avatar Marel Poultry B.V. Manufacturing
  • Location: NOORD-BRABANT 
  • Founded: 1948-07-27
  • Website:

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    ANNUAL REPORT 2014 INNOVATION THROUGH PARTNERSHIP CHAIRMAN'S ADDRESS THE BIG PICTURE Population growth — combined with urbanization and rising incomes — is expected to result in a more than 50% increase in food demand by 2030. The challenge of fulfilling rising consumption demands in an environmentally, economically and socially sustainable way – providing safe and healthy food for all – is what drives us at Marel to constantly seek new ways of doing more with less. Innovation is the cornerstone of our strategy. It is in our DNA; it is Asthildur Otharsdottir, Chairman of Marel´s Board of Directors our heartbeat. We partner with our customers to continuously create new methods for improving yields and minimizing waste in food production, reducing the use of scarce resources such as energy and water and improving the handling of raw materials. Together, we contribute to making quality food more affordable and safe while protecting the environment. Further modernization of food production is essential to enable feeding a global population of 9 billion people by 2050. This creates a wealth of opportunities for both Marel and our customers. INNOVATION THROUGH PARTNERSHIP During the past year, I had the privilege of meeting many of our We have opportunities to create value by further fostering employees and customers. partnership within our own ranks. Increased collaboration, transferring technologies across segments, breaking barriers and It has been extremely rewarding to experience first hand the real sharing best practices will enrich our culture and strengthen our meaning of innovation through partnership. I have seen our competitive position. The broadening of Marel’s executive employees’ relentless dedication to creating value for our management team at the end of 2013 was an important step in this customers. And I have witnessed our customers’ trust and direction. commitment to Marel. Joining forces is a necessary route to success in today’s interconnected world. This also applies to our own organization.


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    BUILDING A STRONGER MAREL At the beginning of 2014, we launched the Simpler, Smarter, Faster refocusing program with the aim of building a stronger Marel. We are now halfway through the program and have taken important steps in simplifying our structure and driving down fixed costs while The Board of Directors has proposed to the Annual General Meeting at the same time improving service and customer value. We had to that a dividend payment of €3.5 million, corresponding to 30% of make some tough decisions involving our employees when net profits, is paid to shareholders. This is in line with Marel’s combining units and addressing underperforming businesses, but targeted capital allocation and dividend policy. these were necessary in order to create a stronger foundation for We are fully committed to improving our earnings. Solid economic sustainable growth. performance creates value for all our stakeholders. It allows us to We gained momentum throughout the year and ended by serve our customers better, provide employment opportunities, delivering two consecutive quarters with record revenues and provide satisfactory returns to our shareholders and pursue an orders received, while also investing and building for long-term active role in our communities. As we enter the second year of the success and value creation. Our net results for 2014 are colored by Simpler, Smarter, Faster program we will continue streamlining our significant investments in refocusing actions but our cash flow operations, while focusing on innovation and investing in our remained strong and the balance sheet healthy. At the end of the business for the future. We expect organic revenue growth in 2015, year, we increased and extended the maturity of our loan facilities with a solid increase in both operational and net profit. Our aim to support both operational and strategic flexibility, enabling continues to be achieving profit from operations of over €100 eventual bolt-on acquisitions to close strategic gaps. million in 2017. COMMITMENT TO GOOD CORPORATE GOVERNANCE The Board of Directors of Marel is committed to good corporate We emphasize communication of honest, consistent and governance and ethical business practices, which promote the transparent information to our shareholders, financial partners and long-term interest of shareholders and helps build trust in the other stakeholders with the aim of establishing trust and company. Our code of conduct puts integrity and values at the core understanding. of all our activities and decisions. BRIGHT FUTURE On behalf of the Board of Directors of Marel, I would like to give my We are optimistic for the future. With our strong team, innovative sincere thanks to our employees for their commitment, dedication products and global presence we are in a great position to secure and hard work and to our shareholders for their trust and future growth and value creation. continuing support. We are also grateful to our customers, who buy and use our solutions as well as help drive our innovation.


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    CEO'S ADDRESS YEAR OF PROGRESS AND TRANSFORMATION 2014 was a year of progress and transformation for Marel. The year With good tailwind in the market and a focused market approach, started off slowly, but in the spring we changed the game and we Marel delivered record order intake and sales in the second half of have managed to be at the customer, for the customer while the year; the operational results also improved over the course of refocusing our operations. the year. Marel achieved 7.7% revenue growth in 2014 and an adjusted EBIT of €49 million, in line with management guidance. Free cash flow was €75 million leading to strong capital structure with net debt/EBITDA x2.1 within corporate targets. AT THE CUSTOMER, FOR THE CUSTOMER WHILE REFOCUSING Marel is at the forefront of the industry of innovating and delivering advanced equipment, software and solutions to the poultry, meat, and fish industries. Our customer base ranges from small family- owned businesses to leading global food processors. The Marel team is committed and passionate about serving the needs of the processors to operate at peak productivity, and directly enhancing the overall quality and value of food. Our customers constantly strive for better yield and throughput, with increased focus on sustainability and lower costs, with less use of resources such as Arni Oddur Thordarson, CEO water and energy. We had good order intake in 2014, with orders received at €755 Maintenance remains the backbone of the business, delivering 40% million compared with revenues of €713 million, leading to a of revenues in good and bad times. We see the service and spare stronger order book while we enter 2015. Marel is a truly global part business as a clear growth opportunity and a value driver for company with a good geographical mix in sales. both customers and shareholders. We are now moving in a systematic way from reactive services to more proactive ones, with In the U.S. and Europe, we worked on expansion and modernization long-term service contracts to serve the needs of processors that projects with our long-term customers. We also saw the customer want to secure limited downtime of factories and peak productivity base expanding, with various greenfield projects in growing at all times. markets such as Africa, Asia and South America. REFOCUSING ON TRACK In January 2014, we launched our two-year refocusing plan Simpler, Marel is moving from a diverse manufacturing footprint to a few Smarter, Faster. The aim of the program is to become more efficient multi-industry sites to deliver higher and more consistent quality in serving our customers’ needs, to reduce costs, and to increase products with more speed at lower cost. With fewer and larger overall efficiency in the company. The program is fully on track and sites, Marel can attract further talents to the company with much several actions have already been taken to simplify Marel’s structure better utilization of manpower and capital investments. and reduce the annual recurring cost base. In addition to streamlining, we are also investing in future growth An essential part of the refocusing program is to focus the product through innovation and we are advancing our business with portfolio and optimize the manufacturing footprint. investments in business tools and IT systems that enable us to better manage our most valuable assets; customers and install base In order to continue to advance the global food industry and to as the development of our people – the Marel team. Marel´s aim is create significant and sustainable value for our customers, we want to be the preferred partner. In fact, we are doing the same as our to leverage our strengths and focus on our unique and innovative suppliers and our forward looking customers; Streamlining the solutions to drive further growth and value creation. The other side business, innovating and investing in future growth and value of the coin is that we will discontinue some product families or creation to enhance the whole value chain. partner up with other providers in fields such as freezing and packaging to bring world-class turn-key solutions to our customers.


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    INNOVATION THROUGH PARTNERSHIP Marel operates in a dynamic growth market and our customers are Our commitment to innovation and to providing sustainable value facing increased demand for more convenience and practicality. has led to continuous advancement in food processing, benefitting Marel is driven by the constant challenges our customers face in consumers around the world. Our partnerships with customers keep delivering food more efficiently and always ensuring food safety the wheels of innovation turning at Marel and we will continue to with minimal usage of resources such as water and energy. deliver the new processing technology that enables processors to accommodate the increased volume, as well as the greater demand for value-added processing. READY FOR THE FUTURE My first year as Marel’s CEO proved to me what I already knew — Marel’s future is bright. We have endless potential and that Marel has endless possibilities and potential. We are opportunities ahead of us. The destination of our journey is a commercially strong, with exceptional products and systems, a Simpler, Smarter and Faster Marel that will be better equipped to strong global network, and talented, dedicated employees. increase value to customers and shareholders. We are moving in the right direction and on track to deliver best in class profitability in We are on a journey to change a good company into a great one. line with our competitive position and potentials. Many of the steps that have been taken to streamline our operations have not been easy ones, involving manufacturing optimization and general reduction of employees. It has been truly inspiring to see the commitment of the Marel team and to learn that people are willing to embrace and adapt to necessary changes.


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    WHO WE ARE WHO WE ARE Marel is the leading global provider of advanced equipment, systems and services to the poultry, fish, meat, and further processing industries. Marel’ s state-of-the-art equipment and systems help food processors of all sizes, in all markets, to operate at peak productivity. MAREL’ S MISSION Marel‘s mission is to be the customers’ choice in supplying integrated systems, products and services to the fish, meat, and poultry industries. GLOBAL PRESENCE With around 4,000 employees worldwide, offices and subsidiaries in some 30 countries, and a network of more than 100 agents and distributors, Marel is in a unique position to serve its customers wherever they may be located. ONE COMPANY SERVING FOUR INDUSTRIES Marel’ s four Industry Segments combine all the knowledge, Marel’ s brands – Marel, Stork Poultry Processing and Townsend expertise, and decades of experience accumulated across the Further Processing, – are among the most respected in the industry. company in each of the four core industries it serves. United in one company, Marel offers its customers the convenience of a single source for products to meet their every need. POULTRY PROCESSING FISH PROCESSING Marel offers integrated systems for processing broilers, turkeys, and Marel provides advanced equipment and systems for salmon and ducks under the brand name of Stork Poultry Processing. whitefish processing, both farmed and wild, onboard and ashore. MEAT PROCESSING FURTHER PROCESSING Marel provides advanced equipment and systems to the meat Marel offers an extensive range of products for portioning, coating, industry, specializing in the key processes of deboning and heat treatment, and sausage-making under the brand name of trimming, case ready, food service and bacon processing. Townsend Further Processing.


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    FINANCIAL PERFORMANCE MAREL’ S FINANCIAL RESULTS 2014 was a year of progress and transformation for Marel. We managed to be at the customer, for the customer, while refocusing our operations. GOOD OPERATIONAL IMPROVEMENT WITH SOLID CASH FLOW “We are satisfied with our performance in 2014. Our revenues grew by 8% and at the same time adjusted EBIT was €49 million and in line with management guidance. Cash flow was solid and the order book grew around 30%. Although this is good improvement from the previous year, there is still room to get even better. We now find ourselves in a financially strong position to continue our journey towards becoming a Simpler, Smarter, Faster company that can return increased value to all stakeholders going forward.” Linda Jonsdottir, CFO OPERATIONAL IMPROVEMENT WITH STRONG CASH FLOW ORDER BOOK AT A GOOD LEVEL AT THE START OF 2015 30 220 200 25 180 160 20 140 EUR million EUR million 9.3% 120 15 8% 100 6.3% 80 10 60 40 3% 5 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2013 2013 2013 2013 2014 2014 2014 2014 ADJUSTED EBIT FREE CASH FLOW ORDER INTAKE ORDER BOOK REVENUE EBIT AS PERCENTAGE OF REVENUE 700 700 14% 600 600 12% 500 500 10% EUR million EUR million 400 400 8% 300 300 6% 200 200 4% 100 100 2% 0 0 0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014* REVENUE EBIT AS % OF REVENUE * Before refocusing costs


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    REVENUE BY BUSINESS SEGMENT IN 2014 REVENUE BY GEOGRAPHICAL LOCATION IN 2014 2% 13% 31% EUROPE (EXCL. ICELAND AND POULTRY 40% THE NETHERLANDS) FISH 17% NORTH AMERICA MEAT 53% THE NETHERLANDS FURTHER PROCESSING ICELAND OTHERS 1% OTHER COUNTRIES 2% 16% 25% EBITDA RESEARCH AND DEVELOPMENT EXPENSES 100 60 10% 50 9% 80 40 8% EUR million EUR million 60 30 7% 40 20 6% 20 10 5% 0 0 4% 2010 2011 2012 2013 2014* 2010 2011 2012 2013 2014* * Before refocusing costs R&D EXPENSES R&D EXPENSES AS % OF REVENUE * Before refocusing costs DEVELOPMENT OF NET INTEREST BEARING DEBT REDUCTION OF EUR 43 MILLION IN 2014, EUR 205 MILLION SINCE THE END OF 2008 400 350 300 EUR millions 250 200 150 100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014


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    EQUITY RATIO NUMBER OF EMPLOYEES BY GEOGRAPHICAL LOCATION FTES AT YEAR END 2014 75% 23% 50% 29% NETHERLANDS U.S. ICELAND 25% 7% DENMARK U.K. OTHER COUNTRIES 0% 10% 2010 2011 2012 2013 2014 17% 14% Results 2014 2013 2012 2011 2010 Revenue 712,554 661,536 713,960 668,357 600,421 Gross profit 247,710 233,644 249,226 247,289 227,074 Result before depreciation (EBITDA) 66,698 69,444 85,963 87,006 82,177 Result from operations (EBIT) 29,178 42,909 61,081 62,166 57,334 Net result for the period 11,731 20,620 35,609 34,463 13,626 Order Book 2014 2013 2012 2011 2010 Orders Received* 754,996 668,584 650,493 702,419 638,453 Order Book 174,880 132,438 125,390 196,218 162,155 * Includes service revenues. Cash flow statement 2014 2013 2012 2011 2010 Cash generated from operating activities, before interest & tax 102,201 80,320 65,569 63,716 114,881 Net cash from (to) operating activities 85,601 64,552 49,095 43,183 78,986 Investing activities (28,395) (32,418) (37,294) (28,690) (16,757) Financing activities (55,623) (26,461) (26,486) (47,120) (67,453) Financial position 2014 2013 2012 2011 2010 Total assets 851,440 839,568 865,128 877,818 877,623 Working capital 25,650 49,041 59,076 52,487 78,114 Equity 427,498 419,339 403,748 373,471 343,269 Net debt 174,347 217,130 243,242 250,489 256,741


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    Various figures in proportion to sales 2014 2013 2012 2011 2010 Gross profit 34.8% 35.3% 34.9% 37.0% 37.8% Selling and marketing expenses 14.5% 14.4% 12.6% 11.9% 11.8% Research and development expenses 7.8% 6.7% 5.8% 6.0% 6.1% Administrative expenses 8.4% 7.8% 8.0% 8.0% 9.1% Wages and benefits 37.6% 37.9% 33.9% 31.4% 31.7% Result before depreciation (EBITDA) 9.4% 10.5% 12.0% 13.0% 13.7% Depreciation/amortisation 5.3% 4.0% 3.5% 3.7% 4.1% Result from operations (EBIT) 4.1% 6.5% 8.6% 9.3% 9.5% Net result for the period 1.6% 3.1% 5.0% 5.2% 2.3% Other key ratios 2014 2013 2012 2011 2010 Current ratio 1.1 1.3 1.3 1.2 1.4 Quick ratio 0.7 0.8 0.8 0.8 1.0 Equity ratio 50.2% 49.9% 46.7% 42.5% 39.1% Return on owners’ equity 2.8% 5.0% 9.2% 9.6% 4.1% Return on total assets 1.4% 2.4% 4.1% 3.9% 1.5% Key figures from Marel’s core operations, normalised 2014 2013 2012 2011 2010 Revenue 712,554 661,536 713,960 668,357 582,130 Result from operations (EBIT) 48,778 42,909 61,081 73,152 64,144 EBIT as a % of sales 6.8% 6.5% 8.6% 10.9% 11.0% Result before depreciation and amortisation (EBITDA) 83,666 69,444 85,963 97,992 88,060 EBITDA as a % of sales 11.7% 10.5% 12.0% 14.7% 15.1% Leverage 2.08 3.13 2.83 2.56 2.92 GLOSSARY OF TERMS Net debt EBITDA Return on owners' equity Interest bearing borrowings (current & Earnings before interest, tax, depreciation Annualized result for the period / Average non-current) - Cash & cash equivalents and amortization of total equity ([beginning balance + ending balance for the period] / 2) Net cash Current ratio Return on total assets Cash and cash equivalents Current assets / Current liabilities Annualized result for the period / Average Full time equivalents Quick ratio of total assets ([beginning balance + Number of personnel, where part time (Current assets - Inventories) / Current ending balance fo the period] / 2) employees are counted for the percentage liabilities Leverage of a full time job Equity ratio Net interest bearing debt/ Last twelve Total equity / (Total equity + Total months EBITDA Liabilities)


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    STRATEGY MAREL’S MISSION Marel’s mission is to be the customers’ choice in supplying integrated systems, products and services to the fish, meat, and poultry industries. LEADING GLOBAL PROVIDER Marel is the leading global provider of advanced equipment, Food processors worldwide are asking for increased yield and more systems and services to the poultry, fish, meat, and further valuable products, with less usage of water, energy and other processing industries. resources. They are constantly automating and advancing their operations, leading to 4-6% annual growth in the market in which Marel operates on a dynamic growth market that is driven by Marel is leader — providing advanced equipment and solutions for urbanization, a steady increase in the number of active consumers the protein processing industries. worldwide, and a change in dietary habits. Poultry, meat and fish consumption has been increasing by 2-3% annually for the past two decades and is expected to continue at the same growth rate for the next 20 years. ALIGNING EXECUTION AND STRATEGY In order to further align execution with strategy, reduce the fixed cost base and simplify Marel’s organizational structure, the two-year refocusing program “Simpler, Smarter, Faster was launched in the beginning of 2014.


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    SIMPLER, SMARTER, FASTER The Simpler, Smarter Faster program is fully on track. The Marel At the same time as Marel is streamlining its business, the company team has managed to be at the customer, for the customer while continues to invest in innovation and business tools to advance the refocusing, resulting in greater customer satisfaction, increased business. Key growth drivers remain innovation and market order intake, and improved operational results during the second penetration that will be supported with “bolt on acquisitions.” half of 2014. Marel’s strongest position is in the poultry and salmon segments, where the company can deliver turn-key solutions. The company Marel is strategically and commercially strong, with a solid portfolio will place an emphasis on closing strategic gaps in the white fish of unique solutions. In order to increase the quality of Marel and meat segments in order to create further value for customers. solutions further, and drive down the fixed cost base, Marel is Further Processing focuses on the poultry, meat and fish segments, refocusing its product portfolio and moving from a diverse and in these segments Marel supports customers as they transition manufacturing footprint to a few multi-industry sites on global from volume to more valuable products. scale. REFOCUSING ON TRACK The Simpler, Smarter, Faster refocusing program is a two-year journey, with the first half already completed. The streamlining of the operation is fully on track and many important milestones have been achieved already. The following refocusing actions have been completed: The company also announced the following refocusing actions: At the customer, for the customer while refocusing. Marel has managed In January 2015, Marel announced the consolidation of its Des Moines, to increase the order intake and order book throughout the year while Iowa manufacturing operation to an existing facility in Gainesville, simplifying and streamlining the organization. Georgia. The aim is to capture synergies and increase Marel’s The consolidation of several different business units in Marel’s meat competitiveness by consolidating its manufacturing platform into a few segment, resulting in better utilization of resources and increased multi-industry manufacturing sites. The transition process began in synergies in Marel’s meat activities. January 2015, with completion before year end 2015. The transfer of salmon activities from Norresundby to a larger and In February 2015, Marel announced the divestment of its High Speed modernized facility in Stovring, Denmark. The transfer was finalized in Slicing business, in particular the bacon and deli slicing businesses Q2 and as of Q3, Marel’s salmon operation has been running with based in Norwich, United Kingdom. Marel will retain the frozen increased efficiency. portioning and robotics product families, which remain of strategic The transfer of Marel’s operations from Oss to the multi-industry site in importance to Marel. Boxmeer was completed before year end and will return increased The ceasing of manufacturing production in Singapore will be finalized synergies in innovation and sales going forward. before mid-year 2015 and will increase operational profit during the The streamlining of Marel’s activities in Further Processing resulting in second half of 2015 and onwards. Marel is entering into partnership to better utilization of resources and increased synergies in innovation. continue to provide freezing solutions for integrated solutions to its customers. NEW ORGANIZATIONAL BLUEPRINT During 2015, a new organizational blueprint for Marel will be These divisions operate across the industries, creating a solid implemented step by step. The new structure will simplify Marel foundation for increased efficiency, sharing of best practices and and strengthen innovation, supply chain and sales and service optimization of the use of resources. The aim is to serve the activities across the company. In the new structure, the poultry, fish, customer better, reduce time to market and penetrate markets meat, and further processing industries will remain the four pillars faster and more efficiently. of the company. These four industries will be supported by the The new organizational structure will enable Marel to achieve its company’s global functions: Supply Chain, Commercial, and goal of becoming a simpler, smarter, faster company. Innovation.


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    €100 MILLION EBIT IN 2017 Marel is entering the second half of the refocusing program and will take further actions in 2015. Management guidance for 2015 is organic revenue growth, with solid increases in operational and net profit. The full focus remains on strengthening the market approach and operational improvement, with the aim of achieving an EBIT of over €100 million in 2017.


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    BUSINESS OPERATIONS MAREL’S BUSINESS OPERATIONS GLOBAL SALES Marel’s sales and service network is spread across the globe with Building on their knowledge of the market and customer needs, the offices in more than 30 countries on all continents. Marel’s extensive company’s local teams sell, market, distribute, install and service sales and service network is one of its key competitive advantages, Marel’s standard products. In 2015, Marel will be adopting a new and has enabled the company to penetrate new markets and structure that will further support and strengthen the company’s expand the customer base, as well as strengthen partnerships with sales and service activities. Under the new structure, Marel’s sales new and existing customers. The global sales and service network is activities will be among four main industry lines; poultry, fish, meat Marel’s first line of contact for customers at local level, and brings and further processing, supported by a commercial department. first-rate service, consistency, and continuity to its partnership with The aim is to reduce time to market, penetrate markets faster and clients. more efficiently, and increase service and support to customers worldwide. GLOBAL SERVICE After sales service is the backbone of Marel’s businesses. Marel’s aim In 2015 and onwards, Marel will continue to improve in the area of is to constantly improve customer service and fulfil customer needs service. Increased focus will be on proactive rather than reactive and expectations in the best possible way. The importance of the services and service level agreements will be rolled out in a maintenance business is increasing, with almost 40% of the systematic way through the products portfolio. The customer wants company’s revenue coming from service and spare parts. to secure limited downtime of factories and with service agreements in place, Marel can better organize tailor-made services for each customer. Marel is investing in the service business with investments in advanced business tools and IT systems to make the whole organization more efficient in serving the customers’ needs.


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    THINK GLOBAL, ACT LOCAL “The key to Marel’s approach is to think global and act local. Our customers are located around the world and they all face local market conditions and challenges that we as a global company need to be aware of. Therefore, we have built up local teams around the globe. They have extensive market knowledge and are open to establishing partnerships on a solid foundation. This strong local presence is a critical success factor for Marel and will continue to be a cornerstone of our operations.” Petur Gudjonsson, Managing Director of Marel's Global Sales and Service OUR PEOPLE At the end of 2014, there were 4,053 full-time employees at Marel. To manage fluctuations in demand, Marel uses temporary There were approximately 3,800 employees with long-term manufacturing resources, of which there were 210 resources at year contracts, compared with approximately 4,000 at the beginning of end, compared with 140 at the beginning of the year, reflecting the the year. increased business activity and positive changes to the order book. The largest number of employees is located in the Netherlands, followed by the U.S., Iceland, Denmark and the U.K. Just over 70% of Marel’s employees are located in Europe MAREL EMPLOYEES NUMBER OF EMPLOYEES BY GEOGRAPHICAL LOCATION AVERAGE NUMBER PER YEAR FTES AT YEAR END 2014 4.000 NETHERLANDS 23% Number of employees 3.000 29% U.S. ICELAND 2.000 7% DENMARK U.K. 10% 17% OTHER COUNTRIES 1.000 14% 0 2010 2011 2012 2013 2014 Year end 2014 PREPARING THE TEAM FOR FUTURE SUCCESS “Marel employees are a diverse group of people who are spread around the globe. The role of Human Resources is to provide value-added services to our employees so they can support our customers. We offer our employees an abundance of learning opportunities, workshops and development programs so they can get better at what they do best and are prepared for future competence and success.” David Freyr Oddsson, Corporate Director of Human Resources INNOVATION Innovation is the heart of the Marel organization. Marel’s primary During the year, Vidar Erlingsson was appointed the company’s first goal is to deliver market-driven innovation that serves its customers Head of Global Innovation. The creation of this position and helps them to create further value in a sustainable way, demonstrates Marel’s ongoing commitment to innovation. The whether they are small family-owned businesses or leading global Head of Global innovation is responsible for driving and producers of poultry, meat, and fish. Marel’s annual investment of 5- implementing Marel’s global innovation vision and strategy across


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    7% of revenue in research and development has led to the organization, prioritizing further innovation activities and breakthrough innovations that have transformed the way food is shortening the time to market. Marel´s operations in innovation processed around the world. Marel operates in a dynamic and have also been streamlined during the year in order to increase competitive market and to maintain the company’s leadership in efficiency and synergies. Global Innovation operates across the the industry it is essential to nurture the company’s innovative spirit company, serving the business units by developing unique and strengths. In 2014, many important milestones were reached in solutions and products that create value for Marel’s customers and strengthening and streamlining Marel’s innovation activities. support the company’s long-term strategy. RESEARCH AND DEVELOPMENT EXPENSES 60 10% 50 9% 40 8% EUR million 30 7% 20 6% 10 5% 0 4% 2010 2011 2012 2013 2014* R&D EXPENSES R&D EXPENSES AS % OF REVENUE * Before refocusing costs INNOVATION IS THE KEY TO MAREL’S FUTURE GROWTH “Marel is an innovative company and innovation has played a key role in the making of Marel as global leader in its field. It is clear that innovation is key to Marel’s future growth. We believe that our new model will enable us to serve customers’ needs better and provide the solutions that the market demands.” Vidar Erlingsson, Head of Global Innovation GLOBAL SUPPLY CHAIN AND MANUFACTURING The Global Supply Chain organization at Marel is responsible for During the year several steps were taken to optimize and manufacturing and procurement within the company. The function streamline Marel’s manufacturing footprint in line with Marel’s creates solid foundation for increased efficiency, the sharing of best ongoing Simpler, Smarter, Faster refocusing program. During 2014 practices and optimization of the use of resources throughout the manufacturing activities were streamlined and consolidated in company. Marel is moving away from a diverse manufacturing base Denmark and the Netherlands and a decision was taken to cease of 18 manufacturing centers in the beginning of the year 2014 to a manufacturing in Singapore and Beijing. In 2015 the manufacturing few multi-industry sites. This will make Marel better equipped to optimization will continue and, as was announced in January 2015, take on growth and fluctuations in utilization. Marel is merging its Des Moines, Iowa manufacturing operation to an existing facility in Gainesville, Georgia. “The new Global Supply Chain organization at Marel will help us to improve our support to innovation. By strategically planning purchasing on a global level we are gaining a higher level of expertise and are harmonizing processes and procedures. We will get faster by doing things in a smarter way.” Paul van Warmerdam, Head of Global Supply Chain


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    INTRO MARKETS POULTRY Operational profit margins and volumes in Marel’s poultry segment improved gradually throughout the year and closed the year at a good level. Poultry secured many medium and large projects around the world during the year and the order book is at a healthy level entering 2015. FISH The year was good for Marel’s fish segment. For the second consecutive year, Marel’s salmon activities returned healthy results and increased activity was also seen in whitefish projects throughout the year. Marel is the leading global provider of advanced systems to the global salmon industry. MEAT During the year, Marel took several steps to streamline operations in the company’s meat segment. Business units and operations were consolidated, which will result in increased synergies in sales and innovation. Landmark sales were finalized during 2014 in all continents and reference projects have been established around the globe. Further Processing FURTHER PROCESSING The year began slowly for Marel’s Further Processing segment, but order intake picked up to a good level during the second half of the year. Positive signals were visible in various markets and important sales were finalized. A strong driver is the positive economic situation in the U.S.


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    POULTRY NEW PARTNERSHIPS AND GREATER INNOVATION “In 2014, we successfully launched several innovative solutions. Visitors to the VIV Europe tradeshow were receptive to the new products, and positive about the ongoing upgrades of existing solutions, confirming our approach to continued innovation. Our slogan presented at VIV, ‘We love processing,’ captured the passion behind the market-focused innovation that is part of our DNA”. Anton de Weerd, Managing Director of Marel’s Poultry Industry Center GRADUAL IMPROVEMENTS THROUGH THE YEAR Operational profit margins and volumes in Marel’s poultry segment improved gradually throughout the year and closed the year at a good level. Poultry secured many medium and large projects around the world during the year and the order book is at a healthy level entering 2015. The poultry segment accounted for 53% of the company’s revenue in 2014. MARKET-FOCUSED INNOVATION Many innovative solutions were brought to the market during 2014. Marel operates in a dynamic marketplace and with today’s The new IRIS EV quality assessment system for the evisceration challenges and developments the difference between Marel and its process is a good example of Marel’s market focused innovation. competitors is often in the detail. The new and improved MCheck 2 The quality grade of each product can now be determined before Checkweigher and the new SmartLine grader, for example, have pre-chilling, giving processors more time for an optimum match been completely updated with a heavier emphasis on hygiene. Both between production and customer orders to maximize profit per efficiency and product quality benefit from the updates, particularly product. Marel’s new solutions for stunning, CAS SmoothFlow and when combined with Marel’s successful Innova control software. the Water Bath Stunner PureSine, have also been enthusiastically Combining the right individual equipment into smart solutions is embraced by the market. clearly one of Marel’s strengths, for example with the in-line fixed Another very well received solution is the company’s 8” shackle weight batching solutions with RoboBatcher Flex, or the SensorX pitch concept for processing bigger birds of up to 4.5 kg. The main with SmartSort. In a highly competitive market, these solutions drivers behind this solution are higher yields, better efficiency and reduce giveaway and improve product flow, resulting in higher increased automation. The solution, launched in the U.S., is already efficiency. There are great opportunities for these smart solutions, a huge success. In the U.S. generally, Marel has experienced a good especially in markets like Europe, where there is a strong focus on level of investment as a result of increased profitability of the cutting costs and making processes more efficient, often leading to poultry market. an increased level of automation. PARTNERSHIP WITH CUSTOMERS 2014 has seen an increasing number of companies opt for Marel Demand for Marel’s customers’ product is increasing and poultry processing solutions, with many new customers from production cost is decreasing due to a drop in energy and feed different parts of the world. Additional equipment was also prices. Upscaling and more automation are important themes. In supplied to existing and new customers in China, Indonesia, the Asia, food safety, automation, process control and traceability are Middle East and Central and West Africa. In India, a breakthrough increasingly important issues. greenfield project was realized, feeding the new trend of higher International food service companies and a young urban capacities and higher automation levels in evisceration, cut-up and population boost the demand for the final product. deboning. Exciting new greenfield projects were commissioned around the In several parts of Africa, the growing young urban population is globe, with production capacities ranging from 1,000 to 13,500 influencing demand. Marel supports markets with several birds per hour per line. Each project combines the best and most greenfield projects. Expectations for poultry meat as a healthy,


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    suitable innovative new technologies for the production of a wide affordable source of protein are very positive. Marel’s processing variety of top-quality broiler, turkey and duck products, produced knowledge and experience, dedication and drive, good service and with ever-growing levels of automation. Local market requirements local presence are highly appreciated. are entwined into profitable processing solutions; the company’s strong local presence and good developed service network pays off. PARTNERSHIP WITH CUSTOMERS GREENFIELD FOR AGROSUPER: FROM PLAN TO PRODUCTION IN EIGHT MONTHS The partnership between Marel and Agrosuper in Chile has existed By the end of January 2014, the terrain in Lo Miranda was prepared for 15 years, during which Marel has provided Agrosuper with for construction. On September 1, 2014 the first broilers were processing technology and support. Agrosuper is Chile’s largest processed. The quick work was proof of the excellent partnership food processing company, active in producing broiler meat, turkey, and is another successful project and a great example of the fact pig, salmon, wine and even dried fruits. When a fire engulfed one that close partnership is the key to success. of their poultry processing plants during Christmas 2013, an international team from both companies met the next day and decided to completely rebuild the high capacity broiler processing plant in Lo Miranda. ”WE LOVE PROCESSING” Marel participated in the VIV Europe 2014 show with the theme “We Marel’s innovative character was also highlighted when Marel Stork love Processing.” The company expressed its passion for the was named winner of the sector ‘food industry’ at the Dutch industry, and drive to innovate constantly. The innovative solutions National Business Success awards and one of the 10 finalists for the Marel showcased there were well received; the division won two overall award. innovation awards, for the Stork SmartWeigher Grading and Distribution Line, and as the most innovative company overall. GLOBAL BROILER PRODUCTION AND TRADE LARGEST BROILER PRODUCERS CAGR OF 2% IN PRODUCTION AND 3% IN TRADE SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 100 12.5 Production in million metric tons 80 10.0 Trade in million metric tons 20% 21% 34% 60 7.5 32% 40 5.0 16% 15% 4% 20 2.5 11% 4% 16% 12% 15% 0 0.0 2011 2012 2013 2014e 2015f PRODUCTION TRADE Source: USDA GLOBAL TURKEY PRODUCTION AND TRADE LARGEST TURKEY PRODUCERS CAGR OF 0.3% IN PRODUCTION AND 3% IN TRADE SINCE 2011 2014 ESTIMATE COMPARED TO 2010 (2015 FORECAST NOT AVAILABLE) 6 8 3%2% Production in million metric tons Trade in hundred metric tons 4,5 6 9% 3%1% 9% UNITED STATES EUROPEAN UNION 3 4 BRAZIL 48% 49% CANADA 37% RUSSIA 1,5 2 36% OTHERS 0 0 2010 2011 2012 2013 2014e PRODUCTION TRADE Source: USDA


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    FISH CREATING VALUE FOR OUR CUSTOMERS “At Marel, 2014 was characterized by our innovations for the fish industry, by new and ongoing partnerships and investments, and by positive trends in the industry as a whole. We have succeeded in creating value for our customers, and this success is the key to our own bright future in 2015 and beyond.” Sigurdur Olason, Managing Director Marel’s Fish Industry Center GOOD YEAR FOR SALMON PROCESSORS The year was good for Marel’s fish segment. For the second consecutive year, Marel’s salmon activities returned healthy results and increased activity was also seen in whitefish projects throughout the year. The fish segment accounted for 16% of Marel’s revenue in 2014. Marel performed well in the salmon industry in 2014, and it was a Marel was very active in whitefish projects throughout the year, good year for salmon processors overall. The company entered a making significant sales and developing important strategic huge project with Bakkafrost, the largest salmon producer in the partnerships with customers. The company is also seeing ongoing Faroe Islands, confirming Marel’s position as the leading global investments in the onboard sector worldwide, as customers take provider of advanced systems to the global salmon industry. advantage of lower fuel prices and increased profitability to upgrade their vessels. The company’s move to the modern cross-industy manufacturing facility in Stovring will facilitate further growth and increase operational efficiency. KEY INNOVATIONS Early in 2014, Marel introduced the FleXicut water-jet cutter with More than 50 have been installed in nearly 20 countries around the high-precision bone detection that removes pinbones in whitefish. globe since it was launched in 2012. The automation of the bone removal process is set to transform the Marel’s Innova Software Solutions constantly deliver the tools that whitefish industry as it reduces the need for skilled labor while enable seafood processors to meet increasingly stringent rules and greatly improving product handling and yields. This innovation regulations regarding traceability, product recalls, and proof of highlights Marel’s contribution to adding value to processes origin, as well as content labeling. In 2014, Marel launched Innova throughout the value chain and marks an important cornerstone in Labeling software that meets the need for control and automation the future development of whitefish processing, opening up yet of the labeling process from receiving to dispatch. The labeling unforeseen opportunities. software enables seafood processors to comply with the new EU Throughout 2014, the MS 2730 Filleting Machine has proven itself legislative requirements that came into force in Q4, affecting labels as one of the most advanced salmon filleting machines on the for all fishery and aquaculture products for EU consumers. The market today. The Filleting Machine optimizes yield and has an legislation includes changes to mandatory nutrition information on impressive filleting performance at up to 25 fillets/minute. Its processed seafood, and mandatory labeling of catch area or country trimming functions make it unique and save on labor costs by of production, to provide better information and protection for reducing the need for manual trimming. consumers. PRIZES & AWARDS The FleXicut water-jet cutter won the Innovation Prize at the Nor- Fishing exhibition in Norway. Marel also won the Icelandic Fisheries Exhibition awards for Overall Outstanding Supplier and Outstanding Icelandic Supplier – Processing.


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    SHAPING THE FUTURE OF FISH PROCESSING From small, family-owned businesses to giant processing Marel is driven by the constant challenges its customers face in enterprises, Marel’s cutting-edge equipment and software solutions delivering seafood products more efficiently, offering customers a help fish processors operate at peak productivity, and the greater variety, and always ensuring food safety. company’s products positively and directly enhance the overall quality and value of food. GLOBAL PRODUCTION OF FARMED SALMON LARGEST SALMON PRODUCERS 7% CAGR OF ATLANTIC SALMON, -0.5% OF COHO SALMON, SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 2,5 2 3% 4% 5% 3% 4% NORWAY Million metric tons 5% 7% 1,5 8% CHILE UNITED KINGDOM 1 56% 53% CANADA 23% FAROE ISLAND 0,5 27% OTHERS 0 2011 2012 2013 2014e 2015f COHO SALMON ATLANTIC SALMON Source: FAO and Groundfish Forum GLOBAL PRODUCTION OF TILAPIA AND PANGASIUS LARGEST TILAPIA PRODUCERS 4% CAGR OF TILAPIA, -1% OF PANGASIUS, SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 6 5 30% 30% CHINA 4 Million tonnes 25% 34% EGYPT 3 INDONESIA 6% BRAZIL 2 6% THAILAND 5% 14% 14% OTHERS 1 14% 8% 0 13% 2011 2012 2013 2014e 2015f PANGASIUS AND CHANNEL CATFISH TILAPIA (ALL SPECIES) Source: FAO and Tveteraas GLOBAL PRODUCTION OF COD LARGEST COD PRODUCERS 4% CAGR OF ATLANTIC COD, 3% OF PACIFIC COD, SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 2 11% 1,5 25% 6% 8% RUSSIA 11% Million tonnes 26% NORWAY 1 12% US AND CANADA 13% ICELAND EU (INCL. GREENLAND) 0,5 23% 22% OTHERS 23% 19% 0 2011 2012 2013 2014e 2015f PACIFIC COD ATLANTIC COD Source: FAO and Groundfish Forum


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    MEAT “Marel Meat’s revenues almost doubled over 2014, a significant improvement on previous years. Moving from customized solutions to modularized has been an important factor in advancing Marel’s meat operations. Some landmark sales were finalized during 2014 and reference projects have also been established around the globe.” David Wilson, Managing Director of Marel’s Meat Industry Center. YEAR OF INTEGRATION AND STREAMLINING OF BUSINESS During the year, Marel took several steps to streamline operations in the company’s meat activities. Business units and operations were consolidated, which will result in increased synergies in sales and innovation. Landmark sales were finalized during 2014 in all continents and reference projects have been established around the globe. The meat segment accounted for 17% of Marel’s revenue in 2014. Market conditions had a significant effect on the division’s business. In both the U.S. and Europe, the pork sector has been struggling. In Europe, prices for pork products have been very low over the past 18 months. The company saw continued investment outside Europe and the U.S., especially in South America, where a number of large projects are taking place. PREPARING FOR THE FUTURE During the course of 2014, Marel Meat successfully integrated the The segment’s manufacturing activities were absorbed within the business units of Product Center Meat Harvesting / Fresh Value manufacturing facility in Boxmeer, and a new building was erected Added and Product Center Preparation (the former Carnitech to house the relocated Meat activities. business, which was acquired in 2013). This was a strategic action to Following these improvements, Marel’s Meat Industry Center is strengthen Marel’s core meat activities, and find the synergies of ready to tackle future challenges and create increased value for its business units within Marel that are operating within the same customers. The future remains bright, with a fresh Marel approach sector. A strategic decision was also taken to transfer the activities to the global red meat industry and with a number of key projects in in the Oss facility to Boxmeer in the Netherlands, and ultimately strategic markets. close the Oss location. This was also successfully completed by December, without any disruption to customers. OPPORTUNITIES THROUGHOUT THE WORLD Marel has worked in partnership with hundreds of red meat High expectations exist for further growth in South America, processors globally, in developing and supplying equipment of the particularly in the pork industry in Brazil. Deboning and trimming of highest standard. “Innovation through partnership” sums up the higher-valued primals creates the opportunity for Marel’s unique philosophy and the way the company has worked with the red StreamLine solutions, which offer not only product traceability, but meat industry for many years. By working closely with its customers also yield monitoring and throughput improvements. Trim is and partners, Marel creates the best solutions for red meat becoming an increasingly valuable product, and Marel now offers processing, primary or case ready. The market potential is huge, four unique solutions to support its customers with optimizing the with many opportunities throughout the world. Marel will continue value of this product. to focus on selected product / market combinations, and continue ction its development within key products – such as deboning (StreamLine and DeboFlex), and its program for product modularization. The segment will also focus on Case Ready activities, where Marel will create the necessary solid foundations to capitalize on the enormous opportunity in this sector.


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    PARTNERSHIP WITH CUSTOMERS KEPAK GROUP INTRODUCES BEEF TRIM MANAGEMENT Between 30% and 40% of each beef carcass goes to value-added “Accurate manual sorting of large amounts of trim, based on the products at Irish meat processor Kepak Group – a percentage human eye to decide on the accurate fat percentage, is extremely that compares well with other European beef processing plants. difficult and requires very skilled employees,” explains John Walsh, To handle the trim for further processing effectively, Kepak Site Manager at Kepak in Ballymahon. “So automation was an partnered with Marel to design a state-of-the-art Trim obvious choice for us. The Trim Management System that Marel Management System specifically tailored to their needs. and Kepak developed automates the analysis of trim for the fat/lean ratio, and better enables Kepak to manage their trim and Kepak focused primarily on the trimming part of the production, hit target fat percentages.” aiming to produce and manage trim for specific mince and burger recipes as effectively as possible. GLOBAL BEEF AND VEAL PRODUCTION AND TRADE LARGEST BEEF AND VEAL PRODUCERS CAGR OF 0.3% IN PRODUCTION AND 5% IN TRADE SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 60 12 Production in million metric tons 50 10 19% Trade in million metric tons 21% UNITED STATES 40 8 33% 33% BRAZIL 30 6 EUROPEAN UNION 16% CHINA 17% 20 4 INDIA 6% OTHER 11% 14% 10 2 7% 13% 0 0 11% 2011 2012 2013 2014e 2015f PRODUCTION TRADE Source: USDA GLOBAL PORK PRODUCTION AND TRADE LARGEST PORK PRODUCERS CAGR OF 2% IN PRODUCTION AND 1% IN TRADE SINCE 2011 FORECAST FOR 2015 COMPARED TO 2011 120 9.0 Production in million metric tons 100 7.5 13% Trade in million metric tons 3% 14% CHINA 80 6.0 3% 2% EUROPEAN UNION 3% 60 4.5 UNITED STATES 10% 10% 49% 51% BRAZIL 40 3.0 RUSSIA 22% OTHERS 20 1.5 20% 0 0.0 2011 2012 2013 2014e 2015f PRODUCTION TRADE Source: USDA


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    FURTHER PROCESSING “In 2014, Marel strengthened its position as a world player in the field of processing equipment of cooked products. The year began slowly but order intake and operational results improved during the latter half of the year. The division finalized some important sales and numerous markets continue to look positive.” Gerrit den Bok, Managing Director of Marel’s Further Processing Industry Center IMPROVED MARKET SITUATION AND PROVEN STRATEGY The year began slowly for Marel’s Further Processing segment, but order intake picked up to a good level during the second half of the year. Positive signals were visible in various markets and important sales were finalized. A strong driver is the positive economic situation in the U.S. Operations in Further Processing were streamlined in Q4 and the The product group CoExtrusion Technology created an increased team and market approach strengthened. The Further Processing interest in 2014. The newly developed and introduced high capacity segment accounted for 13% of Marel’s revenue in 2014. solution was very well received. A strong driver is for the segment’s success the more positive During the year, the segment took considerable measures to bring economic situation in the United States. With some exceptions, the innovation expenses in line with the company benchmark. Europe was still reluctant to invest. Parts of Asia and Oceania also These actions have put Further Processing activities in a far showed positive developments. healthier position, supported by the refocusing program Simpler, Smarter, Faster, which Marel introduced at the beginning of 2014. The segment’s strategy to focus on different product lines has proven to be successful. Product groups Fresh and Linkers & Peelers showed successful results in equipment, service, and spare parts. GROWTH SUPPORTED BY STRONG TRENDS The trend of increasing wealth in many emerging markets will Marel has the perfect solutions for these trends, as is evidenced by further stimulate the consumption of value added, convenience the repeat business that the division had last year from market products. People have more money to spend and will consume leading customers in emerging and mature markets. Many more convenience products, in and outside the home. customers expanded their production with a second or third production system. In more mature markets, people are so busy that cooking times need to be further reduced, thus stimulating the purchase of easy- to-prepare products, heavily influenced by the will to eat more healthy.


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    PARTNERSHIP WITH CUSTOMERS NEW JOINT VENTURE FOR FURTHER PROCESSING Wayne Farms is one of the largest fully integrated poultry automated system that was adapted, installed and implemented companies in the U.S., producing over 2.5 billion lbs. of poultry for the specific requirements of the new products that the joint products each year. In December 2013, Wayne Farms and Salm venture wanted to bring to the market. As a result of this Partners, an innovative company producing high volumes of partnership, great products are now being produced, opening up ready-to-eat sausage products and one of Marel’s close partners, profitable possibilities for the customers and new chances for started a joint venture. The goal was to produce high volumes of Marel to further promote this advanced technology. affordable, innovative, high quality, and, above all, tasty gourmet The project is a perfect example of the company’s philosophy of poultry sausages, as an answer to the market’s rapidly growing Innovation Through Partnership. demand. Marel provided a sophisticated high capacity, highly MAREL’S INNOVATIVE FOCUS The segment can clearly see its convenience solutions being The RevoPortioner technology for processing red meat has also increasingly recognized as innovative solutions that bring its made major inroads into the market. Marel sold the first customers higher yields, reduced labor requirements and lower RevoPortioner for fresh red meat in the demanding French market, costs. The MOS (Modular Oven System) had a breakthrough in the a good indicator of future successes. In early 2015, the segment will U.S. in 2014. Various well-known processors purchased this top-of- launch a new development in the market. This will further stimulate the-line solution. the RevoPortioner as the successful and most innovative low pressure portioning solution available today. Another important development is the entry of the RevoPortioner into red meat and fish, building on its past success The product group Linkers & Peelers launched the 2800 Sausage in poultry. Fish processors are increasingly interested in the Peeler in 2014. This new high capacity peeler has been improved company’s RevoPortioner technology and in 2014 HB Grandi, one of based on market requirements. the largest fishing companies in Iceland and a leader in its field, Product group Fresh has a clear focus to bring the developments of finalized its investment in a RevoPortioner. HB Grandi, which places last year to the market, such as the fresh sausage line and the great emphasis on using the very latest in fish processing CoexSkin. technology, recognized the system was a unique opportunity for them to add value to their fish products, turning trimmings into profitable opportunities.


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    SHARES & SHAREHOLDERS SHARE PERFORMANCE Since 1992, Marel’s shares have been listed on the Nasdaq Iceland stock exchange under the symbol MARL. Marel’ s share price stood at ISK 138.00 at the end of 2014, compared to ISK 133.00 at the end of 2013, an increase of 3.8%. In euros, the shares stood at 89 cents per share at year-end compared to 84 cents at the end of 2013. SHAREHOLDERS As recorded in the shareholders’ register, there were 1,864 Marel The ten largest shareholders held 70.6% of the total shares. In total, shareholders at year end 2014, compared to 1,846 at year end 2013. Icelandic pension funds held 32.3% of Marel’ s share capital. As of December 31 2014, Marel held 6,957,850 treasury shares. International shareholders owned 10.2% at year end 2014. The free float of Marel shares was 71% and free float adjusted market value Eyrir Invest hf. is Marel’ s largest shareholder, with 29.3% of shares, of the company was €464 million. followed by Lífeyrissjóður verzlunarmanna – the Pension Fund of Commerce (9.1%) and Grundtvig Invest A/S (8.4%). HOLDINGS BY TYPE OF INVESTOR SHARE CAPITAL AS OF 31 DECEMBER 2014 At year end 2014, there were 735.6 million Marel shares, all in one class. Of these, Marel holds 7 million treasury shares. 8% In 2014, Marel purchased 9.0 million shares for €6.8 million to fulfill stock option obligations, and sold 2.2 million treasury shares for a 29% total of €1.2 million to fulfill the employees’ stock option program. 21% Stock options are granted to management and selected key employees. At the end of 2014 there were 16.8 million shares of granted and unexercised stock options, of which 6.4 million were exercisable at the end of 2014. The remainder will become 10% exercisable between 2015 and 2021. At the company’ s 2014 Annual General Meeting, the shareholders 32% authorized the Board of Directors to increase the company’ s share capital by 35 million shares to fulfill stock option agreements. This EYRIR INVEST PENSION FUNDS, ICELANDIC INTERNATIONAL INVESTORS authorization is valid for five years. No new shares according to this OTHER ICELANDIC INSTITUTIONAL INVESTORS RETAIL INVESTORS, ICELANDIC resolution were issued at the end of 2014. LIQUIDITY OF SHARES Marel has made agreements with Landsbankinn hf. and MP banki This places Marel with the second highest turnover on the Nasdaq hf. regarding market making for the issued shares of Marel. The Iceland exchange in 2014. Marel’s average end-of-day spread was purpose of the agreements is to improve liquidity and to enhance 1.04%. The market value of the company at year end 2014 was ISK transparent price formation in the company’ s shares on Nasdaq 101.5 billion (€656.8 million) compared to ISK 97.8 billion (€612.8 Iceland. The duration of these agreements is unspecified but they million) at year end 2013, an increase of ISK 3.7 billion (€44.0 can be terminated with one month’ s notice. million). Since the company’ s shares are traded in ISK, the fluctuations of the Icelandic krona during the year 2014 affect the Shares in Marel were traded 1,958 times in 2014 for a total market market value when converted into euros. value of ISK 32.6 billion (up from ISK 28.8 billion in 2013), which corresponds to a turnover rate of 37%.


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    SHARE PRICE IN 2014 COMPARED TO OMX ICELAND 6 NOTE: INDEXED NUMBERS, SET AT 100 AT BEGINNING OF YEAR 2014 120 110 Share price index 100 90 80 70 60 Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 MAREL SHARES IN ISK MAREL SHARES IN EUR OMXI6 PI ISK DIVIDEND The Board of Directors will propose to the 2015 Annual General Meeting that € cents 0.48 dividend per outstanding share will be paid for the operational year 2014, corresponding to approximately €3.5 million or 30% of net profit of the year 2014, and refers to the financial statements regarding appropriation of the profit for the year and changes in shareholders’ equity. STOCK OPTIONS AS OF 31 DECEMBER 2014 Program initiated Number of shares in thousands Exercise price per share Exercisable in May 2010 6,388 EUR 0.572 2015 June 2012 7,908 EUR 1.056 - 1.143 2015 - 2018 December 2014 2,475 EUR 0.949 - 1.027 2018 - 2021 Total 16,771 DISTRIBUTION OF SHARES AS OF 31 DECEMBER 2014 Number of Shares Shareholders % Shares % 1- 9,999 1,192 63.95% 4,318,203 0.59% 10,000 - 99,999 507 27.20% 15,255,139 2.07% 100,000 - 199,999 50 2.68% 6,424,177 0.87% 200,000 - 799,999 60 3.22% 22,179,180 3.02% 800,000 - 1,399,999 7 0.38% 7,608,305 1.03% 1,400,000 - 2,999,999 16 0.86% 29,622,020 4.03% 3,000,000 - 9,999,999 19 1.02% 104,464,383 14.20% 10,000,000 - 99,999,999 12 0.64% 330,330,752 44.91% 100,000,000 - >100,000,000 1 0.05% 215,366,838 29.28% 1,864 100.00% 735,568,997 100.00%


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    TOP 10 SHAREHOLDERS AS OF 31 DECEMBER 2014 Shareholders. Number of shares % 1 Eyrir Invest hf. Investment company 215,366,838 29.3% 2 Lifeyrissjodur verslunarmanna Pension fund 66,979,042 9.1% 3 Grundtvig Invest A/S Investment company 61,560,494 8.4% 4 Stefnir - IS 15 Asset management 37,941,197 5.2% 5 Lifeyrissj.starfsm.rik A & B deild Pension fund 34,254,000 4.7% 6 Gildi lifeyrissjodur Pension fund 32,217,979 4.4% 7 Stafir lifeyrissjodur Pension fund 20,512,255 2.8% 8 Stapi lifeyrissjodur Pension fund 19,763,347 2.7% 9 Stefnir lifeyrissjodur Asset management 15,615,550 2.1% 10 Sameinadi lifeyrissjodurinn Pension fund 15,337,293 2.1% Top 10 total 519,583,995 70.6% Others 215,985,002 29.4% Total issued shares 735,568,997 100.0%


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    INVESTOR RELATIONS INVESTOR RELATIONS Providing investors with equal access to timely and accurate information about Marel’s operations and business environment is the central aim of the company's Investor Relations policy. Marel believes that timely distribution of honest, consistent, and transparent information, within the bounds of commercial sensitivity, is key to building trust with current shareholders and potential investors. PUBLICATION OF FINANCIAL INFORMATION Marel publishes financial information in English and Icelandic. All price-sensitive information, regulatory announcements about Marel, and announcements regarding performance and future prospects are published in a timely manner, initially on the website of Nasdaq Iceland, and subsequently on Marel's official website. Financial results are issued quarterly in accordance with the requirements of Nasdaq Iceland. MAREL WAY OF LIFE MYMAREL COMMUNICATIONS Marel emphasizes the importance of open and transparent MyMarel Stream broadcasts intranet-generated news to communications. In order to promote communication between strategically-placed public screens, including TVs, touch screens the company’s 4,000 employees around the world, Marel operates and other interactive stations. many different communication channels under the brand Marel Live TV presents the latest Marel products and solutions to MyMarel. Through these different channels, information is being employees around the globe. made available to all Marel employees at all times. MyMarel Mobile is the latest communication channel of Marel and MyMarel Intranet is the company’s hub of internal was introduced during the summer of 2014. Employees can now communications. It was re-launched in 2014. The new intranet be connected to the MyMarel Intranet everywhere and receive the provides employees with place to catch up with company news latest news and internal information wherever in the world they from around the world and contains a clear overview of all the are located. tools that make their jobs easier. COMMUNICATION WITH SHAREHOLDERS AND THE INVESTOR COMMUNITY Marel aims to be visible and accessible to existing and potential shareholders and other stakeholders. In addition to stock exchange and company announcements, the main channels of communication with investors and analysts are the regular investor meetings that follow the publication of the company’s quarterly results and annual general meetings. Quarterly investor meetings are webcast and presentations from the meetings are published via the Nasdaq Iceland news system. Additionally, several other meetings for investors and analysts are held on an ad-hoc basis. In April 2014, Marel participated in a Capital Markets Day event organized by Arion Bank in Iceland, where the company was For further information, please see: presented to investors and analysts. marel.com/investors In October 2014, Marel participated in an investor event in nasdaqomxnordic.com Stockholm organized by the Nasdaq OMX Stock exchange in Sweden and Iceland.


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    Financial Calendar for 2015 MAREL'S LONG TERM SHARE PRICE DEVELOPMENT 1st quarter 2015 29 April 2015 2nd quarter 2015 29 July 2015 200 3rd quarter 2015 28 October 2015 175 Share price index 150 4th quarter 2015 3 February 2016 125 100 75 50 2009 2010 2011 2012 2013 2014 2015 ISK INDEXED EUR INDEXED WEBSITE AND ANNUAL REPORT Marel’s website contains detailed information about the company, Since 2014, the Annual Report has been only available online. its history, operations, and activities. Current and past press Marel’s Annual Reports can be accessed on desktop computer, releases, presentations, and annual reports are archived in the tablet or mobile phone through marel.com/annualreport. Investor Relations section of the website and available for download. The company's current and historic share prices are available for review against key indices.


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    MAREL’S BOARD OF DIRECTORS CHAIRMAN OF THE BOARD ASTHILDUR MARGRET OTHARSDOTTIR Asthildur Margret Otharsdottir is an independent consultant with extensive prior business experience as a Director of Treasury and Corporate Development at Össur hf. from 2006 to 2010, Senior Account Manager at Kaupthing Bank, now Arion Bank, from 2004 to 2006, and Consultant at Accenture from 1996 to 2000. She is a member of the Board of Directors of Icelandair Group, Marorka, and Jör. Otharsdottir is on the board of the Research Center for Business Ethics at the University of Iceland and the Court of Arbitration of the Icelandic Chamber of Commerce. EDUCATION MBA, Rotterdam School of Management, The Netherlands, 1996; Cand. Oecon., University of Iceland , 1992. ELECTED 2010, Chairman of the Board since November 2013 HOLDINGS IN MAREL 32,000 VICE-CHAIRMAN OF BOARD ARNAR THOR MASSON Arnar Thor Masson has extensive experience in reorganization, EDUCATION strategy and project management. He is currently the Director M.Sc. in Comparative Politics, the London School of Economics and Political General of the Department of Administrative and Social Science, 1997. B.A. in Political Science, University of Iceland, 1996. Studied securities brokerage in 2007. Development at the Prime Minister’s Office in Iceland and also serves as the Chairman of Marel’s audit committee. His previous ELECTED roles include Deputy Director General of the Financial Management 2001. Vice-Chairman since November 2013. Department at the Ministry of Finance. Masson was an adjunct HOLDINGS IN MAREL lecturer at the Department of Political Science of the University of Iceland from 2000 until 2008. He does not sit on the board of any 0 other company.


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    BOARD MEMBER ANN ELIZABETH SAVAGE Since 2004, Ann Savage has been the Technical Director of Bakkavör EDUCATION Group and also serves as its Member of Management Board. She is Studied at the Open University. Post Graduate Diploma in Management mainly responsible for Food Safety, Health and Safety management, Studies from Nottingham University. Manufacturing Excellence and Environmental management at ELECTED Bakkavör. Savage has held a variety of roles during her career, spanning over 30 years in technical and research and development 2013 departments within the retail and food industry, more specifically HOLDINGS IN MAREL for Cooperative Wholesale Society (CWS) Northern Foods (1990- 0 1999) and Geest (1999-2004). BOARD MEMBER BOARD MEMBER HELGI MAGNUSSON MARGRET JONSDOTTIR Helgi Magnusson is the Chairman of the boards of Blue Lagoon, Margret Jonsdottir is the Managing Director of Operations of Eyrir Harpa Holding, and Husasmidjan. He is the Vice-Chairman of the Invest hf. Previously, she was the Director of Finance at Edda Board of the Pension Fund of Commerce and also serves as board Publishing from December 2001 until October 2002. She was member of several other Icelandic companies, including N1, Director of Finance at Kreditkort/MasterCard from August 2000 until Hofgardar and Skipti. He served as a member of the Board of December 2001, Manager of Accounts at FBA Investment Bank (now Directors and the Executive Board of the Confederation of Icelandic Islandsbanki) from January 1998 until June 2000, and Director of Employers from 2006 to 2013 and as Chairman of the Federation of Finance at the Industrial Loan Fund (FBA Investment Bank Icelandic Industries from 2006 to 2012. Magnusson has also been a predecessor) from September 1988 until January 1998. board member of Islandsbanki hf, Framsyn Pension Fund and the Icelandic Chamber of Commerce. For several years, he was the EDUCATION Chairman of the Board of Harpa Sjöfn Paint Factory and Flügger Master of Accounting and Auditing, University of Iceland, 2006; Cand. Iceland Paint Factory. Oecon. in Business Administration, University of Iceland, 1983. ELECTED HOLDINGS IN MAREL EDUCATION 2006 200,419 Business Administration, University of Iceland, 1974; CPA, 1975. ELECTED HOLDINGS IN MAREL 2005 5,305,044 BOARD MEMBER BOARD MEMBER ASTVALDUR JOHANNSSON OLAFUR S. GUDMUNDSSON Astvaldur Johannsson has extensive international experience. He has served as Executive Director for Valitor hf. (an Online and e- Olafur S. Gudmundsson has held various senior management Commerce Payment Solutions- and Services Provider) by leading positions within R&D in the pharmaceutical industry, both for the development- and progress of the organisation international Bristol-Myers Squibb and Genentech Inc. He is also associated with activities for the last three years, but recently stepped down from the Pharmaceutical Chemistry department at Purdue University. that position. Prior to that he worked in various management positions including for Össur, the global orthopedics company EDUCATION during 2002-2011. Before that he was a member of the Executive Ph.D. in Pharmaceutical Chemistry from the University of Kansas 1998; Cand. Team at Nyherji hf., Managing Director at Penninn, a retail chain in Pharm. in Pharmacy from the University of Iceland 1994. Iceland and as a System Analyst- and Process Design and ELECTED Development Expert within the IT Division of SIS (Icelandic Coop’s 2014 Association). HOLDINGS IN MAREL EDUCATION 1,705,427 Education: MBA from the University of Iceland 2002.B.Sc. in Management Information Systems from Heriot-Watt University Scotland 1987. ELECTED HOLDINGS IN MAREL 2014 0


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    EXECUTIVE TEAM CEO ARNI ODDUR THORDARSON Arni Oddur Thordarson is Marel's CEO. He has extensive international business experience within the industrial sector. Before taking up his current position as Marel’s CEO in November 2013 he was the CEO of Eyrir Invest, which he co-founded in 2000. Thordarson served on the Board of Directors of Marel between 2005 and 2013, the majority of the time as Chairman. Thordarson also serves as non-executive director in Fokker Technologies EDUCATION MBA, IMD, Switzerland, Cand. Oecon. in Business Administration, University of Iceland, HOLDINGS IN MAREL 215,498,707 COO CFO SIGSTEINN GRETARSSON LINDA JONSDOTTIR Sigsteinn Gretarsson is Marel's Chief Operating Officer. He joined Linda Jonsdottir is the CFO of Marel. She has been Marel’s Corporate Marel in 1997 as Sales Manager and Consultant in sales and Director of Treasury and Investor Relations since 2009. Before marketing. In 2001 he moved to Brisbane, Australia, where he joining Marel, Linda worked in Treasury and Financing for Eimskip, served as Managing Director of Marel's Australian subsidiary until Burdaras and Straumur Investment Bank. She has also served as 2005. He then worked on mergers and investment projects before board member in the Enterprise Investment Fund (Framtakssjodur being appointed Managing Director of Marel ehf. in June 2007. Islands) since 2010. Gretarsson was appointed the Chief Operating Officer of Marel in October 2011. EDUCATION EDUCATION M.Sc. in Finance from Reykjavík University and Cand.Oecon in Business Administration from the University of Iceland. B.Sc. in Mechanical Engineering from Bradley University, Illinois, and M.Sc. in Mechanical Engineering from the University of Illinois at Urbana-Champaign. HOLDINGS IN MAREL Gretarsson has completed Executive Education business programs at Insead 0 and Reykjavik University. HOLDINGS IN MAREL 25,997


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    GERRIT DEN BOK PETUR GUDJONSSON Gerrit den Bok is the Managing Director of Marel's Further Petur Gudjonsson is the Managing Director of Marel's Global Sales Processing Industry Center. He has been with Marel and its and Service Network. He joined Marel in 1984 as a Programmer in predecessors since 1989. Before taking up his current position in electronic design. Before taking up his current post in 2009 he 2013 he was responsible for Marel Stork Poultry service globally. served in numerous different positions for Marel, including General Previous positions within the company include Food Technologist Manager for Marel in Canada and Sales Director for Marel Iceland in the service department of Stork PMT and a coach of the and Denmark. Technology department. EDUCATION EDUCATION B.Sc. in Electrical Engineering from the University of Iceland. B.Sc. in Food Technology from HAS University. HOLDINGS IN MAREL HOLDINGS IN MAREL 154,430 0 SIGURDUR OLASON DAVID FREYR ODDSSON Sigurdur Olason is the Managing Director of Marel's Fish Industry David Freyr Oddsson is Marel's Corporate Director of Human Center. Olason worked in Marel’s product development department Resources. He joined Marel in 2011 as HR Director in the between 2001 and 2006. He started his current position in May International Sales and Service Network. He took up his current post 2014. Before rejoining Marel, Olason was Manager of Business in 2013. Before joining Marel, he worked at Straumur Investment Development with Samherji, one of Iceland’s leading seafood Bank as Global Head of Human Resources and Corporate Services companies. 2006-2011 and as an HR Consultant at Capacent 1999-2006. EDUCATION EDUCATION MBA from the Brisbane Graduate School of Business; B.Sc. in Computer MBA from Reykjavik University, Cand. Theologius from University of Iceland. Science and B.Sc. in Engineering from the University of Iceland. HOLDINGS IN MAREL HOLDINGS IN MAREL 50,000 0 PAUL VAN WARMERDAM ANTON DE WEERD Paul van Warmerdam is the Head of Marel's Global Supply Chain. He Anton de Weerd is the Managing Director of Marel's Poultry joined Marel as Director of Manufacturing and Materials Industry Center. He has been with Marel and its predecessors since Management Industry Center Poultry and was appointed to his 1982 and during that time has served in many different positions current position in 2013. Before joining Marel, he worked in the including Sales Engineer, Area Sales Manager, Regional Sales semiconductor industry in various operations and business Manager, General Sales Manager, Commercial Director, Managing management roles. Director, and President. He took up his current post in 2007. EDUCATION EDUCATION M.Sc. in Mechanical Engineering at Delft University of Technology. M.Sc. in Mechanical Engineering from Avans University. HOLDINGS IN MAREL HOLDINGS IN MAREL 0 0


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    DAVID WILSON ARNI SIGURDSSON David Wilson is the Managing Director of Marel's Meat Industry Arni Sigurdsson is the Head of Strategy and Development. Center. He has been with Marel and its predecessors since 1998. Sigurdsson has extensive experience in the finance and investment Before taking up his current position in March 2012 he served as management industry. Before joining Marel in January 2014 he Senior Vice President for Marel’s Poultry Industry Center in worked for AGC Partners as Associate. Prior to that he worked at Gainesville, U.S. Landsbankinn where he was instrumental in advising Marel on the acquisition of Stork Food Systems. EDUCATION M.Sc. in Animal Science and Honors B.Sc. in Agricultural Business EDUCATION Management from Aberdeen University. MBA from Harvard Business School and a B.Sc. in Industrial Engineering from the University of Iceland. HOLDINGS IN MAREL 0 HOLDINGS IN MAREL 78,580 VIDAR ERLINGSSON Vidar Erlingsson is the Head of Global Innovation. Erlingsson has been with Marel’s innovation team since 2000 and has led the Product Center Inspection for the last four years. EDUCATION M.Sc. in Engineering from DTU in Denmark and B.Sc. in Electrical and Computer Engineering from the University of Iceland. HOLDINGS IN MAREL 0


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    RISK MANAGEMENT RISK MANAGEMENT Marel’s activities expose the company to a variety of financial Risk management is carried out within the company, where risks: Market risk (including foreign exchange risk and price applicable, under policies approved by the Board of Directors. risk), credit risk, liquidity risk, cash flow risk, and fair value Financial risk is monitored and managed centrally in Group interest rate risk. Treasury. The company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the company’s financial performance. The company uses financial derivatives instruments to hedge certain interest rate and foreign exchange risk exposure. FOREIGN EXCHANGE RISK The company operates internationally and is exposed to foreign Company funding is denominated in the main operational exchange risk arising from various currency exposures, primarily currencies to create natural hedging in the balance sheet. Where with respect to the EUR/USD, EUR/GBP, and EUR/ISK on the cost needed, financial exposure is hedged in accordance with company’s side. The general policy is to apply natural currency hedging to the general policy on permitted instruments and exposure limits. extent possible and prohibit any speculative trading of financial instruments. CREDIT RISK The company minimizes credit risk by monitoring credits granted to Marel has banking relations with a diversified set of financial customers, and assigns collateral to cover potential claims. The institutions around the world. There are policies in place that limit company has policies in place to ensure that sales of products and the amount of credit exposure to any one financial institution. services are made to customers with an acceptable credit history, and products are not delivered until payments are secured. Although one of Marel’s manufacturing sites is located in Iceland, sales to domestic customers account for less than 1% of total sales and the company is exposed to very limited credit risk in Icelandic krona. INSURANCE POLICIES LIQUIDITY RISK The company maintains global and local insurance policies. The Due to the dynamic nature of the underlying businesses, the coverage comprises property damage, business interruption, company has prudent liquidity risk management to ensure general and product liability, marine cargo/mounting, directors and sufficient flexibility in funding under the revolving part of the officers liability, employers practice liability, business travel, and facilities agreement and current financial assets available. accidents. The company believes that its current insurance coverage is adequate. CASH FLOW AND FAIR-VALUE INTEREST RATE RISK The company’s income and operating cash flows are substantially The company manages its cash-flow interest rate risk by using independent of changes in market interest rates. The interest rates floating-to-fixed interest rate swaps. Such interest rate swaps have of finance leases to which the company is lessor or lessee are fixed the economic effect of converting borrowings from floating rates to at inception of the lease. These leases expose the company to fair- fixed rates. The company raises long-term borrowings at floating value interest rate risk. The company’s cash-flow interest rate risk rates, and swaps a portion of them into fixed rates. The risk, arises from long-term borrowings. Borrowings issued at variable measured as the potential increase in interest paid during the rates expose the company to cash-flow interest rate risk, while coming year based on a defined movement in interest rates, is borrowings issued at fixed rates expose it to fair-value interest rate monitored and evaluated regularly. risk.


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    CORPORATE GOVERNANCE CORPORATE GOVERNANCE STATEMENT Marel is committed to the general principles of good corporate governance. Icelandic law and the company’s corporate governance framework determine the duties of the various bodies within the company. Corporate governance defines and dictates the way in which the company is directed and controlled – it involves the broader inter-workings of the Executive Team, responsible for the day-to-day management, the Board of Directors, the shareholders at large, regulators and other stakeholders. 1. CORPORATE GOVERNANCE FRAMEWORK The company’s corporate governance consists of a framework of The CEO is responsible to the Board of Directors for the principles and rules, including its Articles of Association and the performance of the Executive Team. The Board of Directors has not Guidelines on Corporate Governance issued in March 2012 by the established a nomination committee. The Rules of Procedure for the Iceland Chamber of Commerce, Nasdaq OMX Iceland hf. and the Board of Directors clearly stipulate what items shall be taken into Confederation of Icelandic Employers (accessible on the website of consideration when preparing the nomination of Directors. The the Iceland Chamber of Commerce, www.chamber.is). Board of Directors has not issued a specific social responsibility policy for the company but such a policy is under development. In general, the company is in compliance with the Guidelines on Corporate Governance. The Board of Directors evaluates the performance of the CEO at least once a year, but not specifically the performance of the other members of the Executive Team. 2. MAIN ASPECTS OF INTERNAL CONTROLS AND THE COMPANY‘S RISK MANAGEMENT IN CONNECTION WITH THE PREPARATION OF FINANCIAL STATEMENTS The CEO is responsible for ensuring sufficient internal control and EXTERNAL AUDIT risk management in connection with financial reporting. The Board An independent auditing firm is elected at the Annual General of Directors has an ongoing dialogue with the CEO on the Meeting (AGM) for a term of one year. The external auditors shall identification, description and handling of the business risks to examine the company’s annual accounts in accordance with which the company may be exposed. Material risks are discussed in generally accepted accounting standards, and shall for this purpose the Annual Report. inspect accounting records and other material relating to the INTERNAL AUDIT AND CONTROL operation and financial position of the company. The external auditors report any significant findings regarding accounting The company’s risk management and internal controls, in relation matters and any significant internal control deficiencies via the to financial processes, are designed with the purpose of effectively Audit Committee to the Board of Directors. controlling the risk of material misstatements in financial reporting. The company’s internal auditor reports to the Board’s Audit KPMG hf. was elected as the company’s auditor at the company’s Committee and plays a key role in relation to internal control. AGM held on 5 March 2014. Auditors on KPMG’s behalf are Kristrun H. Ingolfsdottir and Hrafnhildur Helgadottir, both State Authorized Public Accountants. They have audited and signed without reservation Marel’s consolidated financial statements for the year 2014. 3. THE COMPANY’S VALUES, CODE OF CONDUCT AND SOCIAL RESPONSIBILITY POLICY VALUES CORPORATE SOCIAL RESPONSIBILITY Marel‘s company values are shared ideals and standards that Being a responsible corporate citizen means going beyond provide direction in day-to-day operations. The company’s statutory legal requirements to aligning all business operations with employees had a direct hand in defining the values, which are: socially accepted principles and contributing to society in a positive commitment, partnerships with customers, diversity, teamwork, way. Marel acknowledges its social responsibility and, as stated learning and excellence, open communication, humor and fun, and above, a specific social responsibility policy for the company is success. The values are continuously promoted in daily operations. currently under development.


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    CODE OF CONDUCT The Board of Directors of Marel approved a Code of Conduct with global application in October 2012. It is closely linked with Marel’s company values and is built on four pillars, i.e. employees’ (including officers and directors) commitment to: (i) each other; (ii) customers and marketplace; (iii) shareholders and (iv) partners, communities and the environment. 4. COMPOSITION AND ACTIVITIES OF THE BOARD OF DIRECTORS, ITS SUB-COMMITTEES, THE CEO AND EXECUTIVE TEAM The company has a two-tier management structure consisting of the Board of Directors and Executive Team, led by the CEO. The two bodies are separate, and no person serves as a member of both. BOARD OF DIRECTORS The company’s Board of Directors is the supreme authority in the The Board of Directors convened 13 times in 2014, with a weighted affairs of the company between shareholders’ meetings. It is elected average attendance of 95%. by shareholders at the AGM for a term of one year and operates in The Board of Directors has made an assessment on which Board accordance with applicable Icelandic law and regulation, the members are independent according to the Guidelines on company’s Articles of Association and the Board‘s Rules of Corporate Governance. All seven Board members are considered Procedure. The Board currently comprises seven Board members independent of the company: Ann Elizabeth Savage, Arnar Thor who were elected at the company’s AGM on 5 March 2014. Masson, Asthildur Margret Otharsdottir, Helgi Magnusson, Margret The Board of Directors is responsible for the organization of the Jonsdottir, Astvaldur Johannesson and Olafur S. Gudmundsson. company and for ensuring the proper conduct of its operation at all Furthermore, five of the Board members are considered times. The Board of Directors shall decide on all matters regarded as independent of the company’s major shareholders: Ann Elizabeth extraordinary or of major consequence, including major borrowing Savage, Arnar Thor Masson, Asthildur Margret Otharsdottir, Helgi requiring pledging of properties or assets of the company. The Magnusson and Astvaldur Johannesson. Board shall establish goals for the company in accordance with the Once a year, the Board of Directors evaluates the work, results, size company’s objectives and shall formulate the policy and strategy and composition of the Board and the Board’s sub-committees. required to achieve these goals. Furthermore, the Board evaluates the work and results of the CEO Regular board meetings are held with management over the course according to previously established criteria, including whether the of the year, including quarterly financial results meetings, a two day CEO has prepared and carried out a business strategy, which is strategy session, a two day human resource and remuneration consistent with the established goals. The Board discusses the session and a next-year operational planning meeting. Company results of the assessment and decides which actions are to be taken, site visits as well as visits to customers are conducted each year. In if any. addition, the Board of Directors meets at least once a year without the management to structure the Board’s agenda and conduct a self- assessment. Additional meetings are convened as needed. All matters brought before a Board meeting shall be decided by majority vote, provided that the Board meeting has been lawfully convened. In the event of a tie vote, the Chairman of the Board casts the deciding vote. However, important decisions shall not be taken unless all members of the Board have had the opportunity to discuss the matter, if possible. SUB-COMMITTEES The Board’s work is supported by its working sub-committees: Sub-committee members are appointed by the Board of Directors Remuneration Committee and Auditing Committee. for a term of one year, in accordance with the rules of each sub- committee adopted by the Board. REMUNERATION COMMITTEE The Remuneration Committee is composed of either three or four The members of the Remuneration Committee are Asthildur members of the Board of Directors, unless the Board decides Margret Otharsdottir, Ann Elizabeth Savage and Arnar Thor Masson. otherwise. The majority of the Remuneration Committee shall be The Remuneration Committee convened 4 times in 2014. The independent of the company. The members of the Remuneration meetings were all fully attended except for one where two of the Committee shall possess the knowledge and expertise needed to three members attended. perform the tasks of the Committee. Its field of work involves


  • Page 38

    negotiating wages and other benefits for the CEO, overseeing and approving setting of management performance targets, and framing the company’s remuneration policy, including wage incentives and stock option rights for company shares. AUDIT COMMITTEE The Audit Committee is composed of either three or four members Members of the Auditing Committee are Arnar Thor Masson, Helgi of the Board of Directors, unless the Board decides otherwise. The Magnusson and Margret Jonsdottir. All members are independent majority of the Audit Committee shall be independent of the of the company and its auditors, Arnar and Helgi are independent company and its external auditors. At least one member of the of large shareholders. Audit Committee shall be independent of shareholders that hold The Audit Committee convened 5 times in 2014. The meetings were 10% or more of the total share capital of the company. The all fully attended. members of the Audit Committee shall possess the knowledge and expertise needed to perform the tasks of the Audit Committee. At least one Member of the Audit Committee shall have solid knowledge and experience in the field of financial statements or auditing. Its field of work includes monitoring Marel’s financial status and evaluating the company’s internal monitoring and risk management systems, management reporting on finances, whether laws and regulations are followed, and the work of the company’s statutory auditors. CEO Arni Oddur Thordarson took over as CEO of Marel in November III. The CEO is responsible for the work and results of the 2013. He has extensive international business experience within the industrial sector. Thordarson has served on the Board of Directors of Executive Team. Marel since 2005, majority of the time as Chairman. He has an MBA IV. The CEO shall ensure that the accounts of the company from IMD Business School in Switzerland and a Cand.Oecon in conform to law and accepted practices and that the treatment Business Administration from the University of Iceland. of company assets is secure. The CEO shall provide any information that may be requested by the company’s Thordarson is an Icelandic citizen, born in 1969. He serves as non- Auditors. executive Board Member in Fokker Technologies in the Netherlands. At least once a year the CEO shall evaluate the work and results of the Executive Team, for which he is responsible, according to The principal duties of the CEO are as follows: previously established criteria. The CEO shall discuss the results of the assessment with each member of the Executive Team and I. The CEO is responsible for daily operations and is obliged to decide which actions shall be taken, if any. follow the Board’s policy and instructions in that regard. The daily operations do not include measures which are unusual or At least once a year, the Chairman and the CEO shall have a meeting extraordinary. The CEO may only take such measures if to discuss the results of the Board’s assessment of the CEO’s work specially authorized by the Board, unless it impossible to wait and results and the proposed actions to be taken, if any. The CEO for the Board’s decision without substantial disadvantage to shall inform the Chairman of the results of his/her evaluation of the the company’s operations. In such an event, the CEO shall Executive Team and which actions will be taken, if any. The inform the Board of his/her measures, without delay. Chairman shall inform the Board of Directors of the discussions with II. The CEO shall act as chairman in the company’s material the CEO as he/she deems necessary and appropriate. subsidiaries which are connected with the sales and manufacturing activities and/or the core activities of the company, unless the Board decides otherwise. EXECUTIVE TEAM The company’s Executive Team is composed of 12 members: Sigurdur Olason, Managing Director of Fish Arni Oddur Thordarson, Chief Executive Officer (CEO) Petur Gudjonsson, Managing Director of the Sales and Service Network Linda Jonsdottir, Chief Financial Officer (CFO) Paul van Warmerdam, Head of Global Supply Chain Sigsteinn P. Gretarsson, Chief Operating Officer (COO) Vidar Erlingsson, Head of Global Innovation Anton de Weerd, Managing Director of Poultry Arni Sigurdsson, Head of Strategy and Business Development David Wilson, Managing Director of Meat David Freyr Oddsson, Corporate Director of Human Resources Gerrit den Bok, Managing Director of Further Processing


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    5. INFORMATION ON VIOLATIONS OF LAWS AND REGULATIONS THAT THE APPROPRIATE SUPERVISORY OR RULING BODY HAS DETERMINED The Icelandic Financial Surveillance Authority (FME) launched an Thus, it was FME’s opinion that Marel violated the Act on Securities inquiry of the alleged leakage of insider information regarding Transactions and other regulations concerning immediate proposed change of Marel’s CEO on 1 November 2013. The disclosure of insider information and immediate reactions in case of company fully cooperated with the FME during that process. leakage or rumors on the market. FME’s position was that Marel should have disclosed information on Nevertheless, as the violation was not considered significant by the the aforementioned matter without delay when learning of the FME, Marel was invited to offer a settlement to finalize the matter, leakage and/or rumor. Immediate suspension of transactions in resulting in a lower fine of ISK 3,300,000 (approximately €20,000), to Stock Exchange of the company’s shares for less than two hours, which the company agreed. requested by the company, until the disclosure of the announcement was not considered sufficient in this respect. 6. COMMUNICATION BETWEEN SHAREHOLDERS AND THE BOARD OF DIRECTORS Shareholders’ meetings, within the limits established by the The Chairman initiates communication with the company’s largest company’s Articles of Association and statutory law, are the shareholders on an annual basis with the objective of establishing supreme authority in Marel’s affairs as well as the primary trust and understanding. All communication with shareholders is communication between shareholders and the Board of Directors. governed by rules and regulations on price sensitive and non-public The AGM is scheduled once a year, before the end of August, and information (insider information) and other sensitive business other shareholders’ meetings are convened when necessary. The information, which may compromise the company’s competitive AGM is advertised publicly with at least three weeks’ notice in position. accordance with Icelandic law. The Chairman is the authorized spokesperson for the Board of Directors. The Board of Directors does not engage in communication regarding details of the company’s financial results, which is the responsibility of authorized members of management. February 10, 2015


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