activity report group avril 2016

ACTIVITY REPORT

2016

CONTENTS

2 • Profile 4 • A Group with a sectoral structure6 • Joint interview with Jean-Philippe Puig and Arnaud Rousseau

8 • Governance 12 • Financial performance13 • Key figures

18 • Avril’s challenges20 • Avril 2020: change to enhance our commitment

22 • A strong and competitive Group in its markets that listens to customers 26 • A resolutely international Group set to conquer new markets

30 • Innovation to drive the creation of sustainable value34 • People committed to serving a federative company project

40 • Sofiprotéol 46 • Oilseeds Processing52 • Oils & Condiments 60 • Oleochemicals 64 • Animal nutrition

68 • Avril Animal Specialties72 • Animal precessing 78 • Avril Development

82 • Financial informations

OVERVIEW OF ACTIVITIES

INTRODUCTION

2016ESSENTIALS

AV R I L — A C T I V I T Y R E P O R T 2 0 1 6

Avril, a collective dynamic

7",200employees

€5.9 Bnturnover in 2016

21countries

OUR MISSIONCreating sustainable value in the oils and proteins sectors, thus contributing to better food for humans and preservation of the planet.

OUR ORIGINALITYThe Avril Group was born of a collective approach. It was set up in 1983 at the initiative of farmers in order to develop the French production of oilseeds (rapeseed, sunflower, olive, soybean, etc.) and protein crops (pea, field bean, lupin, etc.). By federating all actors in these sectors and developing their markets, in a little more than 30 years Avril has become a major industrial and finance group, active in France and internationally in sectors as diverse as agri-foods, livestock nutrition and expertise or renewable energies and chemistry, owning a portfolio of market brand leaders such as Sanders, Lesieur, Puget, Matines, Diester®, Bunica, Taous…

The Group has grown, and still operates, according to an original model: a sectoral organization, from grain to processed products, where each activity creates value for all links in the chain. To drive this model, Avril builds on the complementarity of its two core skills: industrial activities organized around plants and animals, and investments through Sofiprotéol, its finance and development arm. The originality of this model thus makes Avril a singular Group characterized by a well-established shareholder base, strong agricultural and territorial roots and the systematic reinvestment of all profits in the development of national sectors in all the countries in which it operates.

NEARLY ONE THIRD OF TURNOVER ACHIEVED INTERNATIONALLY IN 2016

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GLOBAL BREAKDOWN OF EMPLOYEES IN 2016

STRONG TERRITORIAL ROOTS IN FRANCE

1%Americas

15%Africa

3%Asia

Industrial sites Commercial offices

81%Europe

84 sites in the world of which: 29 sites in oilseed sectors 55 sites in animal sectors

44sites in animal sectors

15 sites in oilseed sectors Réunion

Island

A Group with a sectoral structure, from grain to the

processed productAvril draws strength from its original sectoral

organization that combines the excellence of French agriculture and industry.

This organization was set up in the early 1980s, in response to a US embargo on soybean exports and emerging proof of the dependence of our agriculture with respect to vegetable proteins. Rapeseed producers thus mobilized their forces to set up a French oilseeds and proteins sector that could restore the country’s independence. Farmers from all French regions, working through Sofiprotéol, thus contributed to the construction of an industrial and finance group that could assure long-term and sustainable markets for their harvests. Avril was born.

Through this exemplary commitment, they created conditions for the emergence of new opportunities to valorize their products, such as rapeseed for biodiesel, an innovation initiated by French agriculture. Thanks to this renewable energy, called Diester®, the rapeseed meals cultivated throughout France now represent one of the principal sources of proteins for livestock farms. And thanks to their pioneering and entrepreneurial vision, they built a model centered on creating shared value for all actors in the sector – all closely intertwined throughout French territories and beyond, in all the countries where the Group operates. From grain to processed products, from human foods to livestock feeds, and not forgetting expertise in livestock management, renewable energies and plant chemistry.

Collection of oilseed and protein grains

Involvement of Sofi protéol, fi nance and development company

Seeds, biotechnology; other inputs and services

100,000 agricultural producers

Crushing

Food

Food

Renewable energies

Animal nutrition, Biosecurity

Proteochem®

GB_AVRIL_radd_170x240_rabat_BAT.indd R2-4GB_AVRIL_radd_170x240_rabat_BAT.indd R2-4 15/06/2017 12:4815/06/2017 12:48

Genetics and animal health, other inputs and services

Oleochemicals

Milk, meat

Poultry

Livestock farmers

Eggs, pork

GB_AVRIL_ra_170x240_BAT.indd 5GB_AVRIL_ra_170x240_BAT.indd 5 15/06/2017 12:4215/06/2017 12:42


What is your assessment of 2016?A. ROUSSEAU: For the second year running,

Avril had to deal with a difficult economic context. The convergence of several factors unfavorable to its primary activities damaged its results: the collapse of petroleum prices, poor rapeseed harvests, very low milk prices and changes affecting customer demand for shell eggs.

J.-P. PUIG: In this context, some of our entities nevertheless managed to break records for growth, such as Sofiprotéol, Bunica, Abera, Sopral and Terrial. Despite a downturn in income we held our course, investing more than in 2015. We also pursued our recruitment plan: 200 new managers in 2016, 20% of them arising from internal mobility.

You changed the Group’s organization; for what purpose?

J.-P. PUIG: Our aim was to simplify our managerial organization and broaden the scope of the Comex so that our decision-making could be more rapid and operational managers could react accordingly. This has been a success. Our Group is still in its consolidation phase, and this year saw further structural advances in the implementation of common management tools and the modernization of our information systems. All these projects take time. 2017 should mark a real turning point in this respect.

What is your assessment just a year after launching the Avril 2020 strategic plan?

J.-P. PUIG: We made progress in all areas. By improving our cost structure, we achieved further savings. Another reason for satisfaction was the improvement in our customer relations,

Guided by its new strategic plan, Avril is pursuing its transformation in a difficult economic context. The structural advances achieved in 2016 have

laid future foundations for a Group that remains loyal to its mission. A critical analysis by Jean-Philippe Puig, CEO of Avril, and Arnaud Rousseau,

Chairman of Avril Gestion.

JEAN-PHILIPPE PUIGCEO of Avril

We have enhanced our relations with

customers and developed partnerships

that will allow us to better exploit the advantages of our

sectoral organization.

Combining resilience and long-term vision

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with partnerships enabling us to better valorize our know-how. I would mention two initiatives whose success exceeded our expectations: the high-quality pork sector developed with Fleury Michon, and the joint enterprise with AVF which means that Avril is now making an active contribution to ensuring that French pork will return to our supermarket shelves. We also made progress in developing our international activities, with some important projects offering real opportunities for the future. We now aim to further accelerate efforts in this area.

A. ROUSSEAU: Avril and our sector were also very active in terms of innovation. The Group’s approach was particularly audacious in proteins, developing real market opportunities for agricultural producers. The birth of Evertree in Proteochem® (protein chemistry) is a good illustration, and there are also interesting prospects in foods. Our crops that supply vegetable proteins have a key role to play in our future diet.

How have Avril’s employees felt about this period of transformation?

J.-P. PUIG: I would like to extend my thanks to all our colleagues who have invested so much energy in these efforts over the year. The success of the employee shareholder plan, launched in 2016, testifies to their commitment and demonstrates the trust our teams have in the future. We also set up a Comex for young people which offers us a very interesting viewpoint, working notably on topics such as the digital revolution or the organization of work at the future Avril Campus, which will open in July 2018 in Bruz, near Rennes. In my opinion, this is highly symbolic of Avril’s identity: an innovative, sustainable and open-minded group which welcomes the views of its teams and maintains close links with the farming world.

How is 2017 looking? A. ROUSSEAU: 2017 will be a turning point with

some important milestones, notably regarding the future of the biodiesel market. We remain confident because we benefit from some major advantages. Working together, we shall be able to exploit the pertinence of our approach and the strength of our sectoral model in support of France’s farm.

J.-P. PUIG: This year has started much better. Thanks to the stabilization of crude oil prices, our biodiesel activities have resumed growth. We are

pursuing our development and transformation, with three priorities for 2017: 1. Security; 2. Customers; 3. Economic performance.

Avril Gestion has a new Chairman. What will his role be?

A. ROUSSEAU: Loyal to the legacy of Xavier Beulin, with all the Administrators and in continuity of the Avril 2020 plan, my mission is to support the Group’s main strategic orientations. And in line with the principles that guided its creation, to cultivate the strong links that federate farmers in our sectors and Avril’s talents around common plans for the future, which have already demonstrated that in an open economy and in direct response to market fluctuations, there is strength in unity that can broaden the scope for opportunities. I also want to emphasize the value and transmit to new generations the highly original nature of Avril, its agricultural roots and its mission to act in the interests of all.

Working together, we shall be able to exploit the pertinence

of our approach and the strength of our sectoral model

in support of France’s farm.

ARNAUD ROUSSEAUChairman of Avril Gestion


7 BUSINESS LINES

OILSEEDS PROCESSING

ANIMAL NUTRITION

AVRIL ANIMAL SPECIALTIES

ANIMAL PROCESSING

OLEOCHEMICALS

AVRIL DEVELOPMENT

TERRES UNIVIA FIDOP

EMPLOYEES

FOP

OILS & CONDIMENTS

Collegial governance with strong agricultural

roots

XAVIER BEULIN, AN IMPORTANT LEADER IN AGRICULTUREXavier Beulin died suddenly on 19 February 2017, at the age of just 58 years. He had been Chairman of the Avril Group since 2000. Involved from an early age in agricultural unionism, he steadily climbed the ladder to become Chairman of the FOP in 1999, and then of the FNSEA. We remember a profoundly committed man, a lover of the land and a visionary, who worked unceasingly to develop French farming. He was a central driving force behind the Avril Group, giving it the stature of a national leader.

The Board

GOVERNANCE FORGED FOR THE FUTUREIn 2015, Avril equipped itself with a new governance structure and the status of a limited partnership with share capital (Société en Commandite par Actions, SCA). This structure can separate the power of shareholders (the limited partners or associés commanditaires which include the FIDOP(3), FOP(4) and the Fondation Avril, recognized as a public utility) from that of the manager (Avril Gestion, the general partner or associé commandité). This helps to ensure that the founder shareholders in the Group remain central to its growth strategy. The partners work through a Supervisory Board with eight members, who include two staff representatives from the Avril Group, elected by their

peers. This Board is chaired by Antoine Henrion, who is also Chairman of Terres Univia(5). The Board of Avril Gestion appoints the manager of the SCA and decides upon the major strategic and financial orientations of the Avril Group. This Board comprises nine members: four from the FOP, three qualified personalities and two former CEOs or corporate officers of the Group. In February 2017, the Officers of Avril Gestion elected Arnaud Rousseau to serve as the Chairman of its Board.

(1) Agropol: Interprofessional Association for Promotion and International Cooperation of the French Vegetable Oils and Proteins Sector.

(2) Terres Inovia: Technical Institute for Oilseed Crops, Grain Legumes and Industrial Hemp.

(3) FIDOP: Interprofessional Development Fund for the Oilseeds and Proteins Sector.

(4) FOP: French Federation of Oilseed and Protein Crop Producers.(5) Terres Univia: Interprofessional organization for oilseeds and protein crops.

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BERNARD DE VERNEUILMember of the Board and Administrator of the FOP

PIERRE PRINGUETVice-Chairman of Pernod Ricard

ARNAUD ROUSSEAUChairman of Avril Gestion,

Chairman of the FOP

JEAN-PIERRE DENISChairman of Crédit Mutuel Arkea

and Crédit Mutuel de Bretagne

SÉBASTIEN WINDSOR Vice-Chairman of the FOP

and Chairman of Terres Inovia(2)

SYLVIE RUCARConsultant

GÉRARD TUBÉRYChairman of Agropol(1)

ANNE LAUVERGEONCEO of ALP Services and Chair of Sigfox

ALAIN MIROTFormer CFO of Sofiprotéol


1 - PAUL-JOËL DERIAN Research, Innovation, Development Vice-President (VPRID)

2 - PHILIPPE LAMBLINHuman Resources Vice-President (VPHR)

3 - STÉPHANE YRLÈSGeneral Secretary

4 - YVES DELAINEDeputy CEO

5 - BERNARD MAHÉGeneral Manager of the Animal nutrition Business Line

6 - MOUSSA NACIRIGeneral Manager of the Oleochemicals Business Line

7 - MICHEL BOUCLYDeputy CEO

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51

74

63

The Executive Committee

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8 - JEAN-PHILIPPE PUIGChairman and Executive Officier (CEO)

9 - OLIVIER DELAMÉAGeneral Manager of the Oils & Condiments Business Line

138

12109

11

10 - JEAN-BAPTISTE BACHELERIEGeneral Manager of the Oilseeds Processing Business Line

11 - AYMERIC MONGEAUDChief Financial Officer (CFO)

12 - GABRIEL KRAPFIndustrial and International Development Vice-President (VPIID)

13 - ÉRIC PHILIPPEDeputy CEO

To support changes to the managerial structure, the Executive Committee was extended on 1st January 2016 to include the Group’s main business lines and

the Innovation Division. It also welcomed two new members in 2017: Olivier Delaméa, General Manager of the Oils & Condiments business line, and Paul-Joël Derian, Director

of Research, Innovation & Development.


Deciphering the year

Despite a market context that was unfavorable to most of its activities in 2016, the Group maintained its strategic course in line

with the Avril 2020 plan. It intends to sustain this momentum in 2017 so as to accelerate its transformation.

herds. Animal activities were also hit hard by the extremely rapid evolution in consumption modes, a good example being the egg branch, where farmers were forced to commit to introducing “alternative” methods to battery cages, and have struggled ever since. On its side, the poultry sector pursued its consolidation, in line with the industrial structuring actions completed with success during the previous two years. Although our recapture of the domestic market is now under way, exports were still faced with fierce competition, and repeated outbreaks of avian influenza had serious impacts on certain products. In the pig branch, 2016 saw an improvement in market indicators, and a rise in selling prices. The efforts made to ensure the differentiation of French pork in terms of quality, and its return to the shelves of supermarkets, started to bear fruit.

On the plant side, although arable – and particularly cereal – harvests in the Black Sea region, USA or Argentina were very abundant, French famers experienced their worst wheat harvest for 40 years, mainly because of unfavorable weather conditions. Unlike their European competitors, French oilseed harvests

What is your analysis of 2016? A. M.: After a difficult year in 2015, we had to deal with a further deterioration in our environment. Nearly all our activities suffered from a combination of unfavorable factors. Prices of raw materials, as well as marked volatility, squeezed our margins. In particular, the fall in petroleum prices, down to almost $27 in February – its lowest level for 12 years – penalized biodiesel. In parallel, our commercial negotiations with major retailers in 2016 did not allow us to pass on abrupt rises of up to 16% that notably affected the prices of rapeseed and olive oils. The “price war” and repeated demands from retailers for deflation worsened this situation, highlighting a profound gap with economic reality in the sector. Finally, the unprecedented crisis that affected our sectors spread to involve all parts of French agriculture, which had repercussions on our activities.

How were the group’s activities affected?A. M.: Animal sectors remained in the front line of the crisis affecting farming. In the wake of the end of milk quotas, falling milk prices and increased competition within Europe had serious effects on livestock breeders, who reduced their

AYMERIC MONGEAUDCFO of the Avril Group,

Deputy CEO of Sofiprotéol

Key figures

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€5.9 Bnturnover

€1.78 Bnequity

€144 MEBITDA


Investments

€207"Minvested in 2016,

including:

€38 Mof investments devoted

to the Group’s information systems

€73 Mof industrial investments

in oilseeds sectors

€42 Mof industrial investments

in animal sectors

€54 Mof investments by Sofiprotéol,

the finance and development company

reached record levels and the scope of its activities broadened to new sectors, such as milk and ingredients.

What do you anticipate for the future?A. M.: With equity reaching €1.78 billion and a debt level that remained low and under control, the Group benefited from financial solidity that allowed it to sustain its level of investment, essential to consolidating its business model, the competitiveness of its industrial facilities and achieving the goals laid out in Avril 2020. In this context, the Group raised €880 million in 2016 through a deal club centralized by its holding company and a program for the securitization of customer debts, the latter being important because it secured the funding of our strategic plan and confirmed the confidence of our financial partners. This operation also enabled the Group to accelerate its transformation to achieve operational excellence and the modernization of its infrastructures, processes and information systems, the first practical results of which were seen in 2016: the creation of a Performance Monitoring Division, the gradual deployment of SAP solutions to all our entities, and the grouping of all accounting teams in a shared services center (SSC) which started by welcoming payroll staff in early 2016.

– and notably those of rapeseed – were disappointing, which caused an increase in the use of imported grain. As a result, our crushing margins shrank under the triple effects of lower yields, higher grain prices and stronger competition.

How did the Avril Group perform in 2016?A. M.: Turnover was slightly down, at €5.9 billion, and the Ebitda fell to €143.8 million. The first six months were problematic, but the year nevertheless benefited from a marked upturn during the final quarter. However, net results were severely impacted by a depreciation of assets in our crushing, refining and esterification activities, and in the shell egg branch, and reached minus €51.6 million. In this particularly adverse market environment affecting all our activities, these figures illustrate the resilience of the Group and fully validate the pertinence of our strategic plan, Avril 2020. The main objectives are therefore to: ● reduce the exposure of our industrial activities

to external risks, notably by developing the growth of our specialty products with global markets;

● pursue the dynamic of activities by the finance and development company, which achieved excellent performances as both an investor and financial manager in 2016. Its commitments

The Group benefited from financial solidity that allowed it

to sustain its level of investment, essential to consolidating

its business model.

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2016 ESSENTIALS

Driven by a long-term vision built on forward planning, Avril’s ambitions

for 2020 focus on four strategic areas. A review of progress in 2016.

AV R I L — A C T I V I T Y R E P O R T 2 0 1 6 E S S E N T I A L S

Avril’s challengesLoyal to its mission – to contribute to better foods for humans

and preservation of the planet – Avril is positioning the future of the oils and proteins sector in order to respond to the major food, environment

and societal issues of the 21st century.

Meeting protein requirements – in France, Europe and throughout the worldTo feed a population that will reach more than 8.4 billion in 2030, the contribution of vegetable proteins is becoming a major issue. Protein requirements are likely to increase by 40% between now and 2030* because of two trends: the increasing enthusiasm in developed countries for vegetable proteins as an alternative to meat, and marked growth in the demand for meat linked to rising living standards in emerging countries. To respond to this dual challenge, Avril’s strategy is to increase its production of protein-rich oilseed meals for use as livestock feeds, and to develop new processes and products for vegetable proteins that can be used for human foods.

Solving the food-climate equationHow to feed the planet while reducing the impacts of climate change on natural resources is one of the principal challenges faced by agricultural sectors in the future. Africa is emblematic of this problem, combining important demographic growth with intense exposure to climate change. The structuring of strong sectors, from agriculture upstream to industry downstream, and the sharing of know-how in the context of trusting partnerships, both constitute practical and constructive responses to this challenge. The aim is to facilitate the response of local sectors to the needs of their markets and consumers, while at the same time implementing integrated agricultural and livestock practices that are coherent with their environment.

A commitment to respond to demands from societyHealth and environmental issues are affecting the eating habits of our societies. Consumers are now aware of the origin of products, their traceability and natural sourcing. Producing better with less, consuming responsibly and favoring local sectors have become central values, as have animal welfare or the sustainable health management of livestock units. Because of its integrated sectors and strong territorial roots, the Avril model can play a structuring role in the response to these expectations: by establishing the link between grain and finished products, by developing livestock sectors where traceability is totally controlled and by supporting farmers and livestock breeders to adapt their production to these new challenges.

* BIPE survey – Avril Group, 2014

MICHEL BOUCLYDeputy CEO

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The future of our sectors is based on a global vision of plants and a balanced exploitation of their two

by-products: oils and proteins. We must continue

to develop markets for these two inseparable

resources that will benefit to all our regions.

Avril 2020: change to enhance our commitment

To assure a long term future for its activities, develop new markets and better respond to the demands of its customers, Avril is pursuing

and accelerating its transformation into an ever more competitive, diversified, international and innovative group. It will continue to operate these levers

so it can take up the challenges of today and the future.

ACCELERATING GROUP TRANSFORMATIONA year after its initiation, the pertinence of the Avril 2020 strategic plan has been wholly validated. The problems encountered by commodities trading, subject to fluctuations in raw materials prices, have necessitated an acceleration of its deployment. This plan aims to address to two essential priorities: first of all, to further improve operational excellence so that the Group will be better prepared, more competitive and more flexible in an unstable economic environment. In this respect, the consolidation initiated four years ago has enabled some major advances, and this progress is ongoing. The second challenge is to find new opportunities for growth. This involves greater focus on specialty products with high added value, and the development of brands and international activities. In all these areas, decisive milestones were reached in 2016. In plant sectors, where first-stage processing has evolved towards product diversification for global industrial customers, and in livestock sectors, thanks to two major acquisitions: Salus in Brazil, which offers the Group access to the third largest global market in livestock feeds, and Ewabo in Germany, which means that Avril has become European leader in livestock unit biosecurity. Pivotal to these changes has been the

Group’s focus on customers. Avril has shifted from a supply approach, driven by its mission to exploit agricultural markets, to a customer-driven demand culture, designed to better adapt its sectors to their expectations. A good example is the initiative that has enabled the return of 100% French pork to the shelves of Lidl, thus benefiting both livestock farmers and local employment.

REAFFIRMING ITS VOCATIONWhile looking to the future, Avril nevertheless remains loyal to its founding principles: to reduce the dependence of French sectors, notably with respect to vegetable proteins which are an essential component in livestock feeds. Protein remains central to the Group’s strategic orientations regarding a new growth area: human foods. Avril made considerable progress in 2016 through advances in its research programs, notably regarding the utilization of rapeseed and sunflower proteins in agri-food markets. It is the same commitment to vegetable proteins which led the Group to mobilize its forces in favor of a sustainable and 100% French soybean sector, which by definition is non-GMO. In 2016, this resulted in plans for the first processing unit to produce pig feeds for south-western France (see opposite).


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A SUSTAINABLE AND 100% FRENCH SOYBEAN SECTORHaving contributed to revitalizing the French soybean sector, with more than 144,000 hectares planted in 2016, Avril is pursuing its efforts to organize the sector. It is working with the Carrefour Group, the Euralis cooperative group, FIPSO and Sanders-Euralis which have all signed a partnership agreement on the creation of a long-term program for the production of 100% French soybean. Within this context, the mission in 2017 for Sojalim, the Avril/Euralis joint enterprise, will be to operate a processing plant for non-GMO French soybean in Vic-en-Bigorre (Hautes-Pyrénées). Turned into oilseed meal, this soybean will be used to feed pigs reared in the south-west by breeders committed to the Carrefour Quality Line. This is an excellent example of Avril’s sectoral approach and its strong territorial roots, working to serve France’s farm.

The view from upstream agricultureVegetable oils and proteins make a significant contribution to dealing with food, climate, energy, social and territorial challenges in the modern world. Through the know-how, excellence and creativity of our sector, we benefit from some major advantages that will enable us to pursue our commitment to combine the economic growth of our production and the sustainable development of our regions. Avril’s model and its actions to serve the sector offer a practical illustration of which we, farmers, are very proud. The Group’s strategic orientations are more than ever playing a structuring role, creating value and competitiveness for France’s farm and its actors: arable farmers, livestock breeders, industry and consumers. And the international reputation of the Group’s activities – and hence of our sectors – offers a strong signal for the future; it demonstrates the pertinence of a model imagined some 35 years ago by French oilseed and protein crop producers.

ARNAUD ROUSSEAUChairman of Avril Gestion and Chairman of the FOP

KRISTELL GUIZOUARN Director of Sustainable Development

Sustainable development, a vector for change and differentiation2016 saw a broadening to all our original activities and beyond of deploying a sustainable development policy loyal to the principles of our founders. In direct line with our mission, this deployment offers a crucial lever for the transformation and differentiation by which Avril constantly determines its new challenges, through the formalization of demanding policies and commitments with respect to animal welfare, responsible purchasing and supplies of sustainable palm oil. This is also achieved through the practical structuring achievements of our subsidiaries, such as the “Commitment to livestock” approach and an emblematic partnership with Fleury Michon with respect to French pork.

Strategic Area #1

A strong and competitive Group in its markets

that listens to customersThe constant attention paid to health and safety issues, optimizing purchasing and the supply chain, enhancing our customer culture,

improving the competitiveness of our industrial assets and also developing sectors thanks to investments by Sofiprotéol, are all levers that allow

the Group to confirm its leadership and prepare optimally for the future.


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In an adverse environment, Avril has continued to control its costs. To preserve the profitability and long-term future of its activities, the Group has based itself on an ambitious operational and strategic excellence approach (EOS) that has achieved savings worth more than €70 million since it was introduced in 2013.

SAFETY, THE ABSOLUTE PRIORITYSince 2013, the accident rate (TF2) has fallen by more than 60%. This performance has been favored by a continuous progress approach called “EOS Safety”, which targets a zero accident rate throughout the Group. Actions implemented in this context include site safety visits (VST), a tool used by all staff which ensures that safety is always central to everyday activities. In three years, more than 700 employees have been trained and more than 9,300 safety visits completed.

OPERATIONAL EXCELLENCE AT ALL LEVELSWhile continuing to mutualize purchasing, the Group also initiated a Supplier Relationship Management program (SRM) called “Win-Win Way”. The introduction of online negotiation was one of the key achievements of 2016. In parallel, the Group launched the gradual deployment of an ERP (SAP) solution designed to facilitate the management of finance, purchasing and operations, the aim being to improve our response to the demands of internal and external customers and interactions with suppliers and partners. In terms of industrial performance, Avril pursued the deployment of Lean Six Sigma methods to optimize processes and develop skills, generating nearly €22 million of value. Consolidation of the EOS approach was also extended to the supply chain through the structuring of a dedicated Division responsible for aligning the Group with the best global standards. To serve this ambition, Avril pursued the sustained rhythm of its industrial investments. Nearly €210 million were thus committed in 2016 to fund major development projects, notably in industrial sites. In Algeria, this involved the construction of a Lesieur mayonnaise factory and an increase in the capacity of the Sim Sanders cattle feed plant. In Tunisia, structuring of the rapeseed sector was pursued. In Morocco, new olive groves were acquired. And in France, new activities and installations were launched: at the Lesieur site in Bassens (Gironde), Matines in Brugnens (Gers) and Ovoteam in Plaintel (Côtes d’Armor). Last but not least, work started on the “Avril Campus” which will open in 2018 near Rennes.

Operational excellence is the life blood of our success. In an adverse

market context, consolidation of our

EOS program has more than ever become a

differentiating advantage which aligns the Group

with the best global standards.

Competitiveness as seen by Gabriel Krapf, Industrial and International Development Vice-President

€70-M savings achieved through the EOS program since 2013

€760-Mof investments since 2013

A SAFETY DAY FOR STAFF In line with consistent efforts to raise the awareness of employees to their safety, the Group organized the first “Avril Safety Day” in 2016. At each site, all staff met in working groups to review the actions carried out and opportunities for further improvements. Workshops offered reminders of basic safety rules, checks on equipment and the training of staff in the use of particular devices (fire extinguishers, defibrillators, etc.). Solutions were also proposed by staff employees to prevent certain risks, improve results and ensure that the Group moves even closer to its goal of a zero accident rate.

Strategic Area #1 / Key facts

DEVELOPING INTERNATIONAL SYNERGIESProgress with the EOS program should enable Avril to confirm its leadership in France and to develop synergies between its activities in order to conquer new international markets. In this context, two new operational zones were opened up in 2016: the USA and Africa. This extended organization will enable Avril not only to reinforce the presence of its subsidiaries in these regions but also to enhance their competitiveness. This represents a crucial advantage in providing better support for customers in these regions.

OPERATIONAL EXCELLENCE CENTRAL TO AVRIL’S COMPANY PLANSThe EOS approach focuses on six principal areas: health and safety at work, industrial performance, optimized purchasing, adapting production facilities to market conditions, optimizing support functions and reducing working capital requirements. Since it was launched in 2013, work on EOS has been gathering pace, with numerous projects under way or completed that have affected activities throughout the Group. 2016 was a further illustration of these efforts, with more than 500 projects initiated; a figure that should more than double in 2017.


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WHEN SUPPLIERS CAN IMPROVE SAFETY During its second Supplier Day, Avril gave “Supplier Safety Awards” to four of its suppliers in recognition of their significant contributions to improving safety within the Group. Aon France and Generali France collaborated with Avril in a fire risk management program for production units. Delattre Levivier Morocco (DLM) set up a system for awareness and safety monitoring in industrial environments at Lesieur Cristal. In the context of its strategic partnership with Oleon, G4S devised a safety procedure for working in confined spaces, accompanied by evacuation equipment specially designed for Avril. The fourth award went to SAP and its partner Augusta Reeves, who developed two new digital apps intended to achieve a zero accident rate: an “Immediate Accident Communication” (CIA) tool to notify accidents in a structured manner, and a “Digital Safety Visit” (VSD) tool to facilitate the follow-up of actions decided upon in the context of site safety visits.

Strategic Area #2

A resolutely international Group set to

conquer new marketsAvril has a strong strategic objective to search for

international growth areas and seize new opportunities, starting with the African continent, a priority in

the Avril 2020 strategic plan.


26 27

ACCELERATING DEVELOPMENT IN AFRICAAvril’s plan for Africa is to invest in oilseed sectors as a response to the strong increase in local food demand. By helping African farmers to produce more and better, the Group aims to contribute to reconquering food independence, as it is doing in France. Its approach is to share its know-how in order to revitalize local sectors, along the lines of the Moroccan model where for the past four years the Group’s subsidiary Lesieur Cristal has been supporting development of the oilseed sector and restoration of the olive sector in the context of the Green Morocco Plan. In 2016, Avril reinforced its presence in the Maghreb countries through its local partners. In Tunisia, a milestone was reached with development of a 100% Tunisian rapeseed sector (see on p. 28). In Algeria, the Group is already planning to double the capacity of the new SIM Sanders cattle feed plant, which came into service in 2016, to produce up to 120,000 tons of feed a year. In the same country, Avril has already launched the construction of a mayonnaise production unit with its partner, the Djadi Group, so as to respond to strong local demand.

CONQUERING NEW MARKETSAvril is also developing new international growth opportunities thanks to increasing importance of specialty areas, acquisitions and a brand policy focused resolutely on exports. Among achievements in 2016, the Oilseeds Processing Business Line set up Avril Oil & Ingredient Solutions (AOIS), a B-to-B commercial platform targeting industrial customers in both France and internationally, and opened a branch office in Singapore to sell Saipol products on the Asiatic market. The Avril Animal Specialties line will achieve its objective of attaining international turnover of 50% in 2017, thanks to two major acquisitions in the animal nutrition and health market: Salus in Brazil and Ewabo in Germany.

With olive, sunflower and rapeseed in Morocco, rapeseed in Tunisia and

peanut in Senegal, we are working in the context

of projects to structure and develop efficient and sustainable agricultural sectors, from upstream

agriculture to downstream industry. Avril wishes to place its experience and know-how at the service

of all African oilseed producers.

International growth as seen by Yves Delaine, Deputy CEO

STRUCTURING OILSEED SECTORS IN SENEGALIn 2013, the Avril and Castel Groups set up Copeol, a joint enterprise focused on developing oilseed sectors in West and Central Africa. Copeol Senegal owns a peanut processing plant in Kaloack which benefits fully from Avril’s expertise in terms of sectoral structuring and development. There is also close involvement upstream: in the context of a partnership with a leading peasant farmer organization (ASPRODEB), a major program on contractual arrangements with producers with products was initiated. In 2016, Copeol Senegal supported more than 15,000 farmers growing 22,500 hectares of peanut, a figure that should double in 2017. From upstream to downstream, Copeol also focuses on developing local markets through Oleosen, a refining and packaging plant for grain oils – notably soybean – and mayonnaise, based in Dakar. Traditional 1, 3 and 5 liter PET bottles delivering 25 cl “doses” are particularly appreciated in Senegal, and products from this factory are sold under the Jaara and Lesieur brands.

LAUNCH OF A RAPESEED SECTOR IN TUNISIAIn early 2017, the Tunisian government, Avril and its subsidiary Cristal Tunisia inaugurated a local rapeseed sector. Initiated in 2014, introduction of this crop first saw the development of an upstream sector involving more than 100 farmers cultivating more than 3,000 hectares. The sector was then structured both upstream and downstream around local partners in order to produce 100% Tunisian Lesieur-branded rapeseed oil, with rapeseed meal to be exploited by Sanders Tunisia as feed for livestock throughout the country. The rapeseed is processed by the local Carthage Grain crushing plant, and refining is assured by a Tunisian refinery. Cristal Tunisia manages the bottling and marketing of the oil.

TARGETING SUB-SAHARAN AFRICALesieur Cristal, leader in the Moroccan table oils market, achieved a record year in terms of developing its export sales, principally to Sub-Saharan Africa. In addition to major growth in Asia, the Near East and Middle East, Lesieur entered the Ethiopian market in 2016, selling 500,000 liters of Lesieur oil within a few months, thanks to its strong reputation. Other projects are planned for 2017.



AVRIL, A PARTNER IN THE INITIATIVE ON THE ADAPTATION OF AFRICAN AGRICULTUREIn the context of the COP22, which was held in Marrakech in November 2016, Avril and its subsidiary Lesieur Cristal mobilized their forces to support the Adaptation of African Agriculture (AAA) initiative. Launched in 2016 under the sponsorship of the Moroccan Minister for Agriculture and Maritime Fisheries, this initiative places African agriculture at the center of negotiations on the climate and proposes innovative solutions to resolving the food and climate equation. The challenge: between now and 2050, the African continent will see its population double to reach nearly 2.5 billion people. It will therefore be necessary for it to triple its agricultural productivity while reducing the impacts of climate change on its natural resources. One of the solutions is based on the ability of agricultural sectors to feed more people while implementing sustainable farming and livestock practices that are consistent with their environment, in a context of ecologically intensive agriculture. This vision is shared by Avril, which presented a good example of successful adaptation in Africa in the form of its efforts to revitalize the Moroccan oilseed and olive sectors.

Strategic Area #3

Innovation to drive the creation of

sustainable valueDuring the past three years, Avril has been turning increasingly

towards vegetable proteins to diversify markets in its sector and respond to the challenge of feeding the planet. 2016 was

a year of considerable progress in this area, and the Group Research, Innovation and Development Division (RID Division)

was notably involved in collaborative projects to structure the future.


PROTEIN, A CENTRAL THEME OF INNOVATIONValorizing vegetable proteins is a central theme for work by Avril’s RID. The aim is use grain to produce concentrates (containing 60% protein) and isolates (90%) in order to develop specialty products for three types of market: animal nutrition, food products and Proteochem® (protein chemistry). In the area of human foods, Avril aims to play a leading role in the development of vegetable protein-based foods that will be attractive to consumers. Rapeseed is the full package. It is a valuable protein from a nutritional point of view that can meet considerable demands in volume terms, and it benefits from a highly positive image. In 2016, research on the development of rapeseed protein isolates and derivatives made some major advances. This work is now at the stage of pilot trials being performed by the IMPROVE* platform, and the first production plant is scheduled for 2019.

A VECTOR FOR CHANGE WITHIN THE GROUPFor Avril, this swing towards protein involves the development of tools and skills in first-stage processing. Upstream, in order to optimize the extraction of protein, which is more fragile than oil, and downstream to market a portfolio of specialty products in a broad diversity of markets. At the industrial level, the production of protein isolates from rapeseed grain requires the implementation of specific technologies. This implies either adjustments to current crushing processes, or the development of radically different methods. In either case, industrial facilities will have to change so as to ensure that all grain components can be determined and preserved under a biorefining approach and thus exploit all parts of the plant.

* Institut Mutualisé pour les PROtéines VEgétales (Joint Institute for Vegetable Proteins).

Born of efforts to reconquer the independence of

France’s farm with respect to vegetable proteins,

mainly for animal nutrition, Avril was initially based

on the valorization of oils. Today, we are opening a

new chapter in the history of our Group and its sector

by exploiting the protein fraction of grains for direct

use in human foods.

15 patents filed each year

5 main RID centers in France, Morocco and Malaysia

250 research scientists

30 31

Avril’s RID Division has joined a European consortium of industrial partners in order to implement a research project with Wageningen University in the Netherlands. The aim is to develop new techniques for the production of meat analogues using plant raw materials, in order to achieve results that are similar to meat in terms of texture and flavor. The markets targeted are human foods and pet products. Avril’s mission is to supply protein ingredients from rapeseed and sunflower.

Towards a new generation of vegetarian steaks

Innovation as seen by Paul-Joël Derian, Research, Innovation & Development Vice-President

PROGRESS WITH BIOTFUELThe BioTfueL project, supported by ADEME, aims to develop a series of processes that can deal with a broad range of biomass resources (agricultural and forestry wastes) in order to produce a second-generation biofuel that will complement the first generation. The project involves six partners that are leaders in their sectors. At the end of 2016, a demonstrator was opened in Dunkirk, dedicated to the gasification and purification of biomass which was previously “roasted” at Avril’s site in Venette. Development of the biomass roasting process at Avril’s site opens the way to numerous opportunities for valorization, notably as energy, and constitutes a development lever for other Group activities.

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Using rapeseed meal as its starting material, Evertree aims

to target all markets involving the application of Proteochem®, where it can procure both health

and environmental benefits for consumers.

EVERTREE, A NEW MARKET FOR RAPESEED PROTEINAvril, Bpifrance and an Israeli start-up, Biopolymer Technologies, set up Evertree in 2016. Its mission is to develop biosourced solutions based on rapeseed protein as alternatives to chemical products of fossil origin that generate VOC (volatile organic compounds). These compounds, such as formaldehyde, are harmful to both health and the environment, but they are important components in resins, glues, paints and materials used for numerous industrial applications. Evertree has opened up a new pathway for Avril: Proteochem®, or protein chemistry. The first industrial application that is currently being targeted is an additive with high added value used for the manufacture of wood-based composite panels. It can reduce or even avoid the presence of formaldehyde – and exposure to this substance. An initial pilot unit should open during 2017 at the P.I.V.E.R.T. (“Picardie Innovations Végétales, Enseignements et Recherches Technologiques”, Picardy Plant-based Innovations, Teaching and Technological Research) center in Compiègne, with hopes of industrialization as early as 2018.


7 FOUNDER PARTNERS OF THE CONSORTIUM:● Avril● Limagrain● Neovia● Roquette● Tereos● Terrena● VivesciaSupported by the Industries & Agro-Ressources (IAR) Competitiveness Cluster.

MAKING FRANCE A FUTURE LEADER IN PROTEINSFrance has all the advantages to become an international agricultural and industrial leader in the production of proteins, notably those of vegetable origin. This is the conviction of the seven leading French companies in the sector, including Avril, which have joined forces in the context of the France Proteins Consortium. Their aim is to make protein a spearhead for the French economy. An agreement was signed with the government during the SIAL Food Exhibition in 2016, which defined a strategic program for development of the French protein sector in the context of investments worth €1 billion over five years. This program, which supplements the Vegetable Protein Plan for France 2014-2020, includes proposals on support tools for research, development and industrialization.

5 MISSIONS:● To structure the French sector● To support R&D● To accelerate industrial investment ● To encourage the creation

and growth of start-ups● To support product innovation

32 33

Strategic Area #4

People committed to serving a federative

company projectThe men and women of Avril contribute every day to the

development of strong national sectors. They are mobilized by a collective project and a federative vision of common values,

around which the Human Resources Division deploys new initiatives that will drive structural change.


In 2016, this dynamic was marked by a particular focus on welfare and health. As a true vector for cohesion, it was notably through sport that the Group supported this change. And with success, as testified by the actions that have involved an increasing number of colleagues, such as the Mont Saint-Michel marathon, in which more than 130 staff participated in 2016. It was in the same spirit that December 2016 saw the inauguration of a “Fitness center” for staff at the Lesieur plant in Coudekerque, northern France. Equipped with exercise bikes, treadmills, exercise benches and table soccer, this center offers staff an opportunity to relax during their breaks or after work. This initiative, developed with the social partners, should provide a model for others in the near future.

CONSOLIDATING A COMMON CULTUREA European Works Council (EWC) was set up to develop the social cohesion of teams and to consolidate a common culture. Meeting for the first time in June 2016, it counts employee representatives elected for four years who come from Avril entities in Germany, Belgium, France, the UK, Poland and Romania, as well as an observer member from Morocco. Along the same lines, Avril also launched an intranet platform for use by its employees. Called Yellow, in 2016 it attracted more than 3,500 staff members from French Group entities who were interested in its different resources, communities, applications and information. In 2017, Yellow will be pursuing its deployment in international subsidiaries.

DEVELOPING TRAINING AND ACCESS TO EMPLOYMENTIn January 2016 the Group signed a partnership with the French government in the context of the Enterprises and Quartiers Charter. Between now and 2018, the Group will host at all its sites – both in France and internationally – 400 young people in vocational day release training. Sites employing more than 30 people will also have at least 6% of disabled staff. In parallel, Avril is pursuing its efforts to develop skills, exemplified by the launch of the Avril Academy in January 2016. This in-house “university” now groups all the Group’s training facilities and constitutes an efficient vector for the dissemination of culture and knowledge. A first training course was set up in 2016; called “Weedo”, it is intended for our 450 local managers and focuses on basic management skills. At completion, a professional certificate is issued by the Polytechnic College.

Together, we want to enhance our collective commitment to Avril’s

singular company culture. We want each employee to be proud

to contribute to developing agro-food

and agribusiness sectors for tomorrow.

34 35

Avril’s HR initiatives as seen by Philippe Lamblin, Human Resources Vice-President

3,000 JOBS IN AGRICULTURE AND THE AGRO-FOOD INDUSTRYA totally new approach in the French agricultural and agro-food industries has been adopted: for the first time, fifteen companies and federations have worked together to create a platform dedicated to employment in the sector. The result: 3,000 job opportunities were listed by the partner companies in France. Under the impetus of Xavier Beulin, the Avril, Bel, Danone, Nestlé/Nespresso Groups and the InVivo, Tereos and Terrena cooperatives, ANIA, FC2A and ANEFA organized a “job dating” session in the context of the 2017 Salon international de l’Agriculture in Paris. Their aim was simple: to facilitate contacts between companies in the sector and those seeking employment. Several hundred people participated in this initial event.


AN EXECUTIVE COMMITTEE FOR YOUNG PEOPLE: LET THE YOUNGER GENERATION SPEAKEnsuring the more active participation of young managers in changes to the Group and its strategy was the aim of the Executive Committee for young people, launched by Avril. It comprises sixteen members, all younger than 35 years of age and including at least eight males and eight females working in different parts of the Group, such as Saipol, Matines, Lesieur, Lesieur Cristal, Expur, Sanders or Ovoteam, etc. Appointed for a period of two years, these young colleagues will be able to express their views on strategic subjects relative to operational affairs, such as internal changes with respect to the digital revolution or working practices. The first meeting took place in September 2016.

A SUCCESS FOR AVRIL’S EMPLOYEE SHARE OWNERSHIP SCHEMEIn February 2016, Avril signed a collective agreement on a Group Savings Plan (GPS) which would enable employees of the French subsidiaries to invest in the Group by acquiring shares in an open-end company mutual fund (FCPE). Nearly 50% of staff based in France participated in this operation, which was far more than had been anticipated. This plan underlines the Group’s desire to involve employees in its profits over the long term, to stimulate the understanding of its teams regarding the challenges we face in the future and to develop a sense of belonging and loyalty to the company’s plans. Employees were able to invest in the FCPE Avril as from May 2016.


AN AVRIL CAMPUS IN RENNES FOR 2018The Group has just launched construction of the Avril Campus. Based at the ZAC de Ker Lann in Bruz, south of Rennes, it will employ nearly 600 people. Covering a total of 13,000 m2 on three levels, and surrounded by 28,000 m2 of grounds, this collaborative facility will cover the vast range of skills required by all the Group’s activities, from plant sectors to animal sectors, and will also centralize certain support functions. The Avril Campus will open in 2018. In line with the rural roots of the Group, it has a landscaped design, being constructed around a solar greenhouse that will contain the Avril Campus.

36 37

OVERVIEW OF ACTIVITIES

Avril’s activities are organized around its two complementary skills: that of an investor

through Sofiprotéol and its industrial activities structured in seven business lines. An overview

and some highlights of the year.

AV R I L — A C T I V I T Y R E P O R T 2 0 1 6 AC T I V I T I E S

SofiprotéolThe trusted partner of French sectors

With its new organization and increased resources, Sofiprotéol broadened the scope of its actions in 2016 to serve the growth and structuring of French agricultural and agri-food sectors. The Avril

Group’s finance and development arm, Sofiprotéol increased the value of its investments so as to consolidate growth initiatives while preparing

to face the agricultural challenges of the future.

€275 M invested in 5 years

€54 Minvested in 2016

40 41

For more than 30 years, Sofiprotéol has been supporting companies in the European agricultural and agri-food sectors through minority stakes and loans. Its aim is to support their long-term growth and assure the future for these sectors in France. This mission in the general interest was reaffirmed in 2015, in line with the Group’s new governance structure. Sofiprotéol’s activities benefited from a new organization and increased resources, its capital base rising to €330 million. A new fund was set up in 2016 called Sofiprotéol Dette Privée (see on p. 44) to provide a supplementary funding tool for companies in the form of bonds. This new configuration offers greater margin for maneuver and improved market visibility, and it confirms Sofiprotéol’s position as a driver of growth in national sectors, alongside its interprofessional partners.

DIVERSIFIED SECTORS OF ACTIVITYIn the context of the Avril 2020 strategic plan, Sofiprotéol is aiming to invest more than €250 million between 2016 and 2020, versus the €215 million achieved between 2011 and 2015. The scope of its intervention has also

More than

100 companies given support, representing 110,000 jobs

6 areas of intervention

52 stakeholdings

MICHEL BOUCLYDeputy Manager of Sofiprotéol

Sofiprotéol offers an original business model

that can serve the general interest. Its actions are

based on sustainable and responsible investments that will create value for

our partners and all agricultural and agri-food

sectors in our regions.

42 43

broadened to new activities, as an extension to French agricultural sectors. For the future, three areas have been identified for action:● upstream agriculture, and notably support for the

development of new seed varieties and products for plant protection and nutrition, which will enable farmers to produce more efficiently and competitively, while respecting the environment;

● ingredients, notably those made from vegetable proteins, through two stakeholdings: in Solina, the European leader in ingredient-based tailor-made solutions for the agri-food industry, and in Inveja, in collaboration with the cooperative group Terrena (see on p. 45).

● the dairy sector, the leading consumer of rapeseed meals in France, in the context of the crisis affecting French livestock farmers but structural growth in global demand. This strategic choice is once again targeting a long-term investment that will consolidate the French dairy sector and draw value from rapeseed proteins produced in France.

Breakdown of commitments in 2016

Agricultural and food processing and by-products

Upstream plant production Upstream animal production Sustainable innovations, investment funds, other

Food products and consumer goods

Debt fund

41%10%

9%

21% 14%

5%

A renewed partnership with Vivescia Industries

In line with the initial investment made in 2014 at the issue of convertible bonds, Sofiprotéol took a minority stake in the capital of Vivescia Industries in August 2016. A subsidiary of the Vivescia cooperative group, Vivescia Industries federates firms specialized in the processing of cereals, mainly for food uses. The capital stake by Sofiprotéol aims to support the funding of structuring projects in the milling, malting and baking sector, and particularly international activities for the subsidiaries, NutriXo and Malteurop.

Total

€240 M


A RECORD LEVEL OF INVESTMENT IN 2016In 2016, Sofiprotéol invested nearly €54 million in different companies to consolidate the agricultural and agri-food sectors (not including support for innovation), which was a record level (against €36 million in 2015). In the first-stage processing sector, the Group’s finance and development arm pursued its strategy to support firms through different initiatives. It took a minority stake in the capital of Vivescia Industries to enable the funding of international projects in the milling, malting and bakery sector. It pursued its efforts to revitalize a sustainable and competitive non-GMO soybean sector for France, notably through a partnership with the Euralis and Fipso cooperatives and the major retailer Carrefour. Sofiprotéol established new alliances designed to consolidate French livestock sectors. After supporting Terrena in its takeover of Doux, Sofiprotéol and Unigrains backed the acquisition by Arterris of Dufour Sisteron and Ovimpex in the beef and lamb sectors. These acquisitions will enable Arterris, working in collaboration with the cooperative Agneau du Soleil, to develop and consolidate the French lamb sector by reinforcing the value chain downstream and thus cover the collection of animals, their slaughter, cutting and then processing. In parallel, Sofiprotéol participated in the takeover of Medria, which specializes in solutions to monitor and control the health of dairy cows. Medria’s

CapAgro Innovation doubles in size

Since it was set up in 2014 by Sofiprotéol, Tereos and Bpifrance (amongst others), the first French venture capital fund focused on financing innovative start-ups in the agriculture and agri-food sectors has seen growing success. During its first thirty months, and using its initial endowment of nearly €60 million, CapAgro achieved 15 investments in sectors central to today’s challenges and creators of value and jobs, or a rate that was higher than the initial goal. These companies include the manufacturer of robots for agriculture, Naïo Technologies, and Prêt à Pousser, a European pioneer in indoor vegetable gardening. Driven by this enthusiasm, the fund has issued a call for new subscribers and hopes to reach a value of nearly €150 million; it will thus become the leading fund in Europe specialized in innovation in the agricultural and agri-food sectors.

Sofiprotéol Dette Privée, bonds for the food and agri-food sectors

Faced with increasingly numerous requests from companies in the agricultural and agri-food sectors, Sofiprotéol set up a private debt fund that could respond to their specific requirements. To achieve this, Sofiprotéol joined forces with a French leader in asset management, Tikehau IM, to set up Sofiprotéol Dette Privée. This fund is designed to support the development of companies in the sector through interest-only loans or the leverage funding of acquisitions. It offers a tool that will complement the capital operations already carried out by Sofiprotéol. Funded initially by Sofiprotéol and Tikehau Capital with a group of leading institutional investors, its first closing achieved capital of more than €120 million, the aim being to reach commitments worth nearly €200 million by the end of 2017.

AC T I V I T I E S

44 45

aim is to develop new data processing solutions that will further improve the technical and economic effi ciency of dairy farms, both in France and internationally.

PREPARING THE AGRICULTURAL CHALLENGES OF THE FUTURETo help French sectors to structure their activities and face the challenges of the future, Sofi protéol pursued its partnership with CapAgro Innovation, the leading venture capital fund in France dedicated to agriculture. Fifteen innovative start-ups have thus received support (see opposite) since the fund was set up in 2014. In parallel, in the context of managing FASO (the Strategic Oilseeds and Pulses Action Fund), Sofi protéol and the BearingPoint consultancy published a study on development strategies for digital agriculture, market prospects in France and internationally, and the positions of diff erent actors in the sector. It appears that four key levers need to be operated in response to the demands of farmers and enable the large-scale development of digital agriculture: to demonstrate a return on investment in products and services for farmers, to propose tools that are simple to use, to fi nd appropriate marketing channels and to off er fl exible solutions that can adapt to a changing environment. Sofi protéol aims to contribute actively to addressing these challenges by playing a central role in developing the excellence of these new activities, in order to serve sustainable agriculture.

Avril and Terrena, common ambitions for structuring projects

Sharing many common values, such as the development of sustainable farming and the consolidation of agricultural sectors around quality approaches, Sofi protéol and the Terrena cooperative group have further strengthened their links. Partners since 2014 in the creation of Ekoranda, which assures the extrusion cooking of oilseed and protein grains for animal feeds, the two companies set up Inveja in 2016. This fi rm specializes in vegetable protein-based ingredients that are used by the baking and pastry sectors. The objective is to foster the emergence of a French leader in the European market between now and 2025. Sofi protéol also provided support for Terrena in its takeover of the poultry company Doux, their agreement being fi nalized in March 2016. The objective is to pursue consolidation of the poultry market in France, contribute to the recovery of Doux and assure long-term export positions for the French sector.

Sofi protéol continues to pursue its missions at the service of agriculture, with the consistent aim of developing markets for French products, constructing strong sectors for the future and encouraging innovation.

CLAIRE MAINGONDirector of Investment, Deputy Director of Commitments

PIERRE DABBADIETechnical Sales Manager at Sanders Euralis – France



Oilseeds ProcessingDriven by diversification

and innovation

In a difficult context, the Oilseeds Processing Business Line improved its resilience and accelerated its transformation,

evolving its business model to serve the French sector: more customer-oriented, innovative, diversified and international.

11 sites, 7 of them

in France

1.7 Mtonnes of biodiesel

produced

€2.9 Bn turnover

2.2 Mtonnes of oilseed

meal produced

4 M tonnes of grain

crushed

AC T I V I T I E S

46 47

A COMPLEX YEAR BUT CONSTRUCTIVE FOR THE FUTUREUpstream of the oils and proteins sector, the Oilseeds Processing Business Line has two activities: the industrial processing of oilseed grains (crushing, esterification, refining) and the sale of oils, biodiesel, oilseed meals and proteins. During the past two years, these activities have evolved in a highly unstable economic environment, whose volatility further increased in 2016. Between petroleum prices which reached their lowest level of $27 per barrel in February 2016, and the sustained prices of raw materials linked to poor European rapeseed and sunflower harvests, first-stage processing margins found themselves under considerable pressure. In the biodiesel market, the “scissors effect” was compounded at the start of the year by strong competition within Europe. These unfavorable conditions weighed on activities and profits in the business line. Biodiesel losses were minimized thanks to an upturn in petroleum prices and a strong resumption of production at the end of the year. As for crushing, the anticipated recourse to grain imports, and the good management of grain-oils-meals trading meant that a satisfactory balance could be maintained. In a context of smaller French harvests during the past two years, imports of rapeseed proved essential to ensuring the sustained activity of sites and guaranteeing markets within the French sector. In order to return to profitability, and to sustainably adapt its activities, the Oilseeds Processing Business Line implemented its new strategic approach, together with an action plan combining savings and value creation which should generate more than €40 million between now and 2020.

Opening of the Avril Oil & Ingredient Solutions platform

A highlight of the diversification of efforts by the business line, this new commercial platform will enable the grouping and structuring of certain activities in oils and ingredients. Organized along B-to-B lines, it targets customers in the agri-foods, cosmetics and health industries who are offered vegetable oils, specialty oils and functional ingredients produced by Saipol, Lesieur, Kerfoot and Expur. Already highly active, this platform is notable because of the Group’s commitment to launching sunflower lecithin, a natural food emulsifier that can replace soy lecithin. Industrial investments have been made at Saipol and Expur so that production can start in 2017, and Avril will become the leading producer in Europe. Another important event was the Group’s entry into the market of by-products rich in plant sterols.

JEAN-BAPTISTE BACHELERIE General Manager of the Oilseeds

Processing Business Line

2016 was characterized by a dual trend: our

ability to resist the crisis thanks to improved risk

management, a very strong orientation

towards innovation, and diversified responses

to the demands of our customers.

48 49

IMPROVING OUR CONTROL OF RISKS2016 was a good illustration of this: mastery of external and internal uncertainties is crucial to success in this business line. Faced with market fluctuations, our trading activities (grain, oils, meals, biodiesel) implemented appropriate measures: a redesigned organization and new tools for the management of trading risks and performance appraisal. Internally, the supply chain constitutes the link between executing a trading contract, operational planning and customer satisfaction; it is the cornerstone of work flow management. In 2015, the department was reorganized around two objectives: to reduce transport costs under a multi-mode approach (maritime, river, road and railroad) and to optimize all work flows, from grain to finished products, in order to gain in flexibility. In 2017, the challenge will be to base improvements around the Group’s efforts with respect to the digital revolution. Finally, reducing industrial costs was more than ever on the agenda, focused on three areas for improvement: mastery of production processes, optimized energy consumption and efficient maintenance.

ADAPTING OUR BUSINESS MODELTo define its strategic policy, the business line has based itself on Avril’s mission which is to create new sources of added value in terms of both agricultural supplies and products from its factories: refined oils, ingredients, proteins, etc. This supposes an adaptation of our approach in order to shift from that of large volumes to diversified and profitable niche markets. This has marketing, commercial and industrial implications: segmentation between different products, formats and qualities; the definition of a product portfolio in line with customer requirements; the adaptation of industrial know-how and product logistics. Important, well-structured and sustained innovations are being introduced throughout the business line. Already under way, the diversification of activities was illustrated in 2016 by structuring initiatives: optimization of the portfolio of refined oils under a strongly customer-oriented approach based on new applications thanks to the recruitment of technical sales teams, and creation of the Avril Oil & Ingredient Solutions platform (AOIS; see on p. 47). The line also continues to focus on its international efforts to find new outlets, with the operational launch of Saipol Asia (see opposite).

Saipol targets Asia

To reinforce its international efforts and diversify its markets, Saipol has opened an office in Singapore to sell its products on the Asiatic market. The aim is to seize new opportunities in different human and animal food markets. Several projects are already under way: the sale of rapeseed meals from Romania in Vietnam, and the supply of high-quality edible oils in China (sunflower and high-oleic sunflower oils) that place value on their French origin.

A new management structure for the business line

ORGANIZED IN

5 COMMERCIAL PLATFORMS:● Biodiesel ● Crushing ● Oilseed meals and proteins ● Refined oils and ingredients ● Specialty oilsAND

3 MAIN REGIONS:● Western Europe and Asia ● Eastern Europe, from Poland to Russia ● Northern Europe, from Ireland

to Scandinavia and including the UK


A CHAOTIC YEAR FOR RAPESEED BIODIESELTo the oil crisis that triggered a very low price per barrel at the start of the year, causing strong competition within Europe, was added greater competition among HVO (Hydrotreated Vegetable Oil) biofuels, favored by the lower cost of palm oil imports. Avril was thus forced to adjust its biodiesel production activities temporarily in 2016. With the upturn in petroleum prices, the situation improved in the autumn and biodiesel sales experienced an upturn, sustained by favorable incorporation rates: up to 8% in French diesel (7% in Europe) and 4%, which is now obligatory, in off-road diesel.

PRESERVING A SECTOR THAT CREATES VALUEFollowing the pioneering efforts of France in the area of renewable energies, Europe played a decisive and leading role in the development of first-generation biofuels. But in recent months, the European Commission has been proposing a reduction in the share of this renewable energy in transport fuels, its aim being to foster the growth of second-generation biofuels. In this context, the French vegetable oils and proteins sector, alongside all European actors in biofuel production, remains mobilized to preserve the market for first-generation products. Resulting from the commitment of historical actors in their first generation, second generation biofuels complement their predecessors and will enable Europe to achieve its objectives with respect to renewable energies. Although over-capacity of the market and regulatory uncertainties have weakened one of the principal markets for farmers producing rapeseed, Avril remains confident in the future of a French sector that creates value and has unquestionable environmental and industrial advantages:

Figures on the French biodiesel sector

20,000 jobs in regions throughout the country

"1 L = 1.5 KgFor one liter of biodiesel, the equivalent of 1.5 kg of rapeseed meal is produced for animal feed

100,000 farmers grow rapeseed

€1.5 Bnannual savings in the import of fossil diesel and oilseed meals for livestock feeds

€2 Bn contribution to French GDP

FOCUS

Preserving the French rapeseed biodiesel sector

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● Biodiesel is one of the only renewable energies available at present that can easily replace petroleum-based fuels. It generates greenhouse gas emissions that are 60% lower than those of fossil diesel, and its incorporation causes a significant reduction in emissions of pollutant particles: up to 43% fewer particles with a B30 diesel (IFPEN study – 2016).

● Rapeseed biodiesel comes from an agricultural and industrial sector that represents 20,000 jobs in France (mainly in rural areas), favors regional economic dynamism and contributes €2 billion to French GDP.

● A by-product of rapeseed meals used for livestock feeds, rapeseed biodiesel contributes to the food dimension of agriculture and enables France to reduce its dependence on GM soybean imports. Thanks to its rapeseed biodiesel, France’s self-sufficiency has risen from 23% in 1983 (when the Group was founded) to more than 55% today.

Born in France in the early 1990s, the biodiesel sector is emblematic of the excellence, innovation and know-how that drive our territories. Its development has enabled the advantages of our agriculture and the strengths of our industry to come together and make France a leader in renewable energies and plant chemistry in Europe, while at the same time defending the independence of France and Europe with respect to vegetable proteins, an essential component in our livestock feeds.

STÉPHANE YRLÈSGeneral Secretary


Oils & CondimentsLeading brands in their markets

In an uncertain market environment, the Oils & Condiments Business Line drew strength from its sectoral organization,

brand reputation and constant innovation dynamic to consolidate its market positions and accelerate its

international development.

12 sites, of which

7 in France

€1,1 Bn turnover

1.2 Mtonnes of table

oils sold

44,000tonnes

of soap sold

42,000tonnes

of sauces sold

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LESIEUR ACCELERATES ITS GROWTH IN ALL MARKETS French market leader in edible oils and third in condiments, Lesieur continues to launch breakthrough innovations and to modernize its industrial facilities, while accelerating its international deployment in North and West Africa, Asia, the Near East and Middle East. In a stable French market where industrial margins were under pressure, Lesieur focused on breakthrough innovations, targeting new consumption modes and top-quality product ranges driven by original recipes. After the success of Stop Goutte, the brand created a buzz with its “easy spread” oil in a new 150 ml format with an integrated silicone applicator. The success of its combined oils enabled it to broaden its range in 2016 with ISIO 4 Touche de Noix and Lesieur Sunflower & Olive. Puget, which in 2017 will be celebrating its 160 years of existence, pursued the sustainable growth of its sales, thank notably to the launch of a squeeze bottle with a no-drip stopper, and a premium virgin olive oil (Saveur fruité noir), a 100% French oil with the delicate flavor of preserved olives. In order to increase its activities in a strong growth segment, Lesieur also joined forced with the Italian brand Monini to introduce its organic olive oils onto the French market. In terms of condiments, the company produced some new recipes, such as its Duo mayonnaises (an exclusive Lesieur innovation), a sweet and sour sauce and other two-phase sauces.

AN INDUSTRIAL UNIT IN ALGERIA IN 2018With its products now sold in 65 countries, Lesieur is accelerating its international deployment by operating two levers: developing its export activities and setting up production units in growth markets. Thus Lesieur developed the export from France of premium products – notably condiments – whose sales continue to increase in Asia (particularly China) and in the Middle East, driven by the French brand name and tailor-made recipes adapted to market demand. This trend was also seen with respect to olive oil, through international distribution by Lesieur of the Italian brand Azienda Olearia del Chianti. At a local level, Lesieur increased its presence in certain countries through partnerships, such as the agreement with the Djadi Group to construct a mayonnaise factory in Algeria, which will be operational in 2018.

2016 as seen by Romain Nouffert, General Manager of Lesieur

A revolutionary process in Coudekerque

A minor revolution is in preparation at the Lesieur unit in Coudekerque (Nord), the historical home of the brand. €22 million are being invested to modernize and develop both industrial and research activities at the site. This record investment, spread over three years, means that Lesieur Coudekerque will become a reference in terms of quality, flexibility and industrial innovation with respect to both recipes and packaging. On top of all this, the plant’s capacity will increase to 210 million liters (versus 180 million in 2016), alongside significant reductions in the amount of plastics used, more durable bottles and a revamped design, so as to better respond to the demands of both customers and consumers.

OLIVIER DELAMÉA General Manager of the

Oils & Condiments Business Line

To serve our mission, our brands constitute

a remarkable vector for the creation of value shared at all

levels of the sector. That is what makes these brands

leaders in their markets, the priority being to constantly

improve our products and ensure our commitment

to responding better to the demands of consumers.


EXPUR TARGETS SYNERGIES TO DIVERSIFY ITS PORTFOLIO A key actor in the oilseeds market in Romania, Expur assures the collection of rapeseed and sunflower grains for Saipol and for its own site in Slobozia, and sells oilseed meals, edible oils and biodiesel in Romania, which is the development platform for the entire Black Sea region and Mediterranean basin. Expur had to operate in a difficult economic environment in 2016. Falling petroleum prices and consumption levels, linked notably to a demographic downturn in Romania, constituted obstacles to the development of its activities. Despite this adverse context, and reinforced by investments in recent years and the mobilization of its staff, Expur was able to overcome these problems and consolidate its position in both the local and export markets, achieving globally dynamic production. Its collection and crushing activities saw an increase in volumes to 450,000 tonnes of grain crushed in 2016. With 120,000 tonnes sold in 2016, biodiesel sustained its progress and saw the development of growth opportunities throughout the region. The production of oilseed meals for livestock feeds reached 200,000 tonnes, thus contributing 50% to the needs of Romanian livestock farmers for vegetable proteins.

DIVERSIFICATION OF THE PORTFOLIOIn Oils & Condiments, Expur maintained its commercial positions, with 100 million liters of sunflower oil produced in 2016, 95% of it bottled. The development of bulk supplies for professionals in the agri-food and out-of-home dining sectors saw excellent growth, increasing by nearly 30%. As for Untdelemn de la Bunica, work on renovation, diversification and brand upgrading bore fruit (see opposite). This is continuing in 2017, with significant growth of the export volumes sold, notably towards the Middle East. In parallel, Expur, working in synergy with Lesieur Cristal, is working on introducing an olive oil called Zagora onto the Romanian market. In B-to-B, the diversification dynamic initiated by Expur forms an integral part of the new Avril Oil & Ingredient Solutions commercial platform set up by the Oilseeds Processing Business Line. The aim is to benefit from synergies within Avril in order to offer vegetable oils, specialty oils and high quality functional ingredients that will meet the needs of its customers.

2016 as seen by Pascal Pinson, General Manager of Expur

Bunica confirms its leadership

Leader in edible oils in Romania, Untdelemn de la Bunica saw its sales increase in a market that was nevertheless declining, to reach record levels: 14 million liters were sold in 2016, versus 13 million a year earlier, thus confirming the brand’s leadership in Romania. This success was made possible by the complete renovation of its product ranges and the launch of major innovations breaking with the habits of Romanian consumers who previously tended to prefer sunflower oil. A vitamin D-enriched sunflower oil and a special frying oil were thus put on the market successively during the past two years. This dynamic is continuing with the launch of the Zagora olive oil brand and an ambitious program for innovations under the Untdelemn de la Bunica brand, underpinned by a marketing and media plan equal to Expur’s ambitions.

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LESIEUR CRISTAL EXPANDS ITS EXPORT POTENTIALWith a portfolio of strong heritage brands in Morocco (Lesieur, Al Horra, Huilor, El Kef, Taous), Lesieur Cristal confirmed its leadership in the edible oils and soaps markets. Its business model, based on a strategy of innovation and diversification, now largely exceeds the frontiers of Morocco. Lesieur Cristal had to deal with difficult climatic and economic conditions in 2016. The year was marked by a particularly severe episode of drought which had repercussions for both agricultural production and consumption levels in rural populations. In this context, Lesieur Cristal nevertheless succeeded in sustaining its product innovation efforts, while increasing its growth at export. Structuring innovations were thus introduced, and notably a range of Taous shampoos, an extra virgin Al Horra olive oil and a powdered El Kef household soap sold in dose sachets. This latter product, a real success in Sub-Saharan Africa, contributed to considerable growth in export sales of +14% in 2016, all market segments taken together, thus confirming Lesieur Cristal’s leadership in North and Sub-Saharan Africa. For 2017, the company will be focusing on its role as an aggregator for upstream agriculture, developing its innovation pipeline and pursuing the conquest of new international markets, with plans for the USA, Egypt, Ivory Coast and Nigeria.

PERSONAL CAREER DEVELOPMENT CENTRAL TO THE COMPANY’S SUCCESSThe subsidiary stood out once again in 2016 for its commitment to HR innovations and to the career development of its staff. The accident rate (TF2) fell by 50% in 2016, enabling Lesieur Cristal to receive first prize in the Moroccan Accident Prevention Awards for major companies. In parallel, the “Live my life” operation enabled 40 employees from different departments to discover, each week for three months, the lives of their commercial colleagues and thus offer their support. Another important action concerned “Lesieur Cristal has talent”, an event which enabled all employees to visit stands dedicated to the company’s innovations. The company was also involved in shared initiatives in the context of the “Performance Challenges” and the “Nourrir la Vie” (“Food for Life” management program, which each year assemble Avril employees around an in-house challenge and initiatives that are simple to replicate and thus drive progress in the community.

2016 as seen by Samir Oudghiri Idrissi, General Manager of Lesieur Cristal

Lesieur Cristal, a driver in relaunching the oilseed and olive sectors

Since 2013, Lesieur Cristal has been working alongside the Avril Group to exploit cultivable land in the context of the Green Morocco Plan. Its actions to support an aggregation system involving 900 farmers enabled an increase in the land sown to sunflower and rapeseed – almost inexistent in Morocco in the early 2010s – to more than 50,000 hectares in 2016. The aim is to reach 130,000 hectares in 2020, two-thirds sown to sunflower, with sectors structured from upstream to downstream. A dynamic that is contributing to the vegetable protein independence of Morocco livestock farmers, thanks to the concomitant production of oilseed meals. The olive sector saw the same mobilization, its revitalization forming part of an aggregation program involving more than 200 farmers (500 between now and 2020) and centered on sustainable agriculture. Lesieur Cristal now owns three major olive groves (more than 350,000 olive trees planted on 1,500 hectares) and has equipped itself with a crushing unit with a capacity of 12,000 tonnes at the El Kelaâ des Sraghna site near Marrakech. The long term objective is to fulfil 40% of Lesieur Cristal’s olive oil needs.

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OleochemicalsA diversified model that creates value

In the adverse environment of 2016, with its activities threatened by falling petroleum prices, Oleon nevertheless

confirmed its strategic choices: to diversify its portfolio towards applications with high added value, to strengthen

its knowledge of markets and customers and to invest in research to prepare the future.

6 sites in Europe

and Asia

€632 M turnover

More than

€10 M spent on R&D

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Breakdown of turnover 2016

Europe Asia North America

76%13%11%

CONSIDERABLE CAPACITY FOR RESILIENCEA major actor in renewable chemistry, Oleon develops, manufactures and sells biosourced molecules based on vegetable oils and fats. Its ambition is to be among the global leaders in its specialty by consistently offer more added value to its customers. In the unfavorable macroeconomic environment of 2016, Oleon achieved a good performance that demonstrated the resilience of its business model. By triggering a halt to oil drilling throughout the world, and particularly in the USA, the fall in petroleum prices had a serious impact on a major market for Oleon specialties. It also contributed to intensifying competition between molecules of fossil origin. To remain competitive, Oleon strives constantly to improve its productivity by controlling energy consumption, reducing waste losses and optimizing the supply chain, etc. This program for continuous improvement, adopted by all entities in the Group, enabled some major savings. This is an important advantage if we are to better resist the strong competition that characterizes the sector, notably in terms of commodity products such as certain fatty acids.

CONTINUING TO DEVELOP SPECIALTY PRODUCTSTo reduce its vulnerability to market fluctuations, create more added value and improve its customer retention rate, Oleon has for some years chosen to develop more technical products. This policy has been implemented in both specialty products and commodities, such as vegetable glycerin, whose quality and level of purity – certified by numerous bodies – offer opportunities for new and challenging applications. This is one of the vocations of the new glycerin packaging facility that opened in Venette, near Compiègne, in early 2016. With a design that ensures appropriate environment conditions, with air treatment and a contained filtration room, it complies with pharmaceutical and food industry guidelines that are extremely stringent with respect to hygiene. Another opportunity to create value is to develop applications driven by a brand strategy. Oleon has increased its presence at professional events and fairs, in order to publicize its know-how and innovations. For example, Jolee®, a range of innovative emollients for the cosmetics market, was presented at the In-cosmetics show in Paris (see opposite). With some twenty patents filed each year, Oleon still makes major investments in R&D on both its standard products and on more innovative processes such as biotechnologies. 2017 promises to be an important year for innovations in this field.

The birth of Jolee®

Presented at the In-cosmetics show in Paris, Jolee® is a new Oleon Health & Beauty brand in its Radia® range. Jolee® molecules have multifunctional properties that are also designed to facilitate the work of formulators because they can be used under cold conditions. This initiative illustrates the strategy adopted by Oleon Health & Beauty to give new impetus to its products and solutions: to focus on specialties while proposing innovative applications developed by Oleon’s formulation experts.

MOUSSA NACIRI General Manager of the Oleochemicals Business Line

In contrasting and unstable markets, our model will only

remain resilient through continuing improvements to our industrial performance,

the broad diversity of our activities and markets and very close proximity with

our customers and partners.

PUB oleon

Jolee ,

Oleon Health and Beauty’snew top brand. Meet her at:

www.oleonhealthandbeauty.com

®

Natural emollients & emulsifiers with multifunctional and sustainable benefits.


Animal nutritionDefending the values

of French livestock production

In a difficult context for livestock production, Sanders stayed on course by addressing two challenges: pursuing

its development in a declining animal nutrition market and contributing to consolidation of this market in order

to gain competitiveness for French sectors.

P 675 C P 280 C C 21 / M 100 / J 0 / N 0 C 100 / M 100 / J 0 / N 22 R 195 / V 0 / B 123 R 0 / V 54 / B 124

28 sites, 25 of them

in France

€1.1 Bn turnover

3.4 Mtonnes of feed produced

using Sanders techniques

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CONTRIBUTING TO MARKET CONSOLIDATIONIn 2016, the animal nutrition market in France experienced an historic decline of 4.8% or a drop of nearly one million tonnes of feed in volume terms. This downturn exceeded 10% in the ruminants market, and notably dairy herds that were penalized by milk prices. With sales prices lower than their costs, numerous dairy farmers simply ceased production. To this diffi cult context was added a health crisis that aff ected duck production in south-western France. Despite these adverse conditions, Sanders managed to sustain its volumes thanks to both the alliance signed in 2015 between Avril and the LDC poultry group, and to the policy on industrial contracts introduced four years previously with local partners, such as the cooperative groups Agrial in Brittany or Euralis in the south-west. These agreements are designed to develop processing activities in order to pursue investment, modernize factories and gain in competitiveness for French sectors. In 2016, Sanders acquired from Euralis the company Nutripalm, specialist in the manufacture of feeds for farmed livestock, and notably ducks bred and fattened in south-western France. Other acquisitions are also planned, with the same objective of consolidating the market.

DAILY SUPPORT FOR BREEDERSDiffi cult periods also provide an opportunity to develop closer ties. By launching Pacte 360° on the ruminants market, Sanders can off er a new dimension for its technical sales teams. The aim is to help breeders produce better with

ABERA – Almost 30 pork producers and farmers, members of the 100% French quality label “Engagés dans l’Élevage” and customers of Sanders Bretagne and Sanders Ouest, visited Abera.

Towards the Sustainable Health Management of livestock units

In adverse economic and health contexts, Sanders placed its expertise and that of its partners in the Sustainable Health Management of livestock units, at the service of French producers. The goal is indeed considerable: to reduce the consumption of antibiotics in livestock units in order to respond to demands from society and assure a long-term future for the sector. Sustainable Health Management (SHM) is based on a broadened vision of livestock farming and focuses on fi ve pillars: the secure management of livestock, a balanced diet that favors the development of immunity, biosecurity, the use of natural alternatives and sustainable medication. To implement this approach, Sanders depends on the training of its teams and the close involvement of its partner livestock farmers.


BERNARD MAHÉGeneral Manager of the

Animal nutrition Business Line

As the leader in animal nutrition in France, Sanders

displays its commitment through important efforts regarding the sustainable

health management of livestock units. Our ambition

is to support breeders in adding value to their products

and satisfying the demands of consumers.

66 67

less, and to enhance their performance through tailor-made support. The principle of Pacte 360° is to propose a full diagnosis of a livestock unit and identify levers that could improve profitability, after which a progress plan is put in place with the farmer. To support these recommendations, technical datasheets have been compiled with MiXscience which contributes its scientific know-how in animal nutrition and health. This consulting approach is based on Sanders’ historical expertise in livestock management and on the close links between technicians and breeders. In 2017, a challenge will reward the best Pacte 360° operations.

ADDING VALUE TO SUSTAINABLE PRODUCTION MODELSOne of Avril’s challenges in the animal sectors is to contribute to developing a sustainable production model that associates all links in the value chain. The aim is to provide consumers with products that are guaranteed in terms of animal welfare and nutritional quality, as well as ensuring a source of income for farmers. Based on its “Nourrir nous engage” (Food is our commitment) signature, Sanders is a key player in this approach, which in 2016 was illustrated by several highlights. First was the success of the first sector of excellence, “Engagés dans l’élevage” (Committed to Livestock) which was created in partnership with Fleury Michon: the pigs are fed a non-GMO diet of French cereals and raised without antibiotics as from the end of weaning (the aim between now and 2020 being to achieve zero antibiotics as from birth). This exclusive sector already involves 41 enthusiastic breeders who are wholly dedicated to this production (155,000 pigs), in five French departments. Thanks to the commitment of all partners, ham bearing the “J’aime - Engagés dans l’élevage” (I like – Committed to Livestock) label has become the ham that is preferred by the French*. For three years, Sanders has been developing a global approach to livestock management in its sectors – Sustainable Health Management – in order to reduce the use of antibiotics. Boosted by the results to date, the brand is now seeking to promote these good practices to a maximum of breeders (see opposite). Similarly, in partnership with teams from MiXscience and Theseo, 200 technicians and veterinarians have worked together on the theme of water control as a tool for the technical and health management of livestock units. Finally, Sanders was one of the first signatories of the Duralim Charter, a collective approach to improving the sustainability of livestock feeds, designed to underpin consumer confidence in agriculture and food.

* UFC-Que Choisir survey of 30 ham products (June 2016).

The international presence of Sanders

2016 saw the opening of the new SIM Sanders cattle feed production plant in Algeria. It has already reached saturation point, and planned work on its enlargement will enable it to increase production from 70,000 to 120,000 tonnes. Sanders produced 100,000 tonnes of feed in 2016 at its international sites, with excellent results in Algeria and Serbia.

“Engagés dans l’élevage”: a sector of excellence that has proved its worth

In the “Engagés dans l’élevage/J’aime” (Committed to livestock/I like) sector of excellence, relationships with breeders, and the know-how they can contribute, are crucial. We have long been committed to an approach free of antibiotics and GMO feeds, because quality is essential if we are to add value to our products. In the context of our partnership with Avril and Fleury Michon, we know to whom we are entrusting our animals. We know what will happen to them and we are also sure that our work on quality is respected throughout the value chain. That makes us very proud.

ROLAND LEFEUVREPig breeder in the Côtes-d’Armor region


Avril Animal Specialties Conquering new markets

Driven by a clear vision and ambitious development strategy, the most recent Business Line in Avril’s animal sectors achieved

some concrete advances for the future, notably with respect to innovation and international reputation.

€134 M turnover

80% nutrition-health 15% biosecurity

5% liquid supplements

12 units operating

in 7 countries

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A STRONG MARKET POSITIONCreated in 2014, the Avril Animal Specialties Business Line (AAS) is the focus of the Group’s expertise in managing the performance of livestock units. It focuses on two main activities: innovation in nutrition and health (natural additives, nutritional specialties, premixes, minerals, vitamins, etc.) with MiXscience, and biosecurity – which groups all preventive hygiene methods for both buildings and livestock – with Theseo. AAS positions itself to respond to the environmental and health challenges of livestock farms, and notably the issue of demedicalization, which is taking on increasing global importance.

INTERNATIONAL GROWTHIn a very difficult French context for livestock production, AAS declared some ambitious goals: to double its turnover by focusing on the growth market of additives, and to carry out 50% of its activities internationally. In both areas, the Business Line achieved some excellent progress. In terms of innovation, MiXscience launched its VSTAR Technology – a unique concept in animal nutrition – at the international EuroTier trade fair in Hanover (see opposite). An initial range of ten additives resulting from this innovative concept has already been put on the market, and others will follow in 2017. At an international level, after setting up units in Poland and Turkey, AAS pursued the development of joint platforms with reputed regional partners. In 2016, the Line made two major acquisitions, thanks to which it achieved its goal of carrying out 50% of its activities internationally as soon as 2017: Salus in Brazil, which means that AAS now

VSTAR Technology, a new generation of feed additives

This unique concept of feed additives for animal nutrition combines effective biological and pharmaceutical active substances. Thanks to encapsulation of the additives, it is possible to control their release in target organs as a function of the objective, the livestock species and the animal’s physiological status.

ANTOINE LENEPVEU In charge of continual improvement at MiXscience

JEAN-PIERRE PAILLOTGeneral Manager of the

Avril Animal Specialties Business Line

Our ambition is to become an international leader for innovation in nutrition and

health in order to ensure sustainable animal

production. We intervene in growth markets driven by a strong global trend:

reducing the use of antibiotics in livestock units.

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ranks third in the global animal nutrition market (see opposite), and Ewabo in Germany, which was taken over at the start of 2017. This alliance between Theseo and one of the German leaders in biosecurity will enable it to double in size and become European leader in this market (not including dairy cows). In parallel, growth was also seen at export, one example being the agreement signed with Ceva to distribute TH4, an internationally-referenced disinfectant, in China.

CONSOLIDATING ANIMAL SECTORS THROUGH ITS MAJOR CUSTOMERSIn 2016, AAS pursued its efforts to provide active support for its major customers in order to consolidate their leadership. In France, MiXscience developed with Sanders the Pacte 360°, a novel approach to the ruminant market based on overall advice in nutrition and health that will ensure the optimum performance of livestock units. In the poultry market, AAS reinforced its consulting and service provision to Avril’s partner LDC, and signed an agreement with the cooperative group Terrena. In Senegal, MiXscience works in partnership with NMA (Nouvelle Minoterie Africaine, or New African Milling), Sanders’ exclusive dealer in West Africa, on the supply of additives which have already contributed 50% to turnover.

SUPPORTING TRANSFORMATION OF THE BUSINESS LINEFor the past two years, AAS and its teams have been working on a transformation process to address its new challenges. At a financial level, the €26.9 million capital stake taken by the investment company Tikehau has enabled support for external growth. The Line has equipped itself with the tools it needs to improve its competitiveness. In terms of safety, the results have exceeded the objectives, with a 30% reduction in occupational accidents and a zero accident year in 2016 in biosecurity. This was also the first year of integration of the site in Laval, with a gain in productivity of more than 20% linked to dissemination of the EOS approach throughout the Group. Finally, the acquisition of Salus in Brazil allowed MiXscience to reach an important milestone: grouped purchasing, access to the sourcing of ingredients in China and access to a second analytical tool through the Artemis laboratory, set up last year. Transformation also involved the implementation of an ambition human resources policy regarding recruitment, training and team integration. 2017 will be a year for the consolidation of acquisitions and the conquest of new regions: North America and Asia, while awaiting installation in 2018 of the future research laboratory at the new Avril Campus in Bruz, near Rennes.

MiXscience is set to conquer Brazil

In 2016, MiXscience achieved a major advance in its international growth by becoming majority stakeholder in the Brazilian company Salus. As the third largest animal nutrition market in the world, Brazil offers some very promising openings for nutritional specialties. These closer ties between two major actors in the sector will enable a joint and global response to the specific needs of animal sectors in the country, and also offer an opportunity to seize opportunities for growth in neighboring markets.


Animal Processing A sectoral approach to taking up

market challenges

In 2016, the Animal Processing Business Line achieved contrasting results in its two branches, Pork and Eggs, although guided by the same

strategic vision: to integrate processing activities in a sectoral approach in order to deal with market changes and take better account of

the demands of customers and consumers.

A SINGLE AMBITION: TO REVITALIZE FRENCH ANIMAL SECTORSIn 2015, Avril sold to LDC its poultry slaughtering and processed products activities so that it could focus on developing an efficient French poultry sector. A year later, the result was conclusive. The deal enabled both parties to invest €150 million in modernizing industrial facilities throughout the poultry sector and confirm the status of a French

leader. This is an excellent illustration of the Group’s ambitions: to accelerate the restructuring of national sectors, if necessary through the development of mutually trusting strategic alliances. The aims and approaches are the same for the two major markets – pork and eggs – where Avril remains directly involved in processing and marketing activities.

€476 M turnover

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A WINNING PARTNERSHIP STRATEGYRecent changes in the pork branch concerning its slaughtering and butchery activities have confirmed Avril’s know-how in terms of developing long-term, high quality sectors. The success of the partnership signed in 2015 between Abera and the German group Tönnies to develop processed pork products of 100% French origin confirmed Avril’s strategic choices. These closer ties united the expertise of the two partners which are major actors in the European pork sector, in the setting of an ultra-modern butchery and processing facility for French pigs, called AVF (Alliance des Viandes de

3units specialized in pig slaughter and pork butchery and processing: Abera, Porcgros and AVF

26,000pigs slaughtered each week

Pork branch

NICOLAS BOURDONWorkplace Health and Safety Coordinator, Abera (Ille-et-Vilaine), Animal Products Processing business line


France), based in Vire (Calvados, Normandy). Operational since April 2016, this new facility produces shelf-ready packaged pork products for major retailers in France, and notably Lidl and Aldi, with which Tönnies is used to working. This alliance enables Avril to respond to a strong demand from French consumers – to have access to 100% French meat in supermarkets – and has given new impetus to the entire French pig sector and its partner livestock farmers. The AVF joint enterprise balanced its books in the first year (see opposite) and Abera, the supplier of 5F pigs (born, reared, slaughtered, butchered and processed in France) to AVF was able to consolidate its positions.

A RESILIENT BUSINESS MODELThanks to this new challenge, Avril’s pork branch confirmed its atypical and resilient business model in a French market under threat. Indeed, since 2013, France has imported more pork, notably from Germany, than it exports. Specialized in first and second-stage processing, Abera diversified its know-how to being able to manage all types of meats and cuts, and to comply with all specifications. The company thus improved its product mix with a good balance between meats and customers: half-carcasses for the butchery market and out-of-home dining sector, the promotion of specific joints in China and Asia, and butchery for processed products to be sold by retailers with AVF. To these three markets could be added the niche market in Rungis with Porcgros, which is investing in a new workshop in 2017. Thus consolidated and given a new dynamic, the pork branch achieved a good year in 2016 in terms of its results, with a higher than targeted Ebitda.

SECTORAL EFFORTS TO ACHIEVE PRODUCT DIFFERENTIATIONAs well as its processing activities in the pork market, Avril has set up a dedicated organization which can provide a sectoral response to specific customer requirements: a sectoral steering committee and a coordinator establish links between the different activities. One illustration of this in 2016 was the success of the “Engagés dans l’élevage” (Committed to Livestock) approach initiated with a strategic customer, Fleury Michon, and its implementation through partners in the Group, Sanders and MiXscience. Avril works within the same framework with other major food brands such as Herta and Aoste. Other projects in the pork branch concerned fundamental efforts to respond to increasingly strong demands from consumers in terms of demedicalizing livestock units and animal welfare.

Alliance des Viandes de France: a virtuous circle

The new pork butchery and processing facility born of the AVF joint enterprise between Avril (via its subsidiary Abera) and the German specialist in processed products, Tönnies, became operational in 2016 and was a year ahead of its goals. Already at saturation, the site in Vire (Calvados) will be doubling its capacity in 2017, with the addition of an 850 m2 building. At the end of 2016, the facility was processing between 6,000 and 7,000 French pigs each week, and its products were replacing the imported pork sold by certain major French retailers. As the exclusive supplier of AVF, the Abera abattoir is planning to create some sixty new jobs over the next three years in order to respond to demand.

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ÉRIC PHILIPPEDeputy CEO

When managing our processing activities,

we need to find the optimum balance between product

differentiation and performance. Our aim is to be able to comply with

the most demanding specifications, while ensuring

the competitiveness of French animal sectors.


Ovoteam has developed a new process to formulate, industrialize and package a preparation for truffle omelets, sold in doypack sachets in supermarkets by the company Truffière de Rabasse. The R&D teams in both companies worked on a pump system to enable micro-dosing of the truffle mixture in each sachet of the preparation. This technological «first» received an award during the 2016 MDD Expo event in Paris.

Truffle-flavored egg products in supermarkets – a first

EGG PRODUCTS SEEING MAJOR GROWTHAssembled under a single brand since January 2016, activities in egg products took advantage of a strong growth market, notably at an international level. Ovoteam is the leading producer and processor of French eggs and targets professionals in out-of-home dining, bakery-viennoiserie-pâtisserie (BVP) and the food industry in France and at export. Its mission is to create value around eggs through innovation, the central lever for growth in this market. Coq’œufs, poached eggs and liquid egg in small units were the successes of the year. Activities continued to develop at export, notably towards the UK, Asia, North Africa and Eastern Europe, thanks to technologies adapted to long-term storage such as powdered or pasteurized egg in sealed packaging. To support growth in this market, and changes towards the products of alternative rearing systems, Ovoteam committed to a plan to modernize its industrial facilities and the first milestone was reached in 2016: a new line for liquid egg packaging at the Plaintel site in Côtes-d’Armor.

SHELL EGGS: A COMPLETE ABOUT-TURN Under the Matines brand, egg packaging and marketing activities suffered again in 2016 from a context of the over-production of standard eggs and a collapse in sales prices. Induced by an acceleration of demands from society, notably with respect to animal welfare, conversion of the market towards alternative eggs (+10% for organic, +8% for free range) was more rapid than anticipated. To adapt its products, Avril worked through its sector and invested with its 140 partner farmers in the context of a 5-year plan which should favor the conversion of units to alternative production systems. The aim is to achieve 50% of free range and organic eggs, and also to imagine another alternative to standard eggs that will enable the French sector to remain competitive. In parallel, Matines pursued its “Eggxcellence” program to improve the performance of its packaging centers: reorganization of the supply chain and the modernization of equipment. In 2016, the unit in Brugnens (Gers) welcomed a cutting-edge machine that is capable of calibrating 120,000 eggs per hour.

3,2 Bneggs sold

Egg branch

AC T I V I T I E S


Avril DevelopmentThe Avril incubator

2016 was a very positive year for Avril Development, the Group’s “incubator” which covers a broad range of activities and company formats requiring a tailor-made

approach. Focus on some atypical activities that are evolving towards growth markets.

€71 M turnover

Feed Alliance

AC T I V I T I E S

78 79

SOPRAL, THE ART OF DIFFERENTIATIONAn expert in nutrition for dogs and cats (under the Pro-Nutrition brand) and horses (under the Dynavena and Sanders brands), Sopral depends for its differentiation on a portfolio of premium and hyper-premium products focused on the natural sourcing of ingredients, animal well-being and nutritional equilibrium. It thus targets professionals and specialized distribution circuits: wholesalers, veterinarians, specialized retailers and garden centers. Sopral is present in more than 50 countries, and achieves nearly a third of its turnover at export, with its pet foods alone achieving more than double. This strategy bore fruit in 2016. Sopral experienced a record year, driven by some pertinent innovations. Its advantage is that it targets specific nutritional requirements and can meet specialized needs: performance and well-being for horses (notably in the context of competition) and health for dogs and cats, with products segmented as a function of the pathological situation: joint pain, excess weight, etc. To develop innovations for the future, R&D is therefore central to Sopral’s concerns. In 2016, this Avril subsidiary repositioned and rebuilt the graphic identity of its Protect health food range for dogs

2production facilities in Pléchâtel, near Rennes

Products sold in 50 countries

Pure Life: high quality products for a healthier life

Increasing numbers of owners are seeking to improve the diet of their pets and are sensitive to new products, such as those which are gluten-free. Pure Life, a range of dog foods launched by Sopral in 2016, is fully in tune with this trend. Adapted to the carnivorous nature of dogs, it is formulated without gluten or cereals, containing 85% proteins of animal origin and a wide variety of fruits and vegetables. In 2016 it was a great success at Interzoo, the International Pet Industry Trade Fair in Nuremberg.

PART OF THE PROJECT TEAM, from left to right: Jean-Claude Sauvée, Lise Bieder, Yannick Guého, Sophie Le Floch, Benoît Gouwy, Laurence Fenard, Pierre Cressard.

SOPRAL

JEAN-PHILIPPE PUIGCEO of Avril

In markets that are distant from the core business

of the Group’s activities, Avril Development manages

a flotilla of SMEs with a start-up spirit. Its missions are to grow activities with high potential, experiment

new skills and define business models for

the future.

80 81

and cats, in order to reinforce its identity. Always sensitive to new trends, the firm identified particular enthusiasm among dog owners for natural ingredients and well-being, and created a new range of products for them called Pure Life (see on p. 79). To support its growth, notably in pet foods, Sopral is making major investments in 2017 in order to modernize and develop its industrial facilities.

TERRIAL ALIGNED WITH NEW CULTIVATION METHODSThe exploitation of natural resources is central to Avril’s strategy and to its sectoral growth model. Terrial’s vocation is to transform waste into resources. A specialist in organic fertilizers, it recycles livestock waste and organic waste generated by the Group’s industrial activities into compost or methane which produce fertilizers and energy. Terrial, which aims to become the French leader in organic composts, achieved a good year in 2016, benefiting from its position aligned with evolutions with cultivation practices that are more respectful of the soil. Its product range enables farmers to limit the use of chemical fertilizers and pesticides, and there was particular success with nutrient solutions such as biofertilizers and biostimulants based on plant extracts and micro-organisms. These products target a broad range of customers growing all types of crop, but above all have been developed in response to a strong growth market, organic farming, which already accounts for 30% of sales. Terrial is constantly searching for new opportunities to add value - both financial and environmental – to the different industrial by-products generated by Avril production units, under a circular economy approach.

A PIVOTAL YEAR FOR ADONIALAnother actor in the circular economy that forms part of Avril Development, Adonial processes by-products from the agri-food industry (mustard bran, apple or beetroot pulp, etc.) and production rejects (biscuits, dairy products, etc.), transforming them into raw materials that can be used for animal feeds. Adonial can respond to demands from both suppliers and customers that expect stringent health guarantees. For Adonial, 2016 was a pivotal year in terms of its product ranges, the search for new products to be recycled and also its industrial processes. During 2017, the company will have centralized its activities at a single industrial and storage site in Château-Gontier, which is currently under development. This facility will host workshops that specialize their inputs and processing, thus improving the rationalization of equipment and flows of goods.

Terrial reinforced by Ferti-Mauges

In 2016, Terrial acquired Ferti-Mauges, a specialist in the granulation of organic fertilizers (35,000 tonnes of granules per year). The two partners had already been working together for ten years. This takeover will enable Terrial to integrate know-how that is essential to its activities and to secure markets for the organic livestock waste and industrial waste generated by the Group.

100,000 tonnes of industrial waste recycled for methanization and fertilization

240,000tonnes of organic fertilizers produced by recycling waste from Avril’s partner livestock farmers

60,800 tonnes of by-products, production rejects and surpluses recycled

TERRIAL

ADONIAL

TERRIAL


Turnover EBITDASofiprotéol and its subsidiaries 40.9 10.2Oilseeds Processing 2,903.5 (4.2)Oils & Condiments 1,089 58.8Oleochemicals 632.3 47.5Animal nutrition 1,107.7 18.6Avril Animal Specialties 134 4.6Animal Processing 476.4 2.7Avril Development 70.9 5.9Other 80 (0.4)Eliminations (629.7) -Total Group 5,905 143.8

Group 2015 Group 2016Group net consolidated pro forma income 13.5 (51.6)Equity 1,826.2 1,780.8Investments 186 207Of which industrial investments in animal sectors 50 42Of which industrial investment in oilseeds sectors 77 73

Of which investments by Sofiprotéol, the finance and development company 37 54

Of which investments devoted to the Group’s information systems 22 38

Financial informations

Selected financial data(DATA IN € M ILL ION )

82 83

2015 2016OILSEEDS SECTORSEdible oils (packaged + bulk) 1,164 1,188

Soaps 37 44Sauces 42 42

Oilseed meals (not including specialized crushing) 2,263 2,151Crushed grain (not including specialized crushing) 4,278 3,996

Biodiesel 2,005 1,727of which production in France 1,497 1,334of which international production 508 393

Oleochemical products 521 532ANIMAL SECTORSFeeds produced (not including premixes) 2,757 2,644Tonnage of pigs slaughtered 106 115

Number of eggs (upstream eggs, shell eggs and egg products) (in millions) 3,161 3,154

2015 2016Upstream oilseeds production 40.4 32.9Upstream livestock production 55 50Agricultural and agri-food processing and by-products 89.9 98.2Food products and consumer goods 15.5 25Sustainable innovations, investment funds, other 22.3 22.5Debt fund - 11.5Total commitments 223.1 240.1

Industrial production(DATA IN THOUSANDS OF TONNES )

Commitments of the finance and development company

(DATA IN € M ILL ION )


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We would like to thank all Avril’s employees and partners – agricultural producers, livestock farmers, research scientists, fund-providers – who supported the Group and its achievements in 2016.Published by the Avril Group Communication Division – Responsible Editor: Sébastien Delerue – Editor-in-chief: Tom Doron Design and production | – Photo credits: Arnaud Février, Bruno Clergue, Copeol, Evertree, Expur, Happy Days, Cédric Helsly, Urich Lebeuf, Lesieur, Lesieur Cristal, Matines, Philippe Montigny, Oleon, Ovoteam, Cédric Pasquini, Gwenaël Saliou, Sojaxa, Thibaut Voisin, © Avril Group - All rights reserved (June 2017).

This document was printed with vegetable-based inks on paper made using 100% fibers originating from sustainably and equitably managed forests or verified by an Imprim’Vert printer in an ISO 14001 & EMAS certified factory.

ACTIVITY REPORT

2016

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