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ANNUAL REPORT2015-2016

BETTER COWS | BETTER LIFE

MESSAGE FROM THE CHAIRMAN 3

CRV: BETTER COWS | BETTER LIFE 4

MAJOR EVENTS 8

CRV HOLDING BUSINESS REVIEW 10

Photography: Stefani Buijsman, Eric Elbers, Eveline van Elk,

Mark Pasveer and CRV

CONTENTS

MESSAGE FROM THE CHAIRMAN

Last year, I wrote that low prices and new legislation had caused a great deal of financial uncertainty and anxiety. At the time, I could not have even dared image that the uncertainty would continue to increase. Farm-gate prices for milk plummeted to equal the deepest dip of 2009 and never before have they taken so long to recover again.

At the time of writing, we are busy clambering up a steep hill. Hopefully we can reach an acceptable milk price. And I hope that once we reach the summit, prices will stabilise so we can catch our breath. In the meantime, our beef farmers are still seeing prices that are far below what their quality beef is worth.

Just as for farmers, efficiency is key at CRV in order to counteract the poor state of the economy in dairy farming. These negative market conditions placed considerable pressure on CRV’s turnover in the past financial year. In a financial sense, our organisation was one of two halves. In the Dutch/Flemish cooperative market, results remained stable due to an increase in the number of dairy cattle. However, our international subsidiaries were faced with dwindling numbers of herds, intense competition and we saw declining prices for genetic products.

The past financial year was characterised by building work at CRV. Construction work on the buildings for bulls at Bela Vista in Brazil and the Dairy Breeding Center to accommodate our nucleus herds in the Netherlands is advancing steadily. Less visible, but equally as important, is the construction of our new data system. On this platform, we are building new data applications that offer greater functionality to support our clients in herd management.

Peter Broeckx | Chairman CRV

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CRV: BETTER COWS | BETTER LIFE

CRV is an innovative herd improvement organisation.

We help beef and dairy producers to breed efficient

and healthy herds and offer a wide range of products and

services aimed at creating optimal herd performance.

Our shareholders are the Dutch cooperative CR Delta and the Flemish cooperative VRV. Almost 26,000 Dutch and Flemish dairy and beef producers are members of these cooperatives and are therefore our owners: by farmers, for farmers. CRV operates internationally and employs about 2000 people worldwide.

CRV operates in an international structure with business units that serve our local customers. This enables us to respond adequately to the local needs of cattle farmers. We supply our products and services to more than 50 countries. The head office, located in Arnhem, supports the business units and their local branches.

INVESTING IN INNOVATIONGrowth achieved through a customer-centric and innovative approach is the primary focus at CRV. Global trends and dynamic market and customer developments demand significant investments in innovation, technology, products and solutions. In order to realise this aim, national and international growth is vital. CRV offers innovative solutions and concepts that meet the needs of its customers: dairy and beef producers worldwide.

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CRV annual report 2015-2016

CRV is committed to achieving sustainable and efficient cattle farming that supports the continuity of our members’ and customers’ businesses. Animal hea l th and we l fa re and reducing the carbon footprint are important focus areas in this respect.

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CRV annual report 2015-2016

CRV: BETTER COWS | BETTER LIFE

SUSTAINABLE AND EFFICIENTCRV is committed to supporting sustainable and efficient dairy and beef farming that supports the continuity of our members’ customers’ businesses. Animal health and welfare and reducing the carbon footprint are important focus areas in the CRV strategy. With the growing world population, farmers are facing a huge challenge in this respect.Dairy and beef farmers therefore have a great influence on CRV’s policy through the advisory bodies and member committees.

COOPERATIVE SHAREHOLDERS MERGEThe 2015-2016 financial year saw preparations being made for the merger between CRV’s two cooperative shareholders: CR Delta u.a. ( the Netherlands) and VRV vzw (Flanders). The merger was completed in January 2017, uniting both organisations to form Cooperative Royal CRV u.a..

CRV SUPERVISORY BOARD (as of 31 August 2016)– P. J. D. (Peter) Broeckx, Dessel

Chairman– E. J. M. (Etienne) Cosyns, Leuven– W. (Wietse) Duursma, Bellingwolde– K. J. (Kurt) Faes, Meer– G. A. E. J. (Linda) de Groot, Rossum

– H. L. M. (Henk) Hermsen, Havelte– A. P. H. J. (Fons) Kersten, Sevenum– D. R. M. (Dirk) Ryckaert, Dikkelvenne– S. (Sjoerd) Schaap, Tirns– P. (Peter) Schrijver, Epse– B. (Bernard) Uyttendaele, Den Haag– G. J. (Gert-Jan) Verploeg, Buurmalsen

CRV EXECUTIVE BOARD IN 2015-2016– R. M. A. (Roald) van Noort

Chairman of the CRV Executive Board– J. F. H. M. (Joop) Kersten

Executive Director Finance & Organisation– A. G. (Alfred) de Vries

Executive Director Operations & Development

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CRV annual report 2015-2016

MISSION: CRV is a leading customer-focused cattle improvement co-operative, fully committed to adding value for farmers

CRV Executive Board (from left to right): Joop Kersten, Roald van Noort, Alfred de Vries

Supervisory board CRV – standing (left to right): H. Hermsen, S. Schaap, G.J. Verploeg, P. Schrijver, E. Cosyns, F. Kersten, B. Uyttendaele – seated (left to right): K. Faes, W. Duursma, P. Broeckx, D. Ryckaert, L. de Groot

CRV: BETTER COWS | BETTER LIFE

On february 1st 2017 Huib Jan Krasenberg joined the executive board as Executive Director business unit Western Europe.

MAJOR EVENTS

SEPTEMBER 2015– The holstein test programme of CRV is modified. The criteria for bull

selection are tightened, InSires are used more widely and the focus shifts to collecting data relating to animal health and efficiency.

OCTOBER 2015– The Ovalert fertility management system is launched in Brazil,

during the Agroleite event. – CRV Lagoa celebrated the 15th birthday of the Nelore bull Backup.

With semen production of almost 1 million doses, Backup is the world record holder for his breed. Backup passed away in February 2016.

– Their Majesties King Willem-Alexander and Queen Máxima of the Netherlands visit the Sino Dutch Dairy Development Center (SDDDC) in Beijing. CRV participates in the SDDDC with Dutch and Chinese companies and institutions. One of the main targets of this farm and research centre is to develop the Chinese dairy sector through exchanging knowledge. Our CRV CEO Roald van Noort was one of those accompanying the royal couple on their trip.

– After almost a decade and noting production in excess of 1.4 million straws of semen, the AI-career of Delta Paramount ended. He holds the record at CRV for the highest number of straws sold of SiryX (sexed semen), namely 136,575 doses.

NOVEMBER 2015– CRV Germany organises a roadshow focusing on the rearing of

youngstock with partners in the dairy industry. Over 450 farmers participated in these information days.

MARCH 2016– Big Boukje 192: 18 years old, bursting with health and production

exceeding 200,000 kg of milk! The first cow in the Netherlands to

break the barrier of lifetime production in excess of 200,000 kg of milk lives on the Knoef-Hendriksen family farm.

– CRV starts a joint initiative with Agrifirm and FrieslandCampina cooperatives to develop an electronic data highway. This data hub is a platform that collects data submitted by dairy farmers and other parties in the dairy chain relating to aspects such as animal health, longevity and mineral efficiency. The project signals the next step in the development of the SmartDairy Farming program.

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CRV annual report 2015-2016

Big Boukje 192 was the first Dutch cow to produce 200,000 kg of milk

The Sino Dutch Dairy Development Centre in Bejing was visited by Their Majesties King Willem-Alexander and Queen Máxima of the Netherlands

APRIL 2016– CRV’s Better Life indicators for efficiency and health are proving

to be highly effective in improving the technical results of herds. Analysis of the on-farm performance of 61,000 dairy cows on almost 300 farms delivered undisputed proof. An improvement of 1% to the figure for Better Life Efficiency resulted in extra lifetime production of 1,500kg of milk for example.

– CRV introduces robot traits in the USA, so that farmers can make a more targeted choice of bull for breeding – one that gives daughters who are easy and efficient milkers in robotic systems.

MAY 2016– The new CRV Ambreed location is fully operational and now home

to the bulls too. The CRV Bellevue production and logistic centre in New Zealand combines hypermodern barns for the bulls with a semen collection station, a laboratory and storage facilities for semen destined for the domestic market and export.

AUGUST 2016– CRV Lagoa celebrates its 45th anniversary.– In Germany, CRV dominates the Fleckvieh rankings. Eight, CRV-

owned bulls feature in the top 10 genomic bulls. CRV also tops the rankings for the daughter proven bulls.

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CRV annual report 2015-2016

MAJOR EVENTS

The German Fleckvieh rankings were dominated by CRV bulls

CRV HOLDING BUSINESS REVIEW

CRV’s turnover in the financial year under review,

2015-2016, fell by 3.6%, before the payment of member

dividend. The worldwide dairy crisis was the main reason

for this disappointing performance. Member dividend

amounted to almost two million euros.

Dairy farmers all over the world were confronted by a crisis in the dairy produce sector. For CRV in the 2015-2016 financial year, this signified a slight fall in turnover compared with the previous financial year. The operating results before payment of member benefits and incidental cost items shows a 35% decrease compared with the previous financial year. This dairy crisis had already been factored into the financial planning. Ultimately, CRV ended the financial year with an operating result that was 30% higher than anticipated.

1.94 MILLION MEMBER DIVIDENDCRV’s turnover in the financial year 2015-2016, fell by 3.6%, before the payment of member dividends, at the actual exchange rates. With identical exchange rates compared with the financial year 2014-2015, this decrease would have amounted to 1.2 %. The decline in the operating results by around 35% can mainly be attributed to falling turnover in genetic products worldwide. The member dividend for 2015-2016 amount to 1.94 million euros. Liquidity and solvency have maintained a comparable, robust level.

FOCUS ON COST SAVINGS AND EFFICIENCYAs the summer of 2015 progressed, it became apparent that the low milk prices would persist. The demand for milk products did not rise, although production continued to steadily increase, partly due to the abolition of the milk quota in the EU. The declining demand for dairy produce resulted in dwindling herds, with the exception of the Netherlands and Ireland: consequently, the demand for breeding products also fell.

All CRV business units were affected by the worldwide recession in dairy farming. For this reason, cost saving measures were implemented within the organisation worldwide, with a focus on efficiency and intensive contact with customers. Thanks to these measures, CRV was still able to note a positive result.The board of CRV is highly indebted to the employees who helped navigate CRV through his challenging period.

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CRV annual report 2015-2016

The global recession in dairy and beef farming affected all CRV branches

WESTERN EUROPE: BETTER THAN EXPECTEDDespite the low milk prices and the imminent introduction of phosphate rights, the Western Europe BU performed better than expected. The lifting of the milk quota promoted a growth in herd numbers by more than 90,000 animals in the Netherlands. This boost to the market impacted positively on semen sales. The share of Belgian Blue semen utilised in cross-breeding sharply increased (37% compared with the previous financial year). The use of sexed semen decreased.The growing herds led to more inseminations and also 6% extra animals in milk recording. However, more farmers chose a six-weekly milk recording, so the number of milk samples decreased marginally.In Flanders, poor milk prices resulted in higher use of bulls for natural mating and DIY inseminations, resulting in a slight decline in sales.Sales of information products in the Netherlands and Flanders rose by 6% compared with the previous financial year. This was partly caused by larger herds in the Netherlands, but also by an increased market share of CRV’s innovative solutions for management support.

SOUTH-AMERICA: A CHALLENGING YEARBU South America can look back on a very challenging year. Increasing political turmoil, devaluation of the currency, persistently high inflation levels and low milk prices caused herd sizes to decline by 25%. The management of the BU were forced to find a solution to this disturbing cocktail of external factors. Investments in innovations were temporarily deferred to minimise costs. Construction on the new production site Bela Vista continued unabated, with the opening scheduled for March 2017.

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CRV annual report 2015-2016

CRV HOLDING BUSINESS REVIEW

CRV FINANCIAL KEY FIGURES

(X EUR thousand) 2015-2016 2014-2015 2013-2014 2012-2013 2011-2012

net sales before member dividend 170,244 176,663 170,955 168,458 169,569

member dividend -1,941 -3,118 -3,369 -517 0

net sales after member dividend 168,303 173,515 167,586 167,941 169,569

operating results before amortisation of goodwill, member dividend 6,991 10,693 6,645 3,900 2,270

amortisation of goodwill -3,249 -3,330 -3,011 -3,086 -2,986

member dividend -1,941 -3,118 -3,369 -517 0

operating result 1,801 4,245 265 297 -716

result after taxation 1,940 3,118 3,369 518 -786

shareholders’ equity 79,481 75,454 76,028 71,773 75,078

balance sheet total 119,884 111,032 111,983 108,498 115,826

working capital (including liquid assets) 39,982 39,912 36,251 26,501 26,118

liquidity (current ratio) 2.16 2.26 2.14 1.85 1.82

solvency 66% 68% 68% 66% 65%

The table above shows the development of CRV over the past five financial years. To enable comparison, the key figures are shown inclusive and exclusive of member dividend and amortisation of goodwill. Goodwill is an intangible asset in a company’s accounts, typically when an existing business is acquired. Writing off goodwill is known as amortisation.

The implemented measures resulted in profits recovering at Bela Vista, but CRV Lagoa showed figures in the red. The actions taken by the management place both companies in a robust position for the future and the initial signals in the new financial year indicate a cautious and fragile recovery.

OCEANIA: POSITIVE RESULTS DESPITE BEING HIT HARDESTIn the summer of 2015, it became apparent that the crisis in dairy farming would hit the market in New Zealand the hardest. The management at the BU responded adequately and managed to suppress costs. In the end, the business unit closed the financial year with positive local results, which in view of the market conditions is an amazing performance compared with the competitors.As forecast, the results booked by CRV in Australia were profitable. The LIC dealership in Australia operated to full satisfaction.

CENTRAL-EUROPE: PRESSURE ON SEMEN PRICESPoor milk prices also pressurised semen prices in the Czech Republic. Increasing use of genome selection means that the available space in the barns is not optimally utilised. These two developments caused an operational break-even result and a slight decline in sales. During the financial year, the BU management started to restructure the organisation. The MPR activities were disposed of and a number of existing barns were put up for sale. All the supporting services were bundled at the head office in Vestec. Merging the Fleckvieh breeding programme with CRV Germany resulted in improved production quality and should lead to a higher market share of Fleckvieh in the Czech market.

NORTH-AMERICA: STRONG TURNOVER GROWTHBusiness unit North America showed strong sales growth in excess of 35% throughout the 2015-2016 financial year. Expanding the sales capacity resulted in higher turnover in the short term, but not to improved profits. This situation is expected to improve in the 2016-2017 financial year, leading to a recovery of the operating results.CRV is a clearly visible operator on the American market, manifesting its offering not only through genetic products but also its herd management solutions for producers. This distinguishes CRV from the competition, a fact that is not going unnoticed in the market.

IBD: EXPORT RESTRICTIONS IMPEDE TURNOVERDespite the strong performance delivered by CRV XSeed in South Africa and CRV Canada, the International Business Development (IBD) BU was unable to continue the rising trend shown in the last financial year. The financial year closed with a minor operational loss. This is namely accounted for by the export restrictions placed by Canada (blue tongue), where part of the North American bulls are housed. This impeded serving the Chinese market and the solid exports of grazing and Fleckvieh products were unable to compensate for the loss of exports to China.

FORECAST 2016-2017 – In the new financial year we expect a slight recovery in the global

dairy markets. The rising milk prices are shadowed by rising feed costs, which is placing pressure on our members’ margins.

– Due to declining herd numbers caused by the introduction of

phosphate rights, we expect pressure to be exerted on the sales and revenues of the Dutch part of our activities. To address these developments, we will restructure the cooperative domestic market in the 2016-2017 financial year. This move will enable us to serve our customers better and faster.

– In addition, CRV will continue to make every effort to support its members and customers in complying as efficiently as possible with the new guidelines relating to phosphate legislation and maintaining derogation, by offering products including the revised CRV Mineral and genomic testing of youngstock.

– We expect limited growth in turnover at the other business units and improved operating results triggered by a slight recovery in the market and the effects of the restructuring implemented at the various business units.

– The main investments that will be made by CRV in the 2016-2017 financial year, financed by own capital are: – completing construction of the Dairy Breeding Center in

Leeuwarden; – completing construction of Campo Verde to replace the current production sites at Bela Vista and CRV Lagoa in Brazil; – modifications to production barns in the Netherlands; – renewing and future-proofing the digital infrastructure of CRV’s information products.

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CRV annual report 2015-2016

CRV HOLDING BUSINESS REVIEW

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CRV annual report 2015-2016

CRV HOLDING BUSINESS REVIEW

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CRV annual report 2015-2016

CRV HOLDING BUSINESS REVIEW

CONSOLIDATED BALANCE SHEET CRV

ACTIVA 31-8-2016 (x € 1,000) 31-8-2015 (x € 1,000)

FIXED ASSETS

intangible fixed assets 2,359 1,993

tangible fixed assets 41,347 35,712

financial fixed assets 1,806 2,120

total fixed assets 45,512 39,825

CURRENT ASSETS

inventories 14,742 13,769

account receivable 26,994 26,283

cash at bank and in hand 32,636 31,155

total current assets 74,372 71,207

total 119,884 111,032

PASSIVA 31-8-2016 (x € 1,000) 31-8-2015 (x € 1,000)

shareholders’ equity 79,481 75,454

group equity 79,481 75,454

provisions 6,002 4,271

long-term debt 11 12

current liabilities 34,390 31,295

total 119,884 111,032

KEY FIGURES CRV HOLDING BV

GENERAL 2015-2016 2014-2015

employees (full-time; on average) 1,329 1,343

milk samplers (full-time; on average) 128 127

RESULTS (consolidated)

net turnover (€1 mln) 168.3 173.5

operating result (€1 mln) 1.8 4.2

result after taxation (€1 mln) 1.9 3.1

BALANCE SHEET (consolidated)

group equity (€1 mln) 79.4 75.5

balance sheet total (€1 mln) 119.8 111.0

solvency (shareholders’ equity/balance sheet total) 66% 68%

cash flow (€1 mln) 1.5 6.8

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CRV annual report 2015-2016

CRV HOLDING BUSINESS REVIEW

ACTIVA 31-8-2016 (x € 1,000) 31-8-2015 (x € 1,000)

FIXED ASSETS

intangible fixed assets 2,359 1,993

tangible fixed assets 41,347 35,712

financial fixed assets 1,806 2,120

total fixed assets 45,512 39,825

CURRENT ASSETS

inventories 14,742 13,769

account receivable 26,994 26,283

cash at bank and in hand 32,636 31,155

total current assets 74,372 71,207

total 119,884 111,032

PASSIVA 31-8-2016 (x € 1,000) 31-8-2015 (x € 1,000)

shareholders’ equity 79,481 75,454

group equity 79,481 75,454

provisions 6,002 4,271

long-term debt 11 12

current liabilities 34,390 31,295

total 119,884 111,032

CONSOLIDATED PROFIT AND LOSS ACCOUNT CRV

2015-2016 (x € 1,000) 2014-2015 (x € 1,000)

NET TURNOVER

genetic material 78,495 83,826

information products 22,991 22,302

services 58,094 61,750

management 10,664 8,755

net sales before member dividend 170,244 176,633

member dividend -1,941 -3,118

net sales after member dividend 168,303 173,515

changes in inventories 215 171

capitalised production 462 647

other operating income 2,563 662

total operating income 171,543 174,995

OPERATING EXPENSES

purchases 13,604 12,620

production costs 28,808 32,033

staff costs 90,100 87,463

travelling and car expenses 10,362 10,654

accommodation expenses 3,396 3,396

depreciation, amortisation and book results 9,259 9,787

other operating expenses 13,640 14,797

total operating expenses 169,742 170,750

operating result 1,801 4,245

2015-2016 (x € 1,000) 2014-2015 (x € 1,000)

VARIOUS RESULT COMPONENTS

financial income and expenses, on balance 269 249

result from participating interests 346 482

result from ordinary operations before taxation 2,416 4,976

taxes -476 -1,858

result after taxatation 1,940 3,118

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