.m.b.H., Austria AGRANA Zucker und Stärke AG & Co KG, Austria S.C. AGRANA Romania Holding and Trading Comp. s.r.l., Romania S.C. Zaharul Romanesc S.A., Romania AGRANA Zucker und Stärke AG S.C. Danubiana Roman S.A., Romania S.C. A.G.F.D. Tandarei s.r.l., Romania Magyar Cukor Rt., Hungary Hungrana Kft., Hungary Moravskoslezské Cukrovary a.s., Czech Republic Slovenské Cukrovary a.s., Slovakia AGRANA Internationale Verwaltungs- und Asset- Management AG & Co KG Management and Coordination AGRANA Marketing- und Vertriebsservice Ges.m.b.H. INSTANTINA Ges.m.b.H., Austria Zuckerforschung Tulln Ges.m.b.H., Austria Hottlet Sugar Trading N.V., Belgium Portion Pack Europe Holding B.V., Netherlands As on 28 February 20 11

14 The sweet side of Slovakia Korunný cukor je značkou skupiny Agrana. Tak chutí život. Oddnes môžete mať pečivo rozprávkovej chuti. Také ako práškový Korunný cukor.

15 h Consolidated Group Report

16 Economic conditions AGRANA Beteiligungs-AG h Economic conditions Conditions in general At the end of January 20, the EU Council accepted the European Commission s proposals for the liberalization of agricultural policy in the run-up to the WTO negotiations. The cornerstones of the EU proposal in the area of market access are the reducing of all tariff-rates by an average of 36 percent and a cut of at least 15 per cent in every tariff line. It is proposed that the least developed countries (LDCs) should have tariff-free and quota-free access to the markets of the developed countries. The developed countries are to ensure that at least 50 per cent of imports from the LDCs should be duty-free. The EU proposals for the liberalization of trade have been made dependent on sufficient consideration of so-called non-trade concerns (food safety, compulsory labelling, environmental protection and rural development). In February 20, Stuart Harbinson, Chairman of the WTO s Committee on Agriculture, presented his First Draft of the so-called Modalities Paper, which goes well beyond the EU s proposals. It suggests five years as the implementation period for most modalities (ten for developing countries). The core of the proposals is a reduction in tariffs. In the proposals made within the scope of its mid-term review of Agenda 2000, the European Commission recommended decoupling subsidies from production. In the starch segment, the Commission recommended a 50 per cent decoupling of direct payments and the abolition of the minimum price for starch potatoes. The next key event is the WTO Conference in the autumn of 20 in Cancun, Mexico. The world sugar market World sugar production during 20/ has been estimated at 143 million metric tons, compared with roughly 138 million metric tons in 2001/. Consumption will rise to approximately million metric tons (previous year: 136 million metric tons). Whereas sugar production and sugar consumption were in balance in the 2000/01 sugar marketing year, inventories continued to accumulate in the two years thereafter. Based on the assumption that Brazil could process a larger proportion of its sugar cane harvest into alcohol in 20/04, output is currently expected to fall in that period. At the beginning of the 20/ financial year, the average world market price of white sugar (as quoted in London) stood at US$ 238 (March 20), and aside from harvest-related fluctuations, it remained virtually static until the end of the 20/ 14

17 h Economic conditions AGRANA Beteiligungs-AG financial year (February 20). It averaged US$ 244 at a dollar rate of 1.08 US$/ in February 20 and averaged US$ at a dollar rate of 1. US$/ in March 20. The sugar and starch markets in Austria and the rest of Europe The sugar market Areas under beet in the European Union increased from 1.8 million hectares in 2001 to million hectares in 20. The increase in areas under beet and the good development of yields boosted the output of beet sugar in the European Union from 16 to 18.5 million metric tons. The European Commission carried out a temporary sugar-quota cut (declassification) of 826,988 metric tons for the 20/ sugar marketing year (1 July 20 through 30 June 20). That reduced the Austrian sugar quota from 387,326 metric tons to 364,200 metric tons (295,279 metric tons of A sugar and 68,921 metric tons of B sugar). Based on the Austrian intertrade agreement concluded in September 2001, there have been adjustments to a number of aspects of planting and delivery conditions for 20, 2004 and 2005 (increase in the remuneration for dried pulp, the basis of assessment for C1 beet, the premium for participating in EUF soil analyses). A one-off premium was paid to compensate for the difficulties caused by wet weather during the 20 campaign. The starch market The EU market regime for starch potatoes was extended for another three years in May 20. Consequently, the quotas awarded to the individual EU member states, the direct payment to growers of per metric ton of starch and the premium of per metric ton paid to the starch industry will remain in place until the 2004/05 marketing year. AGRANA has improved potato-planting conditions for the 20 harvest year. The agreement contains another cut in the organizational levy to 0.73 per metric ton (previously 1.45 per metric ton), an increase in the transport costs contribution and the provision of advisory services for growers. Maize deliveries during the 20/ financial year totalled 267,000 metric tons (previous year: 240,000 metric tons). We processed a total of about 69,000 metric tons (previous year: 47,000 metric tons) of wet maize between 11 September and 24 November

18 Economic conditions AGRANA Beteiligungs-AG h Mid-term review In January 20, the EU Commission presented its legislative proposals in the course of the mid-term review of Agenda Deviating from its proposals in July 20, the Commission also proposed a reform of the milk market regime and remodelled the dynamic modulation. The core of the proposals remains the decoupling of direct payments from production. The reform proposals are designed to boost the competitiveness of the EU agricultural sector and give it a stronger market orientation. In order to reinforce rural development, the Commission plans to fund subsidies for this so-called second pillar of CAP by carrying out a cut in direct payments based on the size of a business. To date, farmers have received a direct payment of per metric ton of starch for producing starch potatoes. According to the proposals put forward by the EU Commission, 50 per cent of that payment will be taken into account in the calculation of the lump sum transfer based on deliveries made in The remaining 50 per cent would remain coupled to the production of starch potatoes. Other proposals include the abolition of the minimum starch potato price (to date per metric ton) and the abolition of the production refund for starch. The EU Environment Council has agreed on regulations that will make it possible to trace genetically modified organisms in foodstuffs and animal feed. Under those regulations, it must in future be possible to trace the use of GMOs (genetically modified organisms) all the way along the production and transport chain. That will enable consumers to identify not only where foodstuffs come from but also what they are made of and whether they contain GMOs. The European Union s eastward enlargement The European Commission closed its summit in Copenhagen in December 20 with the decision to enlarge the EU to include Poland, Hungary, the Czech Republic, Estonia, Latvia, Lithuania, Slovakia, Slovenia, Malta and Cyprus on 1 May Unless otherwise arranged in special agreements, the accession countries will adopt the communities rules for the agricultural sector upon joining. Transitional measures are limited in time and extent. The maximum sugar production quota (A and B sugar) of the EU-25 will be raised from the present EU-15 total of 14,482,142.5 metric tons by the amount of the maxi- 16

19 h Economic conditions AGRANA Beteiligungs-AG mum sugar production quota of the accession countries of 2,958,393.0 metric tons to total 17,440,535.5 metric tons in 2004/05. Seven countries have been granted a quota. Cyprus, Malta and Estonia do not have a sugar industry and have therefore not been granted a quota. Poland, Slovakia and Hungary have been given an isoglucose quota, increasing the maximum isoglucose production quota in the EU by 206,955.0 metric tons from 300,724.9 metric tons to 507,679.9 metric tons. Accession countries Czech Republic, Estonia, Latvia, Lithuania, Poland and Slovakia have been granted a potato starch quota of 186,584 metric tons, increasing the EU potato starch quota from 1,762,148 metric tons to 1,948,732 metric tons. Sugar Isoglucose Potato starch Metric tons Total A quota B quota Total A quota B quota quota Cyprus Czech Republic 454, ,209 13, ,660 Estonia Hungary 401, ,454 1, , ,627 10,000 0 Latvia 66,505 66, ,778 Lithuania 1,010 1, ,211 Malta Poland 1,671,927 1,580,001 91,926 26,781 24,911 1, ,985 Slovakia 207, ,760 17,672 42,547 37,524 5,3 700 Slovenia 52,973 48,157 4, Total accession countries 2,958,393 2,828, ,4 206, ,062 16, ,584 EU-15 14,482,142 11,894,223 2,587, , ,713 51,012 1,762,148 EU-25 17,440,535 14,723,214 2,717, , ,775 67,905 1,948,732 Council Regulation (EC) 1408/20 enacted a double-zero agreement with Hungary (i. e. the abolition of export subsidies at the same time as the abolition of tariffs) regarding Annex I products. The outstanding double-zero concessions for the Czech Republic, Slovakia, Poland, Romania, Bulgaria and Slovenia (regarding Annex I and non-annex I products) are likely to be implemented during the first half of

20 Financial condition and profit position AGRANA Beteiligungs-AG h Financial condition and profit position in 20/ Reporting in accordance with IAS The Consolidated Financial Statements for the 20/ financial year were drawn up in accordance with the International Accounting Standards (IAS). We have reported in thousands of euros (also 000 or K). Profit position Consolidated revenues grew by 3.9 per cent to 875,700 thousand (previous year: 842,800 thousand). That growth was largely attributable to the changeover of the balance-sheet dates of the AGRANA International companies to the Consolidated Group s balance-sheet date (last day of February), which was carried out to facilitate consolidation. The consequence was that the Group-members in Central and Eastern Europe which previously closed their financial years on 31 December came into the Income Statement with an accounting period of 14 months (i. e. including January and February 20) in the 20/ financial year. The increase in revenues of 32,900 thousand was generated in the Starch Division in Austria and Central and Eastern Europe, which grew by 11.9 per cent, and by the Group s foreign subsidiaries in the sugar segment, whose revenues grew by 14.3 per cent. Central and Eastern Europe accounted for 35 per cent of aggregate revenues. Profit from operating activities advanced by 5.9 per cent to 80,500 thousand (previous year: 76,000 thousand). The Group-member in Central and Eastern Europe developed particularly well, accounting for 57 per cent of consolidated profit from operating activities. Thanks to an exceptionally good profit from investing and financial activities and a reduced tax ratio, consolidated earnings were 47 per cent up on the year at 65,400 thousand. Net cash from profit increased by 16.2 per cent to 105,000 thousand (previous year: 90,400 thousand). Revenues by country in 20/ [2001/] Profit from operating activities in 20/ [2001/] Romania 7% [6%] Czech Republic 7% [6%] Slovakia 3% [3%] Central and Eastern Europe 57.7% [41.4%] Austria 42.3% [58.6%] Hungary 18% [17%] 18 Austria 65% [68%]

21 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG AGRANA Zucker und Stärke Aktiengesellschaft SUGAR DIVISION Course of business A decline in earnings in the wake of a fall in domestic sugar sales to 309,000 metric tons (previous year: 326,000 metric tons) and higher outlay on materials and staff characterized the division s business development during the financial year under review. Sugar sales (domestic and exports) during the financial year from 1 March 20 through 28 February 20 totalled 436,200 metric tons (previous year: 444,000 metric tons). Sugar revenues for the purposes of IAS came to 324,200 thousand (previous year: 333,400 thousand). Production AGRANA concluded beet-cultivation contracts with 10,000 Austrian farmers (previous year: 10,300 Austrian farmers) for an area of 44,600 hectares (previous year: 44,700 hectares) for the 20 campaign. The per-hectare beet yield of 68.5 metric tons (previous year: 62.0 metric tons) was 10 per cent up on the year and higher than the long-term average. Growing conditions were ideal until the end of July, but heavy rain in August flooded some 800 hectares of beet crop, and no part of our catchment area was spared. However, high levels of precip- itation led to excellent crop development where flooding had not caused damage. During the 20 beet campaign, 3,043,400 metric tons of beet (previous year: 2,773,500 metric tons of beet) with an average sugar content of per cent (previous year: per cent) were processed into 455,800 metric tons of sugar (previous year: 423,400 metric tons of sugar). That was per cent of our maximum EU production quota of 364,200 metric tons. The bigger beet crop lengthened the campaign to 83 days, as against 77 days the year before. We were able to increase our three sugar factories daily throughput by another 2.1 per cent or 750 metric tons to 36,800 metric tons. That was mainly possible because of a nearly glitchfree campaign, the beet s lower sugar content and a raft of detailed optimizations. The extracted total of 152,000 metric tons per sugar factory represented an increase of 7.7 per cent on the year, further reinforcing our Austrian factories standing near the top of the European performance rankings. Markets AGRANA Marketing- und Vertriebsservice Ges.m.b.H. (AMV) is responsible for product development, marketing, brand cultivation, sales, distribution and customer service on behalf of the entire Sugar Division. We will be reporting on those activities in the section of this report dealing with AGRANA Marketingund Vertriebsservice Ges.m.b.H., commencing page 22. Investments Investments in the three sugar factories in Austria totalled 10,400 thousand during 20/. The primary focuses were beet deliveries, cutters, limekilns, energy, juice purification, sugar houses, white sugar centrifuges, packaging and pulp presses. A betaine extraction plant was added to our molasses desaccharification systems at the Tulln sugar factory. In addition to increasing capacities, those investments also further cut energy costs and reduced our consumption of process materials and supplies. Our investments in juice purification and a special computer-aided optimization program (LIMOS) developed by Zuckerforschung Tulln Ges.m.b.H. considerably reduced our limestone consumption to 2.1 per cent of beet processed. That represents a cut of 12.8 per cent and is a European record. Since 1990, the Sugar Division s aggregate energy consumption in relation to quantities of beet processed has gone 19

22 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG h down by more than 32 per cent, and specific CO 2 emissions have fallen by roughly 34 per cent over the same period. As a result, Austria s sugar industry has not only made an important contribution to reducing burdens on the environment. It has also long since surpassed the target agreed in Kyoto, which is to reduce CO 2 emissions in Austria by 13 per cent between 1990 and STARCH DIVISION Course of business Business developed satisfactorily during the 20/ financial year. Revenues increased by 7.9 per cent to 139,300 thousand (previous year: 129,100 thousand), thanks above all to the opening up of new markets and upgrading towards higher-quality products. However, pressure in the marketplace depressed prices. Profit from operating activities continued to grow in the 20/ financial year, thanks largely to increased capacities at the Aschach maize starch factory, cost optimizations and the development of new markets and market niches. In October 20, we acquired the Deuring maize starch factory in Hörbranz, Vorarlberg Province. Production AGRANA accepted delivery of a total of 200,000 metric tons (previous year: 213,800 metric tons) of starch and organic starch potatoes from 2,113 farmers (previous year: 2,291 farmers) during the 20 potato starch campaign, which lasted 110 days. We increased daily processing throughput to 1,823 metric tons (previous year: 1,742 metric tons) of potatoes. The potatoes had a starch content of 17.1 per cent (previous year: 17.4 per cent). Starch production was 16 per cent below our 20 EU potato starch quota of 47,691 metric tons. We concluded cultivation contracts for 212,700 metric tons (previous year: 216,500 metric tons) of starch and organic starch potatoes for the 20 harvest year. Four hundred and six growers delivered a total of 14,000 metric tons (previous year: 15,700 metric tons) of potatoes and organic potatoes for the food industry to be used in the manufacture of long-life potato products (e. g. mashed potato) and organic products. We concluded cultivation contracts for 15,400 metric tons (previous year: 14,200 metric tons) of potatoes and organic potatoes for the food industry for the 20 harvest year. The Aschach maize starch factory processed 267,000 metric tons (previous year: 240,000 metric tons) of maize during the 20/ financial year. The increase in processed volumes was due to the start-up of the capacity increase at our maize starch factory in mid Areas under maize are likely to remain stable in the 20/04 financial year. Markets Despite the economy s poor development, sales of starch products, special starch products and starch by-products were 11 per cent up on the year. Sales of potato starch products grew by 27 per cent, and sales of maize starch-based products increased by nearly 17 per cent. Total revenues ( mn) 58% % % % / 00 00/ 01 01/ / Total revenues Export ratio 20

23 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG toes and maize into organic potato and maize starches, organic saccharification products and organic potato products (potato flakes and dried potatoes) at the Gmünd and Aschach factories. Those products are sold throughout the food and beverage industries and are primarily used in products such as (to name just a few) fruit preparations, confectionery, baby foods, cakes and pastries and delicatessen products. In addition, AGRANA also makes household products that include mashed potato and dumpling mixes for major European manufacturers of branded products. More than 90 per cent of those organic ingredients are exported. Our biggest markets are the European Union, Switzerland, North America, Southeast Asia and Oceania. The Gmünd and Aschach factories are certified organic producers within the meaning of Council Regulation (EC) 2092/91 (as amended). In recent years, both sales and revenues in the organic segment have shown double-digit annual growth. GM-free maize starch products AGRANA has been manufacturing certified GM-free maize-based and waxy maize-based food ingredients since Certification encompasses the entire production process, from the selection NON-FOOD (Technical Starches) The NON-FOOD (Technical Starches) segment accounted for 25 per cent of total starch sales by volume and showed an increase of nearly 27 per cent in sales by volume. However, prices were generally lower. Domestic sales by volume to the paper industry during the 20/ financial year were up 25 per cent, and total sales inclusive of exports increased by 27 per cent. However, prices were under considerable pressure because of the economic slump and the resulting reduction in paper machine throughput. Total sales to the corrugated cardboard industry grew by about 8 per cent, while sales to the textile industry remained stable. There was an increase of 22 per cent in sales by volume to the construction industry. FOOD starches for the food and beverage industries FOOD is the Starch Division s largest subsegment. Sales by volume increased slightly. Output of long-life potato products was another 16 per cent up on the 2001/ financial year. Organic products For more than 10 years, AGRANA has been processing organically grown potaof seed, cultivation and harvesting to processing at Aschach and Gmünd. Certification is carried out in accordance with the Austrian Codex, Germany s Verordnung zur Änderung der Neuartige Lebensmittel- und Lebensmittelzutaten-Verordnung and the Swiss Lebensmittelverordnung. The product line includes native starches, pregelatinized starches, malto-dextrine and dried glucose syrups for use among other things in blancmanges, soups and sauces, dairy foods for infants and baby food in jars, spice mixtures and fruit and vegetable powders. AGRANA is one of the biggest B2B suppliers of both organic and GM-free products in the European marketplace. GROUP INTERESTS We will report on the interests held by AGRANA Zucker und Stärke AG in Central and Eastern Europe whose management and coordination are the responsibility of AGRANA Internationale Verwaltungs- und Asset-Management AG & Co KG from page

24 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG h AGRANA Marketing- und Vertriebsservice Ges.m.b.H. AGRANA Marketing- und Vertriebsservice Ges.m.b.H. (AMV) sells AGRANA s products to the food trade (branded products) and the food and beverage and animal feed industries as well as being responsible for marketing the entire product line of AGRANA Zucker und Stärke AG. AMV also has responsibility for brand management and the distribution and sale of the flour brands made by Erste Wiener Walzmühle Vonwiller Ges.m.b.H. and FARINA Mühlen Ges.m.b.H., in addition to which it handles sales of the catering products of Hellma Lebensmittel-Verpackungs-Ges.m.b.H. (a part of Portion Pack Europe). Course of business AMV recorded revenues of 439,000 thousand (previous year: 456,000 thousand) during the 20/ financial year. Successful branded products Wiener Zucker Based on the emotional goodwill of the Wiener Zucker brand, we redefined our advertising and marketing strategy for the 20/ financial year. The brand s verbal core The sweet side of life is synonymous with everything that is good, beautiful, pleasant and sweet in life. Wiener Zucker is an important and natural part of enjoying life. Wiener Zucker sweetens the most pleasurable moments. The new sugar campaign works with heightened emotion and heightened motivation. We therefore developed new TV spots. Among others, we were able to engage football manager Hans Krankl and model Cordula Reyer for testimonials. The TV campaign began in mid-march (before Total sugar sales (metric tons) 464, , ,200 00/ 01 01/ / 22

25 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG the start of the Easter season) and was supplemented by adverts and articles in the printed media that communicated the diversity of sugar as a product. During 20, we launched a see-through pack of fifty 5-gram sugar sticks called Zuckerillo in the grocery segment. Whole sugar and normal crystal sugar were repackaged. We completely relaunched decorative sugar, which is now sold in a 250-gram box with a pourer instead of a 500-gram pack. Household sugar sales during the financial year under review totalled 66,900 metric tons, which was 4.4 per cent below the previous year s figure of 70,000 metric tons. In particular, the poor fruit harvest in 20 reduced sales of preserving sugar by 8.6 per cent. Sales of bagged sugar likewise fell by nearly 14 per cent, which was mainly attributable to a fall- off in sales of sugar to vintners and sugar imports from Italy and Croatia. Fini s Feinstes, Küchenperle, Farina During the year under review, marketing of our Fini s Feinstes, Küchenperle and Farina flour brands continued to focus successfully on the printed media (product placements and various cooking events) to ensure the consistent cultivation of those brands in the consumer segment. We positioned them as follows: Fini s Feinstes Austria s leading national flour brand; Küchenperle the traditional regional brand in Upper Austria; Farina the supra-regional flour brand for the provinces of Styria, Carinthia, Vienna, Lower Austria and Burgenland. Fini s Feinstes Polenta was launched in the market at the end of January 20, strengthening the momentum of the Fini s Feinstes brand in direction of cooking. That strategy had been initiated the year before with the Fini s Feinstes Backteiggeheimnis (batter secrets) campaign. Sugar for the food and beverage industries Because of the general stagnation of the food retailing trade, the Austrian food and beverage industries grew little during the year under review. In general, the pressure from brands is growing, creating challenges for every producer of brand-name articles. Imports from the Western Balkans reduced sales to the Austrian food and beverage industries by 3.7 per cent. of which Domestic sugar sales (metric tons) Quota sugar exports (metric tons) C sugar exports (metric tons) 340, , ,800 19,300 56,150 61,950 49,700 77, ,100 00/ 01 01/ / 00/ 01 01/ / 00/ 01 01/ / 23

26 The sweet side of Austria

27 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sales by volume to manufacturers of soft drinks fell by 4.4 per cent. That was among other things due to the partial loss of bottling orders from German spring operators, and Austrian exporters of beverages in PET bottles were hard hit by Germany s new packaging regulations, which have introduced compulsory bottle deposits. Volumes of sugar substitution by imported high-sugar fruit juice concentrates, which attract lower customs duties, remained very high. Sales in the confectionery segment stabilized at the same overall level as in 2001/, although sales to individual customers fluctuated considerably. Sales in the other foodstuffs segment declined by 5.4 per cent. That was primarily due to imports of strongly sugared fruit juices from Switzerland and the Czech Republic and of sugar imported to Austria duty-free within the scope of the Western Balkans Agreement. Sugar for the fermentation, chemical and other industries In a period of low sugar prices in the world market, production refunds were high, enabling us to supply the fermentation industry with roughly 8,500 metric tons during the year under review. Starches for the food and beverage industries Sales of starch to the Austrian food and beverage industries are handled by AMV. Sales by volume increased by approximately 36 per cent on the year. Starch prices were static or falling slightly. By-products Both domestic and foreign sales of dried pulp developed well. Because of harvest conditions, dried pulp volumes were high and we still have some in stock. Prices stayed at the previous year s normal level. Sales of beet molasses came under pressure because of cut-price offers for sugarcane molasses. We were able to sell about 12,000 metric tons during the year under review. However, prices were lower than the year before. Revenues from sales to the spirits and yeast industries and to the animal feed industry were 3.5 per cent down on the year. Volumes of both maize concentrates and maize gluten were static on the year, but prices fell slightly. Thanks to the growing needs of manufacturers of organic products, demand for potato protein developed well. Sales of third-party goods purchased for resale Sales of goods purchased from third parties for resale came to 456,000 metric tons. This line consists mainly of protein feed but also includes bee food, fondant and invert sugar syrup. 25

28 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG h AGRANA Internationale Verwaltungsund Asset-Management AG & Co KG AGRANA Internationale Verwaltungs- und Asset-Management AG & Co KG manages the operations of all the foreign subsidiaries of AGRANA Zucker und Stärke AG. AGRANA aims to expand its core business operations in the sugar and starch segments by acquiring interests in Central and Eastern Europe, and it plans in particular to become a major player in the countries neighbouring Austria that will be a part of the European Union s eastward enlargement. Within those countries, AGRANA s primary focus will be on exploiting opportunities to apply its production and marketing expertise in its core business segments sugar and starch and on developing those segments to ensure competitiveness within the European Union. AGRANA s plans are based not just on transfers of cutting-edge technology but also on the application of the Group s wide-ranging know-how in the raw materials, manufacturing, management, marketing, distribution and sales fields. For consolidation purposes, the 20/ financial year consisted of 14 months (from 1 January 20 through 28 February 20) for all the AGRANA International companies in Central and Eastern Europe. 26

29 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar and starch in Hungary Prevailing conditions in the Hungarian sugar market Sales in the Hungarian sugar market came to 320,000 metric tons during calendar 20 (previous year: 318,000 metric tons). 31,000 metric tons of sugar were imported and 87,700 metric tons exported. In the industrial segment, we were still seeing high volumes of substitution with artificial sweeteners and sacchariferous syrups taking place for prices reasons, and we also observed a significant rise in sugar imports. Most imported sugar was from Poland. The normal tariffs for sugar imports can be eluded by importing sacchariferous cocoa mixtures (sugar content of over 90 per cent) and syrup solutions. An intertrade agreement between representative of the Hungarian beet farmers and the sugar industry was concluded in May 20. It primarily regulates the beet price paid to farmers. During membership negotiations with the EU, Hungary s national sugar quotas after accession were set at 400,454 metric tons of A sugar and 1,230 metric tons of B sugar, making 401,684 metric tons in all. In addition, Hungary was also granted isoglucose quotas of 127,627 metric tons of A isoglucose and 10,000 metric tons of B isoglucose, making 137,627 metric tons in all. The Group s interests in Hungary Hungrana Kft. a processor of maize into starch and isoglucose recorded revenues of 138,420 thousand during the 20/ financial year, which lasted 14 months (previous 12 months: 116,740 thousand). Magyar Cukor Rt. closed its 14-month 20/ financial year with revenues of 83,330 thousand (previous 12 months: 77,000 thousand). Magyar Cukor Rt. s two sugar factories (Kaposvar and Petöhaza) processed 958,000 metric tons of sugar beet into 132,500 metric tons of white sugar in

30 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG h Sugar in the Czech Republic Prevailing conditions in the Czech sugar market The Czech sugar market regime that entered into force in 2001 was revoked at the end of November 20 because it was inconsistent with the Czech constitution. In view of the country s forthcoming entry into the EU in May 2004, an amended market regime was introduced, but it too seems untenable from a constitutional point of view. Thanks to the more effective safeguard measures in place during the year under review, domestic sales rose to nearly 340,000 metric tons. Sugar imports came to roughly 36,000 metric tons and sugar exports totalled 172,000 metric tons. During membership negotiations with the EU, the Czech Republic s national sugar quotas after accession were set at 441,209 metric tons of A sugar and 13,653 metric tons of B sugar, making 454,862 metric tons in all. The Group s interests in the Czech Republic Revenues during the 14-month 20/ financial year totalled 61,120 thousand (previous 12 months: 50,110 thousand). The sugar factories in Hrusovany and Opava processed 760,200 metric tons of sugar beet into 113,000 metric tons of sugar during the 20 campaign. The beet had a sugar content of per cent and the concentrated juice was per cent pure. 28

31 h Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar in Slovakia Prevailing conditions in the Slovakian sugar market Intensive work was done on the drafting of a sugar market regime during the period under review, and it has now been ratified by the Slovak government. The regime is based on the assumption that the sugar quotas awarded within the scope of membership negotiations namely 189,760 metric tons of A sugar and 17,672 metric tons of B sugar, making 207,432 metric tons in all will be in place from However, sales in 20 did not live up to those quotas. Slovakia s domestic sugar market has a total volume of roughly 137,500 metric tons. Imports were stable at 6,900 metric tons, and exports were on the rise at 44,000 metric tons. Domestic prices were over 5 per cent up on the year, and the development of the world market price of sugar made it possible to hike export prices by more than 10 per cent. Slovenské Cukrovary a.s. recorded aggregate sales of 50,000 metric tons during the period under review, which was more than one third up on That was mainly thanks to the increase in export volumes. The Group s interests in Slovakia Revenues during the 14-month 20/ financial year came to 28,720 thousand (previous 12 months: 22,650 thousand). The sugar factories at Rimavská Sobota and Sered processed 369,500 metric tons of sugar beet into 46,000 metric tons of white sugar during

32 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG h Sugar and starch in Romania Prevailing conditions in the Romanian sugar market Romania s domestic sugar market had a volume of 521,000 metric tons in 20 (previous year: 456,000 metric tons). Most of the total was imported from Brazil in the form of unrefined sugar and then refined into white sugar in local factories. The introduction of a 30 per cent tariff on imports of unrefined sugar as of 1 March 20 prompted substantial imports of unrefined sugar in January and February 20. The resulting high inventory levels together with falling world market prices during the second quarter created severe downward pressure on prices in the marketplace. The Group s interests in Romania The AGRANA Group has interests in the following companies: S.C. Zaharul Romanesc S.A. 87% S.C. Danubiana Roman S.A. 92% S.C. A.G.F.D. Tandarei s.r.l. 100% S.C. AGRANA Romania Holding and Trading Company s.r.l. 100% S.C. BETA Tandarei S.A. and S.C. Zaharul Buzau S.A. were merged on 27 September 20 and renamed S.C. Zaharul Romanesc S.A. The sugar factory in Roman extracted 18,500 metric tons of sugar from 216,200 metric tons of beet during Romania s 20 campaign, and the Buzau and Roman factories made some 144,500 metric tons of white sugar from imported unrefined sugar, giving total sugar production by AGRANA s Romanian sugar factories of 163,000 metric tons. The starch factory in Tandarei began production in March 20. It was particularly successful in attracting customers from the food and beverage industries. S.C. AGRANA Romania Holding and Trading Company s.r.l., domiciled in Bucharest, acts as the holding company for the Group s Romanian sugar and starch subsidiaries, and AGRANA Romania Holding and Trading has also been responsible for sales and marketing activities on behalf of those companies since the 20/ financial year. The Romanian Group-members recorded revenues of 60,150 thousand during the 14-month 20/ financial year (previous 12 months: 54,300 thousand). 30

33 The sweet side of the Czech Republic Tak chutná život. Ode dneška bude život čtyřikrát sladší. S Korunním cukrem krystal, krupicí, moučkou a kostkami.

34 The environment AGRANA Beteiligungs-AG h The environment AGRANA has spent approximately 171,000 thousand on environmental protection in Austria since That is roughly half of total investment outlay by the Group s sugar and starch divisions. The principal emphases have been energy and water management. The success of AGRANA s efforts to protect the environment is amply illustrated by the sugar factories energy usage. The processing heat and electrical energy needed to process the sugar beet (i.e. to evaporate its water content of about 75 per cent) is created by combined heat and power generating plants (steam and gas turbines). The highly efficient use of energy resources reduces our consumption of fossil fuels and cuts specific emissions. Since 1996, AGRANA has only been burning natural gas. Thanks to our outlay on cutting energy consumption, our specific energy usage has fallen by more than 32 per cent since Over the same period, CO 2 emissions in relation to campaign energy consumption have fallen by 34 per cent, making a significant contribution to preventing environmental damage. The Austrian sugar industry has therefore already achieved the Kyoto objective of a 13 per cent reduction in CO 2 emissions in Austria between 1990 and Roughly half of the beet delivered to the sugar factories in Hohenau, Leopoldsdorf and Tulln arrives by rail, and about one third of the potatoes processed by the starch factory in Gmünd are also delivered by rail. Hygiene is essential when manufacturing foodstuffs. AGRANA Zucker und Stärke AG applies a HACCP concept (hazard analysis and critical control points), which is constantly updated in line with the latest research. AGRANA uses hop extracts and resins for disinfecting purposes in its extraction plants. The technique was developed by research subsidiary Zuckerforschung Tulln Ges.m.b.H. International patents are pending. 32

35 h The environment AGRANA Beteiligungs-AG The greatest possible use of closed circuits and the biological sewage clarification systems installed at all our sugar and starch factories in Austria have optimized the management of water resources and sewage. Processing and treating the earth stuck to the beet when it arrives at the factory is also of major ecological importance. Having been drained, the soil is stabilized in so-called soil cassettes for a period of three years, after which it can be returned to the field. Both the sugar factories and the potato starch factory in Gmünd sell the by-products of their manufacturing processes so-called Carbokalk and potato run-off as high-grade fertilizers and soil enhancers. We have greatly improved the sound insulation and filter systems at all our factories during the past few years to control noise and dust pollution. Extensive measures were taken to reduce dust, odour and noise pollution during the final stage of the enlargement of the Aschach maize starch factory. In addition, a modern biological filter for organic odoriphores now cleans exhaust flows from the by-product lines. We offer beet and potato growers comprehensive commercial and ecological advice. The gypsum absorber block method for measuring moisture in the soil near the root of the plant guarantees that beet fields are irrigated at exactly the right time. Soil analyses using electroultra-filtration (EUF) enable us to develop precise fertilization recommendations, in turn making sure that each plant only gets exactly what it needs to grow in addition to the nutrients already available in the soil without over-fertilizing the land or dirtying the ground water below. The new intertrade agreement for beet growers includes rewards for participating in those analyses. 33

36 Research and development AGRANA Beteiligungs-AG h Research and development The research and development programme for the entirety of the AGRANA Group is in the hands of Zuckerforschung Tulln Ges.m.b.H. and its 49 staff-members. The company s activities cover a broad range of fields from agriculture to food technology, chemistry and other technological disciplines to microbiology and biotechnology. The Sugar Division We have now found a third natural means of combating the unwanted development of microorganisms and controlling the desired fermentation of lactic acid in extraction towers in our sugar factories alongside hop and pine resin products. It will complement the use of hop beta-acids and resin acids. A patent has been applied for. Experiments begun last year in the use of resin products to control microbiological processes in water circuits were successful and will now continue on a larger scale. We have applied for a subsidy for the project from the Forschungsförderungsfonds der gewerblichen Wirtschaft (the research promotion fund of the chamber of trade and industry). For a number of years, the Tulln factory has been using a technique for admixing milk of lime in exactly the right quantities. For the first time, the process was licensed to two German sugar factories during the 20 campaign. It substantially reduces the consumption of lime in sugar factories. In order to accelerate process analyses in the laboratory, a number of measuring devices were combined to create a plant that can measure juice quality without any labour-intensive input. Compared with conventional methods, the system has reduced the number of staff needed to carry out analyses. The work of the Agricultural Department at Zuckerforschung Tulln a certified testing laboratory for seed varieties and crop protection chemicals under European standard ÖNORM EN 45001:1990 is subdivided into production engineering trials, advisory services, the dissemination of information and the rendering of support services. Healthy soil and sustainable soil fertility are the key prerequisites for reliable and cheap beet production. Special attention was paid to intermediate crops during soil processing trials in the year under review, and analyses were carried out 34

37 h Research and development AGRANA Beteiligungs-AG on the basis of tests of 9,500 soil samples using electro-ultra-filtration (EUF). Fertilization recommendations for sugar beet and potatoes were then prepared from those analyses. In all, the Agricultural Department carried out field trials at 18 locations in Austria s beet growing region and evaluated some 2,800 trial plots to test the effectiveness, tolerance and compatibility of means of production and processes. In addition, 4,500 beet samples were examined for yield and internal quality. We also continued our BETAEPO advisory project during 20. BETAEPO is a year-round exhibition field measuring about 6 hectares made up of roughly 400 small plots containing sugar beet, potatoes, maize, rape and sunflowers. During two open days, we were able to educate roughly 2,000 visitors from Austria and abroad about processing techniques and possible applications in the food and industrial segments. An Internet project called BETAEPERT aims to develop an IT-based regionally differentiated warning system for the integrated control of beet leaf diseases. BETAEPERT offers beet growers an objective and independent source of advice. The Starch Division The key to a successful marketing strategy for starch products in changing markets is the continuous adaptation and optimization of the product line. One part of that strategy is the development of made-to-measure starch products for solving new and current application problems. That is where we see the principal role of our development work in the starch segment: the rapid and skilled execution of customer-orientated product development work on the basis of broadly-ranging know-how, the rapid implementation of that development work on a manufacturing scale, and the reinforcing of our marketing activities by providing the customer with concentrated applications support. The construction industry is an attractive growth market for starch products. Based on the high-quality building starches that we have already successfully introduced to the market, we are working intensively on the development of new solutions for specific gypsum and cement applications, including in particular applications in the shotcrete segment (e.g. to inhibit rebound and dust). In the textiles segment, our successful existing line of sizing starches is being supplemented by a series of special starch products for selected applications. In the field of textile printing thickeners, we have developed a modified starch with substantially improved properties for use in reactive textile printing. Our activities in the paper segment focus on the development of new coating starches for speciality papers in close cooperation with the paper industry. We use a mobile laboratory to provide the paper industry with prompt and professional analytical and applications support on a direct on-the-spot basis. Steadily rising demand has led to a growing need for organic starches with improved technological properties. Intensive trials have made it possible to enhance the properties of maize starches and waxy maize starches for the organic segment. Pilot plants for extracting maize starch and potato starch have given us valuable information about the industrial working properties of individual potato, waxy maize and maize varieties and enabled us to evaluate the characteristics and possible applications of pure starches. 35

38 Staff and social report AGRANA Beteiligungs-AG h Staff and social report The AGRANA Group employed an aver- 20/ financial year (previous year: age of 3,916 staff during the 20/ 420 thousand). The primary focuses financial year (previous year: 4,463). of that outlay were on information tech- The total was made up of 1,362 (previ- nology, personality development semi- ous year: 1,341) employees in Austria nars, honing the English-language skills and 2,554 (previous year: 3,122) employ- of all staff-members working in inter- ees working for foreign Group-members. national departments, seminars in the That represented an increase of 21 in marketing and sales fields and practical Austria, most of which took place in training and apprentice training. the Starch Division. The number of staff Management and behavioural training working for foreign Group-members fell consisted of several training programmes by 568. The Group s average total work- targeting communication proficiencies force during the year was 547 smaller and personality development and in- than in 2001/. house workshops for management staff On our reporting date (28 February 20), in Austria and at the Group s foreign 1,347 people were working for the subsidiaries. In addition, meetings were The workforce Group in Austria (previous year: 1,276), held for young management personnel and the foreign Group-members had a who had just joined the Group to give 4,753 4,463 combined workforce of 2,001 (previous year: 2,291), making 3,348 in all (previous year: 3,567). That reflected the them an opportunity to exchange views and communicate with other members of the organization. 3,916 Slovakia Romania rationalizations that had taken place within the Group. The increase in staffing in Austria was due to the acquisi- Apprenticeship training is an important aspect of our activities. Our Austrian Group-members were training 59 appren- tion of the Deuring maize starch factory tices during the 20/ financial year. Czech Republic Hungary Austria (addition of 51 employees) and a rise in the number of staff in the Starch Division. The Austrian members of the AGRANA The most important apprenticeship professions were engine fitter and chemical laboratory assistant and the combined trades of engine fitter/lathe operator and Group spent 473 thousand on basic works electrician/process control tech- and advanced staff training during the nician. 00/ 01 01/ / 36

39 h Outlook for 20/04 AGRANA Beteiligungs-AG Outlook for 20/04 At the beginning of April 20, AGRANA acquired 99 per cent of fruit-juice concentrates and fruit juice manufacturer Vallø Saft A/S, Denmark, from Danish investment funds and private shareholders. During the 20 financial year, the company recorded revenues of 38,000 thousand with 100 employees at its production sites in Denmark and Poland. The acquisition represents a continuation of AGRANA s strategy of refining agricultural raw materials at the primary stage. At the time of writing, the takeover was still subject to the approval of the pertinent competition regulators. The Austrian Sugar Division The Austrian Sugar Division concluded cultivation contracts with 9,700 farmers to plant some 43,400 hectares with beet for the 20 harvest. Following the ample beet harvest in 20, that was a reduction of 2.6 per cent. This beet s growth this year is in line with the longterm average. We anticipate a beet harvest of 2.6 million metric tons. The intertrade agreement was adjusted in the areas of dried pulp refining and the basis of assessment for C1 beet volumes for the 20, 2004 and 2005 harvest years, and a premium was introduced for participating in EUF soil analyses. Aggregate sugar sales in March 20 were 10 per cent down on the same period of the previous year and domestic sugar sales were static on the year. The fall-off took place in sales of quota sugar to non- EU countries. In the case of household sugar, one must make allowance for the fact that sales of sugar for the Easter baking season were not yet included in the March figures because the 20 Easter holiday fell very late. In the Sugar Division, our three Austrian sugar factories will be investing 12,900 thousand this year. Investments will focus primarily on packaging plants and raw materials and on measures to further enhance quality, cut energy consumption and improve safety. The Austrian Starch Division Cultivation contracts for the 20 harvest were concluded for 213,000 metric tons of starch and organic starch potatoes and 15,400 metric tons of potatoes and organic potatoes for the food industry. The Starch Division will be investing 23,200 thousand during the 20/04 financial year. Above all, it will be investing in the first stage of the next increase in the daily processing capacity of the Aschach maize starch factory (to 1,000 metric tons of maize) and in a drum drying and extrusion plant at the potato starch factory in Gmünd. Sugar and starch abroad The AGRANA sugar factories contracted the following quantities of beet for the 20 harvest: Beet Hungary 900,000 metric tons Czech Republic 725,000 metric tons Slovakia 379,000 metric tons Romania 300,000 metric tons We will be investing 11,700 thousand in our foreign subsidiaries during the 20/04 financial year. Prices in Hungary are likely to come under severe pressure because of the large quantities being imported, because high inventories in Poland will be pushing into neighbouring markets, and because Hungary s existing safeguard measures have proved inadequate in the face of low import prices. Further negotiations with the authorities are needed to determine the amount of inventory stocks that will be accepted as quota sugar upon accession to the Single Market. Those stocks will then be brought into the scope of the EU sugar market regime. 37

40 The sweet side of Romania O perla veritabila este o bucurie pentru orice femeie. Margaritar este un zahar de cea mai buna calitate, o adevarata perla a zaharului. Prelucrat prin procedee tehnice traditionale pentru a fi mai alb, mai pur, mai dulce. Zaharul Margaritar este o sursa naturala de energie. Margaritar. Perla zaharului.