Proteins, fats, vitamins B2 and B12, minerals, sugars... milk

At a glance

2 3 Proteins, fats, vitamins B2 and B12, minerals, sugars... milk

4 Royal FrieslandCampina daily provides millions of consumers all over the world with dairy products that are rich in valuable nutrients from milk. The quality of every step in the chain is determining for the success of the entire chain. It starts with grass, the daily diet of cows. The cow is able to transform grass into a valuable foodstuff: milk. This milk is then processed into a wide range of dairy products, ranging from yoghurt, custard, dairy-based beverages, cheese, butter and infant nutrition to ingredients for the food industry. Satisfied customers and consumers are a prerequisite for the continuity of FrieslandCampina and, consequently, for the farms of the member dairy farmers. The chain is complete. 5

Strategy route2020: sustainable growth and value creation 6 Providing the growing world population with the right nutrients is the 7 challenge in the coming decades. By offering trustworthy, relevant and nourishing dairy products, FrieslandCampina is contributing towards safeguarding food and nutrient security. FrieslandCampina s purpose Better nutrition, a good living for our farmers, now and for generations to come nourishing by nature stands for better nutrition for the world s consumers, a good living for our farmers, now and for generations to come. Leverage the Dutch dairy heritage and unique milk chain in a sustainable way FrieslandCampina s unique dairy chain underpins its activities. In order to remain successful, the focus must remain on sustainable growth in the most valuable product market combinations and attention must also be paid to product market combinations that use a lot of milk supplied by the members. At the same time, it is important that the company continues to be managed in a very cost-conscious way to ensure the availability of the means to achieve this envisaged growth. Having an efficient organisation is an important prerequisite for optimum processing and valorising of all the milk supplied. Expand the leading positions Protect the volumes Build future markets in growth areas in home markets Highly engaged, capable people who work effectively together

8 The dairy farmer. Well cared-for cows are the basis for high-quality milk. The better a cow feels, the more readily she gives milk and the healthier she remains. Dairy farmers care for their cows and calves day in, day out. They also pay a lot of attention to growing the feed for their animals. The majority of this feed is the grass and corn grown on their own farms. The skill and professionalism of its member dairy farmers underpin the quality, safety and sustainability of FrieslandCampina s wide range of dairy products. 9

The cooperative tradition 10 FrieslandCampina is one of the world s largest dairy companies and its The 19,000 member dairy farmers jointly form the the Supervisory Board of the company. The Chairmen s 11 cooperative tradition dates back more than 140 years. Via Zuivelcoöperatie FrieslandCampina U.A. the member dairy farmers in the Netherlands, Germany and Belgium own 100 percent of Royal FrieslandCampina N.V. has a District Board. The Cooperative s members appoint the Cooperative. The Cooperative s geographical area of Boards of the 21 districts. Together the 210 members of the Meeting is comprised of the 21 district chairmen, who act The Cooperative holds all the shares in the capital of operations has been divided into 21 districts, each of which District Boards form the Cooperative s Member Council. The as a sounding board for the Board. Royal FrieslandCampina N.V. The activities of the various All these member dairy farmers are independent entrepreneurs. Board has nine members and together with four Supervisory Board members from outside the Cooperative jointly form subsidiaries have been divided into five business groups. 1879 1913 1919 1965 1997 2001 2004 2012 2014 Organisational structure Founding of Arnhemse Melkinrichting Founding of CCF in Leeuwarden Friesche Vlag, Dutch Baby and Bonnet Rouge are registered for international markets Founding of Coberco in Zutphen Merger of Coberco, Friesland Dairy Foods, De Zuid- Oost-Hoek and Twee Provinciën Acquisition of Nutricia Dairy & Drinks Group Friesland Foods receives Royal designation on its 125th anniversary Acquisition of Alaska Milk Corporation in the Philippines Acquisition of Olam in Ivory Coast and DEK in Italy Zuivelcoöperatie FrieslandCampina U.A. Members holding all shares in Districts Royal FrieslandCampina N.V. 2008 Merger of Friesland Foods and Campina Acquisition of mozzarella producer Fabrelac in Belgium 2015 Acquisition of majority stake (51%) Engro Foods in Pakistan 2016 Chairmen s Meeting 1 Member Council Board General Meeting of Shareholders Supervisory Board Acquisition of IDB Belgium Acquisition of the activities of Anika Group in Russia Executive Board Corporate & Support 1871 Nine farmers take over a cheese factory in the Dutch Wieringerwaard 1880 Founding of the first dairy co-operatives 1926 Founding of the De Meijerij Veghel / De Melkindustrie Veghel 1947 Campina brand introduced 1989 Founding of Campina Melkunie 1993 Acquisition of Südmilch (Heilbronn) 2001 International launch of formation of international Campina brand and co-operative Acquisition of Zijerveld and Veldhuyzen and G. den Hollander Holding 2013 Founding of joint venture Friesland Huishan Dairy in China Consumer Products Europe, Middle East & Africa 1 The Chairmen of the 21 District Councils Consumer Products Asia Consumer Products China Cheese, Butter & Milkpowder Ingredients

12 The transport. The milk is transported from the farm to one of FrieslandCampina s production facilities in a milk truck. The quality of the milk must be the same when it arrives at the production facility as it was when it left the farm. The milk truck driver plays a major role in ensuring this. From inspecting the milk in the storage tank at the farm and taking samples to the hygiene within the milk truck itself. The transport is becoming increasingly sustainable through the use of cleaner fuels or even the generation of energy via solar panels on the milk trucks. 13

Milk 14 Milk, by nature, contains valuable nutrients Dairy and physical activity fit in well energy. A healthy lifestyle with enough 15 together: the nutrients in dairy products physical activity and a varied and healthy such as proteins, vitamins B2 and B12 and such as milk, buttermilk, yoghurt, soft curd diet is important at all ages, young and old, minerals such as calcium. This is why milk, as cheese and cheese help people to remain everywhere in the world. physically active. Proteins are important for are vegetables and fruit, fish, oil and grains, is the build-up and maintenance of the muscles FrieslandCampina uses the natural nutrients part of a healthy diet. Yoghurt and cheese are and calcium is needed for strong bones. Milk from milk as the basis for a broad range of and cheese also contain vitamin B2 and B12, dairy products. In this way FrieslandCampina recommended as healthy nutrition as well. which help the nervous system to function wants to make its contribution to a healthy properly and to provide the muscles with and varied diet for everyone.

16 The employee. The skills and professionalism of the employees are determining for FrieslandCampina s success. Inspiring and motivating employees, encouraging entrepreneurship and providing a safe working environment are priorities. 17

Working at FrieslandCampina 18 FrieslandCampina is an international company with a strong local character: peopleoriented, approachable and open. The aim of FrieslandCampina s company culture and working environment is to enable individual talents to maximally develop themselves and, at the same time, make a contribution to The way of working revolves around alignment, accountability and action. Employees are encouraged to act as role models in the field of safety, to take on challenges together, to develop together, to take responsibility themselves and to effectively act and take decisions. FrieslandCampina s code of conduct, Compass, forms the basic principle in this. The global safety programme within FrieslandCampina ensures a proactive approach towards continuous improvement of safety. 19 achieving the company s ambitions. FrieslandCampina is always looking for new talent in a broad range of disciplines, such as sales, marketing, finance, R&D, HR and operations. All employees are valued for their skills and stimulated to develop their knowledge and expertise. This helps FrieslandCampina to achieve optimum valorisation of the milk supplied. www.careersatfrieslandcampina.com

20 Quality and safety. The quality and safety of milk and products are FrieslandCampina s highest priority. Together with the cooperative s member dairy farmers, FrieslandCampina commands and controls the entire milk production chain from the farm to the end product from grass to glass. This guarantees the quality, safety and sustainability of the products. 21

Guarantee throughout the chain 22 Every customer and consumer everywhere Foqus ISO 9001, ISO 22000, FSSC22000, OSHAS 18000 and ISO the area of quality assurance and the Foqus requirements are 23 around the world must be able to trust that FrieslandCampina has its own integral quality system, 14000, are integrated into Foqus. The Foqus stipulations are or will be in line with the Golden Quality Rules. The Golden Foqus, to safeguard the safety and quality of its products reviewed, and if necessary revised, each year to ensure that Quality Rules are to ensure that product and process quality every product is of an impeccable quality. throughout the entire production chain. With Foqus, the system always reflects the latest knowledge and insights. are safeguarded even more effectively and efficiently. FrieslandCampina wants all its production FrieslandCampina offers consumers, customers and the authorities the guarantee that the products and production Foqus planet The Golden Quality Rules are: and distribution companies to take the same processes meet the most stringent standards in the fields of The Foqus module for member dairy farmers (Foqus planet) satisfied consumers and customers; approach towards safety and quality, whatever food safety, quality, safety, working conditions, fire protection gives priority to safeguarding quality and qualified and committed people; and environment. An extensive programme of training food safety. In addition, the continued stimulation of robust processes; and wherever they are producing. courses and audits helps safeguard the implementation and continuous monitoring of Foqus in the production facilities, on the member dairy farms and at the suppliers of basic materials. The guiding principles of the quality control are the statutory stipulations supplemented with additional demands. The various international standards, such as GMP+, HACCP, sustainability in the dairy farming sector through means of various programmes that allow dairy farmers to earn additional income is key. The Golden Quality Rules The Golden Quality Rules were introduced in order to encourage all employees to even better meet the quality expectations of customers and consumers. All initiatives in clean and efficiently organised work areas; implement changes and solve problems in a sustainable manner; reliable data; professional partners and suppliers.

24 Innovation. FrieslandCampina has the high-quality expertise and technology needed to implement innovations throughout the entire chain. Ingredients of milk are used as basic materials for various products in the food and pharmaceutical industries. Product development and process innovation are put at the disposal of FrieslandCampina s customers, generally in direct cooperation projects. This leads to healthy, nutritious and tasty food products that really highlight all the goodness of milk. 25

Respond to needs 26 Innovation within FrieslandCampina is driven FrieslandCampina is making an effort to gain even more objectives. Combined with knowledge of milk components 27 and managed on the basis of the basic principles underlying nourishing by nature. Insights into the needs of consumers and cultures and the role dairy products can play in the daily diets of these people. Innovation Centre in Wageningen FrieslandCampina has brought together its expertise in insight into the nutritional needs of babies, children, adults, and technology, this contributes to improving returns, while active sports people and the elderly in various countries and at the same time reducing the impact on the environment. industrial buyers, and insights into the area Process technologists are focused on the development of the fields of innovation and research & development in the of nutrition, social trends and sustainability new, and the optimisation of existing, production processes Innovation Centre in Wageningen. In Wageningen, the centre relating to product quality and product safety, cost of the agrofood knowledge infrastructure, at the campus are key in this respect. The expertise of effectiveness and sustainability. of Wageningen UR, FrieslandCampina works together with scientists and other companies operating in this sector. FrieslandCampina s experts lies in the area In the purchase of foodstuffs, taste is almost always a of nutritional science relating to nutrients, decisive and distinctive factor. Understanding and the ability FrieslandCampina Development Centre in Singapore milk components and their applications, milk to properly measure the sensory properties of a product The FrieslandCampina Development Centre in Singapore consequently is an important step in developing new concentrates on the development of dairy-based beverages processing, production processes, products, products or improving existing products. and infant nutrition, specifically oriented towards the Asian consumers. packaging, dairy farming and sustainability. The process of developing packaging takes the direct needs of all steps in the logistics process into account, and most definitely those of the end-user, the consumer, as well. Areas for attention also include reducing any food residues left behind in packaging, reuse, minimising the use of materials, optimising logistics and reducing the emission of greenhouse gases. Dairy farming Packaging Sustainability Products Nutrition Unlocking the nutritional potential of milk by excellence and dedication Processing components Milk Sustainability is a key motivating factor in many innovation projects. Reducing energy and water consumption in production processes and making more effective use of raw materials contribute to the realisation of sustainability

28 Sustainability. Corporate social responsibility and sustainability play major roles in pursuing the route2020 strategy. Nourishing by nature better nutrition for the world s consumers, a good living for our farmers, now and for generations to come provides direction for the daily activities and defines the values that FrieslandCampina considers important. This includes creating value in the market, as well as assuming social responsibility. The corporate social responsibility (CSR) and sustainability policy has been fully integrated into the route2020 strategy. 29

The CSR strategy 30 Provision of food for the growing population Better nutrition Now and for generations to come is processed. In order to realise climate-neutral growth, 31 is a huge challenge and has implications Dairy forms a key part of the daily nutrition for many people FrieslandCampina is committed to climate-neutral growth FrieslandCampina is working on several initiatives for an throughout the entire world. With its high-quality milk and of the dairy farming sector, continuous improvement of efficient and sustainable production chain. This means for people, animals as well as for the milk products, FrieslandCampina wants to contribute to food animal health and welfare and preservation of biodiversity. furthering sustainability in dairy farming, procuring environment. How can sufficient affordable, and nutrients security. In addition, FrieslandCampina wants The objective of FrieslandCampina is to make sure that sustainable (agricultural) raw materials and reducing to help constrain the growing number of overweight people, the emission of greenhouse gases in the year 2020 will be energy consumption in the production of dairy products. nutritious food be produced? Fertile soil and especially children. FrieslandCampina does this by imposing equal to or lower than in 2010. This also applies in case of an Furthermore, FrieslandCampina, with the help of green clean drinking water are scarcities in many strict requirements on products composition, providing increase in production. This goal includes the greenhouse certificates, stimulates member dairy farmers to generate education and information about healthy nutrition and a gases released at the member dairy farms, during transport sustainable energy, for example with wind turbines, solar areas in the world and the pressure on the environment is only increasing. Will there healthy lifestyle, and by making it easier for the consumer to choose healthy nutrition. from the farm to production facilities and when the dairy panels or biomass. Nourishing by nature still be enough farmers to produce our daily A good living for our farmers Better nutrition, a good living for our farmers, FrieslandCampina s aims to add as much value as possible to food? Will they be able to generate sufficient now and for generations to come the milk so as to maximise its contribution to the incomes and income to provide for themselves and for their families? These global challenges and the basic principles for the route2020 strategy together form the basis of the CSR strategy. Nourishing by nature: better nutrition for continuity of member dairy farms. It is FrieslandCampina s responsibility to process the milk of the Zuivelcoöperatie FrieslandCampina s member dairy farmers and sell it at a price that also creates value in a sustainable way over the long term for member dairy farmers and society. This value creation becomes evident in various ways, for example by means of the performance premium that member dairy farmers receive on Better nutrition A good living for our farmers Now and for generations to come the world s consumers, a good living for our top of the guaranteed price for their milk. Better products Optimal milk valorisation Climate-neutral growth Through the Dairy Development Programme, farmers, now and for generations to come. FrieslandCampina supports local dairy farmers in Asia, Africa Responsible marketing Economic performance & profitability Sustainable purchasing Sustainable production and Eastern Europe in improving their business operation and Improved quality & quantity of milk in Transparent nutritional value labelling the quality of the milk they supply. Dairy Development Programme Animal health & welfare 1 Healthy lifestyle education 1 Concerning Zuivelcoöperatie FrieslandCampina U.A. Improved knowledge and skills in Dairy Development Programme Meadow grazing 1 Biodiversity 1

32 The consumer. FrieslandCampina daily provides millions of consumers all over the world with dairy products containing valuable nutrients from milk. However, milk is more than a natural source of essential nutrients. Milk has been part of the daily diets of large groups of the world population for thousands of years. Through the centuries, different cultures and customs have led to new applications in response to people s habits, needs and tastes. 33

Brands Consumer Food service 34 35 Ingredients The top 10 consumer brands in revenue in euro 1 Friso worldwide 2 Frisian Flag Indonesia 3 Dutch Lady Vietnam, Malaysia, Myanmar, Singapore and China 4 Peak Nigeria 5 Alaska Philippines 6 Campina Netherlands and Belgium 7 Rainbow Saudi Arabia and United Arab Emirates 8 Foremost Thailand 9 Debic Food service in Europe 10 Frico worldwide The top 5 industrial products in revenue in euro 1 DMV Excellion (caseinates) 2 Kievit Vana Blanca (creamers) 3 Domo Vivinal GOS (galacto-oligosaccharide) 4 DFE Pharmatose (pharmaceutical lactose) 5 Kievit Vana Grasa (fat powders)

36 All over the world. FrieslandCampina is a multinational dairy company with a wide offering of dairy products and leading brands in more than 100 countries. FrieslandCampina has locations in 33 countries. The activities of FrieslandCampina have been divided into five market-oriented business groups, being Consumer Products Europe, Middle East & Africa; Consumer Products Asia; Consumer Products China; Cheese, Butter & Milkpowder and Ingredients. The company globally achieves annual revenue of 11 billion euro. 37

Business groups Consumer Products Europe, Middle East & Africa Consumer Products Asia 38 39 The Consumer Products Europe, Middle East & Africa business group provides consumers and professional customers in Europe, the Middle East and North Africa & West Africa with dairy products, such as milk, dairy-based beverages, condensed milk, yoghurts, desserts, infant nutrition, cream, butter and cheese. In the Netherlands and Belgium, the business group also sells fruit juices, fruit drinks and sports drinks. The business group operates in seventeen countries (Netherlands, Belgium, Germany, France, Russia, Hungary, Romania, Greece, Spain, Italy, United Kingdom, Saudi Arabia, United Arab Emirates, Egypt, Nigeria, Ghana and the Ivory Coast). The Consumer Products Asia business group provides consumers in Asia with dairy products such as infant nutrition, milk, dairy-based beverages and condensed milk. The business group operates in nine countries in Asia (Philippines, Hong Kong, Indonesia, Malaysia, Myanmar, Pakistan, Singapore, Thailand and Vietnam). Many products are produced locally. Several products, such as Friso infant nutrition, are exported from the Netherlands to Asia.

Consumer Products China Ingredients 40 41 The Consumer Products China business group provides consumers in China with dairy products such as infant nutrition, milk and condensed milk. Prior to becoming an independent business group on 1 January 2016, Consumer Products China was part of the Consumer Products Asia business group. The Ingredients business group develops nutritious and functional ingredients that add value to existing products. The business group throughout the world supplies natural ingredients based on milk, cheese whey and plant-based raw materials to industrial buyers in the infant nutrition sector, the food sector, the pharmaceutical industry and the young animal nutrition sector. The Ingredients business group has branch offices in eleven countries (Netherlands, Germany, United States of America, Indonesia, China, Singapore, Japan, Brazil, Egypt, New Zealand and India).

Export 42 Cheese, Butter & Milkpowder History has taught us that the Dutch climate, 43 The Cheese, Butter & Milkpowder business group sells cheese, mozzarella, condensed milk, infant nutrition, butter and milk powder throughout the world. The portfolio consists of a broad range of Dutch types of cheese, such Gouda, Edam, Maasdam and foil cheeses, in the form of whole cheeses, as well as packaged wedges and slices, different types of butter and milk powders. The business group has branch offices in six countries (The Netherlands, Germany, soil, location and green pastures plus the skills and entrepreneurship of farmers offer an excellent basis for dairy farming. The Netherlands and dairy are inextricably linked. These dairy products are sent to the farthest corners of the world. The Netherlands is an important exporter of dairy products. The Dutch dairy sector represents a substantial part of the Dutch economy. The export of dairy products is still growing, in particular to emerging markets such as China and Africa. With an export value of 4.9 billion euro in 2016, FrieslandCampina represents a considerable share of this. Belgium, France, Italy and Spain) and exports to more than 100 countries.

Markets 44 Europe 6,046 12,922 66 Asia and Oceania revenue* employees locations 3,523 7,786 36 Africa and the Middle East 1,053 1,050 6 revenue* employees locations North and South America 379 169 6 revenue* employees locations Netherlands Russia Indonesia China Nigeria United Arab Emirates United States Germany France Malaysia Hong Kong Ghana Saudi Arabia Brazil Belgium Spain Singapore Pakistan Ivory Coast Egypt Greece Italy Thailand India Hungary Austria Myanmar Japan Romania United Kingdom Vietnam New Zealand Philippines Figures 2016 * in millions of euros revenue* employees locations 45

Key figures 2016 46 11.0 billion euro revenue 21,927 employees Offices in 33 countries Export to over 100 countries NL BE DE 18,906 member dairy farmers own the Company Millions of consumers every day

Every day Royal FrieslandCampina provides millions of consumers all over the world with dairy products that are rich in valuable nutrients from milk. With annual revenue of 11.0 billion euros, FrieslandCampina is one of the world s largest dairy companies. FrieslandCampina produces and sells consumer products such as dairy-based beverages, infant nutrition, cheese and desserts in many European, Asian and African countries through its own subsidiaries. Apart from this, dairy products are exported throughout the world from the Netherlands. Products are also supplied to professional buyers, such as cream and butter products to bakeries and catering businesses in Western Europe. FrieslandCampina sells ingredients and semi-finished products for producers of infant nutrition, the food industry and the pharmaceutical sector all over the world. FrieslandCampina has branch offices in 33 countries and employs just under 22,000 people. The products of FrieslandCampina find their ways to over 100 countries. The company has its Central Office in Amersfoort, the Netherlands. The activities of FrieslandCampina have been divided into five market-oriented business groups, being Consumer Products Europe, Middle East & Africa; Consumer Products Asia; Consumer Products China; Cheese, Butter & Milkpowder and Ingredients. The Company is fully owned by Zuivelcoöperatie FrieslandCampina U.A, with 18,900 member dairy farmers in the Netherlands, Germany and Belgium one of the largest dairy cooperatives in the world. June 2017 Royal FrieslandCampina N.V. Stationsplein 4, 3818 LE Amersfoort, Netherlands T +31 33 713 3333 www.frieslandcampina.com