Glossary

Finance

Cash flow Net inflow of funds. Difference between receipts and spending expenses within one accounting period. For the sake of simplicity, the cash flow is determined on the basis of net income, plus non-spending expenses, in particular write-downs and changes in non-current provisions. The cash flow is available to the company for investment, repayment of liabilities and distribution of profits.

Consolidation The Group accounts are drawn up as if all Group member companies formed one uniform company in law. All expenditures and earnings as well as all interim trade results and other transactions between the Group members are eliminated by way of offsetting (expense and result as well as interim result consolidation). Stakes held in Group companies are set off against their equity capital (capital consolidation), and all intra-Group receivables and liabilities are eliminated (debt consolidation) because such legal relationships do not exist within a legal entity. Summation and consolidation of the remaining items of the annual financial statements result in the consolidated balance sheet and the consolidated income statement.

Declaration of compliance Annual declaration made and published by the Executive and Supervisory Boards of listed companies in accordance with Sec. 161 AktG (German Stock Corporation Act), stating to which extent the company management complies with the recommendations of the Commission of the German Corporate Governance Code and which recommendations are not applied.

Dividend The amount of a stock corporation’s net income apportioned to each individual share. Dividends are either expressed as a percentage of the par value or as a currency amount per share (earnings per share). The Annual General Meeting votes on the distribution of the dividends. Dividends are paid out on an annual basis in Germany.

EBIT (earnings before interest and taxes) This figure supplies information on the results of current operations. Differences in capitalisation are not accounted for, therefore the general interest-rate level and tax rates are not considered.

EBITDA (‚earnings before interest, taxes, depreciation and amortisation’) This key indicator is a way of measuring operating performance before capital expenditure.

Equity method An accounting method in which shares in a company are initially recognised at cost and subsequently adjusted to reflect the shareholders’ interest in the net assets of the investee company.

Equity ratio A financial indicator describing the relationship between shareholders’ equity and total assets.

Finance lease In contrast to an operating lease, the lessor transfers the risk of the investment and thereby the economic ownership of the asset to the lessee.

German Corporate Governance Code Guidelines formulated in 2002 on the management and supervision of German companies listed on the stock exchange. The German Corporate Governance Code outlines nationally and internationally accepted standards of responsible business management, which primarily aim at transparency and clarity. The Code defines the responsibility of Executive and Supervisory Boards and sets forth or makes recommendations on how to protect the rights of shareholders, how executive and supervisory bodies should be filled and how their members should be remunerated. Non-listed companies are also recommended to comply with the Corporate Governance Code.

Hedge accounting under IAS 39 Refers to the way in which two or more contracts (or financial instruments) between which hedging relationships exist are recognised in the balance sheet. This method differs from conventional accounting methods.

IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) are accounting standards that render balance sheet and disclosure methods comparable on a global scale. These accounting standards have been compulsory for listed companies in Germany and throughout the EU since the beginning of 2005.

Impairment test This test must be conducted regularly according to IFRS in order to verify the valuation of non-current assets. It may result in the recognition of impairment.

Interest-rate swap Contractual agreement on the swap of interest cash flows at specific points in time according to a basic notional principal. Interest-rate swaps enable variable interest-rate agreements to be converted to fixed interest rates.

International Accounting Standards Board (IASB) is an independent international committee of accounting experts that develops and revises International Financial Reporting Standards (IFRS) as needed.

International Financial Reporting Interpretations Committee (IFRIC) is the name of a group within the International Accounting Standards Committee Foundation (IASC). The job of IFRIC is to publish interpretations of IFRS and IAS accounting standards in cases where it becomes apparent that the standard is capable of being interpreted differently or incorrectly or when new circumstances emerge which have not been dealt with fully in the previous standards.

Joint venture A cooperation between companies in which a new, legally independent business unit is created in which the founding companies (two or more) invest capital. In addition to capital, the founding companies generally contribute a significant amount of technology, intellectual property rights, technical or other expertise and operating equipment.

Natural hedge approach Minimising currency risks by financing foreign-currency investments in the same currency, for example.

Net debt Financial liabilities minus cash and cash equivalents.

Operating lease A lease is classified as an operating lease under IFRS if it does not transfer essentially all the risks and rewards of ownership of the leased asset.

Registered share The subscribed share capital of Nordzucker AG is divided into registered shares with a nominal value of EUR 2.56 each.

Return on equity A figure which shows the profitability of capital employed and is calculated by dividing net income for the year by shareholders’ equity.

Return on revenues A financial indicator obtained by dividing net income for the year by revenues and enabling an analysis of a company’s profitability.

Syndicated loan Lending by several banks (syndicate) on the basis of standardised contract documents and identical terms and conditions.

Total profitability This indicator is calculated by dividing EBITDA (earnings before interest, taxes, depreciation and amortisation) by total output (revenues plus changes in inventories).

Volatility (‘unpredictable, liable to change’) A market is volatile if it is subject to major price fluctuations. Volatility is the statistical means of measuring market fluctuations.

Sugar and bioethanol

Bioethanol Ethanol produced from biomass (renewable substances containing carbon). Starch (e.g. from wheat or maize) is broken down by enzymes into glucose. Yeast is then added and the glucose is fermented to create ethanol. When sugar beet is used to produce ethanol, the raw juice or thick juice created as a by-product of sugar extraction is fermented directly. Unlike fossil fuels, bioethanol is CO2-neutral and has long-term economic benefits. In Germany, the Biofuel Quota Act has been in force since 2007, which stipulates the amount of bioethanol to be blended with petrol.

Carbohydrates or saccharides, which mainly consist of sugars and starches, form the largest usable and unusable (dietary fibre) share of the human diet, along with fats and proteins. Carbohydrates are the main source of energy for the human organism.

CO2 (carbon dioxide, ‘greenhouse gas’) Chemical compound consisting of carbon and oxygen which, like carbon monoxide, is a carbon oxide. This colourless and odourless gas is a natural component of air. It is created when substances containing carbon are burnt, and during cellular respiration. Plants and some bacteria convert CO2 into biomass.

Cossettes Pressed beet chippings are a by-product of the sugar production process. They are used as animal feed.

Crystal sugar The term for standard grade sugar used in industry and the home for a variety of purposes, particularly for making desserts and cakes. In a second processing step the crystal sugar is turned into caster sugar, which retails under the name of household sugar for instance.

Emission The release of substances into the environment.

Isoglucose Sugar made primarily from corn starch and used in beverages and preserved fruit. Isoglucose is a regulated market product.

Molasses Syrupy by-product of sugar production. Used to manufacture yeasts and animal feed.

Mulch seeding Mulch seeding is a ploughless sowing method in which the remains of a catch crop or the stubble of the preceding crop cover the soil before and after sowing and protect it from erosion and siltation.

Pellets By-product of sugar production. These extracted, dried sugar beet pellets are sold molassed or unmolassed as animal feed.

Raw cane sugar Sugar made from sugar cane. This can then be refined to convert it into white sugar.

Raw juice Sugary juice extracted from sugar beet which can be processed to make sugar or bioethanol.

Refining Used in a general sense to describe a process of cleaning or purifying raw materials. For sugar this means bleaching brown raw sugar (from sugar cane or sugar beet) by a (repeated) series of different processes.

Strip tilling In some cases beet has also been sown recently using the strip tilling method. This is a special method of sowing individual seeds in which the soil is only tilled in the seed row to a depth of 25 cm. This is done by chisel coulters attached in front of the drilling machine. Initial findings suggest that the advantages compared with conventional mulch seeding with seed bed preparation in the spring include greater energy efficiency and reduced work intensity per hectare, the conservation of ground water and good protection against soil erosion.

Thick juice Concentrated, purified sugar juice containing some 70 to 75 per cent solid material. Thick juice is produced at the end of the steam dryer unit before the sugar undergoes the actual crystallisation process in the sugar factory’s juice boilers.

White sugar is normal household sugar and is made from raw sugar.

Sugar industry

ACP countries (Africa, Caribbean and Pacific) This encompasses 77 states, most of them former French or British colonies. The EU has granted these countries preferential access to the European market and duty-free imports of 1.3 million tonnes of raw sugar since 1975 by means of the Cotonou Agreement. As of 2008, the EU wants to replace this treaty with Economic Partnership Agreements (EPA) with the ACP countries. In terms of sugar, this should place the countries on an equal footing with the least developed countries (LDC).

CEFS Comité Européen des Fabricants de Sucre, the European Committee of Sugar Manufacturers represents all European sugar manufacturers and refiners among the European institutions (Council of Ministers, European Commission, European Parliament, Economic and Social Committee, etc.) and among different international organisations (FAO, WTO, etc.).

CIBE (Confédération Internationale des Betteraviers Européens) International Confederation of European Beet Growers

Dansukker Nordic Sugar, part of the Nordzucker Group, offers consumers a wide range of sweet sugar products from sugar beet and sugar cane under the brand name of Dansukker. The assortment is refined continuously in keeping with the needs of modern households and includes for example various types of granulated sugar, sugar cubes and icing sugar, brown sugar and syrups as well as organic and Fairtrade products.

Doha development round is the name for a package of activities that the economic and trade ministers of the WTO member states were supposed to work through at the fourth World Trade Conference in Doha (capital of Qatar) in 2001 and complete by 2005. The main topics of negotiations included the liberalisation of agricultural trade, improved market access for developing countries and matters relating to intellectual property. Negotiations were suspended as no agreement was reached at the WTO conference in Cancun in 2003. They were resumed in July 2004 and again suspended unresolved in late July 2006 by the WTO General Director Pascal Lamy.

EFFAT European Federation of Food, Agriculture and Tourism Trade Unions

Fairtrade The heart of the Fairtrade standard is the payment of a guaranteed minimum price above the level of the world market price that covers the cost of living and production of the producers.

LDC (Least developed countries) LDC relate to an EU resolution of 2001 according to which the 50 least developed countries in the world may import any goods except arms into the EU free of any duty. Sugar falls under a special transitional arrangement until 2009. As of 1 July 2009, sugar can also be imported into the EU free of duty and with no restriction of quantities.

Sugar market regime A common market organisation for sugar founded in 1968 (active in the EEC/EC/EU) which regulates prices for sugar and sugar beet, maximum production quantities for sugar, and import safeguards. The previous regulation (EC) No. 1260/2001 was replaced on 1 July 2006 by regulation (EC) No. 318/2006, which was passed by the ministers of agriculture of the EU member states on 20 February 2006.

Sugar quota Sugar quotas were introduced in the EU to limit sugar production and prevent surpluses. Volumes produced within these quotas benefit from a sales and price guarantee.

SweetFamily SweetFamily is the Nordzucker Group’s international umbrella brand. Beet sugar products for end consumers, bakers and the food industry have been marketed in Germany, Poland, Slovakia and Hungary under the SweetFamily brand since November 2004.

WTO (World Trade Organisation) Multinational organisation located in Geneva, in which 150 member states negotiate world trade liberalisation.

Certification, quality assurance and consumer protection

DIN EN ISO 9001 This standard is part of the EN ISO 9000 series, which documents the principles of quality management activities. EN ISO 9001 deals in particular with requirements of quality management systems for which organisations must show that they are capable of supplying products which conform to customer and regulatory demands.

DIN EN ISO 14001 This internationally valid standard lays down globally acknowledged specifications for environmental management.

DIN EN ISO 22000 Covers rules for internationally accepted food safety management standards.

DIN EN ISO 50001 An ISO (International Organisation for Standardisation) certifiable standard that specifies requirements for establishing, implementing, maintaining and improving an energy management system.

EMAS II (Eco-Management and Audit Scheme) Voluntary system used by the EU as an environmental management instrument and to promote environmental action.

FSSC 22000 is the first global food safety norm covering food production. The norm was developed specially for companies producing or processing animal or plant-based products or ingredients.

GMP B2 (Good Manufacturing Practice B2) Dutch standard of quality control for animal feed from non-resident suppliers.

IFS (International Food Standard) This standard is a means of safeguarding food safety and consumer protection.

OHSAS 18001 (Occupational Health and Safety Assessment Series) is not a norm, but can be used as a certification basis for management systems relating to health and safety at work. The structure of OHSAS is oriented towards DIN EN ISO 14001. This makes it suitable for use as an integrated management system.

PAS 220 (Publicly Available Specification 220) Certification standard developed to define basic requirements for the certification of production processes with the food supply chain and intended to assist in controlling food safety standards. It is intended to be used in conjunction with DIN EN ISO 22000. ISO 22000 and PAS 220 are generally known as FSSC 22000.

Q&S Standard German feed standard established by Q&S-GmbH, Bonn, Germany, to guarantee feed quality.

Work-life balance The term work-life balance refers to a situation in which people give equal priority to their professional and private lives. It assumes that an equilibrium can be reached between two opposing demands.