avatar Marel Poultry B.V. Manufacturing
  • Location: NOORD-BRABANT 
  • Founded: 1948-07-27
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    ANNUAL REPORT 2016


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    ANNUAL REPORT 2016 Contents CHAIRMAN´S ADDRESS ................................................................................................................................ 8 ADVANCING FOOD PROCESSING ............................................................................................................ 8 THE CHALLENGE........................................................................................................................................ 8 THE OPPORTUNITIES ................................................................................................................................ 9 PROGRESS IN LINE WITH STRATEGY ..................................................................................................... 9 DISTRIBUTION OF PROFITS ..................................................................................................................... 9 CORPORATE RESPONSIBILITY .............................................................................................................. 10 POSITIONED FOR FUTURE VALUE CREATION .................................................................................... 10 CEO´S ADDRESS ......................................................................................................................................... 11 GREAT YEAR ............................................................................................................................................ 11 MAREL EXPANDS ITS MEAT OPERATIONS .......................................................................................... 11 ADVANCING FOOD PROCESSING .......................................................................................................... 12 EARNINGS PER SHARE INCREASED BY 34% ....................................................................................... 12 A FAST CHANGING AND DYNAMIC WORLD .......................................................................................... 13 UNITED TEAM STRIVING FOR EXCELLENCE ....................................................................................... 13 WHO WE ARE ............................................................................................................................................... 14 OUR VISION .............................................................................................................................................. 14 ONE COMPANY......................................................................................................................................... 14 GLOBAL PRESENCE ................................................................................................................................ 14 ONE COMPANY SERVING THREE INDUSTRIES ................................................................................... 14 MAREL POULTRY ..................................................................................................................................... 14 MAREL MEAT ............................................................................................................................................ 14 MAREL FISH .............................................................................................................................................. 14 FINANCIAL PERFORMANCE ....................................................................................................................... 15 MAREL IN FIGURES.................................................................................................................................. 16 COMPARISON BETWEEN 2015 AND 2016 .......................................................................................... 16 FROM MAREL'S CONSOLIDATED ACCOUNTS ...................................................................................... 17 MAREL’S BUSINESS OPERATIONS ............................................................................................................ 21 GLOBAL SUPPLY CHAIN AND MANUFACTURING ................................................................................ 21 SALES ........................................................................................................................................................ 22 2


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    ANNUAL REPORT 2016 GLOBAL SERVICES .................................................................................................................................. 23 INNOVATION ............................................................................................................................................. 24 STRATEGY .................................................................................................................................................... 25 MAREL’S VISION ....................................................................................................................................... 25 A PERIOD OF STRONG GROWTH .......................................................................................................... 25 TURNING POINT ....................................................................................................................................... 25 AT-THE-CUSTOMER, FOR-THE-CUSTOMER ......................................................................................... 26 OUR MARKETS ............................................................................................................................................. 27 MAREL POULTRY ..................................................................................................................................... 27 MAREL MEAT ............................................................................................................................................ 27 MAREL FISH .............................................................................................................................................. 27 MAREL POULTRY ......................................................................................................................................... 28 LANDMARK PROJECT WITH HARIM ....................................................................................................... 28 STEADY STREAM OF INNOVATIVE SOLUTIONS .................................................................................. 29 SUSTAINABLE SOLUTIONS FOR THE FUTURE .................................................................................... 29 MAREL MEAT ................................................................................................................................................ 31 EXCELLENT YEAR FOR MAREL .............................................................................................................. 31 STEADY STREAM OF INNOVATIVE SOLUTIONS .................................................................................. 32 EMPHASIS ON SUSTAINABILITY ............................................................................................................ 33 MAREL FISH .................................................................................................................................................. 34 LANDMARK PROJECT WITH LEROY ...................................................................................................... 34 STEADY FLOW OF NEW SOLUTIONS .................................................................................................... 35 EMPHASIS ON SUSTAINABILITY ............................................................................................................ 35 SHARE PERFORMANCE .............................................................................................................................. 37 SHAREHOLDERS ...................................................................................................................................... 37 SHARE CAPITAL ....................................................................................................................................... 37 LIQUIDITY OF SHARES ............................................................................................................................ 38 DIVIDEND .................................................................................................................................................. 38 INVESTOR RELATIONS ............................................................................................................................... 40 PUBLICATION OF FINANCIAL INFORMATION ....................................................................................... 40 WEBSITE AND ANNUAL REPORT ........................................................................................................... 40 AUDBJORG OLAFSDOTTIR .................................................................................................................. 40 MAREL´S BOARD OF DIRECTORS ............................................................................................................. 41 3


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    ANNUAL REPORT 2016 CHAIRMAN OF THE BOARD ................................................................................................................. 41 ASTHILDUR MARGRET OTHARSDOTTIR............................................................................................... 41 EDUCATION ........................................................................................................................................... 41 ELECTED ............................................................................................................................................... 41 HOLDINGS IN MAREL ........................................................................................................................... 41 BOARD MEMBER .................................................................................................................................. 42 OLAFUR S. GUDMUNDSSON .................................................................................................................. 42 EDUCATION ........................................................................................................................................... 42 ELECTED ............................................................................................................................................... 42 HOLDINGS IN MAREL ........................................................................................................................... 42 BOARD MEMBER .................................................................................................................................. 42 MARGRET JONSDOTTIR.......................................................................................................................... 42 EDUCATION ........................................................................................................................................... 42 ELECTED ............................................................................................................................................... 42 HOLDINGS IN MAREL ........................................................................................................................... 42 BOARD MEMBER .................................................................................................................................. 42 ANN ELIZABETH SAVAGE ....................................................................................................................... 42 EDUCATION ........................................................................................................................................... 43 ELECTED ............................................................................................................................................... 43 HOLDINGS IN MAREL ........................................................................................................................... 43 BOARD MEMBER .................................................................................................................................. 43 ASTVALDUR JOHANNSSON .................................................................................................................... 43 EDUCATION ........................................................................................................................................... 43 ELECTED ............................................................................................................................................... 43 HOLDINGS IN MAREL ........................................................................................................................... 43 BOARD MEMBER .................................................................................................................................. 43 HELGI MAGNUSSON ................................................................................................................................ 43 EDUCATION ........................................................................................................................................... 44 ELECTED ............................................................................................................................................... 44 HOLDINGS IN MAREL ........................................................................................................................... 44 VICE-CHAIRMAN OF BOARD ............................................................................................................... 44 ARNAR THOR MASSON ........................................................................................................................... 44 EDUCATION ........................................................................................................................................... 44 4


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    ANNUAL REPORT 2016 ELECTED ............................................................................................................................................... 44 HOLDINGS IN MAREL ........................................................................................................................... 44 CEO ........................................................................................................................................................ 45 ARNI ODDUR THORDARSON .................................................................................................................. 45 EDUCATION ........................................................................................................................................... 45 HOLDINGS IN MAREL ........................................................................................................................... 45 EXECUTIVE VICE PRESIDENT OF COMMERCIAL REGIONS ........................................................... 46 PETUR GUDJONSSON ............................................................................................................................. 46 EDUCATION ........................................................................................................................................... 46 HOLDINGS IN MAREL ........................................................................................................................... 46 MANAGING DIRECTOR (EVP) OF MAREL MEAT ............................................................................... 46 DAVID WILSON ......................................................................................................................................... 46 EDUCATION ........................................................................................................................................... 46 HOLDINGS IN MAREL ........................................................................................................................... 46 CFO ........................................................................................................................................................ 46 LINDA JONSDOTTIR ................................................................................................................................. 46 EDUCATION ........................................................................................................................................... 46 HOLDINGS IN MAREL ........................................................................................................................... 46 EXECUTIVE VICE PRESIDENT OF STRATEGY AND CORPORATE DEVELOPMENT ..................... 47 ARNI SIGURDSSON .................................................................................................................................. 47 EDUCATION ........................................................................................................................................... 47 HOLDINGS IN MAREL ........................................................................................................................... 47 MANAGING DIRECTOR (EVP) OF MAREL POULTRY ........................................................................ 47 ANTON DE WEERD................................................................................................................................... 47 EDUCATION ........................................................................................................................................... 47 HOLDINGS IN MAREL ........................................................................................................................... 47 EXECUTIVE VICE PRESIDENT OF HUMAN RESOURCES ................................................................ 47 DAVID FREYR ODDSSON ........................................................................................................................ 47 EDUCATION ........................................................................................................................................... 47 HOLDINGS IN MAREL ........................................................................................................................... 47 MANAGING DIRECTOR (EVP) OF MAREL FISH ................................................................................. 48 SIGURDUR OLASON ................................................................................................................................ 48 EDUCATION ........................................................................................................................................... 48 5


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    ANNUAL REPORT 2016 HOLDINGS IN MAREL ........................................................................................................................... 48 EXECUTIVE VICE PRESIDENT OF SUPPLY CHAIN ........................................................................... 48 PAUL VAN WARMERDAM ........................................................................................................................ 48 EDUCATION ........................................................................................................................................... 48 HOLDINGS IN MAREL ........................................................................................................................... 48 EXECUTIVE VICE PRESIDENT OF INNOVATION ............................................................................... 48 VIDAR ERLINGSSON ................................................................................................................................ 48 EDUCATION ........................................................................................................................................... 48 HOLDINGS IN MAREL ........................................................................................................................... 48 MANAGING DIRECTOR (EVP) OF MAREL MEAT ............................................................................... 49 REMKO ROSMAN (AS OF APRIL 1, 2017) ............................................................................................... 49 EDUCATION ........................................................................................................................................... 49 HOLDINGS IN MAREL ........................................................................................................................... 49 MANAGING DIRECTOR (EVP) OF MAREL FURTHER PROCESSING ............................................... 49 JESPER HJORTSHØJ ............................................................................................................................... 49 EDUCATION ........................................................................................................................................... 49 HOLDINGS IN MAREL ........................................................................................................................... 49 CORPORATE SOCIAL RESPONSIBILITY ................................................................................................... 50 CORPORATE SOCIAL RESPONSIBILITY - GUIDANCE POLICY ........................................................... 50 SOCIAL RESPONSIBILITY .................................................................................................................... 50 ENVIRONMENTAL RESPONSIBILITY .................................................................................................. 51 ECONOMIC RESPONSIBILITY ............................................................................................................. 51 SOCIAL RESPONSIBILITY ........................................................................................................................... 52 OUR PEOPLE ............................................................................................................................................ 52 DIVERSITY ................................................................................................................................................. 53 SAFETY, HEALTH AND ENVIRONMENT ................................................................................................. 53 FORCED LABOR AND UNDER-AGE WORKERS .................................................................................... 54 FREEDOM OF ASSOCIATION .................................................................................................................. 54 ENVIRONMENTAL RESPONSIBILITY ......................................................................................................... 55 INNOVATION AND THE ENVIRONMENT ................................................................................................. 55 CO2 ............................................................................................................................................................ 56 ENERGY .................................................................................................................................................... 56 ECONOMIC RESPONSIBILITY ..................................................................................................................... 57 6


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    ANNUAL REPORT 2016 ECONOMIC VALUE GENERATED ........................................................................................................... 57 TAX FOOTPRINT ....................................................................................................................................... 58 INNOVATION ............................................................................................................................................. 58 BRIBERY/ANTI-CORRUPTION ................................................................................................................. 58 CORPORATE GOVERNANCE STATEMENT ............................................................................................... 60 1. CORPORATE GOVERNANCE FRAMEWORK ..................................................................................... 60 2. MAIN ASPECTS OF INTERNAL CONTROLS AND THE COMPANY‘S RISK MANAGEMENT IN CONNECTION WITH THE PREPARATION OF FINANCIAL STATEMENTS ........................................... 60 3. THE COMPANY’S VALUES, CODE OF CONDUCT AND SOCIAL RESPONSIBILITY POLICY ......... 61 4. COMPOSITION AND ACTIVITIES OF THE BOARD OF DIRECTORS, ITS SUB-COMMITTEES, THE CEO AND EXECUTIVE TEAM .......................................................................................................... 61 5. INFORMATION ON VIOLATIONS OF LAWS AND REGULATIONS THAT THE APPROPRIATE SUPERVISORY OR RULING BODY HAS DETERMINED ........................................................................ 64 6. COMMUNICATION BETWEEN SHAREHOLDERS AND THE BOARD OF DIRECTORS ................... 65 ENTERPRISE RISK MANAGEMENT ............................................................................................................ 66 FOREIGN EXCHANGE RISK .................................................................................................................... 66 CREDIT RISK ............................................................................................................................................. 66 INSURANCE POLICIES ............................................................................................................................. 66 LIQUIDITY RISK ......................................................................................................................................... 67 CASH FLOW AND FAIR-VALUE INTEREST RATE RISK ........................................................................ 67 7


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    ANNUAL REPORT 2016 CHAIRMAN´S ADDRESS ADVANCING FOOD PROCESSING Yet another good year for Marel. It was a year of strategic growth and a further strengthening of our foundations. Amidst significant shifts in the world’s geopolitical landscape resulting in both political and economic uncertainty the strategic drivers in our industry remained intact. The immense social challenge of how to feed the world’s population in the future continues to present Marel with opportunities for sustainable value creation by advancing the way food is processed. THE CHALLENGE The only way we can address these immense challenges is with technology, innovation and changes in behavior. We have to find ways to do more and better with less. This represents countless opportunities for Marel and its customers. Armed with innovation–the core of our strategy–Marel pursues its vision of transforming the way food is processed, in partnership with our customers. Marel is continuously seeking new ways of doing more with less, enabling our customers to increase yields, minimize waste, decrease the use of water, energy and other valuable resources while increasing food safety and improve animal welfare as well as the working conditions of employees. 8


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    ANNUAL REPORT 2016 THE OPPORTUNITIES Today’s global population of 7.5 billion is projected to rise to around 9.7 billion in 2050. This, along with continued urbanization, increased prosperity and changes in consumer behavior, is expected to lead to a substantial rise in the demand for food. The UN’s Food and Agricultural Organization predicts the increase will be up to 50%. At the same time, the focus on sustainability and environmental matters is continuously growing. We are using too much of scarce resources such as water, land and energy for food production. On top of this, we waste an unconceivable amount of food. It is estimated that around one third of the food produced in the world today is wasted somewhere in the value chain. That is equivalent to 1.3 billion tons of waste, worth around $1 trillion. In 2016, Marel invested €63m in innovation, corresponding to 6.5% of our revenue. In a world where the pace of technology-driven change is faster than ever before, we must be vigilant and remain agile, finding the right balance between addressing customers’ current needs and leading the future development of the industry. The industrial Internet revolution, digitalization and big data are changing Marel’s business like the rest of the world. We see great future opportunities in our Innova Food Processing Software, which has already been installed in over 1600 plants worldwide. Innova enables food processors to optimize their performance and provides full traceability, adhering to ever changing food safety standards. Marel’s future success is based on the ability to bring innovation to the market and deliver value to customers, fueling further investments in our own business and future growth. PROGRESS IN LINE WITH STRATEGY Over the last decade, Marel’s revenues have grown around 20% per year on average, one-third through organic growth and two-thirds through acquisitions. The target continues to be set at the organic growth being greater than the market, which has been growing by 4-6% per year in the past. The market is still fragmented and ripe for further consolidation. Our aim is to continue to leverage Marel’s strong foundation and create additional value for shareholders through acquisitions. In 2016, organic growth was fueled by the continued strengthening of our product portfolio and the introduction of several new, state-of-the-art solutions. Significant investments were also made in advancing our own business, upgrading manufacturing equipment, improving facilities and IT platforms. In the beginning of the year, the acquisition of MPS was closed, supporting Marel’s full line offering in the meat processing industry and contributing to a more balanced revenue split between industry segments and geographies. Revenues increased by over 18% during the year and are approaching one billion with healthy profitability. Profit for the year amounted to €75.8m and earnings per share increased by 34%, reflecting the strong operating results and the fact that the MPS acquisition was completed without issuing new equity capital. The progress in 2016 is fully in line with our strategy. DISTRIBUTION OF PROFITS Marel’s financial position is strong with net debt to EBITDA well within the target range of 2-3. In line with the company’s capital allocation and dividend policy, the Board of Directors has proposed to the 2017 Annual General Meeting that a dividend payment of €15.3m, corresponding to approximately 20% of net profits, is paid to shareholders. 9


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    ANNUAL REPORT 2016 Furthermore, the Board of Directors has authorized the purchase of own shares for up to €15m to be used as payment for potential future acquisitions. CORPORATE RESPONSIBILITY Marel’s Board of Directors is committed to good corporate governance and ethical business practices that promote the long-term interests of shareholders. In the beginning of 2016, we were awarded a recognition as “Exemplary in Corporate Governance” by the Research Center for Corporate Governance at the University of Iceland, Nasdaq Iceland, the Iceland Chamber of Commerce and the Confederation of Icelandic Employers. During the year, significant progress was made in developing and executing a formal approach to corporate social responsibility. Guiding principles for the approach to people, the planet and profitability were introduced throughout the organization and Marel became a signatory to the UN’s Global Compact. For further information, reference is made to the Corporate Responsibility section of this report. During the year, the Board held meetings in Iceland, the Netherlands and the U.S., providing board members with a great opportunity to visit Marel’s operations as well as customers in these countries. Board members also participated in several trade shows, providing valuable insights into market dynamics. POSITIONED FOR FUTURE VALUE CREATION Marel is well positioned to capture long-term profitable growth. We stay true to our purpose of partnering with customers to transform the way food is processed. Our vision is of a world where quality food is processed sustainably and affordably. On behalf of the Board of Directors, I congratulate the Marel team on the results and achievements made in 2016 and extend our appreciation for the dedication and hard work. We thank the company’s shareholders for their continuous commitment and support. Asthildur Otharsdottir, Chairman of Marel´s Board of Director 10


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    ANNUAL REPORT 2016 CEO´S ADDRESS GREAT YEAR 2016 was a great year for Marel. It was a year of strategic moves and solid performance with 983 million in pro forma revenue and 14.6% EBIT. I would like to thank our customers and employees for an eventful and enjoyable year. With passion and dedication, we are transforming the way food is processed. The year 2016 was a great year for Marel. Our customers are setting up state- of-the- art-processing plants in Asia, South America, North America and Europe that will enable them to offer affordable quality food. Exciting orders were secured in Africa and the Middle-East as well. Our product portfolio is strong and we introduced several revolutionary products to the market in 2016. Our vision is a world where quality food is affordable and produced in a safe and sustainable way. MAREL EXPANDS ITS MEAT OPERATIONS After successfully simplifying our operations, organization and processes, we were ready to take the next steps in executing our strategy of being a full line provider to the poultry, meat and fish industries. We finalized the acquisition of MPS Meat Processing Systems at the beginning of the year, allowing Marel to become a full-line supplier to the meat industry. In fact, we were repeating the game where we became a full line supplier to the poultry industry with the acquisition of Stork Food Systems in 2008.


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    ANNUAL REPORT 2016 Integration is on track with the first year's focus being on combining and cross training the sales force and synchronizing the financial reporting. Companies can become too focused on internal issues and lose sight of serving the customers' needs following acquisitions and during business refocusing. We are acutely aware of this and have always emphasized the essential importance of being at-the- customer, for-the customer while advancing our business. From January 1, 2017, all Marel meat activities are all branded as Marel. We will take specific steps in the coming quarters to fully integrate our businesses with a focus on after sales services and supply chain activities. ADVANCING FOOD PROCESSING We have a good business model with high quality of earnings. Our revenues are well balanced geographically and consist of greenfield projects, modernization and extension projects with a strong backbone in our maintenance business. The cash flow is strong and we managed to execute the acquisition of MPS without issuing any new shares. As we are advancing the businesses of our customers, we are advancing the business of Marel with extensive investments in our manufacturing, innovation and IT platforms. At year-end 2016, the net debt EBITDA is x2.25 in line with the targeted capital structure. EARNINGS PER SHARE INCREASED BY 34% Pro forma revenues were €983 million, compared to 819 million in the previous year for Marel stand alone. We have gradually increased the operational performance in recent years and deliver a solid operational performance with 14.6% EBIT in 2016. Earnings per share increased by 34% between years due to an increased operational performance and a better utilization of the balance sheet. Throughout the year, the modernization and maintenance business remained strong while we saw some softness in the greenfield and expansion projects at the beginning of the year. However, in Q4 we saw the order intake at an all-time high with landmark projects for the poultry, meat and fish industries around the globe resulting in a strong order book entering 2017. 12


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    ANNUAL REPORT 2016 A FAST CHANGING AND DYNAMIC WORLD Marel is the leading global provider of advanced processing systems and services to the poultry, fish and meat industries. We are at the center point of prevailing trends in a fast changing and dynamic world. The global population is expected to reach between 9 and 10 billion people in the next two or three decades. Moreover, due to urbanization and better economic prospects in general, the proportion of people considered “active” consumers is increasing at a faster rate than ever before. The need for solutions and services to process affordable quality food in a safe and sustainable way is clearer than ever. UNITED TEAM STRIVING FOR EXCELLENCE As a united team, we strive for excellence in serving our customers’ needs. The aim is to continue to grow organically above market rates with focused market approach. Strong financials and an experienced team make Marel well equipped to take on further growth through strategic acquisitions. We are firmly committed to delivering increased value to society, customers and shareholders by enhancing safe and sustainable food processing. Arni Thordarson CEO 13


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    ANNUAL REPORT 2016 WHO WE ARE Marel is the leading global provider of advanced processing systems and services to the poultry, meat and fish industries OUR VISION In partnership with our customers we are transforming the way food is processed. Our vision is of a world where quality food is produced sustainably and affordably. ONE COMPANY United under one vision and one set of values. GLOBAL PRESENCE With around 4,600 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 THREE INDUSTRIES Marel’s industries combine the knowledge, expertise, and decades of experience accumulated across the company in each of the core industries it serves. MAREL POULTRY Marel offers the most complete product range and the largest installed base worldwide. Marel provides in-line poultry processing solutions for all process steps and all processing capacities for broilers, turkeys and ducks. MAREL MEAT Marel provides advanced equipment and systems to the meat industry, specializing in primary processing, the key processes of deboning and trimming, case-ready, food service and bacon processing. MAREL FISH Marel provides advanced equipment and systems for salmon and whitefish processing, both farmed and wild, onboard and ashore. 14


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    ANNUAL REPORT 2016 FINANCIAL PERFORMANCE 2016 was a great year for Marel. The acquisition of MPS at the beginning of the year allowed Marel to become a full-line supplier to the meat industry. Integration is on track and the acquisition is delivering value to customers and shareholder.


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    ANNUAL REPORT 2016 MAREL IN FIGURES The consolidated financial accounts include the operations of MPS from February 1, 2016. Pro forma results include the operations of MPS for the respective quarters and are presented to provide better comparison. COMPARISON BETWEEN 2015 AND 2016 16


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    ANNUAL REPORT 2016 FROM MAREL'S CONSOLIDATED ACCOUNTS 17


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    ANNUAL REPORT 2016 18


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    ANNUAL REPORT 2016 19


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    ANNUAL REPORT 2016 20


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    ANNUAL REPORT 2016 MAREL’S BUSINESS OPERATIONS GLOBAL SUPPLY CHAIN AND MANUFACTURING Marel’s Global Supply Chain organization is responsible for manufacturing and procurement within the company. It is the foundation of improved efficiency and use of resources as well as being a platform for sharing best practices within the company. In 2016, Marel successfully concluded the consolidation of the organization in the United States. The operations in Gainesville, Lenexa and Des Moines are now a unified organization under a single management team. Investment in Marel’s facilities in Slovakia, as well as the maximum utilization of the Iceland facility, resulted in a record number of standalone equipment being delivered in 2016. The companywide implementation of a new Sales and Operation Planning System along with a Procurement Savings Program were two of the most successful projects implemented for the Global Supply Chain in 2016. Together, they contributed to the maximum utilization of Marel’s capacity at its twelve production sites where solutions are manufactured for the company's three major industries: poultry, meat and fish. Additionally, the introduction of a simpler method of financial performance tracking enabled the supply chain to increase performances while drastically shortening decision-making time frames. The deployment of a global structure for key performance indicators within the supply chain organization ensures that continuous improvement is always high on the agenda. 21


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    ANNUAL REPORT 2016 SALES Marel’s global network of dedicated sales representatives is one of the company's strongest and most visible assets. The Marel sales operation consists of local representatives in 30 countries, 19 regionalized organizations and a global network of more than 100 agents and distributors. With such a large network Marel can serve large and small food processors and food retail companies on location wherever they are. Each one of the industries Marel operates in is manned with specialized sales people working in partnership with customers around the world. They are dedicated to bringing top-of-the-line services, consistency and excellence to each project they participate in. 22


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    ANNUAL REPORT 2016 GLOBAL SERVICES The service and maintenance operation is and will be one of the main sources of revenue and growth for Marel, delivering around 40% of the company’s revenues. The service and spare part business is a clear growth opportunity, driving value for both customers and shareholders. The company is now moving systematically away from a reactive service model towards a more proactive one. This includes long-term service contracts that are designed to serve the needs of customers that want to prevent downtime in their production facilities and secure peak productivity at all times. In 2016, Marel took important steps towards modernizing and harmonizing the service business. This was done by implementing one global field service management platform across the company. The system provides a full overview and insight into the installed base, customers and workforce. It collects and shares data faster from the field engineers to the office, harmonizing processes and increasing efficiency delivering better and more reliable data. By standardizing the company's processes and IT platforms, Marel is now in a better position to take the service network to a new level. The positive effects are already evident in improved service delivery and sustainable growth. Response times have shortened, on-time performance has improved and there are consistent productivity improvements in the field. Service will continue to be a key source of revenue and growth for Marel in the coming years. Major investments have been made in business improvement in the last few years, including IT and employee development. This has created a solid foundation for future growth and profitability from the service part of the company. 23


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    ANNUAL REPORT 2016 INNOVATION Innovation at Marel is driven by constant collaboration between employees and customers and their desire to improve processing and solve challenges with a new approach. A myriad of innovative ideas were realized in 2016 with more than 25 new or upgraded products being launched. New applications that tie into the revolutionary FleXicut fish pinbone detection and removal system were launched, as well as new portioning applications for salmon. In addition, new labelers and primary processing solutions as well as Innova Food Processing Software modules saw the light of day. Marel launched the second generation of the Controlled Atmosphere Stunning system called CAS SmoothFlow for the poultry industry. It has been optimized by arranging the system into a single straight horizontal line, which sets a new industry standard. A new portion cutter for meat processing, the I-Cut 130, was released. This machine uses the latest in laser vision technology to ensure optimal utilization of the raw material. It delivers fixed weight portions with unmatched accuracy. Marel continues to invest in the further processing industry. A Universal Fresh Sausage Line was launched which enables flexible and highly automated production of fresh sausages in many different types of casings. Marel’s innovation efforts focus on creating breakthrough innovations designed to meet the challenges facing customers. The company also focuses on creating product upgrades and incremental additions to existing machines and systems to make sure its equipment stays competitive. 24


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    ANNUAL REPORT 2016 STRATEGY MAREL’S VISION In partnership with our customers, we are transforming the way food is processed. Our vision is of a world where food is produced sustainably and affordably. A PERIOD OF STRONG GROWTH An ambitious 10 year growth strategy was laid out for Marel in 2006. The goals included achieving €1bn in revenue as well as a 15% market share through strategic acquisitions and organic growth. Marel’s past ten years have been characterized by a continuous and steady growth with the annual compound growth rate in 2005-2016 being 22%, of which organic growth was around 7%. The growth can be attributed to new market entrances, successful innovations and strategic acquisitions along with a sharp operational focus. Over the past ten years Marel has actively participated in the ongoing consolidation of the food processing equipment market. Marel acquired AEW Delford and Scanvægt in 2006 to complete its product offering in secondary processing solutions. The acquisition of Stork Food Systems in 2008 paved the way for full line poultry processing solutions and the acquisition of MPS in 2016 closed the value chain gaps in primary meat processing, making Marel a full line supplier to the poultry, meat and fish industries. TURNING POINT The result of the 10 year growth strategy introduced in 2006 has put Marel in a position to build on its solid financial foundations and continue to enjoy sustainable growth. To further cement its position as one of the market leaders in its field, Marel is emphasizing the streamlining of internal processes in order to reach its full potential. An integral part of this will be to get all of the company’s business units on the same IT platforms, a project that will strengthen Marel’s position significantly as a global market provider. With full-line solutions, the company will also continue to invest further in the already best-in- class sales and service network to reach global markets where growth can be expected through the best possible means. 25


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    ANNUAL REPORT 2016 Today, Marel is a full line equipment provider to the global poultry, meat and fish processing industries. The full-line approach combined with extensive process know-how solidifies Marel’s position as the preferred supplier for many of the world’s largest food processing companies. Marel will continue to assess and fill the relevant application gaps in the coming years in order to strengthen its position across the value chain. In addition, it will focus on growth through innovative solutions and acquisitions with a good strategic fit. AT-THE-CUSTOMER, FOR-THE-CUSTOMER Marel will continue to have a strong product offering in the advanced and high-end equipment markets as well as strong aftersales services. It will therefore be ready to fulfill one of its most important tasks; to support its customers when they enter new markets and face new challenges. 26


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    ANNUAL REPORT 2016 OUR MARKETS Marel Poultry, Marel Meat and Marel Fish offer solutions and services tailored to the sectors they serve. Each division offers primary, secondary and further processing solutions designed to meet current and future processing needs. Marel Poultry is the largest division, followed by Marel Meat and Marel Fish. All of them are equally strong in their respective fields, leading the way in innovation and processing improvements worldwide. MAREL POULTRY Marel Poultry had an excellent year, with strong operational profit margins and volumes. Market conditions in poultry remained favorable throughout the year. Projects were well distributed geographically and between different product types and sizes, including large projects in Hungary, France, Russia, China, Korea and in the U.S. A number of innovative solutions were introduced during the year including the revolutionary live bird handling system, which takes into account the highest possible animal welfare. MAREL MEAT Marel Meat is now a full-line provider to the meat industry as MPS Meat processing systems has been part of Marel since January 29, 2016. Integration of Marel and MPS is on track and going well. From January 1, 2017 all products from Marel Meat and MPS are presented as Marel Meat. Marel Meat had a good year with strong operational profit margins and volumes. Market conditions for large projects picked up during the latter half of the year which saw a unified sales team secure full line projects in China, S-America and in the U.S. MAREL FISH Soft market conditions at the beginning of the year and the rationalization of the product offering negatively affected Marel Fish’s results in 2016. During the last quarter of the year market conditions picked up and Marel Fish secured a record order intake due to a strategic shift and improved market conditions. Landmark projects were secured in the salmon industry in Norway in addition to various projects in Europe, North- America and South-America. 27


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    ANNUAL REPORT 2016 MAREL POULTRY Marel Poultry generated €514 million in revenue with an adjusted EBIT of €85 million (16.6% of revenue) in 2016. The poultry segment accounted for 52% of Marel’s pro forma revenue in 2016. Market conditions in poultry remained favorable throughout the year. Projects were well distributed geographically and between different product groups and sizes of orders, including some large projects in Hungary, France, Russia, China, Korea and the U.S. A number of innovative solutions were introduced during the year including the revolutionary ATLAS live bird handling system, which was awarded the EuroTier 2016 Innovation Medal for setting a new industry standard. LANDMARK PROJECT WITH HARIM Marel Poultry continued to increase its strong worldwide presence in 2016. Market conditions remained favorable throughout the year resulting in good projects around the globe. Several landmark orders were secured throughout the year. In Q4, a landmark order was signed with Harim in South Korea. The processing plant will potentially be the world's largest and Marel will install four new processing lines, implementing Marel’s latest technology in defeathering, evisceration and chilling. The lines all include low maintenance, self-calibrating high speed SmartWeighers that have proven performance and 28


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    ANNUAL REPORT 2016 stability in more than 100 processing lines worldwide. Marel Poultry and the Harim Group know each other very well, as most of Harim's plants are already equipped with many Marel Poultry solutions. Marel Poultry also secured two important orders in France in 2016. SBV Volailles, a part of the large LDC group, chose Marel Poultry to extend their Keranna plant in Bretagne. Another French company, Sofral, also ordered a large project. In the U.S., Marel Poultry signed a contract with Simply Essentials for a new Greenfield factory. Marel will supply all the equipment and processing lines for this new project, designed to process 8,400 birds per hour. In 2016, Marel Poultry exhibited its latest solutions at trade shows around the world, strengthening its relationships with customers and reaching new ones in all markets. In September, Marel Poultry took part in three exhibitions that ran simultaneously on three continents: CIMIE in China, Polagra Tech in Poland and AgrikExpo in Nigeria. At the EuroTier exhibition in Hannover, Marel Poultry launched five major innovations that received a lot of attention from customers, press and other professional visitors. STEADY STREAM OF INNOVATIVE SOLUTIONS Many innovative solutions were introduced to the market in 2016. The Stork ATLAS (Advanced Technology Live bird Arrival System) was launched. The innovative system achieves revolutionary impact, efficiency and hygiene, lifting animal-welfare to new heights which are unrivaled in the poultry processing industry. The impressive carrousel modules of the Stork Thigh Fillet System, another global launch, also earned widespread acclaim in 2016. Thigh deboning has become completely industrial now, with no human intervention needed. 2016 marked a year in which Marel Poultry was very passionate about adding ever more intelligence to the process. A fine example of this is the AMF-i intelligent breast cap filleting system. No more manual settings are needed, as all modules adjust themselves to the individually measured breast cap sizes. Several solutions were also brought to market that help Marel’s customers gain better control over their secondary processing, creating better value and insight into yields while increasing food safety. SUSTAINABLE SOLUTIONS FOR THE FUTURE Marel has always focused on optimizing energy and water consumption in its solutions. A good example is the AeroScalder, which uses up to 75% less water and 50% less energy than competing solutions in the market. In 2016, Marel introduced the revolutionary ATLAS live bird handling system which was awarded the EuroTier 2016 Innovation Medal. This outstanding innovative concept sets new industry standards and is designed to cope with future challenges. 29


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    ANNUAL REPORT 2016 30


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    ANNUAL REPORT 2016 MAREL MEAT 2016 was a strong year for Marel Meat that generated €334 million in revenue on a pro forma basis and EBIT* of €52 million in 2016. Marel Meat accounted for 34% of Marel’s pro forma revenue in 2016. Marel Meat is now a full-line provider to the meat industry as MPS Meat processing systems has been part of Marel since January 29, 2016. From January 1, 2017 all products from Marel Meat and MPS have been presented as Marel Meat. EXCELLENT YEAR FOR MAREL 2016 was an excellent year for Marel Meat with good volume, order intake and improved profitability. Marel, with MPS on board, is a leading global provider for the primary, secondary and further processing of meat. Integration of Marel and MPS is on track and going well. Sales teams have been trained to sell the whole product portfolio in meat, from primary processing to secondary and further processing. Market conditions were good throughout the year. The mix between product groups and geographies was good most of the year. Large projects picked up in the latter half when a unified and cross-trained sales team secured full line projects in China, S-America and in the U.S. 31


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    ANNUAL REPORT 2016 Marel Meat participated in many international exhibitions during the year, including the IPPE show in Atlanta, Anuga in Germany and the CFIA exhibition in France. Joint Marel Meat and MPS teams also participated in exhibitions in Brazil, China and Russia with good results. The 5th Marel Meat ShowHow was held in Progress Point, Denmark. The event drew over 200 customers representing 140 companies based in over 70 countries. STEADY STREAM OF INNOVATIVE SOLUTIONS Innovation highlights were closely connected to the continuous work with current solutions in deboning, trim handling and case-ready solutions. One of the solutions Marel Meat released was a new portion cutter, the I-Cut 130. This machine uses the latest in laser vision technology to ensure optimal utilization of the raw material and delivers fixed weight portions with high accuracy. During the year Marel launched a new high-speed wraparound linerless labeler which employs the latest labeling technology. The M360 labeler is designed for the premium labeling of all popular tray sizes and is ideally suited for skin packs. Its high quality labeling promotes superior shelf presentation for all pack types. 32


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    ANNUAL REPORT 2016 EMPHASIS ON SUSTAINABILITY Marel Meat customers are facing many challenges. The last few years have been tough and margins continue to be challenged. Therefore, customers are looking for solutions that improve their margins. Marel Meat offers customers solutions that help them meet these challenges and are specifically designed to increase their productivity and yield. Food safety continues to be one of the most important aspects of meat processing. Marel Meat provides processors with the traceability systems they need to comply with regulations and stay ahead of minimum requirements for food safety in the future. Advanced food traceability systems coupled with innovative new applications underpin the range of Marel Meat food safety solutions. 33


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    ANNUAL REPORT 2016 MAREL FISH Soft market conditions at the beginning of the year and the rationalization of product offering negatively affected the results of Marel Fish in 2016. Marel Fish accounted for 13% of Marel’s revenue in 2016. Marel Fish generated €127 million in revenue and an EBIT of €3.9 million (3.1% of revenue) in 2016. Marel Fish accounted for 12.9% of Marel’s pro forma revenue in 2016. In the first half of 2016, Marel streamlined its operations in Seattle and rationalized its product portfolio. Marel is now focusing its onboard business on innovative and standardized solutions instead of customized ad-hoc solutions. LANDMARK PROJECT WITH LEROY Market conditions were soft for most of 2016 due to various factors. Prices for whole salmon where high and other issues made fish processors reluctant to invest in equipment and other solutions. Market conditions improved in Q4 and Marel Fish secured a record order intake with various projects in Europe, North and South America. The highlight was a landmark order with Lerøy Seafood Group in Norway, which is one of the largest fish industry contracts to date. Marel will deliver a logistics system, a packing system for whole fresh salmon and five filleting lines to Lerøy’s new state-of-the-art processing facility in Jøsnøya, Norway, early in 2018. The facility will have 34


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    ANNUAL REPORT 2016 all the latest salmon processing technology from Marel and will set new benchmarks for the industry. Annual capacity will be over 100,000 tons. The project is a platform for an innovative partnership that aims to drive the salmon processing industry forward. Marel is very proud to be delivering efficient high-tech systems to Lerøy’s groundbreaking facility. As in the previous years, Marel Fish successfully exhibited its latest innovations for the fish industry at various international tradeshows and events. STEADY FLOW OF NEW SOLUTIONS Marel is constantly looking for new opportunities to deliver the next application that will help processors stay ahead. Marel Fish believes that high quality raw material deserves the best quality processing technology. Marel meets the needs of a wide range of customers: from those who need sturdy entry- level equipment to those who are well on their way to revolutionizing the fish processing industry. Marel Fish introduced innovative new solutions in 2016, with new technologies and updates of existing solutions. The emphasis was on reducing labor and increasing yield and efficiency and help customers get the most out of their valuable raw material. From Marel’s end-of-line solutions, the new M360 labeler was launched. This state-of-the-art labeler employs the latest technology in linerless labeling. It offers premium presence on the retail shelf for all pack types. The FleXicut high precision water-jet cutter for pinbone removal and portioning–one of the company’s flagship innovations–was upgraded and extended. Up and running at several large processors, the system continues to impress customers. It has generated considerable attention following successful development projects. The high level of technology and automation inherent in the FleXicut are the key elements that will transform the very nature of whitefish processing. The system enables producers to process the fish closer to source, which increases the quality and value of the product. This is a game changer for the industry as processors are under pressure from a very discerning market that calls for high quality products at competitive prices. EMPHASIS ON SUSTAINABILITY Marel Fish is constantly working on greater efficiency and quality to help producers become more sustainable. Energy and water consumption must be considered in processing. Marel's solutions are designed to deal with these issues effectively. By developing the FleXicut, Marel is also contributing to reducing the overall environmental footprint by helping customers process the fish closer to the source, thus drastically reducing the distance the fish must travel before it reaches the end consumer. 35


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    ANNUAL REPORT 2016 36


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    ANNUAL REPORT 2016 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 243.00 at the end of 2016, compared to ISK 253.50 at the end of 2015, a decrease of 4.1%. In euros, the shares stood at €2.04 per share at year-end compared to €1.79 at the end of 2015. SHAREHOLDERS SHAREHOLDERS As recorded in the shareholders’ register, there were 1,907 Marel shareholders at year-end 2016, compared to 1,986 at year-end 2015. As of December 31, 2016, Marel held 21,543,150 treasury shares. Eyrir Invest hf. is Marel’s largest shareholder, with 29.3% of issued shares, followed by Lifeyrissjodur verzlunarmanna – The Pension Fund of Commerce (9.1%) and Gildi pension fund (7.0%). The ten largest shareholders held 69.3% of the total issued shares. In total, Icelandic pension funds held 38.0% of Marel’s issued share capital. International shareholders owned 3.2% at year-end 2016. The free float of Marel shares was 71% and free float adjusted market value of the company was €1.1 billion. SHARE CAPITAL At year-end 2016, there were 735.6 million Marel shares issued, all in one class. Of these, Marel holds 21.5 million treasury shares. During the year 2016, Marel purchased 4.0 million shares for €8.1 million to fulfill future stock option obligations and sold 2.6 million treasury shares for a total amount of €2.7 million to fulfill the employees’ stock option schedules. In connection with the acquisition of MPS, Marel sold 10.8 million treasury shares for €16.3 million to the previous owners of MPS. Stock options are granted to management and selected key employees. At the end of 2016 there were 8.8 million shares of granted and unexercised stock options, of which 1.8 million were exercisable at the end of 2016. The remainder will become vested in the years 2017 to 2021. At the company’s 2014 Annual General Meeting, the shareholders authorized the Board of Directors to increase the company’s share capital by 35 million shares to fulfill stock option agreements. This authorization is valid for five years following its adoption. No new shares according to this resolution were issued at the end of 2016. 37


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    ANNUAL REPORT 2016 LIQUIDITY OF SHARES Marel has made agreements with Landsbankinn hf. and Kvika banki hf. regarding market making for the issued shares of Marel. The purpose of the agreements is to improve liquidity and to enhance transparent price formation of the company’s shares on Nasdaq Iceland. The duration of these agreements is unspecified but they can be terminated with one month’s notice. Shares in Marel were traded 2,654 times in 2016 for a total market value of ISK 70.3 billion (up from ISK 61.1 billion in 2015), which corresponds to a turnover rate of 40%. This gives Marel the second highest turnover on the Nasdaq Iceland exchange in 2016. Marel’s average end-of-day spread was 0.98%. The market value of the company at year-end 2016 was ISK 178.7 billion (€1.5 billion) compared to ISK 186.4 billion (€1.3 billion) at year end 2015, a decrease of ISK 7.7 billion (an increase in euros of €182.2 million). Since the company’s shares are traded in ISK, fluctuations of the Icelandic krona during 2016 affected the market value when converted it into euros. DIVIDEND The Board of Directors proposes that a dividend of 2.14 euro cents per share will be paid for the operational year 2016. The estimated total dividend payment, based on current outstanding shares, will be 15.3 million corresponding to approximately 20% of profits for the year. The proposed dividend is in line with Marel’s targeted capital allocation and dividend policy. This is in line with the dividend policy of 20-40% of net results and the targeted capital structure of x2-3 net debt/EBITDA. 38


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    ANNUAL REPORT 2016 39


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    ANNUAL REPORT 2016 INVESTOR RELATIONS The central aim of the company's investor relations policy is to provide investors with equal access to timely and accurate information about Marel’s operations and business environment. 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. WEBSITE AND ANNUAL REPORT Since 2014, the Annual Report has been available only online. Marel’s Annual Reports can be accessed on a desktop computer, a tablet or a mobile phone through marel.com/annualreport. INVESTOR RELATIONS CONTACT AUDBJORG OLAFSDOTTIR Corporate Director of Investor Relations and Communications audbjorg.olafsdottir@marel.com Phone (+354) 563 8626 40


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    ANNUAL REPORT 2016 MAREL´S BOARD OF DIRECTORS *ALL HOLDINGS AT DECEMBER 31, 2016 CHAIRMAN OF THE BOARD ASTHILDUR MARGRET OTHARSDOTTIR Asthildur Margret Otharsdottir is an independent consultant and board member. She has 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 and Marorka and Chairman of the Board of Frumtak II investment fund. 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 41


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    ANNUAL REPORT 2016 BOARD MEMBER OLAFUR S. GUDMUNDSSON Dr. Olafur S. Gudmundsson is currently the Director of Pharmaceutics at the Bristol-Myers Squibb Company, a global biopharma company. He has previously held various senior level management positions within R&D in the pharmaceutical industry, both for Bristol-Myers Squibb and Genentech Inc. He is also associated with the Pharmaceutical Chemistry department at Purdue University. EDUCATION Ph.D. in Pharmaceutical Chemistry, University of Kansas, 1998; Cand. Pharm. in Pharmacy, University of Iceland 1994. ELECTED 2014 HOLDINGS IN MAREL 1,705,427 BOARD MEMBER MARGRET JONSDOTTIR Margret Jonsdottir is the Managing Director of Operations of Eyrir Invest hf. Previously, she was the Director of Finance at Edda Publishing from December 2001 until October 2002. She was the Director of Finance at Kreditkort/MasterCard from August 2000 until December 2001, the Manager of Accounts at FBA Investment Bank (now Islandsbanki) from January 1998 until June 2000, and the Director of Finance at the Industrial Loan Fund (FBA Investment Bank predecessor) from September 1988 until January 1998. EDUCATION Master of Accounting and Auditing, University of Iceland, 2006; Cand. Oecon. in Business Administration, University of Iceland, 1983. ELECTED 2006 HOLDINGS IN MAREL 193,184 BOARD MEMBER ANN ELIZABETH SAVAGE Ann Savage recently retired from her role as the Group Technical Director of Bakkavor Group. She served as a member of the management board, where she was mainly responsible for food safety, health and safety management, manufacturing excellence and environmental management at 42


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    ANNUAL REPORT 2016 Bakkavor. Savage has held a variety of roles during her career, spanning over 35 years in technical and R&D departments within the retail and food industry, more specifically for Cooperative Wholesale Society (CWS), Northern Foods (1990-1999) and Geest/Bakkavor (1999-2016). EDUCATION Studied at the Open University. Post Graduate Diploma in Management Studies, Nottingham University. ELECTED 2013 HOLDINGS IN MAREL 0 BOARD MEMBER ASTVALDUR JOHANNSSON Astvaldur Johannsson, is currently serving as the VP of Sales at Men and Mice, an International software organization. In addition, Astvaldur has extensive prior international experience, holding various senior management positions for Ossur hf., Global non-invasive Orthopedics Corporation and as an Executive Director of International Division of Valitor hf., an e-commerce payment solutions and services provider. Other experiences include: Director membership of the Executive Team of the IT company Nyherji hf., the Managing Director at Penninn, and as a system analyst expert within the IT sector focusing on process design and development. EDUCATION MBA, University of Iceland 2002, B.Sc. in Management Information Systems, Heriot-Watt University Scotland 1987. ELECTED 2014 HOLDINGS IN MAREL 0 BOARD MEMBER HELGI MAGNUSSON Helgi Magnusson is the Chairman of the Board of the companies the Blue Lagoon, Harpa Holding and Husasmidjan. He serves as a board member of several Icelandic companies, including N1 and Hofgardar. He served as a member of the Board of Directors and the Executive Board of the Confederation of Icelandic Employers from 2006 to 2013 and as the Chairman of the Federation of Icelandic Industries from 2006 to 2012. Magnusson has also been a board member of Islandsbanki hf, the Framsyn Pension Fund, the Pension Fund of Commerce, Siminn and the Icelandic Chamber of Commerce. For several years, he was the Chairman of the Board of Harpa Sjofn Paint Factory and the Flugger Iceland Paint Factory. 43


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    ANNUAL REPORT 2016 EDUCATION Business Administration, University of Iceland, 1974; CPA, 1975. ELECTED 2005 HOLDINGS IN MAREL 3,779,044 VICE-CHAIRMAN OF BOARD ARNAR THOR MASSON Arnar Thor Masson has extensive experience in re-organization, strategy and project management. He is currently the Alternate Director at the European Bank for Reconstruction and Development in London and also serves as the Chairman of Marel’s Audit Committee. His previous roles include being the Director General of the Department of Administrative Development at the Prime Minister’s Office in Iceland and the Deputy Director General of the Financial Management Department at the Ministry of Finance. Masson was an adjunct lecturer at the Department of Political Science of the University of Iceland from 2000 until 2008. EDUCATION M.Sc. in Comparative Politics, London School of Economics and Political Science, 1997; B.A. in Political Science, University of Iceland, 1996; Studied securities brokerage in 2007; High Performance Boards, executive course for supervisory board members and chairpersons, IMD Business School, 2014. ELECTED 2001. Vice-Chairman since November 2013. HOLDINGS IN MAREL 0 44


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    ANNUAL REPORT 2016 EXECUTIVE TEAM *ALL HOLDINGS AT DECEMBER 31, 2016 CEO ARNI ODDUR THORDARSON Thordarson 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. EDUCATION MBA, IMD, Switzerland, 2004; Cand. Oecon. in Business Administration, University of Iceland, 1993. HOLDINGS IN MAREL 131,869 45


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    ANNUAL REPORT 2016 EXECUTIVE VICE PRESIDENT OF COMMERCIAL REGIONS PETUR GUDJONSSON Gudjonsson joined Marel in 1984 as a programmer in electronic design. Before taking up his current post in 2016, Gudjonsson served in numerous different positions for Marel, including the Managing Director of Sales and Service Units, the General Manager of Marel in Canada and the Sales Director for Marel Iceland and Denmark. EDUCATION B.Sc. in Electrical Engineering, University of Iceland. HOLDINGS IN MAREL 219,430 MANAGING DIRECTOR (EVP) OF MAREL MEAT DAVID WILSON Wilson has been with Marel and its predecessors since 1998. Before taking up his current position in March 2016, he served as the Managing Director (EVP) for Marel Meat. Before that he served as the Senior Vice President for the Marel Poultry Industry Center in Gainesville, Georgia, U.S. EDUCATION M.Sc. in Animal Science and Honours B.Sc. in Agricultural Business Management, Aberdeen University. HOLDINGS IN MAREL 27,300 CFO LINDA JONSDOTTIR Before taking up her current position in October 2014, Jonsdottir was Marel’s Corporate Director of Treasury and Investor Relations. Before joining Marel, Jonsdottir worked in Treasury and Financing for Eimskip, Burdaras and Straumur investment bank. She also served as a board member at the Enterprise Investment Fund (Framtakssjodur Islands) between 2010 and 2015. EDUCATION M.Sc. in Finance, Reykjavik University and Cand.Oecon in Business Administration, University of Iceland. HOLDINGS IN MAREL 62,500 46


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    ANNUAL REPORT 2016 EXECUTIVE VICE PRESIDENT OF STRATEGY AND CORPORATE DEVELOPMENT ARNI SIGURDSSON Sigurdsson has extensive experience in the finance and investment management industry. Before joining Marel in January 2014, he worked for AGC Partners as an associate. Prior to that he worked at Landsbankinn, where he was instrumental in advising Marel on the acquisition of Stork Food Systems. EDUCATION MBA, Harvard Business School; B.Sc. in Industrial Engineering, University of Iceland. HOLDINGS IN MAREL 100,000 MANAGING DIRECTOR (EVP) OF MAREL POULTRY ANTON DE WEERD De Weerd has been with Marel and its predecessors since 1982. During his time at Marel he has served in different sales and marketing positions and as a Commercial Director, a Managing Director and as President. He took up his current post in 2007. EDUCATION B.Sc. in Mechanical Engineering, Avans University. HOLDINGS IN MAREL 0 EXECUTIVE VICE PRESIDENT OF HUMAN RESOURCES DAVID FREYR ODDSSON Oddsson joined Marel in 2011 as the HR Director of the International Sales and Service Network. He took up his current post in 2013. Before joining Marel, Oddsson worked at Straumur Investment Bank as the Global Head of Human Resources and Corporate Services 2006-2011 and as an HR consultant at Capacent 1999-2006. EDUCATION MBA, Reykjavik University; Cand. Theologius from University of Iceland. HOLDINGS IN MAREL 75,000 47


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    ANNUAL REPORT 2016 MANAGING DIRECTOR (EVP) OF MAREL FISH SIGURDUR OLASON Olason worked in Marel’s product development department between 2001 and 2006. He took up his current position in May 2014. Before rejoining Marel, Olason was the Director of Business Development at Samherji, one of Iceland’s leading seafood companies. EDUCATION MBA, Brisbane Graduate School of Business; B.Sc. in Computer Science and B.Sc. in Mechanical and Industrial Engineering, University of Iceland. HOLDINGS IN MAREL 0 EXECUTIVE VICE PRESIDENT OF SUPPLY CHAIN PAUL VAN WARMERDAM Van Warmerdam joined Marel as the Director of Manufacturing and Materials Management in Poultry and was appointed to his current position in 2013. Before joining Marel, Van Warmerdam worked in the semiconductor industry in various operations and business management roles. EDUCATION M.Sc. in Mechanical Engineering, Delft University of Technology. HOLDINGS IN MAREL 0 EXECUTIVE VICE PRESIDENT OF INNOVATION VIDAR ERLINGSSON Erlingsson has been with the Marel innovation team since 2000. He was instrumental in developing the SensorX technology within Marel and played a key role in bringing the solution to commercial success. He took up his current post in 2014. EDUCATION M.Sc. in Engineering, DTU in Denmark; B.Sc. in Electrical and Computer Engineering, University of Iceland. HOLDINGS IN MAREL 0 48


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    ANNUAL REPORT 2016 MANAGING DIRECTOR (EVP) OF MAREL MEAT REMKO ROSMAN (AS OF APRIL 1, 2017) Prior to taking up the position of Managing Director of Marel Meat, Rosman was CEO of MPS. Before, Rosman served as President in Yageo Corporation (Taiwan) and held various positions in Philips Electronics, McKinsey & Company and Royal Dutch Shell. EDUCATION Honors M.Sc. in Applied Physics from Twente University and Honors PhD in Applied Physics of Delft University of Technology. HOLDINGS IN MAREL 5,630,718 MANAGING DIRECTOR (EVP) OF MAREL FURTHER PROCESSING JESPER HJORTSHØJ Hjortshøj is Marel’s Managing Director (EVP) of Further Processing. He has been with Marel since 2006 and has during that time served in several different positions including Marketing Manager, Product Center Manager and Manager Strategy and Portfolio for Global Innovation. EDUCATION Master of Arts in Communication and Media Studies from Aarhus University. HOLDINGS IN MAREL 0 ALL HOLDINGS AT DECEMBER 31, 2016 49


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    ANNUAL REPORT 2016 CORPORATE SOCIAL RESPONSIBILITY Being a responsible corporate citizen is a priority for Marel because in the long run it is simply GOOD BUSINESS. Marel takes pride in going beyond legal requirements to align all business operations with socially accepted principles. The company strives to contribute to society in a positive way in all its operations. A specific social responsibility guidance policy for the company was approved by Marel’s board of Directors and Marel’s Executive team in 2016. It is now being implemented. This is the first time Marel reports on its activities under the new corporate social responsibility policy. The corporate social responsibility guidance policy can be divided into three separate focus areas based on the triple bottom line approach; people, planet and profits. Marel’s policy is based on the ISO 26000 guidelines as well as the company being a signatory to the United Nations Global Compact. CORPORATE SOCIAL RESPONSIBILITY - GUIDANCE POLICY SOCIAL RESPONSIBILITY Marel provides a safe and healthy working environment and equal opportunities. It fosters individual and team development and ensures the right to freedom of association for all its employees. Human 50

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