Integrated Reporting The Future of Corporate Reporting

Transcription

1 Integrated Reporting The Future of Corporate Reporting A guide on integrated reporting highlighting the key content elements and principles of good reporting practices for your company

2 Integrated Reporting The Future of Corporate Reporting A guide on integrated reporting highlighting the key content elements and principles of good reporting practices for your company

3 Integrated Reporting The Future of Corporate Reporting Preface Published by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft May 2012, 80 pages, 5 figures, softcover This material may not be reproduced in any form, copied onto microfilm or saved and edited in any digital medium without the express permission of the editor. This publication is intended to be a resource for our clients, and the information herein was correct to the best of the authors knowledge at the time of publication. Before making any decision or taking any action, you should consult the sources or contacts listed here. The opinions reflected are those of the authors. Preface Globalisation, regulation and increased stakeholder expectations have added significantly to the complexity of businesses in all major economies. Accordingly, over the last decades, the information used to manage businesses and support stakeholders decisions has become similarly complex. Integrated reporting seeks to align relevant information about an organisation s strategy, governance systems, performance and future prospects in a way that reflects the economic, environmental and social environment within which it operates. The goal is to give a comprehensive picture of the organisation, thus helping management, investors and other stakeholders make better-informed decisions.however, a lack of clarity on what integrated reporting is really about, coupled with a limited number of best practice examples, makes it difficult for organisations to understand what needs to be in place for the journey towards integrated reporting. To address this issue, the International Integrated Reporting Council (IIRC) has gathered leaders from a variety of sectors to develop a new approach to reporting, one which will meet the needs of the 21st century. The first result was the publication of the discussion paper Towards Integrated Reporting Communicating Value in the 21st Century in September 2011, which offers initial proposals for the development of an International Integrated Reporting Framework and outlines the next steps towards the publication of an exposure draft in In this paper, we address the crucial issues in integrated reporting. In Part A, we explain current trends and challenges, taking into consideration the IIRC discussion paper, and address some burning questions about integrated reporting. As figuring out the first steps towards integrated reporting can be difficult, we provide a roadmap that details how to start planning for implementation and what to consider in the process. In Part B, we present a selection of illustrative examples from published reports. These samples effectively reflect the ideas behind integrated reporting, as expressed in the IIRC discussion paper, and thus can help to provide a better idea of what an integrated report could look like. We would like to point out that this is only a collection of good practice examples which we have identified in current reports and which we think provide a broad picture of the implementation of the ideas of integrated reporting today. Hence, this collection is not comprehensive. Other good reporting examples may exist. Please, do not hesitate to present these practice examples to us for consideration in our next best practice edition. Integrated reporting is still an area of continuous development, and it will be further shaped through the discussions triggered by the IIRC, the expected exposure draft, and the development of reporting practice. We will continuously monitor the reporting landscape and update this collection of illustrative examples as practices emerge. May 2012 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Armin Slotta Michael Werner Integrated Reporting The Future of Corporate Reporting 3

4 Contents A What integrated reporting is about Contents A What integrated reporting is about Preface...3 A What integrated reporting is about Current trends and the business case Some burning questions about integrated reporting Roadmap to integrated reporting What should an integrated report look like? Structure of an integrated report Key content elements and guiding principles Organisational overview and business model Operating context, including risks and opportunities Strategic objectives and strategies to achieve those objectives Governance and remuneration Performance Future outlook...70 C Further insights...78 Contacts Current trends and the business case Reporting is at a crossroads. The voices questioning whether the current reporting model gives a fair reflection of an organisation are getting louder. In addition, depicting not only the financial but also the social and environmental impact of an organisation is increasingly requested by both the investor community and a variety of other stakeholders, such as NGOs, customers, suppliers and new recruits. The current reporting model is not able to fulfil these demands. While in many countries corporations are required by law to include significant non-financial information in their reports, this information is often not provided in a coherent way with a clear link between economic drivers, financial information, and social and environmental impacts. In the future, the success of companies will depend more and more on their ability to create value without depleting resources of any kind, whether natural, social, human or financial. Stakeholders will increasingly look for information on how companies connect their business strategy with their financial and nonfinancial performance. The IIRC discussion paper seeks to address these needs by creating a new integrated reporting model that focuses on what is strategically important and material to understanding an organisation s capacity to create and sustain value in the short, medium and long term. Despite being more of a blueprint in its current form, the discussion paper gives a clear idea of the goals and benefits of integrated reporting and indicates what it takes to get there. Organisations that are moving towards integrated reporting in anticipation of regulatory requirements could well develop a competitive advantage which can secure capital and credit, help in the war for talent, and build strong business relationships. Stakeholders will gain a better understanding of the quality and sustainability of performance through insight into external influences, strategic priorities and the dynamics of the chosen business model. The integration and alignment of internal processes will help the business from top to bottom to make better-informed decisions which again will foster a better understanding for stakeholders. Those organisations that go down the road of integrated reporting will be rewarded by an increase in trust and market value. 4 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 5

5 ur A What integrated reporting is about A What integrated reporting is about 2 Some burning questions about integrated reporting Fig. 1 Integrated model of main information areas and their interdependencies in the context of an organisation s environment What are the benefits of integrated reporting? Integrated reporting moves beyond a silo approach of information gathering and reporting towards a more comprehensive assessment and presentation of a company s value and performance. This offers various benefits, such as giving organisations a more holistic view of information relevant to their strategy, business model and ability to create and sustain value in the short, medium and long term. More specifically, potential benefits are: greater access to and transparency of information from a wide range of both internal and external information sources, through integrated processes and the standardisation of information; streamlined reporting through more reuse of reporting elements, transparency and collaboration on reporting, and analytical concepts used by both internal and external analysts; more relevant and understandable information available for management and stakeholders to enable better decision-making; better allocation of capital and other resources; better access to capital markets and business partners; competitive advantage through cost savings, operational efficiencies and differentiation. However, the roadmap to realising such benefits is not necessarily a simple one. It requires a comprehensive approach: understanding the company s strategy drivers, identifying key stakeholders and their specific expectations, and implementing processes to obtain the information necessary for an integrated approach to managing the business. External drivers Societal Geoplitical Consumption Social contribution Funding Wealth creation Performance Technological drivers Environmental Corporate contribution Economic Competitive Strategy Value drivers Performance Renumeration ial res es non-financial resour n Governance Strategy & objectives Business model Non-fiinancial resources Financial resources fi s relationships Relationships Strategy risk Resources and relationships The integrated model set out below highlights the scope of the information that needs to be considered when assessing the information demands of an organisation, including the interdependencies between the various areas external, strategic, business and performance. Regarding external drivers, companies might ask: What is the market and regulatory landscape like today, and how is it changing? What are the megatrends that are changing society now, and how will they impact markets in the future? With a view to the business model, relevant questions include: Are the business model and supply chain designed to withstand the impacts of climate change, technology failures and natural disasters? What assumptions have been made regarding the availability of resources? Answering these questions within an integrated approach will give companies a much clearer picture of their industry, markets and broader environment as well as how to change products and services, business models and positioning to remain sustainable. Source: PwC Is integrated reporting an external reporting phenomenon or does it have wider ramifications? Even though the IIRC discussion paper, which has triggered the current discussion about integrated reporting, initially provides a framework for external reporting, its aim is much higher. The idea of integrated reporting is focused on making some real changes to the existing corporate reporting model, both to external as well as internal reporting. An integrated report is merely intended to be one output of integrated reporting, which should reflect and will depend upon integrated thinking within an organisation. It is about understanding the relevance of various factors financial as well as non-financial and their interdependencies for the company s business model, and considering the insights formed with such a comprehensive approach in strategic and operational decisions. Ultimately, it is a topic with implications for management, steering, governance and culture of an organisation. What does it take to realise the benefits of integrated reporting? And where is our company in terms of meaningful reporting and access to information for business decisions? When organisations start thinking about an integrated reporting approach and identifying potential benefits for their business, it is critical that they ask whether 6 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 7

6 A What integrated reporting is about A What integrated reporting is about their reporting presents a holistic picture of the organisation, and whether their sustainability approach is integrated into their business strategy. Below are some other crucial questions that should be asked at this point. Fig. 2 Questions companies should ask when considering an integrated approach to reporting External Reporting Internal Reporting Are key components of what makes my business successfull missing from our reporting? Would I invest in my company based on what is presented externally? Is the market value of my company a fair reflection of the business? Does the quality of our reporting make us more vulnerable than peers to a hostile takeover bid? Does my company s reporting show clear alignment between strategy, remuneration and KPIs? Is too much time spent producing the numbers, rather than gaining real insigt? Is reporting flexible enough to respond to change? Do we have the market insight and non-financial information needed to stay ahead or are we too dependent on historical, financial information? Do we have transparent performance measures with clear accountability for them? Do we have a complete, timely picture of what s going on in the business financially and operationally? Today, every management team needs to be able to put themselves in the shoes of a skeptical outsider, such as an investor, a new recruit, a customer or supplier. If done well, integrated reporting can secure capital and credit, help win the war for talent and build strong business relationships. Source: PwC A status quo analysis based on the outcome of such questions may be the first step on the road to implementing an integrated reporting approach. Which standards have to be applied? Despite increasing attention on and application of integrated reporting, there is still no common mandatory reporting standard. The only exception so far is South Africa, where companies listed on the Johannesburg Stock exchange have to provide an annual integrated report or explain why they have not according to the King III Code of Governance Principles. The IIRC discussion paper offers initial proposals for the development of a framework and gives some examples that reflect current ideas of how the integrated reporting principles could be addressed. However, these examples are not sufficient to provide a clear idea of what a good integrated report should look like. We also do not know what a future standard might call for. Nevertheless, we think that the principles of good reporting included in the discussion paper can be applied regardless of specific standard requirements. In addition, we see various reporting examples which reflect the ideas of integrated reporting very well and thus offer organisations aiming to move towards integrated reporting a foundation to build upon. We have composed a selection of these examples in Part B of this publication. Is an integrated report a one size fits it all solution? In essence, an integrated report should tell the story of the company. This includes historical financial information as well as information which is forwardlooking, explains the company s strategic direction, and discusses targets, risks and opportunities to be addressed. The structure and length of the report thus depend on the complexity of the company s business. However, the report should focus only on the matters that the organisation considers most material to longterm success. This again leaves room for a different understanding of the scope of reporting and will lead to diversity in integrated reporting practices. Is an integrated report an additional document organisations need to produce? According to the IIRC discussion paper, the main output of integrated reporting is a single report that the IIRC anticipates will become an organisation s primary report, replacing rather than adding to existing reporting. However, the reduction of current reporting to one short integrated report, as envisaged by the IIRC, is currently not realistic given the numerous existing regulatory reporting requirements. Hence, companies will have to find alternative reporting solutions, such as combining existing reports or preparing an integrated report in addition to mandatory reporting. But in any case, the integrated report should be the primary reporting vehicle and thus provide a clear reference point for other communications, such as detailed financial reports or other specific compliance information, detailed sustainability information or investor presentations. Much of this information might move to an online environment, reducing clutter in the primary report. Further alternative ways of structuring an integrated report as long as organisations are bound by existing reporting requirements are discussed in Section 4. When is my company ready for an integrated report? In theory, every company can get ready at any time. However, depending on the size and complexity of an organisation as well as the maturity of its reporting, a move towards integrated reporting may need longer preparation. Fortunately many companies will not need to start the process from scratch, because they already publish a transparent, investor-oriented annual report, sustainability information, KPIs and other information required for integrated reporting. However, such information is often not linked to their strategy and business model. Therefore, moving towards integrated reporting will mean restructuring the underlying reporting and internal processes. In some organisations, the structures may be so complex and fragmented that companies may even consider establishing a new structure with processes designed specifically for integrated reporting. Given the developments and the potential benefits of integrated reporting, organisations should consider moving towards integrated reporting in anticipation of regulatory requirements. It may help them to make a difference as first movers and thus give them a valuable competitive advantage. For those who do not report on non-financials yet, integrated reporting can be an opportunity to move to a more comprehensive and meaningful reporting that meets future requirements from the outset. 3 Roadmap to integrated reporting Integrated reporting provides all necessary information for internal purposes while at the same time offering appropriate information to shareholders and other stakeholders. This requires one pool of data from which the company is able to select the relevant information for the respective purpose (eg, internal and external reporting, financial and non-financial reporting). Integrated reporting is a holistic discipline which is based upon interlinking all kinds of data sets. This 8 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 9

7 A What integrated reporting is about A What integrated reporting is about also means that relevant data, including non-financial information, must be made available on a regular, timely and reliable basis. Once integrated reporting is fully implemented, the integrated report will simply reflect internal processes, materiality discussions and stakeholder engagement. To get there, it is necessary to have cooperation across the various areas in the company and the involvement of stakeholders. In parallel to setting the basis for integrated reporting, the structure of the report and the overall communication concept may be developed in steps. The roadmap below, followed by explanations of each phase, outlines the steps to be taken on the road to integrated reporting. Fig. 3 Steps on the road to integrated reporting Stakeholder expectations Source: PwC Define the business model Establish integrated thinking Assess opportunities and risks and the operating context Adapt business processes Evaluate and control Establish integrated reporting Start with a status quo analysis As outlined in the previous section, a move towards integrated reporting should start with a status quo analysis that will help to uncover the main issues and to identify focus areas in the process of implementation. This sets the starting point for the development of a roadmap to integrated reporting. Stakeholder value Briefly summarised, companies will need to: understand where they are in terms of reporting as well as what level of integration they want to achieve and in what time frame; analyse their current business model and develop a good understanding of the relevant value drivers, including those related to social and environmental impacts; assess risks and opportunities along the value chain under consideration of financial, social, environmental, economic and governance issues and trends; define strategic objectives under consideration of stakeholder expectations and sustainability issues; define material KPIs to track performance; implement necessary organisational changes, in particular concerning the structures, processes and systems for gathering data on, monitoring, controlling and reporting on performance; build awareness around the new reporting approach and the meaning of integrated thinking; decide what information to communicate and how to present it. Define the business model With the aim of offering a broader explanation of performance than traditional reporting, defining the business model in the context of integrated reporting means considering all the relevant capitals on which performance depends, and explaining their role in how the company seeks to create and sustain value. Capitals can be conceived as resources and relationships which are used by the organisation, affect it or are affected by it. Depending on individual circumstances, the organisation needs to categorise relevant capitals and decide on their importance. The following categories of capitals could be taken into account: Financial capital Manufactured capital Human capital Brand/customer capital Natural/social capital Intellectual capital Ideally, the reporting framework is built around the business model, although how closely the two are aligned depends on the level of integration of the relevant capitals. A recommended first step is an analysis of the level of integration of these value drivers in current reporting and a comparison with the desired future level of integration to identify gaps and actions to be taken. Assess opportunities and risks and the operating context from an integrated view Opportunities and risks arise from the current business model and provide impetus for the company s further development. Consideration of the different categories of capitals can conflict with various stakeholder expectations and the environment in which the organisation operates. Therefore, it is crucial to develop an understanding of interdependencies between financial and nonfinancial goals. Hence, decision-makers need to formulate strategic objectives that also consider stakeholder expectations and sustainability aspects and to define and implement concrete measures in their strategy to address them. In the next step, companies should define material financial and non-financial KPIs to continuously measure and monitor sustainable business activities. When properly identified, specified and aligned with the business strategy, these KPIs focus the attention of the management, investors and other stakeholders on the issues most material to the business model and financial prospects of the company, as well as on the most important impacts on society and the environment. Making non-financial KPIs measurable may be a complex exercise for some KPIs. However, various approaches have evolved that make the measurement and even monetising of ecological and social indicators possible (see, for example, Puma s environmental profit and loss account). Adapt business processes To monitor and manage the business using an integrated approach, non-financial information must be gathered on a more timely and more frequent basis. Ultimately, this means that all business processes need to be adapted to fit the integrated organisation. This includes implementing processes for non-financial information to gain robust data collection and administration of all material KPIs, establishing a control environment for data gathering and consolidation of nonfinancial data, and aligning financial and non-financial reporting processes. Expected benefits and challenges of integrated reporting Statements from a PwC survey on integrated reporting "We need to demonstrate that we are capable of handling future developments in all areas. What better way to do so than by presenting our efforts to achieve sustainability? And what better way to show our understanding of economic processes than with a rapid integration of financial and nonfinancial data?" "Financial reporting can be completed very quickly. Right now, sustainability reporting requires significantly more time, and poses a challenge in terms of data collection and processing." "The reports have got to become more firmly integrated; they have got to form one unified report. The main statements have got to be consistent aside from a common language for describing items, a formal integration is also necessary. The reports have also got to be incorporated across all corporate communications." 10 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 11

8 A What integrated reporting is about A What integrated reporting is about Further, companies will have to establish integrated monitoring processes for all new KPIs or those that have not been covered by adequate controlling in the past. Also, many companies will have to develop solutions to make certain KPIs reliably measureable and available on a regular basis at reasonable cost. 4 What should an integrated report look like? Finally, the implementation of the integrated approach will require awareness across the whole organisation. Senior management needs to get involved right up front, and employees should be involved from the beginning and be trained in the objectives and use of integrated reporting. This will help to align processes, unite different parts of the organisation and establish sustainable integrated thinking. Establish integrated reporting The goal of integrated reporting is to depict the effects of the reciprocal relationships between an organisation's strategy, governance, performance and prospects within the economic, social and environmental context in which it operates. An integrated report should provide information that is relevant for each of the different stakeholder groups and allow them to compare and evaluate sustainable actions. This makes it essential to give non-financial KPIs a monetary value, as Puma has recently done in its first environmental profit and loss account, or to point to potential financial impacts. The challenge is to find the right balance of financial and non-financial metrics and insightful narrative. As outlined in Section 2, an integrated report can take various forms, and a fully integrated approach to reporting will often be developed stages. Recognising existing regulatory barriers, the IIRC proposes alternatives in a first stage. Conceivable alternatives on the way to integrated reporting are: publishing a stand-alone integrated report as an addition to the legally required annual report and other mandatory or voluntary reporting; integrating the information usually included in additional reporting (eg sustainability report) with information suggested for an integrated report while maintaining an annual report that includes the financial report and the management commentary (combination); publishing one document that follows the guiding principles for integrated reporting and covers the content elements of an integrated report but still includes all regulatory financial and non-financial information (integration with retention of previously reported information). Given this degree of freedom, we see and expect diversity in practice as long as there are no further-detailed requirements. Integrated reporting as a driver for innovative communication concepts? Statements from a PwC survey on integrated reporting Company reports will still play role in the next 10 years, but they will be digital, published earlier and strongly oriented on social changes and new realities. The interests of stakeholder groups will change, and that means reporting must change as well. [...] It will need to address the specific requirements of the target stakeholders, for example by achieving greater transparency. Newly emerging groups of readers may also expect a different type of reporting. Right now we cannot say what it will be like we have to wait and see. The future belongs to the internet. [...] Moreover, today s stakeholders demand information that is more up to date, and they will no longer be fobbed off with an annual report. In addition to deciding what information to present, companies need to think about how to present it. It may be difficult to depict such complex reciprocal relationships in a uniform document, so the question arises: Which media can be used to structure and publish an integrated report in a clear and easily accessible way that suits stakeholders best? Would it be possible to replace a hard copy of the report with a regularly updated, customised and interactive online version that provides each stakeholder group with the data it considers most relevant, which can be downloaded and used as needed? A general gap analysis of current reporting content and structures compared with the requirements of integrated reporting can provide helpful answers to the questions above. Further, a company should assess which level of integration and, as the case may be, assurance is realistic before deciding what information it wants to present and where it wants to report it. As previously explained, the integration of the reported information into one report can be limited through existing regulatory requirements, in particular if third-party verification is required or desired. Interviews with different stakeholders have shown that the focus of the report and the availability of information are especially important. Therefore, it may also be recommended to get stakeholders views in the process of determining the reporting structure and media. Finally, the design and presentation of an integrated report is a journey, as is integrated reporting in general. Once published, a company s first integrated report will not be the end but the starting point for the next steps of the integration process (improving data quality, aligning other publications, etc). The next sections aim to provide a better idea of what such an integrated report could look like. Fig. 4 Conceivable external reporting concepts Annual report Source: PwC Corporate responsibility chapter Remuneration report MD&A Limited integration Sustainability report Annual report Sustainability report Combination Integrated report Integration However, in its proposed Framework for Integrated Reporting, the IIRC suggests guiding principles and content elements that should be considered in integrated reports, thus contributing to a more unified idea of what an integrated report should address. According to the discussion paper, the following five guiding principles should underpin the preparation of an integrated report: Strategic focus Connectivity of information Future orientation Responsiveness and stakeholder inclusiveness Conciseness, reliability and materiality Consolidated statements Annual report Sustainability report Website Primary report Integrated report as primary report in a holistic communication model 12 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 13

9 A What integrated reporting is about These principles should be applied in determining the content of an integrated report. The content should cover the following elements and make the interconnections between them apparent: Organisational overview and business model Operating context, including risks and opportunities Strategic objectives and strategies to achieve those objectives Governance and remuneration Performance Future outlook Fig. 5 The guiding principles and content elements underpinning the preparation of an integrated report B What integrated reporting can look like Illustrative examples The way to integrated reporting is a journey that is still ahead of most organisations or has just begun. As there is no clear guidance yet of how an integrated report should look, and as the concept of integrated reporting will be shaped through the current discussions triggered by the IIRC, the unclear content of future standards for integrated reporting, and evolving reporting practice, will remain an area of continuous development over the next years. Therefore, we will continuously monitor the reporting landscape and regularly update our collection of illustrative examples. Strategic focus Future outlook Performance Operating context, including risks and opportunities Organisational overview and business model Connectivity of information Governance and remuneration Strategic objectives Future orientation To date, we have yet to see reporting that addresses all the requirements set out in the IIRC discussion paper. However, we have seen a lot of good reporting examples in different reports, and we have selected a number of examples that effectively illustrate single content elements and guiding principles. Since the number of truly integrated reports is still limited, and since there is a number of partly integrated or combined reports, as well as annual reports and corporate responsibility reports that show elements of integrated reporting, we have not limited our selection to fully integrated reports, but considered all current report formats. In the following, we present selected reporting examples that may give you a better idea of: how an integrated report can be structured; how each of the key content elements can be presented effectively; how the guiding principles show up in the reporting examples presented. We have selected illustrative examples of effective structures for integrated reports and for the presentation of each of the six key content elements proposed in the IIRC discussion paper. In these examples we have simultaneously highlighted which specific guiding principles are reflected. Conciseness, reliability and materiality Responsiveness and stakeholder inclusiveness Source: IIRC (ed.), Towards Integrated Reporting Communicating Value in the 21st Century, With this idea of principles and key content elements, the IIRC discussion paper provides a foundation for preparing an integrated report without additional explicit reporting requirements. In Part B, we present selected reporting examples taken from published reports that take into account the proposed content elements and guiding principles and effectively reflect the ideas behind integrated reporting. 1 Structure of an integrated report An integrated report should provide a full, concise and balanced picture of an organisation s overall performance that helps investors and other stakeholders to understand and assess its ability to create and sustain value in the short, medium and long term. Hence, preparing and structuring an integrated report means more then linking financial reporting information with sustainability information through cross references. While for most organisations an integrated report cannot yet be the primary reporting vehicle that includes all necessary financial and non-financial information (because additional reporting is required by law), it should at least provide a clear reference point for all communications. 14 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 15

10 To guide readers through an integrated report that contains links to other reporting elements, organisations should explain the new reporting format. This includes what information it covers, how it links to other reporting information and how this is marked in the report. In this connection, an organisation should indicate which standards have been applied, to what extent the reported information has been verified by a third party, and how this is marked in the report. Finally, the structure of the integrated report should be explained, including, if necessary, significant links to other reports or cross referencing. We start with good examples of introducing readers to reports that integrate reporting information, either in the form of a fully integrated report or an annual report that reflects good reporting practices. Solarworld concisely explains how its integrated report is structured, what information it covers, where additional information is available, which standards have been applied in preparing the report, and which level of assurance is given. WE ARE COMMITTED TO SUSTAINABILITY AND TRANSPARENCY The principle of sustainability The present integrated report combines financial and sustainability reporting. Following the claim of sustainability, we have streamlined the consolidated annual report: Especially relevant ecological and societal topics are extensively portrayed in the annual report. A sustainability factsheet contains an overview of the quantitative data. 86 Factsheet Sustainability At the end of each chapter of the group management report, information boxes refer to the details on our sustainability performance that are available online. All further details of our sustainability performance are interactively prepared in the online report. In this way, we facilitate the demand-oriented search in the online report thus additionally reducing the printing effort in the spirit of sustainability. As a supplement to the ready-to-print PDF version on the Internet, we offer you the possibility of having a print-out made by us and sent to you (print-on-demand). Order card Comprehensive performance audit We have had the entire reporting audited by BDO AG Wirtschaftsprüfungsgesellschaft. The information on the asset, finance and earnings situation is based on the requirements of the International Financial Reporting Standards (IFRS) and, where applicable, on German commercial law and the German accounting principles (German GAAP). Sustainability reporting follows the international guidelines (G3) of the Global Reporting Initiative (GRI) and has consistently reached the highest level of A+ since At the same time, it serves as a Communication on Progress (COP) for the implementation of the ten principles of the UN Global Compact. The audit of the sustainability data has been conducted in line with the German principles of the proper audit review of reports in the area of sustainability identified by the German Institute of Certified Public Accountants (IDW). These principles include the requirements of the International Standard on Assurance Engagements (ISAE) 3000 and do in fact go beyond them. Electrolux has integrated its sustainability information throughout its annual report and additionally dedicated a section to how sustainability issues are relevant to the business strategy as well as goals and performance for mainstream shareholders and stakeholders. Electrolux says that being transparent about how the Group measures, manages and integrates these sustainability priorities into its business is an important part of the annual reporting process. It has therefore developed a comprehensive, three-tiered approach to reporting on sustainability. Integrating sustainability information into the annual report is the first tier; the second is an extensive GRI report, which is available online; and the third is a sustainability strategy report, which focuses on the four issues most relevant to the company and addresses the information needs of different stakeholder groups in a concise way. This reporting approach is explained on the website and in each of the reporting elements with clear links to the related other reporting elements. Contents Reporting realm 1 CEO statement 2 Electrolux offering 4 Sustainable strategy 6 Integrating sustainability 8 Sustainability focus areas 10 Performance review 14 Ethical business and safe workplaces 14 Climate challange 15 Responsible sourcing 16 Restructuring 17 An inclusive approach 18 From trash to treasure 20 Annual report Sustainability information is integrated throughout the printed Annual Report. Written for shareholders and stakeholders, six pages are additionally dedicated to how sustainability issues are relevant to the business strategy, as well as goals and per formance. On-line annual report: Built around a clickable GRI index, the sustainability performance review is integrated into the on-line Annual Report. It shows how Electrolux performs against recognized sustainability indicators in a broader context. It is designed for socially responsible investors and other sustainability professionals. View at: 00 Rounding differences may occur. FOR YOUR GUIDANCE Source: Solarworld AG Annual Group Report 2010, page 2 Management & performance 22 Labor 22 Human rights 25 Environment 27 Product responsibility 30 Society 30 The Electrolux 2010 sustainability Source: performance Electrolux review GRI sustainability includes information performance 2010 provided in the printed annual report and the comprehensive online report available under Sustainability, at Sustainability strategy report: Future InSight is an outlook report aimed at key audiences such as employees, retailers, customers and other business contacts. It is *forward-looking, focusing on how environmental and social challenges are driving innovation and shaping strategies and partnerships. To be launched in Q2, Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 17 Henrik Sundström Vice President Sustainability Affairs Tel Contact

11 18 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. Annual Rep Audited informa Group Income Stat Group Statement o Group Cash Flow S Group Statement o Group Statement o Parent company fin Significant accoun Basis of preparatio Revenue and opera Distribution costs Asset services Compensation Other costs Finance expense a Adjusted profit bef Taxation Discontinued oper Earnings per ordin Segmental analysi Franchise value an Investment in fund Fee and other rece Trade and other pa Cash, liquidity and Investments in ass Leasehold improve Deferred compens Pension benefits Capital manageme Dividends Foreign currency Fair value hierarch Related party trans Financial guarante Principal group inv Independent Audit Unaudited inform Statement of direc Funds under mana Regulatory capital Navigating the financial statements: 58 Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March $m Note Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March $m Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. Open-ended Institutional GLG $bn Guaranteed alternative FoF and other long only Total FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. FY 2011 FY FY 2010 FY Average FUM revenue Margin Average FUM revenue Margin $bn $m bp $bn $m bp Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. The primary statements are contained within the Financial Review (FR) together with narrative content. If any information is detailed in the Additional Financial Information (AFI), this will be indicated in the notes as AFI 00. A detailed index is provided opposite. Audited information has been indicated in the Financial Review and Additional Financial Information by grey background shading. 58 Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. Audited inform Group Income St Group Statemen Group Cash Flow Group Statemen Group Statemen Parent company Significant accou Basis of preparat Revenue and ope Distribution costs Asset services Compensation Other costs Finance expense Adjusted profit b Taxation Discontinued ope Earnings per ord Segmental analy Franchise value a Investment in fun Fee and other re Trade and other Cash, liquidity an Investments in a Leasehold impro Deferred compen Pension benefits Capital managem Dividends Foreign currency Fair value hierarc Related party tra Financial guaran Principal group in Independent Aud Unaudited info Statement of dire Funds under ma Regulatory capita Navigating the financial statements: 58 Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March $m Note Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March $m Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. Open-ended Institutional GLG $bn Guaranteed alternative FoF and other long only Total FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. FY 2011 FY FY 2010 FY Average FUM revenue Margin Average FUM revenue Margin $bn $m bp $bn $m bp Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. The primary statements are contained within the Financial Review (FR) together with narrative content. If any information is detailed in the Additional Financial Information (AFI), this will be indicated in the notes as AFI 00. A detailed index is provided opposite. Audited information has been indicated in the Financial Review and Additional Financial Information by grey background shading. This year s Annual Report is different. We describe the essence of how our business works by answering a series of straightforward questions. We then provide more detailed information to complete the picture. We hope you find this straight talking approach useful and informative. 1. How do we generate long-term value? A description of our business model What are the Board s key responsibilities and priorities? Chairman Jon Aisbitt discusses the Board s activities and agenda What is our strategy for growth? Chief Executive Peter Clarke reviews this year s progress and outlines the key drivers of growth and return How is our business performing? Finance Director Kevin Hayes discusses this year s financial performance How is our marketplace evolving? Chief Operating Officer Emmanuel Roman describes industry, competitive and regulatory trends What differentiates our investment managers? Profiles of AHL, GLG and Man Multi-Manager What makes our business model sustainable? People including remuneration policy highlights 40 Distribution and product structuring 44 Innovation 46 Risk management 48 Community engagement 52 Financial Review Group Income Statement 59 Group Statement of Comprehensive Income 59 Group Cash Flow Statement 63 Group Statement of Financial Position 64 Group Statement of Changes in Equity 74 Independent auditors report Basis of Preparation Funds Under Management Revenue and operating margins Distribution costs Asset services Compensation Other Costs Finance expense and finance income Adjusted profit before tax continuing operations Taxation Earnings per ordinary share (EPS) Segmental analysis Franchise value (goodwill) and other intangible assets Investment in fund products and other investments Fee and other receivables Dividends Earnings per ordinary share Geographical disclosure Foreign currencies Fair value hierarchy of financial assets Leasehold improvements and equipment Capital management Share-based payments: share grant information Pensions: actuarial information Employee Trusts Related party transactions Financial guarantees and commitments Principal group investments 125 Additional information Parent Company financial information 126 Notes to the Company financial information 127 Independent auditors report Trade and other payables Cash, liquidity and borrowings Investments in associates and joint ventures Deferred compensation arrangements Pension benefits Capital management Regulatory capital 75 Five-year record 77 Governance Corporate Governance Report 80 Remuneration Report 94 Directors Report 107 Shareholder and Company Information 108 Additional Financial Information 1. Statement of directors responsibilities Significant accounting policies schedule Funds Under Management Group Cash Flow Note Discontinued operations brokerage Taxation 116 This year s Annual Report is different. We describe the essence of how our business works by answering a series of straightforward questions. We then provide more detailed information to complete the picture. We hope you find this straight talking approach useful and informative. 1. How do we generate long-term value? A description of our business model What are the Board s key responsibilities and priorities? Chairman Jon Aisbitt discusses the Board s activities and agenda What is our strategy for growth? Chief Executive Peter Clarke reviews this year s progress and outlines the key drivers of growth and return How is our business performing? Finance Director Kevin Hayes discusses this year s financial performance How is our marketplace evolving? Chief Operating Officer Emmanuel Roman describes industry, competitive and regulatory trends What differentiates our investment managers? Profiles of AHL, GLG and Man Multi-Manager What makes our business model sustainable? People including remuneration policy highlights 40 Distribution and product structuring 44 Innovation 46 Risk management 48 Community engagement 52 Financial Review Group Income Statement 59 Group Statement of Comprehensive Income 59 Group Cash Flow Statement 63 Group Statement of Financial Position 64 Group Statement of Changes in Equity 74 Independent auditors report Basis of Preparation Funds Under Management Revenue and operating margins Distribution costs Asset services Compensation Other Costs Finance expense and finance income Adjusted profit before tax continuing operations Taxation Earnings per ordinary share (EPS) Segmental analysis Franchise value (goodwill) and other intangible assets Investment in fund products and other investments Fee and other receivables Dividends Earnings per ordinary share Geographical disclosure Foreign currencies Fair value hierarchy of financial assets Leasehold improvements and equipment Capital management Share-based payments: share grant information Pensions: actuarial information Employee Trusts Related party transactions Financial guarantees and commitments Principal group investments 125 Additional information Parent Company financial information 126 Notes to the Company financial information 127 Independent auditors report Trade and other payables Cash, liquidity and borrowings Investments in associates and joint ventures Deferred compensation arrangements Pension benefits Capital management Regulatory capital 75 Five-year record 77 Governance Corporate Governance Report 80 Remuneration Report 94 Directors Report 107 Shareholder and Company Information 108 Additional Financial Information 1. Statement of directors responsibilities Significant accounting policies schedule Funds Under Management Group Cash Flow Note Discontinued operations brokerage Taxation 116 Source: Man Group Annual Report 2011 Man Group, the UK-based international alternative investment management company, uses an innovative annual report format to highlight the information that management sees as essential to understanding its business and to provide stakeholders with the information they want. The first section sets out the business story, using seven key questions about business performance. The second brings from the back end those financial items judged as crucial by management. The third section consolidates additional financial information. Source: Man Group Annual Report 2011, pages Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. Annual Rep Audited informa Group Income Sta Group Statement Group Cash Flow Group Statement Group Statement Parent company f Significant accoun Basis of preparati Revenue and ope Distribution costs Asset services Compensation Other costs Finance expense Adjusted profit be Taxation Discontinued ope Earnings per ordin Segmental analys Franchise value a Investment in fund Fee and other rec Trade and other p Cash, liquidity and Investments in as Leasehold improv Deferred compen Pension benefits Capital managem Dividends Foreign currency Fair value hierarch Related party tran Financial guarante Principal group in Independent Audi Unaudited infor Statement of direc Funds under man Regulatory capita Navigating the financial statements: 58 Man Group plc Annual Report Man Group plc Annual Report 2011 Financial Review continued Group Income Statement For the year ended 31 March $m Note Revenue: Gross management and other fees 3 1,452 1,293 Performance fees ,655 1,345 Gains/(losses) on investments and other financial instruments Distribution costs 4 (318) (325) Asset services 5 (16) Amortisation of acquired intangible assets 13.3 (28) Compensation 6 (566) (349) Other costs 7 (307) (266) Share of after tax profit of associates and joint ventures Gain on disposal of BlueCrest 9, Impairment of Man Multi-Manager and Ore Hill 9, 13.2, 18 (397) Gain arising from residual interest in brokerage assets 9,15 34 Finance expense 8 (86) (36) Finance income Profit before tax continuing operations Taxation 10, AFI 6 (51) (96) Profit for the year continuing operations Discontinued operations brokerage AFI 5 (62) Statutory profit for the year attributable to owners of the parent Earnings per share from continuing operations: 11, AFI 8 Basic (cents) Diluted (cents) Earnings per share from continuing and discontinued operations: 11, AFI 8 Basic (cents) Diluted (cents) Adjusted profit before tax - continuing operations Group Statement of Comprehensive Income For the year ended 31 March $m Statutory profit for the year attributable to owners of the parent Other comprehensive (expense)/income: Available for sale investments: Valuation (losses)/gains taken to equity (5) 62 Transfers from/(to) statement of comprehensive income upon sale or impairment 10 (66) Foreign currency translation of subsidiaries Tax credited 2 5 Total comprehensive income for the year attributable to the owners of the parent Funds under management (FUM) (unaudited) The growth in FUM is a key indicator of our performance as an investment manager and our ability to remain competitive and build a sustainable business. Average FUM multiplied by our fee margin equates to our revenue earning capacity. Our objective is therefore to grow funds under management while maintaining our fee margin. Funds under management are shown by product groupings that have similar margin and investor characteristics. The GLG FUM and FUM movements are included from the acquisition date 14 October FUM, fund flows and margins are discussed further in Section 4 and AFI 3. Open-ended Institutional GLG $bn Guaranteed alternative FoF and other long only Total FUM at 31 March Acquired 14 October Sales Redemptions (2.4) (4.4) (3.2) (3.7) (13.7) Net inflows/(outflows) (1.8) 1.5 (1.4) (0.3) (2.0) Investment movement FX Other 2.0 (0.4) (0.1) 1.5 FUM at 31 March Guaranteed product FUM increased by 8% during the year mainly driven by FX and the re-gearing of the funds following strong AHL performance in CY2010, which offset redemptions. Open ended alternative FUM increased by 113% during the year due to the acquisition of GLG and net inflows following strong demand for alternative formats and positive fund performance in both AHL and GLG. The FUM of $27.3 billion at the year-end comprised $13.7 billion from AHL open-ended products and $13.6 billion from GLG alternatives. Institutional FUM remained broadly flat during the year with net outflows being offset by positive FX movements related to the strengthening of the Euro. 63% of Institutional FUM is denominated in non USD currencies. GLG long only FUM increased by 6% post acquisition driven by strong fund performance. Margins The management fee margin is calculated as revenue divided by average FUM. Previously the share of management fees from associates, primarily from BlueCrest, were included in the gross management fee margin. The sale of the interest in BlueCrest in March 2011 will result in lower associate income in future periods, therefore in the analysis of management fee margins in the table below we have excluded income from associates for all periods. Gross management fee margins by product channel are shown in the table below. FY 2011 FY FY 2010 FY Average FUM revenue Margin Average FUM revenue Margin $bn $m bp $bn $m bp Average FUM / Total , , Guaranteed AHL open ended GLG alternatives Institutional Long only The guaranteed products gross management and other fees margin was 470 bp (2010: 463 bp). The small increase is primarily the result of higher redemption fee income received, mainly in the first half of the year. Margins on recent guaranteed products are consistent with historical levels. The AHL gross management and other fees margin on open-ended products was 360 bp, broadly the same as in The GLG alternatives gross management and other fees margin was 156 bp, compared to 155 bp for 2010 based on GLG average margins for the period from 1 October 2009 to 31 March An increase in the net flows and investment performance of higher yielding funds being broadly offset by inflows and investment performance into lower yielding managed accounts. Institutional gross management and other fees margin was 115 bp, compared to 93 bp for The primary reason for the increase relates to additional management fees earned following the achievement of net asset thresholds in certain Pemba funds. Margins on institutional products are expected to reduce as a result of a mix shift towards managed account mandates which have an average margin of 50 bp. Long only gross management and other fees margin was 75 bp, compared to 83 bp for The primary reason for the decrease is due to material inflows of lower yielding institutional mandates. The primary statements are contained within the Financial Review (FR) together with narrative content. If any information is detailed in the Additional Financial Information (AFI), this will be indicated in the notes as AFI 00. A detailed index is provided opposite. Audited information has been indicated in the Financial Review and Additional Financial Information by grey background shading. At the beginning of the financial review, a navigation page shows readers how to find their way around the new format.

12 2 Key content elements and guiding principles Index of illustrative examples with reference to respective key content elements and guiding principles Guiding principles Strategic focus Connectivity of information Future orientation Responsiveness and stakeholder inclusiveness Conciseness, reliability and materiality Specification An integrated report provides insight into an organisation s strategic objectives, how those objectives compare to its ability to create and sustain value over time, and the resources and relationships the organisation depends on. An integrated report shows the connections between the different components of an organisation's business model, external factors that affect the organisation, and various resources and relationships the organisation and its performance are dependent upon. An integrated report includes the management's expectations for the future, as well as other information to help report readers understand and assess an organization's prospects and the uncertainties it faces. An integrated report provides insight into an organisation's relationships with its key stakeholders, and to what extent the organisation understands, considers and responds to key stakeholders needs. An integrated report provides concise, reliable information that is material to assessing an organisation s ability to create and sustain value in the short, medium and long term. Organisational overview and business model National Bank Australia (p. 24); Anglo American (p. 26); Akzo Nobel (p. 28); Marks & Spencer (p. 30) Schiphol (p. 23); National Bank Australia (p. 25); Anglo American (p. 26); Marks & Spencer (p. 31) Anglo American (p. 27); Akzo Nobel (p. 29) Schiphol (p. 23); National Bank Australia (p. 24) Schiphol (p. 22); National Bank Australia (p. 24); Anglo American (p. 27); Akzo Nobel (p. 29); Marks & Spencer (p. 30) Operating context, including risks and opportunities National Grid (p. 33); American Electric Power (p. 35); Angloplatinum (p.41) National Grid (p. 33); American Electric Power (p. 35); Roche (p. 38); Siemens (p. 42) American Electric Power (p. 35); Natura (p. 37); Roche (p. 38); FMG (pp. 39, 40); Angloplatinum (p.41); Siemens (p. 42) Royal DSM (p. 34); American Electric Power (p. 35); Natura (p. 37); Roche (p. 38); FMG (pp. 39, 40); Angloplatinum (p.41); Siemens (p. 42); adidas (p.43) Strategic objectives and strategies to achieve those objectives Solarworld (p. 45); BASF (pp. 48, 49); Unilever (p. 51) BASF (pp. 48, 49) Solarworld (p. 45); Natura (p. 46); Unilever (p. 51) Solarworld (p. 45); Natura (p. 46); TNT (p. 47); BASF (p. 48); BMW Group (p. 50); Unilever (p. 51) Governance and remuneration Performance Future outlook Scottish and Southern Solarworld (p. 71) Energy (p. 54) British American Tobacco (p. 53); Scottish and Southern Energy (p. 54) Scottish and Southern Energy (p. 54); Royal DSM (p. 55); TNT (p. 56); RWE (p. 57) Vancity (p. 63); Puma (p. 67); Watercare (p. 69) Landcom (p. 58); Vancity (p. 61); Novo Nordisk (p. 64) Landcom (p. 59); Eskom (p. 60); Vancity (pp. 61, 62); Novo Nordisk (p. 65); Watercare (p. 69); Puma (p. 67) Solarworld (p. 71) Solarworld (p. 71); Philips (pp. 72, 73); Vodafone (p. 75); K+S (p. 76) Philips (pp. 72, 73); Vodafone (p. 75); K+S (p. 76) 20 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 21

13 Schiphol Group at a glance Organisational overview and business model Schiphol Group at a glance Conciseness Materiality 2.1 Organisational Aviation overview and business model The Aviation business area operates at Amsterdam Airport Schiphol. It provides services and facilities to airlines, passengers and handling agents. The Netherlands Competition Authority (NMa) regulates the charges levied. This content element includes an introduction to an organisation s business model Sources of revenue: Airport charges (aircraft, passenger and security and activities as well as its potential charges) to and create concession and fees sustain (paid by oil value. companies for the right to provide aircraft refuelling services). On the first narrative pages of its integrated report, Schiphol presents its four business segments, including revenues Consumers and operating results, and business model, thereby briefly addressing its mission, The activities profile, the Consumers activities, business strategy area comprise and developing, approach to involving stakeholders. Aviation granting and managing concessions for shops, food service outlets, services and entertainment, operating shops and car parks, and marketing advertising opportunities at Amsterdam Airport Schiphol. In addition, through the Privium programme and the VIP-Centre, we offer services to the category known as premium passengers. Sources of revenue: Retail sales, concession fees, parking fees, rentals, advertising & media and other fees, and management fees. The Aviation business area operates at Amsterdam Airport Schiphol. Revenue It provides services and facilities to airlines, Real passengers Estate and handling agents. The Netherlands Competition The Authority Real Estate (NMa) business regulates EUR 697 million area develops, manages, operates and invests (1.4% vs 09) the charges levied. in property at and around airports at home and abroad. The property portfolio consists of operational and commercial property, of which Sources of revenue: Airport charges (aircraft, the majority passenger is located at and and security around Amsterdam Operating Airport Schiphol. result charges) and concession fees (paid by oil companies for the right to Sources of revenue: The major source of revenue EUR is the 45 development million provide aircraft refuelling services). and leasing of buildings and property. In addition, (-0.5% revenue vs is 09) generated through the lease of land and the sale of property and buildings. Consumers The activities of the Consumers business area comprise developing, Revenue granting and managing concessions for Alliances shops, food & service Participations outlets, services and entertainment, operating The shops Alliances and & car Participations parks, and business area consists of Schiphol Group s EUR 299 million interests in airports abroad, domestic airports and other activities, marketing advertising opportunities at Amsterdam Airport Schiphol. (5.1% vs 09) including Schiphol Telematics and Utilities. In addition, through the Privium programme and the VIP-Centre, we offer services to the category known Sources as premium of revenue: passengers. The airports abroad contribute Operating to revenue result through management, performance and intellectual property fees. Furthermore, Sources of revenue: Retail sales, concession they contribute fees, parking to the net fees, result rentals, with a share of the EUR result 133 from million associates, dividend and interest income. The domestic airports contribute advertising & media and other fees, and management fees. (28.5% vs 09) to revenue for the most part via airport charges and parking charges. Schiphol Telematics supplies telecom services to companies. The Utility activities generate revenue from the transport of electricity and gas and from the supply of water. Real Estate The Real Estate business area develops, manages, operates and invests in property at and around airports at home and abroad. The property portfolio consists of operational and commercial property, of which the majority is located at and around Amsterdam Airport Schiphol. Revenue EUR 697 million (1.4% vs 09) Operating result EUR 45 million (-0.5% vs 09) Revenue EUR 299 million (5.1% vs 09) Operating result EUR 133 million (28.5% vs 09) Revenue EUR 173 million (0.8% vs 09) Operating result EUR 97 million (233.3% vs 09) Revenue EUR 147 million (2.9% vs 09) Operating result EUR 22 million (139.2% vs 09) Schiphol Group at a glance Mission We aim to rank among the world s leading airport companies. We create sustainable value for our stakeholders by developing AirportCities and by positioning Amsterdam Airport Schiphol as Europe s preferred airport. Schiphol ranks among the most efficient transport hubs for air, rail and road connections and offers its visitors and the businesses located at Schiphol the services they require 24 hours a day, seven days a week. Profile airports, particularly through the Alliances & Participations business area. Our revenues derived from this broad range of activities are made up for the most part of airport charges, concession fees, parking fees, retail sales, rents and leases, and income from our international activities. Amsterdam Airport Schiphol is an important contributor to the Dutch economy. It serves as one of the home bases for Air France-KLM and its SkyTeam partners, from which these airlines serve their European and intercontinental destinations. Amsterdam Airport Schiphol offers a high-quality network serving 301 destinations. Schiphol Group at a glance Schiphol Group is an airport operator, focusing particularly on AirportCities. A prime example of an AirportCity is Amsterdam Airport Schiphol. Strategy Europe s fifth-largest airport in terms of passengers and third-largest in terms of cargo. The maintenance and reinforcement of In addition to our Dutch operations (Amsterdam the Main Port s competitive position, and that Airport Schiphol, Rotterdam The Hague Airport, of Amsterdam Airport Schiphol in particular, Mission Eindhoven Airport and Lelystad Airport), airports, is the particularly single most through important the objective Alliances on which & we have direct and indirect operations in Participations our strategy business is focused. area. This Our strategy revenues combines We aim to rank the among United the States, world s Australia, leading Italy, Indonesia, derived the from airport s this socio-economic broad range function of activities with are airport companies. Aruba We and create Sweden. sustainable Moreover, in value 2008 we took made up our for entrepreneurial the most part business of airport operations. charges, a strategic 8% stake in Aéroports de Paris S.A. The interconnection and interaction between for our stakeholders by developing AirportCities concession fees, parking fees, retail sales, these two elements are crucial for the robust and by positioning Schiphol Amsterdam Group is structured Airport Schiphol and run as a rents and and leases, future-proof and development income from of our Schiphol as Europe s preferred commercial airport. enterprise Schiphol with a ranks socio-economic international Group going activities. forward. Corporate Responsibility among the most function. efficient These transport qualities hubs are necessary for for is an integral part of this strategy and has continued success in the competitive aviation been permeating increasingly all aspects air, rail and road connections and offers its Amsterdam Airport Schiphol is an important industry, to secure long-term access to capital of our operations. visitors and the businesses located at Schiphol contributor to the Dutch economy. It serves markets and to make it easier to attract and the services they retain require talented 24 hours employees. a day, In 2010, revenue as one of the home bases for Air France-KLM seven days a week. totalled EUR 1,180 million, with a net and its Stakeholders SkyTeam partners, from which result (attributable to shareholders) of these airlines serve their European and EUR 169 million. Shareholders equity at Schiphol Group has many stakeholders and intercontinental destinations. Amsterdam year-end 2010 amounted to EUR 3,109 million. their interests can be quite divergent. We do Profile Airport Schiphol offers a high-quality our utmost to conduct an active dialogue with network all serving our stakeholders. 301 destinations. In this, and in everything Schiphol Group Activities is an airport operator, focusing else that we do, our core values play a key role: particularly on AirportCities. A prime example reliability, efficiency, hospitality, inspiration The operation of airports and the development and sustainability. Achieving the ambition to of an AirportCity is Amsterdam Airport Schiphol. Strategy of AirportCities involve three inextricably linked be Europe s preferred airport calls for a culture Europe s fifth-largest business airport areas: Aviation, in terms Consumers of and Real driven by a desire to fulfil or, better yet, passengers and third-largest Estate. The integrated terms activities of cargo. of Aviation, The maintenance surpass the expectations and reinforcement of customers of and In addition to our Consumers Dutch operations and Real Estate (Amsterdam form the core of the Main local Port s stakeholders. competitive position, and that Airport Schiphol, the Rotterdam AirportCity concept. The Hague This concept Airport, is not of Amsterdam Airport Schiphol in particular, only applied to Amsterdam Airport Schiphol Eindhoven Airport and Lelystad Airport), is the single most important objective on which but also either in part or in full to other we have direct and indirect operations in our strategy is focused. This strategy combines the United States, Australia, Italy, Indonesia, the airport s socio-economic function with Aruba and Sweden. Moreover, in 2008 we took our entrepreneurial business operations. EUR 173 million Source: Schiphol Group Annual Report 2010, page 9 a strategic 8% stake in Aéroports de Paris S.A. 8 Schiphol Group (0.8% vs 09) The interconnection and interaction between Annual Report these two elements are crucial for the robust Operating result and future-proof development of Schiphol Group going forward. Corporate Responsibility EUR 97 million is an integral part of this strategy and has (233.3% vs 09) been permeating increasingly all aspects of our operations. Sources of revenue: The major source of revenue is the development and leasing of buildings and property. In addition, revenue is generated through the lease of land and the sale of property and buildings. Source: Schiphol Group Annual Report 2010, page 8 Alliances & Participations The Alliances & Participations business area consists of Schiphol Group s interests in airports abroad, domestic airports and other activities, including Schiphol Telematics and Utilities. Sources of revenue: The airports abroad contribute to revenue through management, performance and intellectual property fees. Furthermore, they contribute to the net result with a share of the result from associates, dividend and interest income. The domestic airports contribute to revenue for the most part via airport charges and parking charges. Schiphol Telematics supplies telecom services to companies. The Utility activities generate revenue from the transport of electricity and gas Revenue Revenue EUR 147 million (2.9% vs 09) Schiphol Group is structured and run as a commercial enterprise with a socio-economic function. These qualities are necessary for continued success in the competitive aviation industry, to secure long-term access to capital markets and to make it easier to attract and retain talented employees. In 2010, revenue totalled EUR 1,180 million, with a net result (attributable to shareholders) of EUR 169 million. Shareholders equity at year-end 2010 amounted to EUR 3,109 million. Activities The operation of airports and the development of AirportCities involve three inextricably linked business areas: Aviation, Consumers and Real Estate. The integrated activities of Aviation, Connectivity Stakeholder inclusiveness 22 Integrated Reporting The Future of Corporate Reporting and from the supply of water. Operating result Consumers and Real Estate form the core of local stakeholders. Integrated Reporting The Future of Corporate Reporting 23 the AirportCity concept. This concept is not EUR 22 million only applied to Amsterdam Airport Schiphol (139.2% vs 09) Stakeholders Schiphol Group has many stakeholders and their interests can be quite divergent. We do our utmost to conduct an active dialogue with all our stakeholders. In this, and in everything else that we do, our core values play a key role: reliability, efficiency, hospitality, inspiration and sustainability. Achieving the ambition to be Europe s preferred airport calls for a culture driven by a desire to fulfil or, better yet, surpass the expectations of customers and

14 At the heart of our Group is a belief in potential. OUR BUSINESS At the heart of our Group is a belief in potential. This belief motivates us to make a positive and OUR BUSINESS This belief impact motivates us tolives make positive and sustainable in the of aour customers Withof its 42-page Annual Review 2010 report, the National Australia Bank sustainable impact in the lives our customers and communities, and underpins a strong and demonstrates how a short integrated report can provide a very good picture of the and communities, and underpins a strong and sustainable business for ourbusiness shareholders. and performance during the previous year. The illustration of their NUMBER OF CUSTOMERS NAB has been prepared to engage and consult with, and get input and feedback from, the consumer movement. It s a welcome change to work with a bank who is prepared to listen, and that s listening to their whole customer base. CHRISTOPHER ZINN, Media Officer, Choice 11.56m BeBei in ng g a a g go o Source: NAB Internal SERVICES FOR CUSTOMERS Across the Group 2,964 1,766 Ge Gettin tti g ng th the e fu fun n o er oy pl yer mplo em odd e lss tatal eenn mm dada 63% 10% 24% 3% 2007 We have responded in a range of ways. We continued to support business customers when the industry contracted its lending and rolled out our Customer-led Innovation Strategy (refer page 14). We have completed the transition of MLC s advice businesses to a fee-for-advice model, and we are investing in our technology to make NAB a more efficient business. We have established a Customer Council in Australia, chaired by Group CEO Cameron Clyne, to discuss customer 4,757 htt rriiggh Organisational Culture, Organisational Culture, Diversity Inclusion, Diversity andand Inclusion, Talent Management, Talent Management, OHSOHS and and Wellbeing, Learning Wellbeing, Learning and and Development, Performance Development, Performance Reward, Industrial andand Reward, Industrial Relations, Flexible Working. Relations, Flexible Working. Australia New Zealand United Kingdom United States 4, Number of branches and service centres Source: NAB Internal Number of ATMs complaints in detail and look at how we can work together to address common concerns. Going forward, we are focused on continuing to improve customer satisfaction and delivering more proof points on our promise of More Give, Less Take, and we are committed to keep listening. This year we held our second CEO Consumer Briefing. The feedback received, on issues such as credit limit increase offers, interest rate transparency and assistance for those in hardship, helps us on our More Give, Less Take journey and we plan to continue this forum on an annual basis. Responsible lending. Ensuring access to fair and affordable banking is the focus of our microfinance programs. In partnership with Good Shepherd Youth & Family Service, we provide no- and low-interest loans and a matched savings program. We also offer microenterprise loans for people who have difficulty accessing business credit. We have committed $130 million in loan capital to support these programs, and this year we ve written over 8,500 microfinance loans. For customers experiencing difficulty, we have dedicated teams to provide assistance. We are committed to managing these customers fairly and compassionately. To help do this in Australia we engaged Good Shepherd Youth & Family Service to provide training on the issues of hardship to staff in our Collections business in industries (including nuclear, pornography, arms dealers, testing on animals) and other industries with which our Group, for ethical reasons, may not wish to be associated. Collection agencies are only engaged by NAB for customers with unsecured debts and once internal avenues have been exhausted. We have in place a variety of formal processes aimed at ensuring the activities of these agencies are aligned to our beliefs and behaviours. Any allegations of inappropriate behaviour are taken very seriously, and we commence immediate investigations in response. Being a responsible lender also means recognising our broader responsibility to society by taking a considered approach to the projects we finance. NAB Group signed the Equator Principles in 2007, which commit us to a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing. Full reporting against the Equator Principles is in our Customer Dig Deeper paper. This year, Wholesale Banking established a formal reputation risk review process for discussing reputation and ethical issues. Environmental and social risk is embedded in our credit risk policies, which prevent lending through normal processes to specific Responsible investment is also important to our business. As a manager of managers, MLC does not select stocks directly; but it researches leading investment managers. An important characteristic of best practice investment managers is the approach they take to assess environmental, social and governance (ESG) issues. MLC believes that sustainable company performance is aligned with strength and leadership in ESG issues. During 2011, we will be meeting with relevant stakeholders to consider the relevance to our businesses of the UN Principles for Responsible Investment. Safety and security. Customers increasingly bank online, and security needs to stay ahead of emerging threats. This year, we improved the way threats are detected and introduced speech security identification in telephone banking in Australia. BNZ developed a technology called Liquid Encryption Number (LEN), which helps early detection and the automatic prevention of counterfeit credit card transactions. At the the heart At heartof ofour our Group is a belief in the Group is a belief in the potential of our potential our customersofand customers and communities, as well as communities, as well as each other. each other. October 2009 Abolishes overdrawn fees from everyday personal transaction accounts. 24 ANNUAL REVIEW 2010 COMMUNITY Volunteering, Reconciliation Community Investment, Action, Disaster Relief. Volunteering, Reconciliation Action, Disaster Relief. January 2010 Removes monthly account service fees from popular personal transaction accounts. Extends opening hours of contact centre to include weekends. December 2009 Abolishes credit card over limit fee and reduced late payment fee. NAB offers the lowest standard variable home loan rate. July 2010 Maintains the lowest standard variable home loan rate for 12 months. March 2010 Introduces free NAB alerts via or SMS. February 2010 Announces the abolition of reference fees on business transaction accounts. Source: National Australia Bank Annual Review 2010, pages Mar 2008 Sep 2008 Mar 2009 Microenterprise Loans No-Interest Loan Scheme Sep 2009 Mar 2010 Sep 2010 StepUp Loans Source: NAB Internal FUTUREFOCUS Delivering more proof points on our promise of More Give, Less Take to show we stand for fairer and better banking. Launching a new customer charter at BNZ and measuring our performance against this. Increasing the uptake of our microfinance programs, with a particular focus on improving the uptake by Indigenous Australians. May 2010 Extends NAB Care offering to Small Business. Removes the mortgage switch fee applicable to NAB Home Loans. Find out more: Considering the expansion of the reputation risk review process across other areas of the bank. September 2010 Announces changes to credit card payment schemes, applying payments to the highest interest rates first. Continuing hardship awareness training within the Australian Collections business and implementing refresher training for employees in our UK Collections team. ANNUAL REVIEW SUPPLY CHAIN COMMUNITY Supporting communities, with a particular focus Supporting communities, onainclusion and investing with particular focus in our youth. on inclusion and investing in our youth. Investment, Community November 2009 Launches NAB Care to better assist customers in short-term financial difficulty. Cumulative since program inception Following through on committed actions from our CEO Consumer Briefing, and continuing this forum for listening and engagement. MORE GIVE, LESS TAKE. THE JOURNEY SO FAR TO DELIVER FAIRER BANKING. September 2009 NAB and Redi ATM join forces in Australia to extend ATM network to over 3,100. NUMBER OF MICROFINANCE LOANS 15,445 Delivering clear value and quality advice. Fees andand Charges, Transparency, Fees Charges, Transparency, Access to Services, Assisting Access to Services, Assisting those Experiencing Hardship, those Experiencing Hardship, Customer Service, Complaints Customer Service, Complaints Resolution, Responsible Finance, Resolution, Responsible Finance, Responsible Lending, Financial Responsible Lending, Financial Literacy, Responsible Investment, Literacy, Responsible Investment, Ethics Business Conduct, Ethics andand Business Conduct, Innovation Product Innovation andand Product Development, Security, Development, Security, Fraud Anti-Money Fraud andand Anti-Money Laundering. Laundering. 1,891 Investing in the skills and Investing in the skills and capabilities of our employees capabilities of our employees More Give, Less Take. Doing the right thing by our customers underpins NAB s More Give, Less Take approach in Australia. More Give, Less Take began by listening and then taking meaningful action on the issues that most annoyed our customers fees and charges. We know that fees and charges aren t the only issues important to our customers. Each of our businesses undertakes research and actively seeks feedback to help us better understand how we can meet customers changing needs. We know that customers want high-quality and easy-to-understand products, helpful and efficient service, support through tough times, clear and transparent financial advice, and secure banking services. % 2,939 Delivering clear value and quality advice. ACHIEVEMENTS AND CHALLENGES DISTRIBUTION OF CUSTOMERS BY GEOGRAPHY 1,808 PEOPLE PEOPLE 1,714 CUSTOMER CUSTOMER We asked Christopher Zinn how we re performing for customers. View the interview at: annualreports.nabgroup. com/customer 10,381 Committed to getting the fundamentals right We recognise the significant role we play in our customers lives and accept the responsibility that comes with it. We are committed to getting the fundamentals of banking right. 6,830 OUR APPROACH TO CORPORATE RESPONSIBILITY OUR PERFORMANCE 4,219 OUR APPROACH TO CORPORATE RESPONSIBILITY Strategic focus Materiality, conciseness, responsiveness and stakeholder inclusiveness CUSTOMER 2,567 material issues, goals and actions taken in each area, but it also sets the frame for the section on performance, which follows later in the report. 1,281 sustainable business for ourapproach shareholders. to corporate responsibility does not only provide a good overview of the Connectivity SUPPLY CHAIN Ad d y iet oc Ad ressin y os g ou dre et ity t l i r broad b i oci ssin s s on p e s r e r o t g ou ility r broad er responsib ENVIRONMENT Working ENVIRONMENT to manage the direct impact of our operations and the indirect impacts Working to through manageour thecustomers. direct impact we have Working to have a positive impact our Working to through have a positive purchasing impactdecisions. through our purchasing decisions. Managing the Impact of our Purchasing, Managing the Impact Selecting Sustainable of our Purchasing, Suppliers, Responsible Selecting Sustainable Procurement Practices, Suppliers, Responsible Offshoring and Outsourcing. Procurement Practices, Offshoring and Outsourcing. of our operations and the indirect impacts Environmental Impact ofcustomers. Operations, we have through our Managing Exposure to Environmental Risk, Environmental Impact of Operations, Financing Environmental Innovation and Business, Managing Exposure to Environmental Environmental Products and Services.Risk, Financing Environmental Innovation and Business, Environmental Products and Services. Source: National Australia Bank Annual Review 2010, page 9 ANNUAL REVIEW Integrated Reporting The Future of Corporate Reporting ANNUAL REVIEW Integrated Reporting The Future of Corporate Reporting 25

15 Anglo American s report includes a good example of how the link from a company s strategy to its KPIs can be presented in a clear way. This example reflects several guiding principles very well. Operating and financial Operating review and financial review Key performance Key performance indicators (KPIs) indicators (KPIs) Connectivity Strategic focus Conciseness, materiality Future orientation Operating and financial review Key performance indicators (KPIs) Anglo American Anglo uses American KPIs to uses KPIs to help measure its help performance. measure its performance. The KPIs are aligned The KPIs to the are aligned to the Investment of choice Investment of choice Strategic aims Strategic aims Strategic Strategic aims focus Strategic focus Strategic KPI focus KPI Description KPI Description Description Results and target (if Results applicable) and target (if applicable) Results and target (if applicable) Asset optimisation Asset optimisation Asset optimisation Total shareholder Total shareholder Share price growth Total plus Share dividends shareholder price growth reinvested plus over dividends the Share reinvested price Please growth over refer the plus to the dividends Remuneration Please reinvested refer report to on the over Remuneration the report Please on refer to the Remuneration report on three key strategic three aims key of strategic aims of and financial and financial return (TSR) return (TSR) performance period. A performance period. A of performance three years period pages of three 80 to years 90 pages 80 to 90 and financial return (TSR) performance period. A performance period of three years pages 80 to 90 the Group the Group Anglo American seeks Anglo to outperform American its seeks competitors to outperform Anglo its performance American competitors seeks to outperform performance its competitors performance is used and TSR is calculated is used annually and TSR is calculated annually is used and TSR is calculated annually in delivering value to shareholders. in delivering value Everything to shareholders. that in delivering Everything value that to shareholders. Everything that Anglo American s strategy Anglo uses is American s to KPIs become to strategy is to become the Group hopes to achieve the Group for all hopes other to stakeholders achieve for all the other Group stakeholders hopes to achieve for all other stakeholders Return on capital Return on capital Total operating profit Return before Total on operating impairments capital profit for before the year impairments Total operating for 2008: the 36.8% profit year before impairments 2008: 36.8% for the year 2008: 36.8% Strategic aims Strategic focus KPI Description Results and target (if applicable) help the leading measure global mining its performance. company. During particularly host governments, communities and employed (ROCE) divided by the average total capital less other investments 2009: 14.6% the leading global mining company. During particularly host governments, communities particularly and host governments, communities and employed (ROCE) employed divided (ROCE) by the average total capital divided less other by the investments average total capital 2009: less 14.6% other investments 2009: 14.6% 2008, three key aims 2008, that should three underpin key aims that should employees underpin must be built employees on a platform must be of sector built on a platform employees of sector must be built on a platform of sector and adjusted for impairments and adjusted for impairments and adjusted for impairments The this ambition KPIs are were aligned identified: this ambition to the were identified: leading financial performance. leading financial performance. leading financial performance. three key strategic aims of Investment of choice Asset optimisation Total Asset shareholder optimisation (AO) Asset optimisation Share Sustainable (AO) price growth operating Asset plus Sustainable profit dividends optimisation benefit operating reinvested from (AO) optimised profit over benefit the Sustainable from optimised 2009: Please operating $749 refer to million the profit Remuneration benefit 2009: from $749 report optimised million 2009: $749 million and financial return (TSR) period. A period of three years pages 80 to 90 > investment of choice; > investment of choice; performance of the asset performance base of the of core the asset businesses base of performance the core businesses Target: of the $1 billion asset by base 2011 of Target: the core $1 billion businesses by 2011 Target: $1 billion by 2011 the Group Anglo American seeks to outperform its competitors performance is used and TSR is calculated annually > partner of choice; and > partner of choice; and in delivering value to shareholders. Everything that Anglo American s strategy is to become the Group hopes to achieve for all other stakeholders One Return Anglo on capital Supply Chain One Anglo Supply Cost Total Chain savings operating to profit the One Group before Cost Anglo resulting savings impairments Supply to from Chain the centralised for Group the resulting year Cost from savings centralised 2009: 2008: to $ % the Group million resulting 2009: from $445 centralised million 2009: $445 million > employer of choice. > employer of choice. the leading global mining company. During particularly host governments, communities and (OASC) employed (ROCE) (OASC) procurement divided by the from average core (OASC) procurement total businesses capital from less other core businesses investments procurement Target: 2009: from 14.6% $1 core billion businesses by 2011 Target: $1 billion by 2011 Target: $1 billion by , three key aims that should underpin employees must be built on a platform of sector and adjusted for impairments this In implementing ambition were its strategy, identified: In implementing Anglo American its strategy, Anglo leading American financial performance. Underlying earnings Underlying earnings Underlying earnings Underlying are net profit earnings attributable are net to equity profit Underlying attributable 2008: Asset optimisation (AO) Sustainable operating profit benefit from optimised 2009: earnings to $4.36 equity $749 million are net profit 2008: attributable $4.36 to equity 2008: $4.36 > measures investment performance of choice; measures with reference performance with reference per share per share shareholders, adjusted per shareholders, for the effect adjusted of special for items the effect and shareholders, of special 2009: performance of the asset base of the core businesses Target: adjusted items $2.14 $1 billion and for by the 2011 effect 2009: of $2.14 special items and 2009: $2.14 to the KPIs set out in the to the adjacent KPIs set table. out in the adjacent table. remeasurements and any remeasurements related tax and and minority any related interests remeasurements tax and minority interests and any related tax and minority interests > These partner KPIs of are choice; aligned and These to its KPIs key aims are aligned and to its key aims and One Anglo Supply Chain Cost savings to the Group resulting from centralised 2009: $445 million > are employer employed of across choice. the are Group. employed The across KPIs the Group. The KPIs New capital New capital New capital Capital projects Capital projects Optimise the pipeline Capital of Optimise projects projects the and pipeline ensure that of projects new capital and Optimise ensure the A that summary pipeline new capital of of the projects Group s A and capital summary ensure projects of that the new Group s capital projects A summary of the Group s capital projects (OASC) procurement from core businesses Target: $1 billion by 2011 encompass both financial and non-financial investments and investment is only committed to projects that deliver the best value to and investments is on pages 20 to 21 encompass both financial and non-financial investments investments and investment and is investment only committed to projects that is deliver only committed the best value to projects to that and deliver investments the best is on value pages 20 to to 21 and investments is on pages 20 to 21 indicators as well as quantitative indicators as and well as quantitative and the Group on a risk adjusted the Group net on present a risk value adjusted basis net present the Group value on a basis risk adjusted net present value basis qualitative In implementing measures. its strategy, qualitative While Anglo these measures. American KPIs While these KPIs Underlying earnings Underlying earnings are net profit attributable to equity 2008: $4.36 are measures helpful performance in measuring are with the helpful reference Group s in measuring the Group s Partner of choice Partner of choice Sustainable Sustainable Energy efficiency* Energy efficiency* Improvements in energy Improvements are in measured energy efficiency are measured per share shareholders, adjusted for the effect of special items and 2009: 2008: $ million GJ total 2008: energy 105 used million GJ total energy used Partner of choice Sustainable Energy efficiency* Improvements in energy efficiency are measured 2008: 105 million GJ total energy used performance, to the KPIs set it out is recognised in the adjacent that they development from a 2004 baseline 2009: 105 million GJ total energy used performance, table. it is recognised that they development from a 2004 baseline 2009: 105 million GJ total energy used development from a 2004 baseline 2009: 105 million GJ total energy used remeasurements and any related tax and minority interests are These not KPIs exhaustive are aligned and to many its key additional Anglo American has a history of successful Target: A 15% improvement by 2014 are not exhaustive aims and and many additional Anglo American has a history of successful Anglo American has a history of successful Target: A 15% improvement by 2014 Target: A 15% improvement by 2014 performance are employed measures across the performance are Group. also used The measures KPIs to are also used collaboration to with its stakeholders, collaboration with including its stakeholders, collaboration including with its stakeholders, including New capital Total Capital water projects use* Total water use* Total Optimise water the use pipeline includes Total of Total projects water only water use* and use ensure used includes for that primary only new water capital Total used water for 2008: A summary primary use includes of million the only Group s m capital projects monitor encompass progress. governments, communities, and non-governmental 3 water 2008: used for million primary m both financial monitor and non-financial progress. governments, communities, and non-governmental : million m governments, communities, and non-governmental 3 investments and investment is activities only committed to projects activities that deliver the best value activities to and 2009: investments million is on m 3 pages 2009: to million m : million m 3 organisations (NGOs). organisations The Group understands (NGOs). The that Group organisations understands (NGOs). that The Group understands that Target: Business units are Target: currently Business setting units are currently setting Target: Business units are currently setting indicators as well as quantitative and the Group on a risk adjusted net present value basis it can only thrive if it is it welcomed can only thrive and respected if it is welcomed in it and can respected only thrive in if it is welcomed and respected in operational targets operational targets operational targets qualitative measures. While these KPIs the countries and communities the countries in which and communities operates. in the which countries it operates. and communities in which it operates. are helpful in measuring the Group s Partner of choice Sustainable Energy CO 2 emission efficiency* intensity* CO 2 emission Improvements Reduction intensity* in COin 2 energy emissions COReduction efficiency per unit in CO are of 2 measured production emissions per is unit of production 2008: million Mt CO 2 GJ equivalent total 2008: energy 19.7 usedmt CO 2 equivalent 2 emission intensity* Reduction in CO 2 emissions per unit of production is 2008: 19.7 Mt CO 2 equivalent performance, it is recognised that they development measured from a 2004 from baseline a 2004 measured baseline from a 2004 baseline measured 2009: from a 2004 million Mt CO baseline 2 GJ equivalent total 2009: energy 19.0 usedmt CO 2 equivalent 2009: 19.0 Mt CO 2 equivalent are not exhaustive and many additional Anglo American has a history of successful Target: A 10% 15% improvement reduction by Target: 2014 by 2014 A 10% reduction by 2014 Target: A 10% reduction by 2014 performance measures are also used to collaboration with its stakeholders, including Total water use* Total water use includes only water used for primary million m monitor progress. governments, communities, and non-governmental Corporate social investment Corporate social Social investment as Corporate defined Social investment by social the investment London as defined Benchmarking by the Social London investment 2008: Benchmarking Spend as defined $76.2 million, 3 by 2008: the 1.11% London Spend of profit Benchmarking $76.2 million, 1.11% of 2008: profit Spend $76.2 million, 1.11% of profit activities 2009: million m 3 organisations (NGOs). The Group understands that Group includes donations, Group gifts includes kind donations, and staff gifts time in for Group kind and includes before tax 2009: Target: staff donations, time Spend Business for $82.5 units gifts before million, are in currently kind taxand 2.23% setting staff time for before tax 2009: Spend of profit $82.5 million, 2.23% of 2009: profit Spend $82.5 million, 2.23% of profit it can only thrive if it is welcomed and respected in administering community administering programmes community and volunteering programmes administering and operational before volunteering community tax targetsprogrammes before tax and volunteering before tax the countries and communities in which it operates. in Company time in Company time in Company time CO 2 emission intensity* Reduction in CO 2 emissions per unit of production is 2008: 19.7 Mt CO 2 equivalent Enterprise development Enterprise development measured Number of from companies a 2004 Enterprise Number supported baseline development of and companies number supported of jobs Number and number of 2009: 2008: companies of jobs 19.0 Number Mt supported CO of businesses 2 equivalent 2008: and supported Number number 3,012; of of businesses jobs supported 2008: 3,012; Number of businesses supported 3,012; Target: A 10% reduction by 2014 sustained by companies sustained supported by by companies Anglo American supported sustained by Anglo number by American companies of jobs sustained supported number 13,431 by Anglo of jobs sustained American 13,431 number of jobs sustained 13, : Number of businesses 2009: supported Number 3,720; of businesses supported 2009: 3,720; Number of businesses supported 3,720; enterprise development enterprise initiatives development initiativesenterprise Corporate social investment Social investment as defined by the London Benchmarking 2008: number development Spend of jobs sustained initiatives $76.2 million, number 12, % of jobs of profit sustained 12,982 number of jobs sustained 12,982 Group includes donations, gifts in kind and staff time for before Target: tax Number of businesses Target: supported Number 3,500; of businesses supported Target: 3,500; Number of businesses supported 3,500; number 2009: Spend of jobs sustained $82.5 million, number 18, % of jobs of profit sustained 18,000 number of jobs sustained 18,000 administering community programmes and volunteering before tax in Company time Employer of choice Employer of choice Safety Safety Work related fatal injury Work related fatal FIFR is injury calculated as the FIFR number is calculated of fatal as injuries the number to of fatal injuries 2008: to 28 fatalities, : FIFR 28 fatalities, FIFR Employer of choice Safety Work related fatal injury FIFR is calculated as the number of fatal injuries to 2008: 28 fatalities, FIFR frequency rate (FIFR) frequency rate employees (FIFR) or contractors frequency employees per 200,000 rate or (FIFR) contractors hours worked per 200,000 employees hours 2009: 19 fatalities, FIFR Enterprise development Number of companies supported and number of jobs 2008: or worked contractors Number of businesses per 200, : 19 supported hours fatalities, 3,012; worked FIFR 2009: 19 fatalities, FIFR Becoming the employer Becoming of choice the for employer Anglo American of choice Becoming for Anglo the American employer of choice for Anglo American 2010 target: zero incidents 2010 target: zero incidents 2010 target: zero incidents sustained by companies supported by Anglo American number of jobs sustained 13,431 begins with an aim to begins provide with a safe an and aim supportive to provide a safe begins and with supportive an aim to provide a safe and supportive Lost time injury frequency Lost time injury 2009: Number of businesses supported 3,720; working environment for everyone who works enterprise The frequency number development of lost Lost time The time initiatives injuries number injury (LTIs) of frequency lost per time 200,000 injuries (LTIs) The number per 2008: 200,000 of lost 1.04time injuries 2008: (LTIs) 1.04 per 200, : 1.04 working environment for everyone working who works environment for everyone who works number of jobs sustained 12,982 rate (LTIFR) rate (LTIFR) hours worked. An LTI rate is hours (LTIFR) an occupational worked. An LTI injury is an which occupational hours worked. injury 2009: 0.76 for the organisation. The for Group s the organisation. commitment The to Group s commitment to Target: which An 2009: target: Number LTI is zero of an incidents businesses occupational 2010 supported injury target: zero 3,500; which 2009: 0.76 for the organisation. The Group s commitment to incidents 2010 target: zero incidents renders the person unable renders to perform the person his/her unable duties to perform renders his/her the number of jobs sustained 18,000 zero harm remains its zero primary harm focus. remains The its organisation primary focus. The organisation The person duties ultimate unable goal of to zero perform harm The ultimate remains his/her goal duties zero harm remains its primary focus. The organisation of zero harm remainsthe ultimate goal of zero harm remains for one full shift or more for the one day full after shift the or more injury the was day for after one the full injury shift was or more the day after the injury was offers a range of career offers paths a for range both of technical career paths and for offers both technical a range of and career paths for both technical and Employer of choice Safety Work related fatal injury incurred, FIFR is calculated whether as a scheduled the incurred, number workday whether of fatal or a injuries scheduled not to workday incurred, or not whether 2008: 28 fatalities, a scheduled workday FIFR or not professional people. With professional its global people. footprint With and its global professional footprint and people. With its global footprint and frequency rate (FIFR) employees or contractors per 200,000 hours worked 2009: 19 fatalities, FIFR Becoming growth aspirations, the employer Anglo growth of American choice aspirations, for can Anglo offer Anglo American both American growth can People offer aspirations, both Anglo American People can offer both People Voluntary labour Voluntary labour Number of permanent Voluntary Number employee labour of resignations permanent employee as resignations Number of : permanent as target: 3.9% zero employee incidents 2008: resignations 3.9% as 2008: 3.9% begins an exciting with and an aim a fulfilling to an provide exciting employment a safe and and a proposition. fulfilling supportive employment an exciting proposition. and a fulfilling employment proposition. turnover turnover a percentage of total turnover permanent a percentage employees of total permanent employees a percentage 2009: of 6.8% total permanent 2009: employees 6.8% 2009: 6.8% Lost time injury frequency The number of lost time injuries (LTIs) per 200, : 1.04 working environment for everyone who works rate (LTIFR) hours worked. An LTI is an occupational injury which 2009: 0.76 for the organisation. The Group s commitment to Gender diversity Gender diversity 2010 target: zero incidents renders Percentage the of person women Gender unable Percentage and female to diversity perform of managers women his/her and employed duties female Percentage managers 2008: employed of women 12% females, and female 17% 2008: female managers 12% managers females, employed 17% female managers 2008: 12% females, 17% female managers zero harm remains its primary focus. The organisation The ultimate goal of zero harm remains for by the one Group 2009: 12% females, 19% female managers full shift or more by the Group 2009: 12% females, 19% female managers day after the injury was by the Group 2009: 12% females, 19% female managers offers a range of career paths for both technical and incurred, whether a scheduled workday or not professional people. With its global footprint and growth aspirations, Anglo American can offer both Voluntary counselling Voluntary counselling Percentage of employees Voluntary Percentage undertaking counselling of employees voluntary undertaking Percentage voluntary 2008: 77% 2008: 77% People Voluntary labour Number of permanent employee resignations as 2008: of employees 3.9% undertaking voluntary 2008: 77% an exciting and a fulfilling employment proposition. and testing (VCT) for and testing (VCT) annual for HIV tests with and annual compulsory testing HIV (VCT) tests counselling for with compulsory support annual counselling HIV 2009: 82% turnover a percentage of total permanent employees 2009: tests support 2009: 82% 6.8% with compulsory counselling support 2009: 82% 2010 target: 100% VCT in 2010 high target: disease 100% burden VCT in high disease 2010 burden target: 100% VCT in high disease burden HIV/AIDS HIV/AIDS HIV/AIDS *Reflects managed operations *Reflects managed operations *Reflects managed operations countries (100% is the long countries term goal) (100% is the long term goal) countries (100% is the long term goal) Anglo American plc Annual Anglo Report American 2009 plc Annual Report 2009 Investment of choice Gender diversity Percentage of women and female managers employed by the Group 2008: 12% females, 17% female managers 2009: 12% females, 19% female managers Anglo American plc Annual Report Source: Anglo American plc Annual Report 2009, pages Voluntary counselling Percentage of employees undertaking voluntary 2008: 77% 26 Integrated Reporting The Future of Corporate Reporting and testing (VCT) for annual HIV tests with compulsory counselling support 2009: 82% 2010 target: 100% VCT in high disease burden Integrated Reporting The Future of Corporate Reporting 27 HIV/AIDS *Reflects managed operations countries (100% is the long term goal) Operating and financial review

16 Akzo Nobel starts the performance statement with a market overview, followed by detailed descriptions of its market sectors, all structured in the same format. This allows the reader to easily gain insight into Akzo Nobel s business model as well as its performance and strategy. AkzoNobel Wood Finishes and Adhesives Future orientation Conciseness, reliability, materiality Strategic focus Performance coatings market overview Despite unfavorable market conditions, we continue to to align ourselves for growth John Wolff Managing Director Revenue in in millions Our Performance Coatings business is represented in most market segments of this industry, holding many leading positions. Market and business characteristics The size of the global market for performance coatings is around 40 billion. General industrial coatings Metal and plastic coatings for a wide range of applications from huge industrial equipment to the latest mobile phones and music players, computers, espresso machines and sporting goods. Protective coatings Corrosion and fire protection across a range of industries including upstream and downstream oil and gas, high value infrastructure such as airports and stadia, power generation, mining and minerals and water and waste water. Vehicle refinishes Recoating of automobile bodies when vehicles are repaired. Automotive OEM Coatings for commercial vehicles (trucks and buses) and automotive plastic components. Aerospace coatings Coatings for small and large aircraft, including products for exterior and interior finishes. Primers for structural components and coatings for high performance exterior and interior finishes. Powder coatings Powder technology involves a coating being applied electrostatically. It is sprayed and then subsequently cured by applying heat, either in an oven or by using infrared or UV light irradiation. Wood finishes and adhesives Wood coatings for home and office furniture, flooring, kitchen and bath cabinetry, windows and doors. Adhesives are the bonding agents for wood composites and laminates used in these applications. Marine coatings Coatings for deep sea and inland marine vessels at new construction or for maintenance that protect against corrosion and abrasion and provide resistance to organic fouling. Yacht coatings The most advanced coatings systems to protect and beautify leisure craft, from the smallest dinghy to the largest and most luxurious super yacht. Coil and extrusion coatings Coil coatings are applied to coiled steel for heating, ventilation, air conditioning and appliances, and in commercial and residential construction to protect metal roofs and building components. Extrusion coatings give aluminum lasting beauty when used on metal building fascias and window frames and provide protection from the elements. Packaging coatings Coatings for packaging which are applied to internal and external surfaces for food and drink cans, caps and closures and cardboard and plastic packaging. Customers We serve a large range of customers including shipyards and yacht builders, architects, consumer electronics and appliance companies, can makers, steel manufacturers, the construction industry, furniture makers, aircraft, bus and truck producers and bodyshops. Global market drivers Growing populations and GDP growth Steel production Consumer confidence Infrastructure development Housing market activities High growth markets Projected industry growth is strong, particularly in Asia Pacific. More than 45 percent of our Performance Coatings revenue is in high growth markets. Innovations Automobile scratch repair systems Low-bake powder coatings Self-repairing clearcoat Foul release coatings Waterborne coatings technology Some key raw materials Resins Titanium dioxide Price drivers Oil/energy prices Construction demand Metals, base chemical prices Market leadership positions Marine and Protective Coatings 1st Marine coatings Protective coatings Yacht coatings Pigments Solvents Automotive and Aerospace Coatings 2nd Aerospace coatings 3rd Vehicle refinish Commercial vehicle OEM coatings 5th Automotive plastic coatings Industrial Coatings 1st Coil and extrusion coatings Specialty plastics coatings 2nd Packaging coatings Powder Coatings 1st Powder coatings Wood Finishes and Adhesives 1st Industrial wood finishes 2nd Industrial wood adhesives Overview It It was a a challenging year of of stark contrasts. On On the the one one hand we we identified new opportunities in in the the world s high growth regions, while on on the the other we we faced uncertainly stemming from the the ongoing economic decline in in the the more mature markets. Lack of of consumer confidence and and weak housing markets adversely affected our our business and and rapidly increasing raw raw material prices caused an an additional strain. Through a a combination of of stringent price increases and and cost control methodologies, we we were able to to optimize revenue and and profit outcomes for for the the year. ing Analysis Our Our activities are are closely linked to to the the world s housing markets and and historically a a significant segment of of our our business has has been dependent upon the the mature, developed parts of of the the world, such as as Western Europe and and North America. Those economies were essentially flat flat during 2011, and and with raw raw material prices increasing dramatically, we we faced extremely challenging business conditions. This situation prompted decisive action to to cut cut costs through headcount reduction and and rationalization projects. Margin management was attained through price increases in in a a very difficult commercial environment on on a a global basis. However, we we did did achieve growth in in the the high growth regions of of Eastern Europe, Latin America and and parts of of Asia in in both our our Finishes and and Adhesives businesses. Highlights Despite unfavorable market conditions, we we continue to to align ourselves for for growth. In In Asia, for for example, we we are are investing in in strengthening and and expanding our our local teams focused on on driving growth in in the the domestic industrial wood segments. They have made rapid progress in in launching into into new Source: Akzo Nobel Report 2011, page 55 domestic markets in in Asia and and are are starting to to supply a a core range of of products. We We also teamed up up with our our Decorative Paints business in in India to to take advantage of of their extensive distribution network to to break into into the the country s industrial wood market. Another significant development was the the start-up of of our our new plant in in Vietnam, which supports our our growth strategy in in the the Asian export and and domestic markets. We ve identified a a number of of new business opportunities and and have already developed a a new range of of products for for this this region. In In Eastern Europe, we we continue to to expand our our business with large OEM customers while increasing our our distribution channels for for the the custom workshop sector. Despite the the difficult economic environment, we re very confident that that these additional activities will will provide us us with a a platform for for accelerated growth moving forward. Developments The The key key focus of of our our business is is to to successfully grow with large OEM customer groups and and drive further market penetration into into the the custom workshop market by by providing valueadded products, services and and solutions delivered locally to to tion our our chosen customer base. This focused approach led led to to a a number of of exciting developments during 2011, including new sustainable waterborne and and UV UV cure products. Among a a series of of product launches, we we introduced VOC compliant coatings into into our our European and and North American distribution lines, while our our Adhesives business launched several new product ranges, including the the GripLine system for for wood construction and and the the LignuLine system for for interior components. These developments are are focused on on improving and and enhancing the the sustainability and and competitiveness of of our our customers, which in in turn turn will will contribute to to a a more sustainable AkzoNobel. Geo-mix revenue by by destination in in % CC A A B B A A EMEA B B Americas C C Asia Asia Pacific Main products Wood coatings Wood adhesives and and board resins Key markets Furniture Cabinets Flooring Windows Doors Building products Key brands AkzoNobel Report Business performance AkzoNobel Performance Coatings AkzoNobel Performance Coatings Business performance AkzoNobel Report 2011 Source: Akzo Nobel Report 2011, page Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 29

17 10 Marks and Spencer Group plc Annual report and financial statements 2010 Page Performance Title overview Page Key performance Title continued indicators Strategic focus Conciseness, reliability, materiality Directors report In its annual report, Marks & Spencer (M&S) uses a structure for performance reporting that helps the reader connect the information on strategy, business model, financial and non-financial performance. Its performance report starts with a concise overview of financial and non-financial information, which is followed by a more detailed explanation of selected performance indicators and their discussion about strategy. To find out more, visit marksandspencer.com/annualreport Overview p01 Performance and KPIs Brand & Marketplace p20 Operating & Financial review p26 Governance p50 Financial statements Connectivity p78 Financial performance These financial performance indicators are based on the statutory 53 week period ended 3 April Group revenue 9.5bn +5.2% 2009/10 9,536.6m 2008/ /08 9,062.1m m 2006/ m m 06/07 07/08 08/09 09/10 UK 7, , , ,567.9 International Total 8, , , ,536.6 Adjusted Group profit before tax* 694.6m +14.9% 2009/ m 2008/ m 2007/08 1,007.1m 2006/ m Adjusted Group operating profit* 843.9m +9.8% 2009/ m 2008/ m 2007/08 1,089.3m 2006/07 1,044.0m m 06/07 07/08 08/09 09/10 UK International Total 1, , Group profit before tax 702.7m -0.5% 2008/ m 2007/08 1,129.1m 2006/ m Adjusted earnings per share* 33.0p 2008/ p 2007/ p 2006/ p *The adjusted profit measures are stated before property disposals and exceptional items. Performance against our strategy What we sell Growing our core UK business p16 How we sell Building our Multi-channel business p28 How we do business Integrating Plan A across the business p36 UK market share Clothing and footwear UK market share Food M&S Direct sales Improve carbon efficiency tonnes CO2e per 1000 sq ft Analysis: During the year we grew our value market share and held on volume, see page 16 onwards for details of our clothing business. Source: Kantar Worldpanel Value market share 11.0% 2008/ % 2007/ % 2006/ % Volume market share 11.2% 2008/ % 2007/ % 2006/ % Analysis: Our market share is slightly down, reflecting the fact we were the only retailer to lower prices during what was an inflationary period. See page 24 for details on how we are working to further improve our Food business. Source: Kantar Worldpanel 3.8% 2008/09 3.9% 2007/08 4.3% 2006/07 4.2% Analysis: We continue to invest in our Direct business as part of our commitment to become a multi-channel retailer and remain firmly on track to reach our 500m target next year. See more on page m* +27% Store, office, warehouse, business travel and logistics carbon dioxide emissions in tonnes CO 2 e per 1000 sq ft of salesfloor. Residual emissions will be offset in Why carbon efficiency? Improving carbon efficiency reduces green house emissions and costs. 2006/07 51* 2009/10 41* -20% 2012 target 0 Average weekly UK footfall Percentage of our stores refurbished since 2005 Improve store energy efficiency kwhs/sq ft Analysis: Around half of UK stores have cameras fitted at the entrance to allow us to track customer visits. We calculate our average footfall by analysing the ratios between visits and sales in these stores and then applying it to stores without cameras. 2006/ m 2007/ m 2008/ m 2009/ m Average weekly footfall 21.0m Analysis: Since 2005 we have refurbished over 80% of our stores. This year we opened 30 new stores, adding approximately 3.2% of trading space. We continue to invest in our stores to ensure they offer a bright, contemporary shopping environment. However, this year our capital expenditure has been focused on laying the foundations for future growth under Project % Store energy usage in kwhs/sq ft of sales floor Why energy efficiency? Improving energy efficiency reduces costs and helps to meets the requirements of new legislation effective from / Send no operational waste to landfill tonnes 2009/ target % 51-25% UK mystery shopping programme Analysis: Mystery shoppers anonymously visit all of our UK stores once a month twice for flagship stores to evaluate the levels of service, scoring factors such as how staff welcome customers and the management of store environment. This year over 6,500 visits were conducted and we have seen a 5% increase in service scores. % Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar / / Visits completed 6,500 average score 89% Where we sell Expanding our International business International revenue as proportion of Group revenue Analysis: Expanding our International business is a key part of our future plan and in 2007/08 we set a target for it to account for 15-20% of Group revenues within five years. Our investment under Project 2020 will support this growth. p %* +0.3% pts Waste sent to landfill from M&S stores, offices and warehouses in tonnes Why no waste to landfill? Sending no waste to landfill will reduce costs in the longer term and help reduce carbon emissions. 2006/07 69, target /10 46,000-25% * Recalculated in accordance with 2009 DEFRA/DECC carbon conversion factors and reporting guidelines. Gas usage included in this calculation has been adjusted using standard degree days to reflect the cold winter of 2009/10. * 52 weeks. Source: M&S Annual report and financial statements 2010, pages Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 31

18 Operating context, and Financial Review including risks and opportunities Business drivers, principal risks and opportunities Business drivers There are many factors that influence the success of our business and the financial returns we obtain. We consider the factors described here to be our principal business drivers. Principal risks and opportunities There are a number of risks that might cause us to fail to achieve our vision or to deliver growth in shareholder value. We can mitigate many of these risks by acting appropriately in response to the factors driving our business. The principal risks are described here. For more detail on risks, see pages 91 to 93. Objectives We have developed the Company strategy and objectives to address the key business drivers and risks, ensuring we manage the business appropriately so as to mitigate risks and optimise opportunities. For more detail on objectives, see pages 38 and 39. Key performance indicators (KPIs) 2.2 Operating context, including risks and opportunities This content element should describe the circumstances under which the organisation operates, including the key resources and relationships on which it depends and the key risks and opportunities it faces. The report should explain the commercial, social and environmental context within which the organisation operates, the key resources from and relationships with key stakeholder groups and the key risks and opportunities thereby addressing possible interdependencies. Price controls and rate plans The prices we charge for use of our electricity and gas transmission and distribution networks are determined in accordance with regulatory approved price controls in the UK and rate plans in the US. These arrangements include incentive and/or penalty arrangements. The terms of these arrangements have a significant impact on our revenues. Regulatory settlements and long-term contracts Our ability to obtain appropriate recovery of costs and rates of return on investment is of vital importance to the sustainability of our business. We have an opportunity to help shape the future of the regulatory environment, for example in our rate filings in the US. If we fail to take these opportunities, we risk failing to achieve satisfactory returns. Multi-year contracts Revenues in our Long Island electricity distribution and generation operations are subject to long-term contracts with the Long Island Power Authority. In addition, revenues in our Grain LNG importation terminal are determined by long-term contractual arrangements with blue chip customers. Financial performance Financial performance and operating cash flows are the basis for funding our future capital investment programmes, for servicing our borrowings and paying dividends, and for increasing shareholder value. Failure to achieve satisfactory performance could affect our ability to deliver the returns we and our stakeholders expect. Delivering strong, sustainable regulatory and long-term contracts with good returns People The skills and talents of our employees, along with succession planning and the development of future leaders, are critical to our success. We believe that business success will be delivered through the performance of all current and future employees, and enhanced by having a workforce that is diverse in its cultural, religious and community influences. Talent and skills Harnessing and developing the skills and talent of our existing employees, and recruiting, retaining and developing the best new talent, will enable us to improve our capabilities. Failure to engage and develop our existing employees or to attract and retain talented employees could hamper our ability to deliver in the future. Building trust, transparency, and an inclusive and engaged workforce Developing our talent, leadership skills and capabilities Capital investment Capital investment is a significant driver of organic growth. In our regulated energy networks, the prices we charge include an allowed return for capital investment determined in accordance with our price controls and rate plans. Capital investment in non-regulated assets allows us to develop new revenue streams or to increase revenues from existing assets. Investment in our networks Our future organic growth is dependent on the delivery of our capital investment plans. In order to deliver sustainable growth with superior financial performance we will need to finance our investment plans. Instability in the financial markets, loss of confidence by investors, or inadequate returns on our investment may restrict our ability to raise finance. Modernising and extending our transmission and distribution networks National Grid, the UK- and US-based electricity and gas utilities company, provides a clear presentation of its business drivers, strategy, objectives and key KPIs, both at group and segment level. Information in the various sections of the report is aligned by means of consistent headings, terminology and use of colour. Objectives remain aligned with business drivers Strategic focus and connectivity Links its vision, strategy and objective to its business drivers Safety, reliability and efficiency Our ability to operate safely and reliably is of paramount importance to us, our employees, our contractors, our customers, our regulators and the communities we serve. Operating efficiently allows us to minimise prices to our customers and improve our own financial performance to benefit our shareholders. Relationships and responsibility Our reputation is vitally important to us. We only earn the trust and confidence of our stakeholders by conducting our business in a responsible manner. Our reputation depends on our behaviours being lawful and ethical, on complying with our policies and licences, and on living up to our core values. We use a variety of performance Adjusted Group return Total Employee Network Regulated Greenhouse measures to monitor progress earnings on equity shareholder engagement reliability controllable gas emissions against our objectives. Some of per share return index targets operating costs these are considered to be key Source: National Grid Customer plc Annual Report and Accounts, pages 36 37; page 39 performance indicators and are satisfaction 32 Integrated set out Reporting here. For more The detail Future on of Corporate Reporting performance, see pages 40 to 69. Integrated Reporting The Future of Corporate Reporting 33 Safety, reliability and customer service The returns we generate are dependent on operating safely and reliably, and providing a quality service to customers. If we fail to meet our regulatory targets or the high standards we set ourselves, we risk loss of reputation as well as financial penalties imposed by regulators. Driving improvements in our safety, customer and operational performance Employee lost time injury frequency rate Efficiency Simplifying and standardising our systems and processes will drive efficiency and reduce costs. Transforming our Sustainability and climate change Safeguarding our global environment for future generations is dependent on integrating sustainability operating model should and climate change enable us to deliver considerations into our increased value to our business decisions and shareholders. If we do influencing legislators, not achieve the expecte d regulators, employees, benefits in efficiency, then shareholder value will not grow as we hope or will diminish. Becoming more efficient through transforming our operating model and increasingly aligning our processes customers and suppliers to address climate issues and become more environmentally responsible. Positively shaping the energy and climate change agenda with our external stakeholders in both regions Other investment Investment in new businesses is also a significant driver of growth, provided we can create value through operational improvements, synergies and financial benefits. Disposals can crystallise value for shareholders, where the price on offer is better than the long-term return we can obtain ourselves or where a business does not fit with our principal operations. Expanding our capabilities and identifying growth opportunities We seek to identify, evaluate and acquire new businesses that build on our core regulated operations. If we are unable to acquire businesses with the correct strategic fit it may restrict our future growth and our ability to increase shareholder value. The acquisition of new businesses is dependent on our ability to fund transactions through internal cash flows or the issuance of new debt or new shares. Expanding our capabilities and identifying new financeable opportunities to grow Business Overview Operating and Financial Review Corporate Governance Directors Remuneration Report Financial Statements Useful Information Business Overview Operating and Financial Review Corporate Governance Directors Remuneration Report Financial Statements Useful Information

19 Source: Royal DSM N. V. Integrated Annual Report 2010, page 114 After a short presentation of its business units and strategy on the first pages of its report, Royal DSM addresses most of the information on the operating context requested for each business unit separately, following the structure business and trends, strategic context, product assortment, the cluster in 2010 and looking ahead. As regards the risks, the IIRC discussion paper suggests that material issues and The company s top five risks their impact on a company s strategy and performance, as well as actions taken or By nature, a report on risks focuses on detrimental effects that has proven to be able to adjust quickly to sudden adverse market planned to mitigate such risks, be clearly pointed out. Royal DSM meets this can be related to certain developments. The table below shows conditions. However, if adverse economic conditions were to that DSM has clearly identified relevant risks and taken request remedial by including occur, this a table could that nevertheless presents have its detrimental top five risks effects and on related the mitigation actions to mitigate them. The CRA was conducted actions under the followed achievement by an explanatory of the targets. narrative. In the table below, the top five risks assumption of normal macro-economic developments. DSM and responses are shown as resulting from the CRA. has improved its early warning and forecasting processes and Materiality Description of risk People, organization and culture The implementation of the new strategy could be hampered by organizational concerns. These can consist of a lack of key resources, insufficient organizational clarity, insufficient priority setting and/or inadequate collaborative and result-oriented behavior. Growth of the Nutrition cluster Due to the high profit contribution of the Nutrition cluster there is a risk that this cluster may fall short of the ambitious growth and profitability targets also due to potential difficulties in implementing the programs geared towards organic growth and growth through acquisitions and partnerships simultaneously with quality differentiation, innovation and cost control. Acquisitions and partnerships DSM may have difficulties implementing sufficient value creating acquisitions to fulfill growth targets. Innovation DSM may have difficulties realizing the growth as projected for the Emerging Business Areas and other innovations in the crossover field between Life Sciences and Materials Sciences. Growth and profitability in the Pharma cluster DSM may have difficulties realizing the growth and return to adequate profitability levels as projected in the strategy. The top five risks and related mitigating actions Mitigating actions The following mitigating actions are being taken: - Filling key positions by fast tracking internal development and increasing external hires - Setting and implementing clear charters, especially for the regional platforms - Setting up a small program office for strategy implementation - Implementing the DSM culture change program with the One DSM philosophy The following mitigating actions are being taken: - Strengthening market position - Further focus on differentiation and innovation - Further focus on cost competitiveness - Instituting program management for the strategy implementation in the Nutrition cluster - Ensuring sufficient, dedicated resources for acquisitions and partnerships - Leveraging DSM's best practices and resources For acquisitions, resources are being focused and decision taking optimized by continuous prioritization and direct involvement of the Managing Board. In order to maximize the chance that opportunities in the chosen areas will be recognized and fulfilled, efforts are being strongly focused in the areas of Biomedical, Bio-based Products & Services (formerly White Biotechnology) and Advanced Surfaces. Priorities in growth platforms are strictly being managed. In the execution of the Pharma strategy, the partnering efforts are receiving maximum attention. This has resulted in the intention to form a joint venture with Sinochem. American Electric Power (AEP) presents its strategy in the context of a changing operating environment and demonstrates how its sustainability strategy feeds into its overall business strategy. The company stresses the importance of integrating environmental and societal issues for its strategy, operations, performance measurement and reporting, and explains how it has changed its organisation to achieve this integration. Leadership, Management & Strategy The IIRC suggests that companies also use the content element operating context to present material stakeholder relations and the relevant issues for their material stakeholders. Strategic focus Stakeholder inclusiveness Connectivity An Integrated, Stakeholder-Informed Strategy The connections between our environmental, financial and social performance are central to our strategy and to our thinking about who we are and what we do. The more we align and integrate our activities in these three areas, the more successful we will be. For more than 100 years, AEP has provided affordable, reliable electricity for our customers; steady, competitive returns for our shareholders; and safe, rewarding jobs for our employees. While doing so, we have worked to protect the environment and to support the communities in which we operate. The link between our environmental and financial performance has become much stronger and clearer to us during the past several years. Environmental issues became a larger part of our risk portfolio, and our performance as a company began to be seen, at least in part, in terms of our ability to address global climate change. We have made major investments in environmental controls at many of our coal-fired plants, which have resulted in reductions in sulfur dioxide and nitrogen oxide emissions by about 80 percent since While there is a clear environmental benefit, these investments have also led to major rate increases for our customers. At the same time, we have led the way in testing and deploying new technologies that will make us more efficient, give customers more control over energy use, enable modernization of the grid and further reduce our environmental impacts. AEP was presented with a new challenge in In Ohio, customers have had a choice for generation service since 2001, but 2010 was the first year in which we have seen active retail marketing that targets our commercial customers. While we expect this Construction continues on the John W. Turk, Jr., coal plant, which is scheduled to begin operations in Reliability: Explicite description how the organisation integrates its operations Source: AEP Corporate Accountability Report 2011, page 6 6 Leadership, Management & Strategy trend to continue in 2011, we are taking steps through the regulatory process to address this while entering the competitive market ourselves. Our new AEP Retail Energy business has initiated retail marketing efforts in our service territory as well as other service territories in Ohio. Read more about this in Public Policy. Employee and other human-resource issues remain vitally important. We are focused on a strategy that ensures we can attract and retain the talent we will need to build, operate and maintain new technologies and interactive energy supply-and-demand systems, such as our gridsmart initiative. Our extensive stakeholder engagement process has helped to inform our business strategy, and it has begun to produce synergies and business opportunities for us. We are discovering that many of the lines we had drawn separating financial from nonfinancial strategies, activities and reporting are no longer relevant and, in some cases, are counterproductive. In response, we have worked to embed and integrate environmental and societal issues and performance into our strategy, our operations and our measurement and reporting systems. For example, in our Engineering, Projects & Field Services organization, the annual business plan is based on our sustainability strategy, and we ve designed goal-setting and performance systems that emphasize the connection between each employee s job and our company s overall environmental, social and financial performance. Strategic Transformation The ancient Greek philosopher Heraclitus said, The only constant is change. He could have been describing the electric utility industry and AEP in particular. We are in the midst of a fundamental transformation, including: Our operations are increasingly integrated: Our operating company presidents are responsible for business performance across generation, transmission and distribution. Consequently, these business units are working more closely and sharing goals and accountability for overall performance at the operating company level. The company presidents are actively involved with resource planning, cash flow, balance sheets, income statements and stakeholder relationships. This business model allows the company presidents to align investment decisions with financial, regulatory and operational priorities and to manage our social and environmental performance in an integrated fashion. Our fuel mix is changing: We are a coal-centric electric utility, but 34 Integrated Annual Reporting Report The 2010 Future of Corporate Reporting 114 Integrated Reporting The Future of Corporate Reporting 35

20 Natura addresses this aspect in its reporting section Who we work with : In the table Dialogue Panels, the report presents relevant stakeholder groups and what actions they have taken to elaborate their needs. In a second table, the report presents the main topics identified for each group and actions taken or planned. Stakeholder inclusiveness Responsiveness In the table below, we present the main topics that our stakeholders wanted to see addressed in the 2009 Annual Report, and the responses from Natura: Conciseness, reliability, materiality Stakeholders Suggested topics Responses from natura Brazilian Foundation for Sustainable Development (FBDS) and SustainAbility Explain the governance structure for sustainability issues. The information is included in the Governance section of the chapter entitled Our moment. FBDS - SustainAbility Specialists Specialists Publish the results of stakeholder engagement (opinions and suggestions). Launch the Wiki Report and give stakeholders a voice in the Annual Report. Publish the list of Natura s majority shareholders We have included, together with the six high-priority sustainability topics, tables with the principal contributions from stakeholders on each topic. The Wiki Report was launched in The Natura We Share section of the chapter entitled What We Aim For presents the voice of the stakeholders who participated in the debates on the Natura Conecta networking platform. The list of Natura s majority shareholders can be found in the Shareholders section of the chapter entitled Who We Work With. Consultants and NCAs, Shareholders, Suppliers, Employees and Consumers Address the Non-Service Rate and Natura s position on matters such as out-of-stock products and delays in delivery. Natura s position on these matters is available in the box entitled Quality of Services, in the chapter Who We Work With. Employees and NCAs Information on the consolidation of the Natura Consultant Advisers model. This issue was addressed in the chapter Who We Work With, under Consultants and NCAs. Shareholders Suppliers Importance of training leaders in the company s culture. Data on dialogue with suppliers and on the feedback from Qlicar supplier development program. This is a strategic matter for Natura and it is tackled twice in the report: in the Natura management System section of the chapter What We Aim For, and under Employees, in the chapter Who We Work With. This information is contained in the Suppliers section of the chapter Who We Work With. Employees Employees and Consultants Natura s position on issues such as the murumuru Case and the Urban Installations exhibition, which stirred up a controversy in the city of São Paulo. Information on Natura s Houses. The murumuru Case is dealt with in the Supplier Communities section, and Natura s position on the exhibition that breached São Paulo s Clean City Law can be found in the Consumers section, both in the chapter Who We Work With. This data can be found in the Consultants and NCAs section in the chapter Who We Work With. Source: Natura Annual Report 2009, page 36 naturaannualreport Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 37

21 Roche Business Report Corporate Responsibility Stakeholder engagement Similarly, Roche presents its relevant stakeholder groups, how it engages with stakeholder engagement process was. FMG presents in its integrated report a materiality matrix which shows the importance of relevant topics for the company and for its stakeholders. This demonstrates FMG s approach to identifying the topics that are material and should be focused on. Roche Business Report 2010 Corporate Responsibility them, and what the outcome of the Stakeholder engagement See pp from each other. The table shows examples from the medical benefits our products provide, our Corporate Development and Environment, Engineer- addressed in this report. We will also continue to Conciseness, reliability, 2010, and there is further information on our website. ing and Facilities, and Corporatedaily business activities, and specific activities with Communications. cover company efforts to reduce emissions and Stakeholder engagement in 2010 materiality each group. We regularly seek stakeholders views The panel reports directly to executive management other environmental impacts, improve energy MoreResults on the Web when formulating business strategy, setting priorities Stakeholder group Examples of engagement of engagement and is tasked with making fundamental decisions on efficiency, conserve resources and improve public including those relating to Corporate Responsibil Stakeholder Patients and Ran workshops for patient groups in several Better engagement: understanding of patients needs so sustainability-based projects. ity (CR), and throughout product development. We mass-transit links to the airport all issues considwww.roche.com/stakeholder_engagement patient groups countries, including France and Germany we can help them manage their disease ered important by FMG stakeholder groups. Reviewed informed consent forms with Consent forms easier for patients to read The panel is responsible for identifying andengagement assessstakeholder in 2010 group, EGAN patient advocacy and understand ing sustainability-related opportunities and risks for research Parallel to the reader survey, weunderstanding conducted an Healthcare Market and needs assessment Improved of customer needs group Examples engagement Results engagement professionals among of HCPs in US and review top five EUof countries Over 3,000 HCPs participatedfrom in American FMG, as well as putting forwardstakeholder important sustaininternal the issues ofof importance (HCPs)ofand Virtual conference services HCPs Society of Clinical Oncology conference Patients Ran workshops for patientforgroups in several Better understanding needs so ability projects, reviewing the status the Group s the company s own perspective. Here, too,ofvirtual itpatients Governments, Participated in industryfrance initiatives topics Development of effective public their healthdisease patient groups countries, including andon Germany we can help them manage sustainability program, and approving any program emerged that priorities set in the prior year were poliregulators and as biosimilars cies and regulations, and shared learnings such Reviewed informed consent forms with Consent forms easier for patients changes. largely unchanged and that we merely needed to to read industry Developed guidelines for misuse Roche WADA signed a memorandum of patient advocacy group, EGANof comandand understand expand and revise the coverage given to a small the World Agency understanding Healthcare pounds Marketwith research andanti-doping needs assessment Improved understanding of customer needs Materiality matrix and sustainability program of topics. Healthcare payers Worked withnumber payers to develop methods to of tools to assess costprofessionals among HCPs in US and top five EU countries Development Over 3,000 HCPs participated in American evaluate and compare the effectiveness of effectiveness The materiality matrix presented here illustrates (HCPs) Virtual conference services for HCPs Society of Clinical Oncology virtual conference Improved understanding among payers of how we prioritize the key sustainability topics medicines that Toinmake numerous and ofinitiatives Governments, Participated industrythe initiatives on topics activities Development effective public health polithe value of our products and services Developed a pricing toolkit and computer shape our strategic sustainability program. included as topics in the materiality matrixand as shared learnings regulators and Each such as biosimilars cies and regulations, models in association with payers industry Developedtransparent guidelines for misuse of com an Roche and WADA signed a memorandum of topic s position within the matrix reflects its imporas possible for external audience, Employees Group-wide programmes to promote our Increased awareness and understanding of pounds with the World understanding tance for our stakeholder groups and for Flughafen FMG hasanti-doping defined Agency a sustainability thatthe global strategic framework the strategic program framework among Healthcare payers Worked with payers to develop methods to Development of tools to assess costmünchen GmbH. reflects company s strategic work force objectives. First Ran management town the hall meetings at evaluate compare the effectiveness of effectiveness major sitesand covered in our 2008 sustainability report, the promedicines Improved understanding among payers of Investors Attended over 70 investor meetings and Improved investor understanding The topics relevance for stakeholders was asgram is updated annually. Like the topics listed ofinour busivaluestrategy of our products and services conferences Developed a pricing toolkit and computer nessthe model, and late-stage pipeline sessed by means of an online survey. This revealed our materiality matrix, our progress on implementmodelswith in association with Suppliers and Worked key suppliers to payers commit to our Minimised supply chain risks that the majority of those who Employees read our 2009 Group-wide ing this program is our reviewed andsupplier approved by the critical of programmes to promote Increased awareness understanding business partners new Supplier Code of Conduct Extended audits toand business sustainability report were essentially satisfied with sustainability panelwith. service strategic framework the strategic among the global providers framework (indirect spend) Began aligning supplier audit protocols Ensure recognition for our access organisations Investors programmes Improved investor understanding of our busi Launched projectstrategy with theand Chinese Ministry ness model, late-stage pipeline The sustainability management panel of key Bernsuppliers and others organ to our Declaration Worked with to on commit Suppliers and business partners Communities donation in China new Supplier Code of Conduct DonatedSG time, money and expertise to Better integration with mass transit systems Collaboration with home region Reduction of environmental footprint Stakeholder dialogue and communications Continuous value creation Safety and security work force of other PSCI members those Ran management town hall meetings at Non-governmental Worked with the Access to Medicines Index major sites its 2010 over ranking on Attended 70 investor meetings and Engaged with Amnesty International, conferences Career training Energy efficiency and resource conservation Very important annually Materiality matrix 1) Supplier management Co-determination Risk management and anti-corruption initiatives (compliance) Airport development and demand-driven capacity expansion Customer satisfaction and feedback management Competitive operating structures Regional sponsorships and charitable giving Equal opportunity and cultural diversity in the workforce Environmental protection and conservation Promotion of employee sustainability awareness Knowledge sharing and innovation Industrial health and safety Sustainable building Health management Political stance and participation in organizations Important sustainability program Materiality, conciseness and stakeholder inclusiveness Importance for stakeholders We update our believe in two way dialogue where both parties learn We aim to create value for our stakeholders through from each other. The table shows examples from the medical benefits our products provide, our 2010, and there is further information on our website. daily business activities, and specific activities with Sustainability decision-makerseach group. We regularly seek stakeholders views the amount of coverage given to the various Stakeholder inclusiveness when formulating business strategy, setting priorities More on the Web The FMG Group has a sustainability panel staffed by topics. However, readers did express a wish for and connectivity Stakeholder engagement: including those relating to Corporate Responsibil believe in two way dialogue where both parties learn We aim to create value for our stakeholders through heads of Human Resources, Finance and Controlling, more information onwww.roche.com/stakeholder_engagement security, and this has been ity (CR), and throughout product development. We Continued education and HR development Waste management Water and wastewater Handling of hazardous substances of Health to establish organ donation Minimised supplyan chain risks system Extended supplier audits to business critical Help to reduce health inequalities Began aligning supplier audit protocols with service providers (indirect spend) causes suchindustrial as AIDS orphans in Malawi President and CEO, Personnel Relations Director Maintain positive relationships with those of other PSCI members and clean water in Uganda Non-governmental Worked with the Access to Medicines Index organisations PE Human Resources FC Finance and Media Controlling Communities Contributed to local communities through on its 2010 ranking communities Ensure recognition for our access Support the next generation of scientists initiatives such as Roche Genetics Education Engaged KEwith Amnesty International, UK Programme programmes Important Launched project with TEthe Chinese Ministry Corporate Engineering Declaration of Bern and others on Corporate organ of Health to establish an organ donation Over 120 corporate press releases and trade Maintain a positive media image and protect Development and Communicationssystem and Facilities donation in China news updates our reputation Environment Donated time, money and expertise to Help to reduce health inequalities causes such as AIDS orphans in Malawi clean2010, water page in Uganda Source: Roche Annualand Report 104 Contributed to local communities through Importance for Flughafen München GmbH Maintain positive relationships with 1) communities Support the next generation of scientists 10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 104 Media Over 120 corporate press releases and trade news updates 10_Roche_AR10_ENG_Corporate Responsibility Part1.indd Integrated Reporting The Future of Corporate Reporting Facilitation of global mobility was defined as a purpose of the company and therefore does not represent a separate area of reporting. Source: FMG Sustainability and Annual Report 2010, page 25 initiatives such as Roche Genetics Education Programme Very important :54:14 Maintain a positive media image and protect our reputation :54:14 Integrated Reporting The Future of Corporate Reporting 39

22 Furthermore FMG names its key stakeholder groups and specifies forms of Stakeholder dialogue dialogue and frequency. Stakeholder inclusiveness Angoplatinum presents an overview of the five material issues that most affect its short-, medium- and long-term sustainability and its approach in responding to these issues and its stakeholders expectations. Conciseness, reliability, materiality Strategic focus Stakeholder inclusiveness Conciseness, reliability, materiality Key stakeholder groups Media Passengers and visitors Airlines and the aviation industry Material issues Financial sustainability Safety and health Regulation and minerals legislation What does this cover? ä Headline earnings. ä /FU EFCU ä Gross profit margin. ä Worker safety (employee and contractor). ä Worker health and wellness. ä Our mining rights as granted by the Department of Mineral Resources. ä Adherence to the Mining Charter and implementation of its social and labour plans. ä Other material licences and authorisations such as approvals of environmental impact assessments (EIAs) and water-use licences. Why is it important? ä Without profits our Company would not exist and its benefits to society would be lost. ä 5IF NJOJOH CVTJOFTT DBSSJFT inherent risks that may affect the safety and health of our workers. ä We want all people who work at "OHMP "NFSJDBO 1MBUJOVN -JNJUFE (Amplats) to return home safely and healthy at the end of their shift. ä Without a valid mining right we would OPUªCF QFSNJUUFE UP NJOF ä /PO BEIFSFODF UP UIF.JOJOH $IBSUFS and/or failure to implement the social BOEªMBCPVS QMBOT DBO MFBE UP SJHIUT CFJOHªSFWPLFE ä Approved EIAs and water-use licences are key to ensuring that our environmental impacts are minimised. What do our stakeholders expect from us ä Shareholders want a sound return on their investment. ä 5IF (PWFSONFOU XBOUT UBYFT ä 5P NBLF TBGFUZ BOE IFBMUI UIF UPQ priority in any situation and have OPªJOKVSJFT BT B SFTVMU ä 5P CVJME NBJOUBJO BOE DPOUJOVBMMZ improve safety and health systems. ä -FHBM DPNQMJBODF BOE UIF WBMJEJUZ PG BMM SJHIUT BVUIPSJTBUJPOT BOEªQFSNJUT ä Implementation of the Mining Charter and the social and labour plans. 115 Government ministries and agencies Munich Airport Employees Policymakers and industry associations Business partners Airport region Region Form of dialogue and medium Meetings with community representatives and policymakers from the airport s surrounding region Frequency As needed Through its regional sponsorship initiatives, FMG maintains contact with more than 500 partner organizations in the region (in sport, education, social welfare and culture) Continuously Regional marketing: Intensive collaboration in the areas of business and tourism with the towns and administrative districts of Erding and Freising Continuously Information events for businesses and lobbyists (e.g., district artisans associations, chambers of industry and commerce, trade and industry associations) As needed Fact-finding visits to the airport by community officials (community, city and county councils) As needed Panel discussions and meetings with citizens initiatives, associations and other societal groups As needed Communities Council: A forum for information exchange and dialogue in connection with Munich Airport s expansion planning. It also decides on how resources from the regional impact fund are allocated. A working committee prepares meeting agendas for final decision-making. As needed Airport forum: Information and communication platform for questions concerning the region s economy and traffic trends in the airport s surrounding area. Under the aegis of the economics ministry, current issues are discussed directly with the neighboring communities. Magazine for the airport region, M Dialog Commission on Aviation Noise: Exchange between local politicians in the affected regions, German ATC, and government agencies PhoneFMG line for aviation noise Source: Sustainability andcomplaints Annual Report 2010, pages 112ff Noise and emission reports (current information on aviation noise, air pollutant levels, etc.) 40 Integrated Reporting The Future of Corporate Reporting Twice a year ä 5IF DPNNVOJUJFT DMPTF UP PVS operations want benefits from our CVTJOFTT 5IFTF JODMVEF QSPDVSFNFOU benefits, employment and the provision of infrastructure. What are we doing? ä 5ISPVHI PVS $PNQBOZ TUSBUFHZ XF XJMMªDSFBUF NBYJNVN WBMVF CZ understanding and developing the market for platinum group metals (PGMs); grow the Company to expand into those opportunities; and conduct our business safely, cost-effectively and competitively, thus contributing positively to our host communities. Monthly ä 5P ¾Y QSPCMFNT QSPNQUMZ BOE OPUJGZªBOZPOF XIP NBZ CF BGGFDUFE by them. ä Safety is one of our values. ä We have a safety strategy intent ä -FUUFST PG DPOWFSTJPO PG NJOJOH SJHIUT were received in Fourteen rights POªEFMJWFSJOH ²[FSP IBSN³ UP PVS employees. have been converted and one is going through the administrative process. ä We have programmes in place UPªSFEVDF FYQPTVSF UP OPJTF 5#ªBOEª)*7 ä 5SBDLJOH TPDJBM BOE MBCPVS QMBO implementation. ä Engaging with the Department of Water and Environmental Affairs to get the four outstanding water-use licences approved. Source: Angloplatinum Annual Report 2011, page 23 Twice a year Continuously Monthly Integrated Reporting The Future of Corporate Reporting 41 Our vision, strategy and materiality Regional engagement and social responsibility

23 g roup ManageM ent r eport Financial r eview 03.4 Risk and Opportunity Report Financial opportunities Management assessment of overall risks and opportunities Customers and portfolio 03.4 Connectivity and stakeholder inclusiveness Conciseness, reliability, materiality sure their satisfaction, reinforce our customer orientation and monitor the corresponding developments. Among other measures, we introduced the Net Promoter Score (NPS) as a unifigures on customers and portfolio Finally, the example of Siemens shows how an integrated approach that looks at In its annual report, adidas provides a table of overall risks along with the changing nature of business environments, society and changing customer management s Financial opportunities assessment of the likelihood that these risks might Management occur and remains its confident that the Group s earnings strength needs can drive innovation and the development of new business models. Siemens assessment of the potential financial impact, where possible, forms the a solid current basis and for our future business development and provides Favourable financial market changes the necessary resource to pursue the opportunities available to the developed an environmental portfolio of energy-efficient solutions and previous year. This gives the reader an idea of the significance of the risks and of Business success is a key element of sustainability. And decisive for business success are long-term customer partnerships of 27.6 billion. We thus reached our target of 25 have billion, a positive impact on the Group s financial results. Our Group In fiscal 2010, our Environmental Portfolio generated Favourable revenue exchange and interest rate developments can potentially Group. environmental technologies which have a three-fold advantage: they benefit the potential financial impact of operational or compliance-related risks. Siemens customers, who boost their own success through low energy costs and and a strong local presence in the markets where our customers operate. Our target system for sustainable value creation, than planned. Conciseness, reliability, materiality which had originally been announced for 2011, much Treasury earlier department closely monitors the financial markets to identify Compared to the prior year, our assessment of certain risks has higher productivity; they benefit future generations, whose living and and exploit opportunities see Treasury, p changed in terms of likelihood of occurrence and/or potential financial environmental conditions are being preserved and improved; and they benefit the 162 impact. These changes are reflected in the following table Table 08. which we call One Siemens, places a high priority on serving Siemens company by enabling it to tap attractive markets and generate profitable innovation-driven growth markets, supported by the ongoing In view of this success, we have set a new, highly ambitious growth. Siemens developed a significant part of this portfolio in collaboration with Nonetheless, the changes in individual risks have no substantial expansion of our customer-oriented Environmental Portfolio. growth target: We intend to increase the revenue generated by its customers. The reporting reflects this integrated approach. Management assessment of overall impact on the overall adidas Group risk profile, which we believe products and solutions in our Environmental Portfolio to at remains unchanged compared to the prior year. risks and opportunities least 40 billion by the end of fiscal We aim to reach that the EnvironMEntaL portfolio is a KEy driver of SuStainabLE growth 1 The Siemens portfolio is primarily comprised of capital goods with long product lifecycles and long service lives for our customers. Thanks to the close relationships cultivated with our customers, we develop a considerable share of our portfolio directly with them, and often even in their own companies. This is particularly true of our Environmental Portfolio, in which we bundle all those products and solutions that directly contribute to environmental and climate protection. The components of our Environmental Portfolio fall into three main categories: > First, products and solutions with especially high energy efficiency, such as combined cycle power plants, energysaving lamps or intelligent building systems; > Second, equipment and components for renewable energies, such as wind turbines and solar power plants; and > Third, environmental technologies, for example to provide clean water and air. Products and solutions qualify for inclusion in our Environmental Portfolio on the basis of clearly defined processes and stringent criteria. Once a year, the Siemens Sustainability Board decides on changes in the composition of the Portfolio. In fiscal 2010, for example, we added new or supplementary components for solar thermal power plants, along with highly efficient transformers and additional efficient gas turbines. goal by introducing innovative new products and by achieving above-average growth in various fields such as renewable Overall energies. risk profile unchanged versus prior year Management aggregates all risks reported by different business units and functions. Taking into account the occurrence likelihood and the potential financial impact of the risks explained within this report With the help of our Environmental Portfolio, our as customers well as the current business outlook, adidas Group Management reduce their CO 2 emissions, lower their energy costs, does enhance not foresee any material jeopardy to the viability of the Group as their productivity and thus improve their success. In a going 2010, concern. for This assessment is also supported by the historical example, we were able to lower the annual CO 2 emissions of our customers by response to our financing demands see Treasury, p The adidas For more information on the Siemens Group Environmental therefore has not sought an official rating by any of the leading Portfolio, visit: rating agencies. roughly 267 million tons. This number was calculated on the basis of the products and solutions installed since 2002, 08 Changes in corporate risk assessment versus prior year environmental-portfolio that had not yet reached the end of their lifecycle. We are therefore confident that we can reduce our customers CO 2 emissions by roughly 300 million tons by the end of fiscal SuccESS on the basis of Long-tErM customer relationships in a Spirit of partnership Sustainable customer relationships are the basis for all our businesses not only the share generated by our Environmental Portfolio and have been for over 160 years. We employ a structured key account management approach throughout the company to ensure that our products and solutions are tailored to the size and regional structure of our customers. Each of our Sectors, Divisions, Business Units and Cross-Sector Businesses bears worldwide responsibility for its business, revenue and profit. Most Siemens customers are small- and medium-sized enterprises which we support locally. Financial For major risks contracts or large-scale projects worldwide, we can serve our customers according to their needs from our respective headquarters. When implementing our customer-driven Source: adidas Anual Report 2011, page Likelihood of occurrence Potential financial impact Likelihood of occurrence Potential financial impact Strategic and operational risks Macroeconomic risks Major Significant Industry consolidation and competition risks Likely Major Probable Significant Hazard risks Possible Unlikely Reputation/brand image risks Probable Possible Inventory risks Probable Possible Customer risks Likely Highly probable IT risks Possible Unlikely Compliance-related risks Legal risks Likely Significant Possible Moderate Social and environmental risks Likely Probable Risks related to product counterfeiting and imitation Probable Highly probable Product quality risks Likely Possible Risks related to non-compliance Possible Moderate Unlikely Minor Interest rate risks Minor Moderate Industry-specific key account management (MDB) 1 Revenues from our Environmental Portfolio and the reduction of our customers annual carbon dioxide emissions are derived from various internal reporting systems that are generally different from those applicable to the financial information presented in our fy FY Revenue generated by the Siemens Environmental Portfolio Consolidated (in billions Financial of euros) Statements. For further information, please refer to the disclaimer on page Reduction in the amount of CO 2 emissions of our customers attributable to products and solutions of the Siemens Environmental Portfolio (in millions of tons of CO 2 ) We added new products and solutions to the Siemens Environmental Portfolio in fiscal 2010, for which proof of fulfillment of the qualification criteria was previously not available. The revenue and CO 2 reduction figures for fiscal 2009 were calculated on a comparable basis; therefore, the 2009 revenue and CO 2 reduction figures presented in this report differ from those presented in the prior-year report. 97 Indices 102 Further information Source: Siemens Sustainability Report 2010, pages Occupational health and safety management regional activities, we can rely on a large international 83 Employeessales MEaSuring customer SatiSfaction 87 Suppliers force managed by our regional Clusters and Regional Companies. 90 Corporate citizenship Knowing that our business success is critically dependent on 95 PwC Independent Assurance the Report satisfaction of our customers, we have taken steps to mea- version: 4. March 2012, 9:47 AM 1st corr corr/corr page en_adigb11_k03.indd 42 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 43 This approach is supplemented by our Executive Relationship Program. In this program, all members of the company s Man- 65 adidas Group 2011 Annual Report

24 SOLARWORLD 2010 STRATEGY AND ACTION Strategic objectives 2.3 Strategic objectives and strategies to achieve those objectives In this content element, organisations should describe their strategic objectives and their strategies to achieve those objectives. It should also be clear how companies measure achievements and target outcomes for the short, medium and long term. Solarworld presents its strategic goals and respective achievements in the reporting year and the year before in a very clear way. By including information from the previous year, Solarworld not only provides a good overview of past target achievements but also of changes in the goals the company has set for itself. TARGETS ACTUAL 2009 TARGETS ACTUAL 2010 TARGETS Gain and retain qualified, skilled employees and management staff: Employment expansion by around 25 % Strengthen employer attraction by way of Employer Branding Groupwide executive and talent development Completion of Code of Conduct and communication to employees 175 new jobs created/ + 10 %, growth was supported by up-staffing, parallel investments in process optimization Germany: Study Great Place to Work th place (2008: 57 th place) trendence graduate barometer 2009: 15 th place Groupwide executive and talent development Postponed to 2010; internal coordination process not yet completed Employment increase by around 10 % Employment increase: 19 % Continuation trendence graduate barometer 14 th place (2009: 15 th place); Emphasis on groupwide executive development After approval by the works council the code will be officially launched and communicated and included in internal training and continuing professional development programs Universum Study Survey 2010: 10 th place (natural science students), 13 th place (engineers students) Groupwide management and executive workshops Approval by work council obtained; official signature by Board of Management and Supervisory Board: Communication re-scheduled for 2011 Employment increase: Groupwide employment increase by around 25 % by the end of 2012 Strengthen employer attractiveness Emphasis on groupwide executive development Groupwide communication of the Code of Conduct / PAGE 025 Conciseness Reliability Future orientation Strategic focus TARGETS ACTUAL 2009 TARGETS ACTUAL 2010 TARGETS Signing of the Achieved Global Compact Review of sustainability report by auditor Consider the interests of stakeholder groups: voluntary disclosure through sustainability reporting pursuant to Global Reporting Initiative (GRI), Carbon Disclosure Project Implementation of awareness-building measures with regard to climate and resource protection Research promotion: expand the cooperation with universities and research institutes Contribution to regional development via Solar2World projects (not-for-profit) Information through throw-ins, target group mailings, school projects, cultural promotion regarding the protection of species, etc. Research promotion 2009: 25 (2008: 21) Project scope: 114 kwp (2008: 53 kwp) Consider the interests of stakeholder groups: voluntary disclosure through sustainability reporting pursuant to GRI, Carbon Disclosure Project as well as Global Compact Implementation of awareness-building measures with regard to climate and resource protection Research promotion: expansion of cooperation with universities and research institutes Contribution to regional development via Solar2World projects (not-for-profit) Information through TV spots, throw-ins, target group mailings, school projects, etc. Cooperation with TUBA in the area of vocational training increased; research promotion 2010: 24 (2009: 25) Project scope: 161 kwp (2009: 114 kwp) Consider the interests of stakeholder groups: voluntary disclosure through sustainability reporting pursuant to GRI, Carbon Disclosure Project as well as Global Compact Implementation of awareness-building measures with regard to climate and resource protection Research promotion: expanding the cooperation with universities and research institutes Contribution to regional development via Solar2World projects (not-for-profit) Target achievement 100 percent Source: Solarworld AG Annual Group Report 2010, page Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 45

25 Natura also demonstrates a clear link between its strategy, specifications planned or initiated to reach strategic objectives, and KPIs to measure progress in the selected focus areas. In the table below, Natura gives an overview of its targets for each high-priority topic and its performance against these targets in the reporting year. Through this presentation of targets and performance for the reporting year and targets for the next year, the reader quickly gets a picture of the development in each focus area. DEVELOPmENT DEVELOPmENT OF OF OUR OUR COmmITmENTS COmmITmENTS DEVELOPmENT OF OUR COmmITmENTS DEVELOPmENT OF OUR COmmITmENTS Materiality Reliability Future orientation Conciseness Over the years, we have established clear commitments to the evolution of our performance indicators as a way to continually Over the years, improve we have the management established clear of our commitments impacts. This to year, the in evolution addition of to our relating performance our targets indicators as the as high-priority a way to Over sustainability continually the years, improve topics, we have as the we management established did in 2008, clear of we our commitments also impacts. aligned This the to year, 2010 the in evolution targets addition with of to relating our performance socio-environmental our targets indicators as the budget, as high-priority way the to objective Over continually of sustainability the years, which is improve to topics, we have further as the integrate we established management did in sustainability 2008, clear of we commitments our also with impacts. aligned our This strategic the to year, 2010 the evolution planning targets addition cycle. with of our to relating our performance socio-environmental indicators our targets as to the budget, as a way high-priority the to objective continually sustainability Over of which the is years, improve to topics, further we have the as integrate management we established did in sustainability 2008, clear of our we commitments impacts. also with aligned our This strategic the to year, 2010 the in planning evolution addition targets with cycle. of to our relating our performance our targets socio-environmental indicators as the budget, as high-priority a way the to To objective sustainability of continually learn more which is improve topics, about as to further the we targets integrate management did in presented 2008, sustainability of we our in also this with impacts. aligned table, our This please the strategic year, 2010 refer in targets to planning addition the chapter with cycle. to relating our on socio-environmental the our related targets stakeholder. as to the budget, high-priority the objective of To learn more about the targets presented this table, please refer to the chapter on the related stakeholder. sustainability which is to topics, further as integrate we did in sustainability 2008, we also with aligned our strategic the 2010 planning targets cycle. with our socio-environmental budget, the objective To EmPLOYEE learn more about the targets presented this table, please refer to the chapter on the related stakeholder. To of which EmPLOYEE learn more is to about further the integrate targets presented sustainability this with table, our please strategic refer planning to the chapter cycle. on the related stakeholder. Hight-priority To learn more about EmPLOYEE Topics the targets Commitments presented in for this 2009 table, please refer to the chapter on the related Commitments stakeholder. for 2010 EmPLOYEE Hight-priority Topics Commitments for 2009 Commitments for 2010 Hight-priority Quality EmPLOYEE of Topics Obtain Commitments a 71% favorable for 2009response rate from employees in the Commitments Obtain a 77% favorable for 2010 response rate Hight-priority relationships Quality of Topics Organizational Obtain Commitments a 71% favorable Climate for 2009 survey. response rate from employees in the in Commitments Obtain the Organizational a 77% favorable for 2010 Climate response Survey. rate Hight-priority Quality relationships of Topics Obtain Organizational Commitments 71% favorable Climate for 2009survey. response rate from employees in the Obtain Commitments the Organizational 77% favorable for 2010 Climate response Survey. TARGET ACHIEVED - We obtained a 72% rate in the Brazilian rate Quality of Obtain a 71% favorable response rate from employees in the Obtain a 77% favorable response rate relationships Organizational operations. This Climate result is due survey. mainly to the increase of eight in the Organizational Climate Survey. relationships TARGET ACHIEVED - We obtained a 72% rate in the Brazilian Quality of Organizational Obtain a 71% favorable Climate survey. response rate from employees in the Obtain the Organizational a 77% favorable Climate response Survey. rate TARGET percentage operations. ACHIEVED This points result in favorable is due We mainly obtained response to the by 72% increase the rate operational in of the eight relationships Brazilian staff as TARGET Organizational operations. a percentage ACHIEVED Climate result of the This points RenovAção result in favorable - We survey. obtained is due Project. mainly response a 72% (Renovação to the by increase the rate means operational in the Brazilian in the Organizational Climate Survey. of eight renewal staff as in operations. TARGET percentage Poruguese, a result of ACHIEVED the This but points RenovAção result is this in form favorable - due We stresses Project. mainly obtained response the (Renovação to the word a by 72% increase Ação, the rate operational means or in of action. ). the eight renewal Brazilian staff as in percentage operations. Poruguese, result of the This but points RenovAção this result in form favorable is due stresses Project. mainly response the (Renovação to word the by increase Ação, the operational means or of action. ). eight staff as renewal in Education Invest a percentage result 3.5% of the of total payroll in employee training. Provide an average of 100 hours of Poruguese, but points RenovAção this in form favorable Project. stresses response (Renovação the word by Ação, the operational means renewal or action. ). staff as in Education Poruguese, TARGET a Invest result 3.5% of ACHIEVED the but of RenovAção total this form payroll stresses - In Project. in employee the Brazil, investment (Renovação word training. Ação, in means or action. ). education renewal allowed in training Provide per an average employee of 100 in Brazil. hours of Education Invest for TARGET the 3.5% training ACHIEVED of total and payroll development - In in Brazil, employee of investment 4,714 training. employees; education the total allowed Provide training per an average employee of 100 in Brazil. hours of Education Invest Poruguese, 3.5% but of total this form payroll stresses in employee the word training. Ação, or action. ). Provide an average of 100 hours of TARGET amount for the training invested ACHIEVED and represents development In Brazil, 4.4% investment of of 4,714 total payroll. employees; education the allowed total training per employee in Brazil. Education TARGET Invest 3.5% for amount the training invested ACHIEVED of total payroll and represents - In in Brazil, employee development 4.4% investment training. of of 4,714 total payroll. education allowed training Provide per an average employee of 100 in Brazil. hours of employees; the total for TARGET the training amount invested ACHIEVED and development represents - In Brazil, 4.4% investment of 4,714 employees; of total payroll. in education the allowed total training per employee in Brazil. CONSULTANTS AND amount for CONSUmERS the training invested and represents development 4.4% of 4,714 total payroll. employees; the total CONSULTANTS AND amount CONSUmERS invested represents 4.4% of total payroll. CONSULTANTS Hight-priority TopicsAND Commitments CONSUmERS for 2009 Commitments for 2010 CONSULTANTS Hight-priority TopicsAND Commitments CONSUmERS for 2009 Commitments for 2010 Hight-priority Quality CONSULTANTS of TopicsAND Commitments maintain CONSUmERS a 90% for favorable 2009 response rate from consultants in the Obtain Commitments a loyalty for rate 2010 of 18% with Hight-priority relationships Quality of Topics Commitments Satisfaction maintain a 90% Survey. for favorable 2009 response rate from consultants in the consultants. Commitments Obtain a loyalty for rate 2010 of 18% with Quality Hight-priority relationships of Topics Commitments maintain Satisfaction TARGET ACHIEVED 90% Survey. for favorable We response maintained rate the from same consultants level as the in the Obtain Commitments consultants. loyalty for rate 2010 of 18% 40% with Quality of maintain a 90% favorable response rate from consultants in the Obtain a loyalty rate of 18% with relationships Satisfaction previous TARGET year ACHIEVED Survey. for both the - We quality maintained of relationship the same (climate) level as rate, the consultants. relationships Natura Obtain Consultant loyalty rate Advisers of 40% with Quality of Satisfaction maintain a 90% Survey. favorable response rate from consultants in the consultants. Obtain a loyalty rate of 18% with TARGET which previous was year ACHIEVED at 90%, for both and the We quality satisfaction maintained of relationship rate, the which same (climate) was level as 88%. rate, the Obtain Natura Consultant loyalty rate Advisers relationships of 40% with TARGET Satisfaction previous which was ACHIEVED Survey. year at 90%, for both and the the - We quality satisfaction maintained of relationship rate, the which same (climate) was level as 88%. the Obtain consultants. a loyalty rate of 40% with rate, Natura Consultant Advisers previous TARGET year which was ACHIEVED for both the at 90%, and the - We quality satisfaction maintained of relationship rate, the which same (climate) was level at as rate, 88%. the Natura Obtain a Consultant loyalty rate Advisers of 40% with Education Collect which previous was R$ year at 3,744 90%, for both million and the from quality satisfaction the of sale relationship of rate, products which (climate) was from the 88%. rate, Crer Collect Natura R$ Consultant 6 million Advisers from the sale of Education Para which Collect Ver was R$ (Believing at 3,744 90%, million and is Seeing) the from satisfaction line. the sale rate, of products which was from at the 88%. Crer products Collect R$ from 6 million the Crer from Para the Ver sale line. of Education Collect Para Ver TARGET R$ (Believing ACHIEVED 3,744 million is Seeing) - from line. We collected the sale of R$ products 3,768 million. from In the order Crer Collect products R$ from million the Crer from Para the Ver sale line. of Education Collect R$ 3,744 million from the sale of products from the Crer Collect R$ 6 million from the sale of Para to TARGET achieve Ver (Believing ACHIEVED this goal, is we Seeing) - invested We line. collected in the launch R$ 3,768 of products million. In such order as products from the Crer Para Ver line. Education Para Collect Ver R$ (Believing 3,744 million is Seeing) from line. the sale of products from the Crer products Collect R$ from 6 million the Crer from Para the Ver sale line. of TARGET new to achieve T-shirts ACHIEVED this and goal, shopping we invested We bags. collected in the R$ launch 3,768 of million. products In such order as TARGET Para Ver (Believing to new achieve T-shirts ACHIEVED is Seeing) this and goal, shopping - We line. we invested bags. collected R$ 3,768 million. In order products from the Crer Para Ver line. in the launch of products such as to TARGET achieve this goal, we invested in the launch of products such as Have 100,000 consultants engaged in new Have T-shirts 463,054 ACHIEVED and consultants shopping - We participate bags. collected in R$ training 3,768 courses. million. In order new Have T-shirts 463,054 and consultants shopping bags. participate in training courses. the Have Natura 100,000 movement consultants engaged in to achieve this goal, we invested in the launch of products such as TARGET ACHIEVED - 527,000 consultants were trained Have the Natura 100,000 movement new consultants engaged in Have (a TARGET T-shirts total 463,054 of ACHIEVED and 583,000 consultants shopping consultants - 527,000 participate bags. participated consultants in training were courses. Have 463,054 consultants participate in training courses. the training trained Have 100,000 consultants engaged in the Have Natura 500,000 movement consultants participate TARGET courses, (a total of excluding ACHIEVED 583,000 repetitions). consultants 527,000 participated consultants in were the trained training the in Have Natura training 100, ,000 movement courses. consultants engaged participate in TARGET Have 463,054 (a 2010 courses, total Have of excluding ACHIEVED consultants 583, ,000 repetitions) ,000 participate consultants in training were courses. trained consultants participated engaged in the movimento training Have the in training Natura 500,000 courses. movement consultants participate (a TARGET courses, Natura 2010 total of (Natura Have 583,000 excluding ACHIEVED 100,000 consultants movement). repetitions). - consultants 527,000 participated consultants engaged in in were the movimento training trained Have 500,000 consultants participate in training courses. courses, (a CONSUmERS 2010 Natura total Have of (Natura excluding 583, ,000 movement). repetitions). consultants in training courses. consultants participated engaged in in the the movimento training Have 500,000 consultants participate 2010 Have 100,000 consultants engaged in the movimento CONSUmERS courses, Natura (Natura excluding movement). repetitions). in training courses. CONSUmERS Hight-priority Topics Natura 2010 Commitments (Natura Have 100,000 for movement) consultants engaged in the movimento Commitments for 2010 CONSUmERS Hight-priority Topics Natura Commitments (Natura for movement) Commitments for 2010 Hight-priority Quality of Topics Commitments maintain a 47% for brand 2009 preference rate according to the Brand maintain Commitments the consumer for 2010 Hight-priority CONSUmERS loyalty rate relationships Quality of Topics Commitments Essence maintain survey a 47% for (brand s 2009 preference image). rate according to the Brand Commitments at maintain 46%. the consumer for 2010loyalty rate Quality Hight-priority relationships of Topics Commitments maintain Essence survey a 47% for (brand s 2009 preference image). rate according to the Brand maintain Commitments at 46%. the consumer for 2010 loyalty rate TNT has considered the results of its stakeholder surveys in its integrated strategy, and defined clear goals and focus areas for actions to achieve these goals, and transparently reports on its performance in these areas. Although this information is widely distributed across the report, it shows that the company has taken a stakeholder-oriented approach when setting its strategic objectives, has defined clear actions, and measured the performance against the targets set. Another positive aspect is the balanced reporting on achievements and missed goals, as required by the guiding principle of reliability. Reliability, conciseness Scope Winter reported change conditions adjusted reported Germany Scope Winter reported change conditions adjusted reported Germany Source: TNT Annual Report 2010, page 212 Source: Natura Annual Report 2009, page Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 47 CO 2 efficiency index performance CO 2 efficiency index performance CO 2 efficiency index CO 2 efficiency index

26 18 Strategy and values 16 B What Management s integrated reporting Analysis can look like Illustrative examples The BASF Group Strategy and values BASF Report 2011 Strategy and values Management s Analysis BASF describes The its BASF strategy Group and values including four strategic BASF Report principles 2011 related to the economy, the Strategy environment, and values customers and employees. Each guideline contains several goals which are first described in a high level overview and then presented BASF aims to strengthen its position as the world s in a table leading chemical company. We describe how we to intend further to details. ronmental protection. Through science and innovation, we with their We combine current economic status. success, A cross reference social responsibility at the end and envi of the table points Management s Analysis The BASF Group BASF Report 2011 achieve this in our We create chemistry strategy, which Strategy enable and our values customers in almost all industries to meet the current Strategy we presented in and November values This strategy builds on and future needs of society. our success in recent years and defines ambitious goals Sustainability is becoming increasingly important as a key Strategic focus for the future. factor for growth and value creation. Customers want sustainable products and system solutions, and the company s employees expect BASF to integrate sustainability firmly into its Strategy and values In 2050, around nine billion people will live on this planet. On the one hand, this population growth is associated with enormous BASF global aims challenges to strengthen but we also its see position many as opportunities, the world s especially chemical for the chemical company. industry. We We describe expect how the chemical we intend indus to leading achieve try to grow this particularly in our We strongly create in chemistry the emerging strategy, economies, which and we that presented these markets in November will account for around This 60% strategy of global builds chemical production success in by recent years Innovations and defines based ambitious on chemistry goals will on our BASF aims to strengthen its position as the world s leading chemical company. We describe how we intend to for play the a key future. role in three areas in particular: achieve this in our We create chemistry strategy, which In Resources, 2050, around environment nine billion people and climate will live on this planet. On the we presented in November This strategy builds on one Food hand, and this nutrition population growth is associated with enormous our success in recent years and defines ambitious goals global Quality challenges of life but we also see many opportunities, especially for the chemical industry. We expect the chemical indus for the future. try BASF s to grow products particularly and strongly solutions in the will emerging contribute economies, to conserving and In 2050, around nine billion people will live on this planet. On the that resources, these markets ensuring will healthy account food for and around nutrition, 60% of and global improving chemical production of life. Sustainability by Innovations and innovation based will on chemistry be significant will one hand, this population growth is associated with enormous quality global challenges but we also see many opportunities, especially for the chemical industry. We expect the chemical indus driving play a key forces. role in three areas in particular: try to grow particularly strongly in the emerging economies, and Our Resources, purpose environment and climate that these markets will account for around 60% of global chemical production by Innovations based on chemistry will Food and nutrition We Quality of create life chemistry play a key role in three areas in particular: for a sustainable future BASF s products and solutions will contribute to conserving Resources, environment and climate resources, ensuring healthy food and nutrition, and improving Food and nutrition quality of life. Sustainability and innovation will be significant Quality of life driving forces. BASF s products and solutions will contribute to conserving Our purpose resources, ensuring healthy food and nutrition, and improving quality of life. Sustainability and innovation will be significant We create chemistry driving forces. for a sustainable future Our purpose We create chemistry day to day activities. That is why we will integrate sustainability much We combine more closely economic into success, our business. social responsibility and environmental Our position protection. as the Through leading chemical science and company innovation, opens we up unique enable our opportunities customers for in almost us to contribute all industries to a to sustainable meet the current future. We and act future in accordance needs of society. with four strategic principles. Sustainability is becoming increasingly important as a key We combine economic success, social responsibility and environmental protection. Through science and innovation, we Our factor strategic for growth principles and value creation. Customers want sustainable products and system solutions, and the company s enable our customers in almost all industries to meet the current employees expect We add BASF value to integrate as sustainability firmly into its and future needs of society. day to day activities. one company That is why we will integrate sustainability Sustainability is becoming increasingly important as a key much more closely into our business. factor for growth and value creation. Customers want sustainable products and system solutions, and the company s Our position as the leading chemical company opens up unique opportunities We innovate for us to to contribute make our to a sustainable future. employees expect BASF to integrate sustainability firmly into its We act in accordance customers with more four strategic successful principles. day to day activities. That is why we will integrate sustainability much more closely into our business. Our strategic principles Our position as the leading chemical company opens up We drive sustainable unique opportunities We add for value us to contribute as to a sustainable future. solutions We act in accordance with four strategic principles. one company Our strategic principles We form the We innovate to make our customers We best add team value more as successful one company We drive sustainable We innovate to make our solutions customers more successful We form the We drive sustainable best team solutions Ambitious growth and profitability targets As part of developing our strategy, we have defined goals that we aim to meet by We forecast that worldwide chemical production will grow faster than global gross domestic product (GDP) through Based on 2010, we expect GDP to grow by an average of 3% per year, which would be slightly faster than in the past 10 years. From baseline 2010, chemical production is estimated to grow on average by 4% per year. We continue to aim to grow two percentage points faster than global chemical production and thus increase sales by an average of 6% per year until We have set ourselves the ambitious goal of earning a premium on our cost of capital of at least 2.5 billion on average each year. Based on the conditions listed above, we aim to increase sales to approximately 85 billion by 2015 and to approximately 115 billion by We expect all regions to contribute to this Management s Analysis Management s sales growth: Analysis Europe with 53 billion in sales in 2020, Asia Pacific with 29 billion, North America with 22 billion and South America, Africa, Middle East with 11 billion. We also want to increase profitability, as well, aiming for an EBITDA of about 15 billion in 2015 and around 23 billion in Our updated strategy also includes, for the first time, a goal for earnings per Our Our goals share: Our goals target is to increase earnings to approximately 7.50 per share by A new strategic excellence program, STEP, serves to strengthen our competitiveness and profitability. By the end of 2015, STEP is expected to contribute around 1 billion to earnings each year. This program, which follows on from our successfully completed 1 Economic goals 1 excellence program NEXT, includes mea Economic goals sures in the areas of production, engineering, maintenance, logistics, procurement and administration. STEP comprises more than 100 projects that are expected to lower fixed costs Profitability We earn a premium on our cost of and Profitability raise profit margins. capital We earn of a at premium least 2.5 on billion our cost on of average capital of per at least year 2.5 billion on average per year Strategic focus Growth targets Innovations for a sustainable future Innovations will play an important part in enabling us to achieve our growth targets. In 2020, we aim to generate 30 billion of our sales and 7 billion of our EBITDA with innovative products that will have been on the market for less than 10 years. Innovations in the chemical industry are nowadays not just based on the development of new chemicals, but increasingly on new materials and system solutions. These are the result of the combination of expertise from a variety of disciplines. For us, innovations of this kind require a broad portfolio and interdisciplinary cooperation as well as a deep understanding of technology and our customers value chains. Based on the three key areas resources, environment and climate; food and nutrition; quality of life we have focused on seven primary customer industries in which we use our chemistry to contribute to solutions, and thus continue to grow profitably: transportation, construction, consumer goods, health and The BASF Group BASF Report 2011 Our The nutrition, goals BASF Group electronics, agriculture, energy and resources. BASF Report These 2011 Our goals industries result in new growth fields in which we can make a decisive contribution to innovative and sustainable solutions for global challenges. Examples of these growth fields include battery materials, plant biotechnology and water treatment. For more on innovation, see page 28 Business expansion in emerging markets BASF s sales to customers in emerging markets have almost tripled in the past 10 years and accounted for approximately one third of total sales (excluding Oil & Gas) in By 2020, we aim to significantly increase sales to customers in emerging markets to around 45% of total sales (excluding Oil & Gas). Investments will also make an important contribution to our growth. Between 2011 and 2020, we plan capital expenditures of 30 billion to 35 billion. More than one third of this amount will be invested in emerging markets We in earned order a premium to strengthen of our 2.6 We earned billion a on premium our cost of of capital leading position. 2.6 billion on our cost of capital EBITDA of approx. 15 billion For more on growth in emerging markets, see page 31 and page 82 Doubling EBITDA compared with EBITDA of 12 billion EBITDA of approx. 15 billion 2010 Doubling to approx. EBITDA 23 compared billion with EBITDA of 12 billion 2010 to approx. 23 billion Earnings per share of around 7.50 Earnings per share of 6.74 Earnings per share of around 7.50 Earnings per share of 6.74 Profitability targets At least two percentage points faster than chemical Average premium on cost of capital Status of at We form the least 2020 Goals year-end Status 2011 at More on Updated strategy Our purpose production 2.5 billion on average 2020 Goals each year year-end 2011 More on for a sustainable future best team Energy and climate protection Energy Sales and of climate approximately protection 85 billion in 2015 EBITDA of approximately 15 billion in 2015 Emissions of greenhouse gases per metric ton of sales product Our We create chemistry strategy builds on our We create chemistry for a sustainable future (baseline 2002) 40% 34.6% page 95 Emissions Sales of greenhouse approximately gases per 115 metric billion ton of in sales 2020 product 2 (baseline 2002) Doubling EBITDA compared 40% with % to approximately page 95 Improvement of energy efficiency in production processes success in recent years and defines ambitious goals (baseline 2002) +35% +26.2% page 98 Improvement All regions of energy contribute efficiency to in growth production processes 2 (baseline 2002) 23 billion in % +26.2% page 98 Stop the flaring of associated gas that is released during crude for the future oil Stop production the flaring by of Wintershall associated (2012 gas that Goal) is released during crude 100% >95% page % >95% page 95 Innovations based on chemistry will play a key role in oil production by Wintershall (2012 Goal) three areas in particular: resources, environment and Reduction in emissions from BASF operations (excluding Oil & Gas) Reduction in emissions from BASF operations (excluding Oil & Gas) climate; food and nutrition; and quality of life Emissions of air pollutants 2 (baseline 2002) 70% 60.5% page 93 Emissions of air pollutants 2 (baseline 2002) 70% 60.5% page 93 Emissions to water 3 of organic substances (baseline 2002) 80% 73.5% page 100 Emissions to water 3 of organic substances (baseline 2002) 80% 73.5% page 100 Updated strategy Our purpose Abstraction of drinking water for production (baseline 2010) Abstraction of drinking water for production (baseline 2010) 50% 50% 20.9% 20.9% page 100 page 100 Introduction of sustainable water management at production sites Conciseness and materiality: Introduction in water stress of areas sustainable water management at production sites 100% 2.0% page 100 Our We create chemistry strategy builds on our We create chemistry for a sustainable future Source: BASF Report 2011, pages % 2.0% page 100 in water stress areas Summary at the end of each Transportation safety success in recent years and defines ambitious goals page Transportation safety Transportation accidents (baseline 2003) 70% 67.9% page 93 for the future Transportation accidents (baseline 2003) 70% 67.9% page 93 Updated strategy Our purpose Product stewardship Innovations based on chemistry will play a key role in Product stewardship three areas in particular: resources, environment and Risk assessment for all products sold worldwide by BASF in quantities of more than Risk >99% 29.5% page 102 Our We create chemistry strategy builds on our We create chemistry for a sustainable future one metric assessment ton per for year all products sold worldwide by BASF in quantities of more than >99% 29.5% page 102 climate; food and nutrition; and quality of life one metric ton per year success in recent years and defines ambitious goals 2 for the future Excluding oil and gas production 2 48 Integrated Reporting The Future of Corporate Reporting 3 Assuming Excluding oil comparable and gas production product portfolio Innovations based on chemistry will play a key role in 3 Assuming comparable product portfolio Integrated Reporting The Future of Corporate Reporting 49 three areas in particular: resources, environment and climate; food and nutrition; and quality of life Annual Goals 2015 Goals 2020 Goals Status at year-end 2011 Growth Annual Goals 2015 Goals Sales of approx. 85 billion 2020 Goals Sales of approx. 115 billion Status at year-end 2011 Sales of 73.5 billion Growth Sales of approx. 85 billion Sales of approx. 115 billion Sales of 73.5 billion 1 Our goals are based on the assumptions that we will continue to grow two percentage points faster than global chemical production annually and that global gross 1 domestic Our goals product are based will on grow the by assumptions an average that of 3% we every will continue year until to 2020 grow and two percentage worldwide chemical points faster production than global by 4% chemical every year. production annually and that global gross domestic product will grow by an average of 3% every year until 2020 and worldwide chemical production by 4% every year. Environment, safety and product stewardship Environment, safety and product stewardship Connectivity: BASF sets a lot of references in its report to avoid unnecessary repeats as well as to lead to further details

27 78 GREENhoUSE GASES BMW Group, in its Sustainable Value Report, displays a table with the status of objectives for each of its five sustainability areas. SuStainable ManageMent A company s success depends on key resources and relationships that go way beyond the traditional accounting definition of control. Innovators are beginning to factor in critical externalities into the way they set their targets and account for their performance. Unilever, for example, measures its carbon footprint along its value chain and sets individual targets for steps in the lifecycle under consideration Approach ofour the respective impact. helping To TAcKLE climate change Conciseness, reliability, materiality Climate change will have a growing impact on our business. We have set ourselves a bold reduction target for greenhouse gas (GHG) emissions. It covers our entire value chain from the sourcing of raw materials Conciseness, reliability, materiality Strategic focus, future orientation through to consumer use of the product and its disposal. Status of objectives in the area of sustainable management Strategic objectives Measures Deadline Status June 2011 Sales target set down by Strategy Number ONE million units in 2010; Outlook 2011: more than 1.6 million units Savings of euro 4 billion in material costs * 2012 Due to the efficiency programme within the context of the Group s Strategy Number ONE, material cost reduction by 2012 will significantly exceed the euro 4 billion planned. Return on capital employed of at least 26 % as well as an EBIT margin of 8 % to 10 % in the Automobiles segment : EBIT margin in Automobiles segment = 8.0 %; ROCE in Automobiles segment = 40.2% We are optimistic that an earnings corridor of 8 % to 10 % in the Automobiles segment is also possible in the long run, i. e. beyond To achieve this target, stable development in the global economic cycle as well as in the economic and political prevailing conditions is a prerequisite. Status of performance Our Metric Profit / profitability and long term value added Most successful premium manufacturer We have developed a metric which measures the greenhouse gas emissions associated with the lifecycle of a product on a per consumer use basis, eg the GHG impact of drinking a single cup of tea. Greenhouse gases per consumer use: CO² equivalents across the product lifecycle (grams) Our Footprint Using this metric we set a baseline by calculating the GHG emissions across the lifecycle of over 1,600 representative products. We calculated it at an absolute level as well as on a per consumer use basis in 14 countries. The calculation covers 70% of our volumes. Stakeholder dialogue Continuation of stakeholder dialogue Host further Stakeholder Round Tables in 2009 and / 2010 First Stakeholder Round Table on sustainable mobility and resource conservation hosted in 2009 in Munich. Second Stakeholder Round Table on the subject of electromobility held in % Sustainability in the supply chain Efficient supply chain that applies the same ambitious sustainability standards worldwide and at all steps of value creation Establish assessment processes at suppliers locations and take sustainability aspects into consideration at all steps of value creation in the concept phase of new vehicle projects 2010 ff. Raise awareness among purchasers for the importance of ecological and social standards and validate supplier partners 2010 ff. 100 % * + Target met. Sustainability requirements integrated and binding part of purchasing terms and conditions. In case of deficit, verification of direct suppliers sustainability status is also established as part of the requalification process for quality assurance. Raw materials 75 % Manufacture Transport + Consumer use Disposal Breakdown by Category our TARGETS 50 % Measures Our analysis has highlighted that the product categories which make the largest contribution to our GHG footprint are those where the consumer requires heated water showering, washing hair and laundry. Halve the greenhouse gas impact of our products across the lifecycle by 2020.* our greenhouse gas footprint % contribution by category Reduce GHG from skin cleansing and 3%1% 1% 4% hair washing Deadline Management of sustainability / sustainability strategy Sales division: Implementation process for sales sustainability strategy to begin in 2011 / / 2012 Development division: Approval of the (development) sustainability package with areas of action, targets, measures and responsibilities Purchasing division: Sustainability management to be integrated along the entire value creation chain. Focus on operational implementation, monitoring and standardisation of areas of action and measures (see next page for details) / 2012 HR division: Implementation of areas of action. Focus on roll-out of Web-based sustainability training for employees, dealers and suppliers as well as on the demography project Today for tomorrow Production division: Review of (production) sustainability package 2011, integration of objectives for 2011 in the objective management process for plants and planning. Further review to define objectives beyond Overarching: Implementation of guidelines for sustainable building planned, construction of new buildings and subsequent performance monitoring Further networking with internationally relevant sustainability networks such as the WBCSD. Active participation in conferences and projects aiming to develop solutions for sustainable mobility across sectors and internationally % 12 Reduce GHG from refrigeration As the world s Soap, shower gel &largest skin careproducer of ice cream, we will 4% By 2015 we aim to 4% reach 200 million consumers with products and tools that will help them 5% to reduce their GHG emissions while washing and showering.6% Our plan is to reach 400 million people by Based on the Group sustainability strategy approved by the Board of Management in 2009, the following divisional strategies are developed on an ongoing basis: 50 Integrated Reporting The Future of Corporate Reporting + REdUcING ENVIRoNmENTAL ImPAcT New objectives in the area of sustainable management International expansion of external sustainability network + 1% The baseline shows us that manufacturing and transport represent just 5% of our total impacts, while sourcing of raw materials and consumer use together account for over 90%. Awareness among purchasers for the importance of ecological and social standards was raised. Qualification measures have begun. Source: BMW Group Sustainable Value Report 2010, page 78 Further development and implementation of sustainability strategy in all divisions 68% 2% Source for footprint and breakdown below: Unilever 2008 baseline study across 14 countries. Total in tonnes. Reference year 2008 Strategic objectives 3% Laundry detergents & fabricof conditioners accelerate our roll-out freezer cabinets Soups, sauces & stock cubes We have already purchased 450,000 units with Tea & beverages 52% the newcleaners refrigerant. We will purchase a further Household Ice850,000 cream by Margarine & spreads Reduce GHG from washing clothes Mayonnaise, mustard & dressings We will reduce the GHG impact of the laundry 11% process by: Toothpaste Most of our Concentrating our liquids and compacting our powders. Reformulating our products to reduce GHG emissions 15% by Source: Unileverby Sustainable Living Plan 2010, pages Encouraging our consumers to wash at lower temperatures and at the correct dosage in 70% of machine washes by Reduce GHG from our manufacturing that use Shampoo & conditioners climate-friendly (hydrocarbon) refrigerants. Future Challenges Deodorants GHG emissions come from the hot water needed to use our soaps, shower gels and shampoos. To achieve our goal we will have to provide consumers with products and tools that will enable them to use less water. We do not yet know how we will do this. But we are clear that this is the biggest contribution we can make towards limiting temperature rise to Integrated Reporting two degrees and towards supporting the call for The Future of Corporate Reporting a more ambitious 80% reduction in global GHG emissions by

28 British American Tobacco Annual Report 2010 Corporate governance 57 British American B What Tobacco integrated Annual reporting Report can 2010 look like Illustrative examples Business review 5 The Chairman will always seek to obtain consensus at Board Approving the Company s Annual Report and reviewing its meetings but, where necessary, decisions will be taken by majority. periodic financial reports. If any Director has concerns about the running of the 2.4 Company or Governance a Declaring interim dividend and and remuneration recommending the proposed action which cannot be resolved, such concerns will be final dividend. recorded in the Board minutes. No such concerns arose in Agreeing the agenda for the Annual General Meeting. This content element Agreeing requires Board a succession description plans of and the considering organisation s the evaluation governance The Non-Executive Directors, led by the Chairman, meet, if structure, of how of governance the Board s performance supports the over strategic the preceding objectives year. and of how the required, Governance prior to meetings and of the Board without the Executive remuneration of those Reviewing charged the Company s Directors present and also meet annually, led by the Senior with governance risk management is linked and internal to performance in the remuneration controls systems and governance framework and approving the Independent Director, without the Chairman present. short, medium and Standards long term. of Business In this Conduct context, and an other integrated Group policies. report should also The Board s principal responsibilities include: provide insight about what actions those charged with governance have taken with Approving the Group s business strategy and ensuring regard that to an culture, ethical values and relationships. This addresses the aspect how a effective management team and the necessary financial and human resources are in place for the Group to meet company its objectives. considers sustainability in its strategy. Agreeing the Group Budget. Key activities of the Board in 2010 Growth The Board kept under review the Group s performance throughout 2010, focusing in particular on industry trends, the outlook in strategically important markets and key consumer segments and the performance of the Group s Global Drive Brands. In doing so, it considered the global economic climate, as well as the impact on the Group s volumes of industry volume declines, growing illicit trade and foreign exchange movements, as well as specific incidents such as the floods in Pakistan. It satisfied itself throughout the year that, despite difficult trading conditions, management remained on track to deliver the strategy. The Board regularly considered opportunities for growth through strategic acquisitions and reviewed the impact of the acquisition of the Bentoel tobacco business and its merger with BAT Indonesia effective 1 January It also considered the innovations pipeline as a driver of future growth. It kept under review the Group s liquidity and the means by which it funds its activities and continued to satisfy itself that management was making sufficient provision in this regard. Productivity The Board continued to oversee initiatives aimed at managing costs, increasing efficiencies and leveraging the Group s global reach. It considered a number of short-term initiatives and reviewed progress on the longer-term Global Integration Project, aimed at achieving structural savings. A number of proposed reorganisations within the Group s regions and functions were considered during the year and are now in the process of being implemented, including a reorganisation of the Group s regions and the closure of the Group s factory in Lecce, Italy. In addition, the closure of the Group s factory in Denmark was completed. British American Tobacco (BAT) describes key activities of its board which are connected to its strategy. Responsibility The Board monitored developments in tobacco regulation around the world, including regulation being considered by the US Food and Drug Administration, the consultation on the European Tobacco Product Directive, and the likely content of the Product Guidelines being developed under the FCTC. It also kept under review the activities being undertaken within the Group s Research & Development function aimed at developing potentially reduced-harm products. It was briefed on the results of clinical trials undertaken by the Group in It also received an update on proposals to conduct extended clinical trials on further prototype products in 2011 and noted that the Group would be publishing several papers covering the results of its clinical trial studies in peer reviewed journals. The cooperation agreement entered into with the European Commission and member states of the European Union in July 2010, aimed at collectively tackling the problem of illicit trade in tobacco, was presented to the Board, and it also received an update on the FCTC Protocol on Illicit Trade. Winning organisation The Board reviewed succession planning in consultation with the Nominations Committee and considered and agreed the Committee s various recommendations for appointments at both Main Board and Management Board level, including those arising from the Chief Executive s forthcoming retirement. In addition, the position of the Group s major pension funds was reviewed including how the Group is managing future liabilities, and the results of the global Your Voice survey of employees conducted in 2010 were considered. The Board held one of its meetings in Russia, one of the Group s key markets, where it received presentations from members of the Eastern Europe regional team and the British American Tobacco Russia top team in Moscow and visited the factory in St Petersburg. Business review Corporate governance Financial statements Other information Our strategy Our strategy is designed to deliver our vision and, as a result, build shareholder value. It is based on growth, funded by productivity and delivered by a winning organisation that acts responsibly at all times. Our vision Growth Productivity Winning organisation Responsibility Productivity Our vision Growth Winning organisation Source: British American Tobacco Annual Report 2010, pages 5, 57 Responsibility To achieve leadership of the global tobacco industry. Our strategy for growth aims to increase our market share, with a focus on our Global Drive Brands. Our commitment to productivity provides the resource we need to invest in our brands and grow share in our key markets, helping us to increase profit. Being a winning organisation ensures that we attract, develop and retain the people we need to deliver growth. Our companies and people act responsibly at all times and we seek to reduce the harm caused by our products. As markets start to come out of the recession, we are now armed with a stronger portfolio and are ready to take advantage of further growth opportunities. Nicandro Durante Chief Executive (from 1 March 2011) A strategy for growth I am delighted Connectivity to take my role at a time when the opportunities for growth continue to be strong. There s no doubt that we have our work cut out to match or exceed the success of the past few years but I know that we have the right business model, the right products and the right people, with the strongest innovations anyone in our industry has at their disposal. Our strategy certainly won t change, although we may talk about it in a slightly different way. Our business model and balanced strategy add value to all aspects of our business and we believe this sets us apart from our competitors. We still think that delivering growth is the key to achieving our vision to lead the global tobacco industry. This means placing an even greater focus on growth and ensuring that it drives everything we do. Our growth is funded by productivity and delivered by a winning organisation that acts responsibly at all times. Strengthening our business In 2010 we strengthened our brands, we strengthened our innovations and we increased market share. We also made good progress on our sustainability agenda and very good progress on reducing costs. We grew share in our Top 40 markets and I believe that as markets start to come out of the recession, we are now armed with a stronger portfolio than we had before and are ready to take advantage of further growth opportunities. The key indicators are moving in the right direction, demonstrating the strength of our business. Business review Corporate governance Financial statements Other information You can read more about our strategy at: 52 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 53

29 Remuneration Report (continued) Remuneration explained Strategic focus The presentation of top management salary and incentive plans in the remuneration report of Scottish and Southern Energy provides a good picture on what basis management are rewarded and how that links to the actual performance of the business, across all its strategic priorities, with an appropriate balance of financial and non-financial drivers. Connectivity 67 Overview Strategy Group performance Segmental performance Corporate governance Financial statements Shareholder information Conciseness, reliability Royal DSM is another one of just a few companies that report that top Report by the Supervisory Board management remuneration depends partly on non-financial targets. The report Supervisory Board report explains Remuneration to what policy regarding extent the targets Managing relate to financial performance and to what extent Board and the Supervisory Board they relate to sustainability and individual performance. Conciseness Reliability Executive Directors salary and incentive plans 2010/11 financial targets accounts for 25% of base salary and the other 25% relates to sustainability and other value-creating targets. The following shared targets linked to sustainability have been defined for the STI: performance measure purpose link to strategy policy and decisions Base salary short term annual Bonus The Annual Bonus is determined by the Remuneration Committee s assessment of the performance of SSE during the year, based on three key areas. Financial performance (60%) Group financial performance is measured by adjusted profit before tax, which reflects the underlying profits of SSE s business. Teamwork (20%) Teamwork is measured by performance against the SSE SET of core values: Safety; Service; Efficiency; Sustainability; Excellence; and Teamwork. Performance against these values is assessed through SSE s performance management process. Personal objectives (20%) In keeping with its Teamwork value, and to avoid setting Executive Directors potentially conflicting personal objectives, SSE believes personal objectives should form a part of the Annual Bonus. They are designed to support achievement of SSE s strategy and reinforce its values. Reflects market data, role, business and individual performance measured against SSE s strategy as set out on pages 10 to 15. The performance targets are clearly linked to SSE s strategy in three key ways: financial performance; teamwork; and personal objectives relating to the Company s priorities. Financial performance (60%) Adjusted profit before tax is a key means of achieving SSE s first responsibility to shareholders: sustained real growth in the dividend. Teamwork (20%) SSE believes it will only be successful financially if it exercises a wider corporate responsibility to others, such as customers and employees, on whom its success ultimately depends. Its core values summarise this approach. Personal objectives (20%) Personal objectives set during the year include: management of political and regulatory issues (Ian Marchant); generation availability (Colin Hood); improving working capital management (Gregor Alexander); and energy trading risk levels and fuel procurement (Alistair Phillips-Davies). long term performance share plan Source: Scottish and Southern Energy plc Annual Report 2011, page 67 For awards granted in 2008 performance is The two elements of TSR and EPS reflect measured against the following two elements relative and absolute measures of performance. over a three-year period. Total Shareholder Return (TSR) kk100% vests at or above 75th percentile kk25% vests at median kkstraight-line basis between median and 75th percentile kkno vesting of award if median performance not achieved The relative TSR measure is dependent on SSE s relative long-term share price performance and dividend return (sustained real growth is SSE s first financial responsibility to shareholders). Further vesting of this element requires the Remuneration Committee to be satisfied with SSE s underlying financial performance. Following the annual review in March 2011 the salary for the Chief Executive and the three Executive Directors remained unchanged. 60% awarded Maximum award of up to 100% of base salary: 75% in cash (non-pensionable); 25% compulsorily deferred into shares which only vest, subject to continued service, after three years. Financial performance (max 60%) During 2010/11, SSE delivered a 1.6% increase in adjusted profit before tax resulting in a target payment at 50% of maximum. Teamwork (max 20%) Safety: Total Recordable Injury Rate again improved but below stretch target. Service: Rated number one in almost all key independent surveys. Efficiency: Additional cost savings achieved during the year and other efficiencies secured in specific areas such as credit management. Sustainability: Renewable energy development and smart home project goals achieved. Excellence: Culture of innovation reinforced with diverse successes such as the hybrid bond issue and zero carbon homes development. Teamwork: It is clear to all of the non-executive Directors that the Executive Directors continue to perform strongly as a team with no evidence of a culture of individualism within SSE. All of this resulted in an above-target payment of 75% of the maximum. Personal objectives (max 20%) Overall, the Remuneration Committee concluded that progress was made in each of these areas during 2010/11 and that individually and collectively the Executive Directors delivered strong performance during the year resulting in an above target payment of 75% of maximum. 0% awarded Maximum award of 150% of base salary each year. Awards are released to the extent performance conditions are met. TSR (max 50%) Out-turn below median of FTSE 100 so 0% TSR element awarded; the graph on page 70 reflects performance over a five-year period. Target areas Distribution Shared Individual Financial 25% 25% 0% Sustainability and individual 25% 20% 5% Total 50% 45% 5% Short-Term Incentive (STI) linked to financial targets The part of the STI that is linked to financial targets (25%) includes elements related to operational performance, being operating profit (EBIT), gross free cash flow and net sales growth (organic), reflecting short-term financial results. The weighting given to the individual financial elements in the bonus is as follows: EBIT 10%, gross free cash flow 7.5% and organic net sales growth 7.5% of annual base salary for ontarget performance. Target areas On-target pay-out (% of base salary) Financial targets - Operating profit (EBIT before exceptional items) 10 - Gross free cash flow Organic net sales growth Total 25 1 Excluding currency fluctuations and divestments and acquisitions The three financial-target-related Short-Term Incentive elements can be derived from the financial statements. Short-Term Incentive (STI) linked to sustainability and other value-creating areas The part of the STI that is linked to non-financial targets (25%) relates to sustainability and other value-creating areas. For 2010/2011 three first tier value-creating-performance measures have been defined in the area of sustainability. The distribution over these three targets is set by the Supervisory Board. On a regular basis, following proper evaluation further refinement/adaptations of performance measures in the area of sustainability and their weight will take place. - ECO+ products Profitable ECO+ product development, consisting of: Percentage of phase transitions from Feasibility (phase 2) to Development (phase 3) that meet ECO+ criteria Percentage of successful product launches that meet ECO+ criteria - Energy-efficiency improvement linked to Triple P target of 20% increased energy efficiency in 2020 compared to Employee Engagement Index related to the High Performance norm in industry The STI targets on sustainability can be defined as follows: - ECO+ products ECO+ solutions are products and services that, when considered over their whole life cycle, offer clear ecological benefits (in other words, a clearly lower ecofootprint) compared to the mainstream solutions they compete with. These ecological benefits can be created at any stage of the product life cycle from raw material through manufacturing and use to potential re-use and end-of-life disposal. ECO+ solutions, in short, create more value with less environmental impact. - Energy-efficiency improvement Reduction of the amount of energy that is used per unit of product (known as energy efficiency). - Engagement Index An Employee Engagement Survey is conducted annually, focusing on a combination of perceptions that have a consistent impact on behavior and create a sense of ownership. Research has consistently shown that the four key elements (satisfaction, commitment, pride and advocacy) define engagement and link engagement to business performance metrics. In addition to shared sustainability targets (20%), a limited number of individual non-financial targets (5%) will apply. Target area On-target pay-out (% of base salary) Non-financial targets - Sustainability 20 - Individual 5 Total 25 Source: Royal DSM N. V. Integrated Annual Report 2010, pages Adjusted Earnings per Share (EPS) Adjusted EPS is used to monitor SSE s EPS (max 50%) Integrated Annual Report kk100% vests where EPS is 9% RPI performance over the medium term because Out-turn growth below the EPS minimum growth kk25% vests where EPS is 3% above RPI it is straightforward: it defines the amount target RPI+3% so 0% of EPS element awarded. kkstraight-line basis between 3% and 9% of profit after tax that has been earned for above RPI each Ordinary Share. kkno vesting if EPS minimum growth 54 Integrated of RPI Reporting +3% is The not Future achieved of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 55

30 TNT s explanation of its remuneration policy and composition of income shows that 50% of the variable income is dependent on non-financial indicators, which are clearly defined and explained in the report. Conciseness, reliability Source: TNT Annual Report 2010, page 159 RWE partially links the remuneration given to members of its executive board to the group s sustainable success. In order to motivate the board to manage the company sustainably, payment of 25% of the bonus earned is withheld for three years. Furthermore, 45% of the bonus is determined on the basis of an index which reflects the group s success in environmental and social activities. Another 10% of the bonus is determined by a motivation index which measures employee satisfaction and motivation. The concrete description of the compensation supports the guiding principle of reliability. 144 Compensation report In order to enable the members of the Executive Board to partake in an even more measurable manner of both positive and negative company performance over the long term, payment of 25 % of the bonus is withheld for three years. This corresponds to nearly 15 % of the total cash compensation. A review based on what is termed a bonus malus factor is conducted by the Supervisory Board at the end of the three-year period, in order to determine whether the Executive Board has managed the company sustainably. Only if this applies is the retained bonus paid. The development of the Group s added value determines 45 % of the bonus malus factor. Another 45 % is determined on the basis of a company-specific index, which reflects the Group s success in the field of corporate responsibility (CR). This CR Index, which builds on the sustainability reporting that has been a fixture at RWE for many years, reflects the Group s environmental and social activity. The remaining 10 % of the bonus malus factor is determined by the Group-internal Motivation Index, which measures employee satisfaction and motivation. At the beginning of the three-year period, the Supervisory Board establishes binding target figures for value added, the CR Index, and the Motivation Index, which may not be altered during the observation period. These target figures are compared to the figures actually achieved at the end of the three-year period. The bonus malus factor calculated by this method determines whether the retained bonus is paid as well as its amount. The better the figures actually achieved, the higher the bonus malus factor. It may vary between 0 % and 130 %. The presented amendments to the compensation scheme will be implemented in accordance with statutory regulations for the Chairman of the Executive Board as soon as his contract has been adapted. In particular, the rules concerning the partial retention of the bonus and the bonus malus factor do not apply yet, and the bonus for fiscal 2010 will be fully paid out after the 2011 Annual General Meeting. In contrast, the new rules apply to the other members of the Executive Board as they agreed to an advance application of the refined compensation system with effect from the year under review. In addition to cash compensation, Executive Board members receive non-cash remuneration and other compensation, consisting primarily of sums reflecting the use of company cars according to German fiscal guidelines and accident insurance premiums. RWE Annual Report 2010 Conciseness, reliability Compensation also includes payment for exercising Supervisory Board mandates held by Executive Board members at affiliates. All this income is deducted from the variable compensation and therefore does not increase the total remuneration. Source: RWE Annual Report 2010, page Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 57

31 Five-year performance summary 2.5 Performance This content element should provide information about how the organisation has performed against its strategic objectives and related strategies. Performance In the section How we performed, Landcom gives a transparent overview of its performance against its targets for the relevant strategic goals which are further explained by narrative (eg, pages for the area urban water cycle management). The comparison of the targets and performance for the reporting year is supplemented by the presentation of the performance indicators and targets for the four previous years, which gives a good picture of the progress made in each area. Five-year performance summary Future orientation Managing urban water: Protecting our waterways: Conciseness, reliability, All our projects had Water Sensitive urban Design strategies or equivalent documents at the masterplan stage. As mentioned previously, our aim is to have a benchmark Stream Erosion Index score of two (equivalent to best practice), with a stretch target of one. However, no projects specifically addressed the index during the reporting period. Percentage reduction in the mean annual load of total phosphorus 100% improving water quality: 90% 80% Thanks to our Water Sensitive urban Design controls, our projects reduced nitrogen by 47%, phosphorous by 71% and suspended solids by 85%, when compared with developments in the greater Sydney region without such controls. Our improved result in nitrogen reduction (45% last year) and phosphorous (56% last year) is largely due to the excellent results achieved at Oran Park, where water is being treated through a combination of wetlands and bio-retention systems. The 5% increase in the reduction of suspended solids (80% last year) was boosted by good results from our Parkbridge, Edmondson Park, The Ponds (Stage 1) and Oran Park projects. Only the latter came close to our stretch targets. 70% Target - current 60% 50% Target - previous 40% 30% 20% 10% 0% 2005/ / / / /2010 Percentage reduction in the mean annual load of total suspended solids 100% 90% 80% Target - current Target - previous materiality We recognise we need to provide guidance to our development teams, partners and consultants so they can more easily understand, implement and measure performance against this benchmark. We propose to work with our stakeholders over the next year to better define our new requirements and then provide a stepped process for developers to make the index easier to use. Despite not being able to report any results for this new indicator, it is worth noting that both our Oran Park and Edmondson Park projects met our previous indicator target, which was to ensure that post development storm discharges equalled predevelopment levels for a 1.5 year Average Recurrence Interval event. 70% 60% 50% Percentage reduction in the mean annual load of total nitrogen HOW WE PERfORMED 40% 30% 100% indicator descriptor Urban water cycle management Water quality Waterway protection indicator Target 2014/2015 Result 2009/2010 Target 2002/ / / / / /2006 0% 2005/ / / / / % 100% 100% 100% 89% 100% 77% 80% Percentage reduction in the mean annual load of total nitrogen 45% 47% 45% 45% 45% 47% 35% Percentage reduction in the mean annual load of total phosphorus 65% 71% 45% 56% 62% 60% 46% 80% 80% 83% 78% 56% 50% Target 40% 30% Percentage reduction in the mean annual load of total suspended solids 85% 85% Stream Erosion Index of % No result N/A N/A Percentage of commercial buildings to be designed and constructed to be capable of achieving a 5.0 star or greater rating under the NABERS Water Scheme 100% One commercial building constructed NABERS rating to be reported in 2010/2011 No historical data - indicator introduced in 2009/2010 Percentage reduction in potable water consumption compared to the base case (single and attached dwellings) 45% 41% No historical data - indicator introduced in 2009/2010 Percentage reduction in potable water consumption compared to the base case (single and attached dwellings serviced by reticulated recycled water) 60% 48% No historical data - indicator introduced in 2009/2010 Percentage reduction in potable water consumption compared to the base case (apartments) 45% N/A No historical data - indicator introduced in 2009/2010 Percentage reduction in potable water consumption compared to the base case (apartments serviced by reticulated recycled water) 55% N/A No historical data - indicator introduced in 2009/2010 Water conservation 20% 10% 0% 2005/ / / / /2010 Source: Landcom Annual Report 2010, page 39 No historical data - indicator introduced in 2009/ % 100% 100% 77% 80% LANDCOM ANNuAL REPORT 2010 N/A N/A Percentage of public open space irrigation systems supplied by a non-potable water source (e.g. recycled water, stormwater) 100% 100% No historical data - indicator introduced in 2009/2010 Percentage of new developments incorporating a dual water reticulation system to supply non-potable water to toilets, gardens and laundry 100% 100% No historical data - indicator introduced in 2009/2010 Reduction in water consumption (average BASIX score) 10% 80% 70% Percentage of projects with specific Water Sensitive Urban Design strategies, ensuring that these strategies are appropriate to the size and location of the project Projects where post development storm discharge equals pre-development storm levels for the 1.5 year Average Recurrence Interval 20% 90% 40% 46% 49% 43% [ 39 ] 37% Source: Landcom Annual Report 2010, page 38 [ 38 ] LANDCOM ANNuAL REPORT Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 59

32 Eskom Holdings Limited 67 Integrated Report 2010 Eskom shows its performance on selected indicators in a clear table with traffic lights. Conciseness, reliability, materiality In its integrated report, Vancity discloses a very transparent performance snapshot that starts with a table of the KPI targets set for the upcoming year and the reporting period and actual performance on each KPI for the current and previous years. This representation effectively meets the principle of being concise, reliable and material. Below are the current Eskom mission critical systems as determined through a business impact risk assessment: Materiality Future orientation Conciseness, reliability IT system Target availability Delivered availability Performance Maximo (Distribution maintenance) 99,00% 99,49% CC&B (Billing) 98,80% 99,30% GTX (Contact centre) 99,00% 99,69% OVS (Online vending systems) 99,00% 99,81% GPSS (Generation production and sales) 100% 100% Phoenix (Transmission) 98,00% 99,20% Source: The business Eskom Integrated continuity Report and disaster 2010, page recovery 67 plans were invoked successfully when three hardware failure incidents occurred. There were no significant information security incidents on our network this year. Going forward There will be a major focus on cost reduction; efficiency improvements; simplification of systems and management of IT in Eskom. Other future priorities include: Computing centralisation: opportunities to save money and promote sustainability through resource centralisation while maintaining the quality and integrity of the computing environment. Application support: widening the range of requirements with regards to applications while integrating, developing and supporting them as best possible. Systems assurance/resilience: continually improve protection from viruses and maintain our reliability of 99,99% uptime for our network and all production systems. Technology collaboration: intended to result in a better IT environment across the business. Anti-fraud and anti-corruption programmes The forensic and anti-corruption department assists Eskom with good corporate governance and prevents, mitigates, detects and responds appropriately to fraud, corruption and other forms of economic crime or acts of dishonesty. This is in support of our commitment as a signatory to the United Nations Global Compact. Partnering Against Corruption Initiatives (PACI) principles were developed by a multi-sectoral and multi-national task force of bodies such as the World Economic Forum, Transparency International and the Basel Institute on Governance, of which Eskom is a member. The aim of these principles is to provide a framework for good business practices and risk management strategies to counter corruption. PACI principles commit companies to two basic actions: a zero-tolerance policy towards bribery, and development of a practical and effective internal programme in line with the policy It is against this background that Eskom has developed a fraud prevention policy to express its commitment to fight fraud, corruption and economic crime, in line with the national anti-corruption strategy of South Africa and in line with the principles of partnering against corruption. Key performance indicators and targets The following table presents the key data and targets we use to evaluate organizational performance and guide our business strategy. Earnings from operations, the overall member loyalty score and the branch service experience score also influenced performance management in 2010, including incentive pay and profit share. For more information on these measures and our performance see the business review, which begins on page 27. For definitions of the key performance indicators, see the glossary of terms on page 87. Key performance indicator 2011 target Financial Earnings from operations $95.0M $88.0M $125.8M $78.6M $75.6M Net earnings $60.0M $56.0M $77.4M $53.8M $46.8M Efficiency ratio Members Overall member loyalty score 42% 42%* 43% 44% 46% Percentage of branches with an overall service experience score 8.69 out of ten 90% 90% 95% Data not available new target in 2010 Data not available new target in 2010 employees Employee engagement score 75% 75% 61% 53% 56% Community investment** Net growth of community investment loan portfolio $408M $294M $304M ($289M) $166M environment Greenhouse gas emissions 6,000t 6,000t 4,783t 5,101t 5,202t Key: met 2010 target; did not meet 2010 target * See note under the progress report for each target or commitment table on page 22. ** See note under the progress report for each target or commitment table on page 23. Source: Vancity Annual Report 2010, page status 2010 target 2010 actual 2009 actual 2008 actual Vancity 2010 AnnuAl RepORt Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 61

33 For each target or commitment, Vancity explains in a concise format what targets and commitments it had set and to what extent it had delivered on these. Finally, the performance of each target and commitment is explained in detail. Conciseness Reliability Connectivity employees What we said Status What we did Who s accountable An employee engagement score of 75 per cent Develop a Total Rewards strategy to provide incentives to employees to achieve and align with the Three Year Plan, while adhering to co-operative principles and ensuring market competitiveness Develop a Talent Management strategy to support employees to learn, develop and grow their career at Vancity Develop a Service Delivery strategy for the Human Resources division to ensure timely, accurate and consistent advice is provided to all employees and is responsive to the needs of managers so they can effectively lead and develop their employees As a result of the Better Decisions, Better Results initiative, leaders throughout Vancity will have clarity on what is expected of them and what they are accountable for, as well as their level of decision-making authority when working on initiatives with colleagues across the co-operative Our employee engagement score was 61 per cent, an increase of eight percentage points over 2009 We completed a Total Rewards philosophy (in place of the Total Rewards strategy, but with the same intent) Completed Completed By the end of 2010, 96 per cent of leaders had participated in the initiative Source: Vancity Annual Report 2010, page 23 Executive Leadership Team VP Human Resources VP Human Resources VP Human Resources Executive Leadership Team employee engagement score Community investment What we said Status What we did Who s accountable Net growth of the community investment loan portfolio is $294 million* Distribute the remaining funds in the Shared Success Economic Recovery Fund in accordance with the program s intentions Develop social and environmental impact measures to support implementation of the Social Finance (now Community Investment) strategy Design three community investment proofs of concept (lending and investing programs) with high social or environmental impacts Develop and implement a new loan program to finance energy efficiency Exceeded. Net growth was $304 million We have distributed $650,000 of the $3 million fund, primarily to not-for-profit organizations. We expanded the program and extended the date for the full distribution of funds to March 31, 2011 Completed We designed five proofs of concept lending and investment programs with especially high positive social or environmental impacts In progress designed but not fully implemented. We established an environment and energy efficiency crossdepartmental team. We also designed a single-family and strata-energy-efficient program employee engagement score SVP Community Investment SVP Community Investment Key: met 2010 target or commitment did not meet 2010 target or commitment * t he target for net growth of the community investment loan portfolio was not published in our Accountability Report. We added this as a key organizational performance indicator partway through % % 2008 For the definition of the employee engagement score, see the glossary of terms on page % target The boost in our overall score was a good indication that we were focused on the right things. The primary areas of concern for employees included work processes and tools, career development and performance management. We remain focused on large-scale systemic improvements and long-term change rather than quick fixes. Examples include additional training and development for member-service employees, investment in infrastructure, including the replacement of our core banking system and business applications, and process improvements. 53% % SVP Community Investment For the definition of the employee engagement score, see the glossary of terms on page 87. Awards 75% Vancity 2010 AnnuAl RepORt 23 Source: Vancity Annual Report 2010, page 43 56% 53% 61% 75% target The boost in our overall score was a good indication that we were focused on the right things. The primary areas of concern for employees included work processes SVP Community and tools, career development and performance management. We remain Investment focused on large-scale systemic improvements and long-term change rather than quick fixes. Examples include additional training and development for member-service employees, investment in infrastructure, including the replacement of our core banking system and business applications, and process improvements. SVP Community Investment In 2009, we began a Better Decisions, Better Results (BDBR) initiative to clarify employees accountability for decision-making. The goal of BDBR is to make better decisions more quickly and closer to the member. By the end of 2010, 96 per cent of people managers across the organization had participated in a two-day training session. We also aligned performance-management practices. Better processes and technology will improve employees experience of working at Vancity. But we want to do even more to invest in them. In 2010, we developed a three-year roadmap to provide a great employee experience, with a focus on Total Rewards and Talent Management. We also implemented a new payroll system and service-request tool to ensure employees and managers get consistent, accurate and timely information and human resource support. In 2010, Vancity was named one of the Top 50 Employers for Young People. We were also on BC s and Canada s Top 100 Employers list. We win workplace awards primarily because we: support alternative work arrangements; offer parental leave top-up payments for new mothers, fathers and adoptive parents; offer three weeks paid vacation, which increases after four years; and offer programs to help employees continue their education. Full list and description of awards: Vancity.com/awards total Rewards Total Rewards includes fixed and variable pay, benefits, perks and wellness, community, education and recognition. Our goal is for employees to have fair compensation, rewards and recognition, and for them to be rewarded based on individual, team and organizational performance. In 2010 we developed a Total Rewards philosophy, informed by our Vision and co-operative principles. In 2011, we will benchmark our current Total Rewards to clarify gaps between the current state and our Total Rewards philosophy, as compared to our local market. talent management and career development We encourage personal growth through continuous learning and on-the-job development. Our performance management practices include mechanisms for career and personal development and constructive feedback. We offer in-house and on-line training programs, and up to $2,400 per year for professional development on non-work time. system and service-request tool to ensure employees and managers get consistent, accurate and timely information and human resource support. Awards In 2010, Vancity was named one of the Top 50 Employers for Young People. We were also on BC s and Canada s Top 100 Employers list. We win workplace awards primarily because we: support alternative work arrangements; offer parental leave top-up payments for new mothers, fathers and adoptive parents; offer three weeks paid vacation, which increases after four years; and offer programs to help employees continue their education. Full list and description of awards: Vancity.com/awards total Rewards Total Rewards includes fixed and variable pay, benefits, perks and wellness, community, education and recognition. Our goal is for employees to have fair compensation, rewards and recognition, and for them to be rewarded based on individual, team and organizational performance. In 2010 we developed a Total Rewards philosophy, informed by our Vision and co-operative principles. In 2011, we will benchmark our current Total Rewards to clarify gaps between the current state and our Total Rewards philosophy, as compared to our local market. talent management and career development We encourage personal growth through continuous learning and on-the-job development. Our performance management practices include mechanisms for career and personal development and constructive feedback. We offer in-house and on-line training programs, and up to $2,400 per year for professional development on non-work time. In 2010, we developed a Talent Management strategy to help us identify and manage the talent required in the organization to drive our business strategy. When someone joins Vancity, we want them to understand their potential career path and feel supported to learn, develop and grow. In 2010, we focused on succession planning for senior managers using a tool called Talking Talent. In 2011, we will continue to implement the strategy, including a succession planning assessment for managers Vancity 2010 AnnuAl RepORt 43 In 2009, we began a Better Decisions, Better Results (BDBR) initiative to clarify In 2010, we developed a Talent Management strategy to help us identify and employees accountability for decision-making. The goal of BDBR is to make manage the talent required in the organization to drive our business strategy. better decisions more quickly and closer to the member. By the end of 2010, When someone joins Vancity, we want them to understand their potential 96 per cent of people managers across the organization had participated in a career path and feel supported to learn, develop and grow. In 2010, we focused two-day training session. We also aligned performance-management practices. on succession planning for senior managers using a tool called Talking Talent. 62 Integrated Reporting The Future of Corporate Reporting In 2011, we will continue to implement the strategy, including a succession Integrated Reporting The Future of Corporate Reporting 63 Better processes and technology will improve employees experience of working planning assessment for managers at Vancity. But we want to do even more to invest in them. In 2010, we developed a three-year roadmap to provide a great employee experience, with a focus

34 2010 accomplishments an 2010 accomplishments and results DKK million Sales Change Modern insulin (insulin analogues) 10,825 14,008 17,317 21,471 26, % Human insulin 13,451 12,572 11,804 11,315 11, % Victoza 87 2,317 N/A Protein-related products 1,606 1,749 1,844 1,977 2, % Oral antidiabetic products (OAD) 1,984 2,149 2,391 2,652 2, % Diabetes care total 27,866 30,478 33,356 37,502 45, % NovoSeven 5,635 5,865 6,396 7,072 8, % Norditropin 3,309 3,511 3,865 4,401 4, % Hormone replacement therapy 1,607 1,668 1,612 1,744 1, % Other products Novo 326 Nordisk 309 presents 324 a five-year performance overview in a table (5.0%) that includes Biopharmaceuticals total Total sales by business segment North America its financial and non-financial performance and selected relevant ratios, as well as 10,877 11,353 12,197 13,576 15, % long-term targets for some key indicators. This presentation gives readers a good 38,743 41,831 45,553 51,078 60, % snapshot of the development of performance in the past and recent performance against 12,280 long-term 13,746 targets 15,154 in all relevant 18,279 areas (ie, 23,609 financial, social and 29.2% Europe 15,300 16,350 17,219 17,540 18, % International Operations environmental). 7,156 7,892 8,984 10,371 12, % of which Region China 1,546 2,022 2,631 3,536 4, % Japan & Korea 1 4,007 3,843 4,196 4,888 5, % Total sales by geographical segment 38,743 41,831 45,553 51,078 60,776 Future 19.0% orientation Performance highlights Increase in local currencies 16% 13% 12% 11% 13% Currency effect (local currency impact) (1%) (5%) (3%) 1% 6% DKK Total million sales increase as reported % % % % % Sales Financial performance Change Depreciation, Modern insulin amortisation (insulin analogues) and impairment losses 10,825 2,142 14,008 3,007 17,317 2,442 21,471 2,551 26,601 2, % (3.3%) Operating Human insulin profit 13,451 9,119 12,572 8,942 12,373 11,804 14,933 11,315 11,827 18, % 4.5% Net Victoza financials 45 2, (945) 87 2,317 (605) (36.0%) N/A Profit Protein-related before income products taxes 9,164 1,606 10,971 1,749 12,695 1,844 13,988 1,977 18,286 2, % 30.7% Net Oral profit antidiabetic products (OAD) 6,452 1,984 2,149 8,522 2,391 9,645 10,768 2,652 14,403 2, % 3.7% Total Diabetes assets care total 44,692 27,866 30,478 47,731 33,356 50,603 37,502 54,742 45,710 61, % 12.2% Equity NovoSeven 30,122 5,635 32,182 5,865 32,979 6,396 35,734 7,072 36,965 8, % 13.5% Capital Norditropin expenditure, net 2,787 3,309 2,268 3,511 1,754 3,865 2,631 4,401 3,308 4, % 9.1% Free Hormone cash flow replacement therapy 4,707 1,607 1,668 9,012 11,015 1,612 12,332 1,744 17,013 1, % 8.5% Other products (5.0%) Financial Biopharmaceuticals ratios total Percentage of sales 10,877 11,353 12,197 13,576 15, % Total Sales sales outside by business Denmark segment 38, % 41, % 45, % 51, % 60, % Sales and distribution costs 30.0% 29.6% 28.2% 30.2% 29.9% 19.0% Research and development costs 16.3% 20.4% 17.2% 15.4% 15.8% North Administrative America expenses 12, % 13, % 15, % 18, % 23, % 29.2% Europe 15,300 16,350 17,219 17,540 18, % Gross International margin 2 Operations % 7, % 7, % 8,984 10, % 12, % 23.8% Net profit which margin Region China 16.7% 1, % 2, % 2, % 3, % 4, % Effective Japan & tax Korea rate % 4, % 3, % 4, % 4, % 5, % Equity ratio Total sales by 67.4% 67.4% 65.2% 65.3% 60.2% Return on equity geographical (ROE) 2 segment 38, % 41, % 45, % 51, % 60, % 19.0% Increase Payout ratio in local currencies 34.4% 16% 32.8% 13% 37.8% 12% 40.9% 11% 39.6% 13% Payout Currency ratio effect excl (local non-recurring currency impact) events % (1%) 34.9% (5%) 36.6% (3%) 40.9% 1% 42.8% 6% Total sales increase as reported Ratios for long-term financial targets 15% 8% 9% 12% 19% Long-term financial targets 4 Operating profit margin Financial performance 23.5% 21.4% 27.2% 29.2% 31.1% 35% Operating profit growth 12.7% (1.9%) 38.4% 20.7% 26.5% 15% Return Depreciation, invested amortisation capital (ROIC) and impairment losses 25.8% 2, % 3, % 2, % 2, % 2,467 (3.3%) 70% Return Operating on invested profit capital (ROIC) 9,119 8,942 12,373 14,933 18, % excl Net financials non-recurring events % % 2, % % (945) 62.4% (605) (36.0%) Cash Profit to before earnings income taxes 73.0% 9, % 10, % 12, % 13, % 18, % Cash Net profit to earnings, three-year average 80.2% 6, % 8, % 9, % 10, % 14, % 90% Total assets 44,692 47,731 50,603 54,742 61, % Equity Share ratios 30,122 32,182 32,979 35,734 36, % Source: Basic earnings Novo Nordisk per share/adr Annual in Report DKK , page Capital Diluted expenditure, earnings per net share/adr in DKK 2 2, , , , , % Free Dividend cash per flowshare 2 in DKK 4, , , , , % Total dividend 2,221 2,795 3,650 4,400 5,700 Financial ratios Percentage of sales Sales outside Denmark 99.2% 99.2% 99.2% 99.2% 99.4% Sales and distribution costs 30.0% 29.6% 28.2% 30.2% 29.9% Research and development costs 16.3% 20.4% 17.2% 15.4% 15.8% 14 Administrative Novo Nordisk expenses Annual Report % 6.0% 5.8% 5.4% 5.0% Gross margin % 76.6% 77.8% 79.6% 80.8% Net profit margin % 20.4% 21.2% 21.1% 23.7% Effective tax rate % 22.3% 24.0% 23.0% 21.2% Equity ratio % 67.4% 65.2% 65.3% 60.2% Return on equity (ROE) % 27.4% 29.6% 31.3% 39.6% Payout ratio % 32.8% 37.8% 40.9% 39.6% Payout ratio excl non-recurring events % 34.9% 36.6% 40.9% 42.8% Long-term Ratios for long-term financial targets financial targets 4 Operating profit margin % 21.4% 27.2% 29.2% 31.1% 35% Operating profit growth 12.7% (1.9%) 38.4% 20.7% 26.5% 15% Return on invested capital (ROIC) % 27.2% 37.4% 47.3% 63.6% 70% Return on invested capital (ROIC) excl non-recurring events % 29.9% 38.4% 47.3% 62.4% Cash to earnings % 105.7% 114.2% 114.5% 118.1% Cash to earnings, three-year average 80.2% 87.0% 97.6% 111.5% 115.6% 90% Conciseness, reliability Social performance Change Patients: Donations to the World Diabetes Foundation (DKK million) % Donations to the Novo Nordisk Haemophilia Foundation (DKK million) % Healthcare professionals trained or educated in diabetes (1,000) (accumulated) ,178 People with diabetes trained (1,000) % New patent families (first filings) % Employees: Employees (total) % Employee turnover (%) Internal assurance and monitoring: Employees trained in business ethics (%) 98 Long-term Ratios for social performance social targets LDCs where Novo Nordisk sells insulin according to the differential pricing policy (%) % Engaging culture (employee engagement) on a scale of or above Diverse senior management teams (%) % Company reputation with external key Improve stakeholders (on a scale of 0 100) (or maintain) Warning letters and reinspections Fulfilment of action points from facilitations of the Novo Nordisk Way (%) of Management % or above Environmental performance Change Inputs: Energy consumption (1,000 GJ) 2,712 2,784 2,533 2,246 2,234 (0.5)% Water consumption (1,000 m 3 ) 2,995 3,231 2,684 2,149 2,047 (4.7)% Outputs: CO 2 emissions from energy consumption (1,000 tons) (34.9)% Wastewater (1,000 m 3 ) 2,583 2,764 2,542 2,062 1,935 (6.2)% Waste (tons) 24,165 17,576 20,346 21,019 20,565 (2.2)% Long-term Ratios for environmental performance environmental targets Source: Novo Nordisk Annual Report 2010, page 15 Energy consumption (change compared to 2007 in %) (9) (19) (20) 11% reduction Water consumption (change compared to 2007 in %) (17) (34) (37) 11% reduction CO 2 emissions from energy consumption (change compared to 2004 in %) (31) (55) 10% reduction 1. As of 1 January 2010 Korea joined Japan to form Region Japan & Korea, while Australia and New Zealand became part of Region International Operations. The historical figures for have been restated and are comparable to the 2010 regional setup. 2. For definitions, please refer to p Impact of ZymoGenetics, Inc. share divestment, discontinuation of all pulmonary diabetes projects and impact of DAKO A/S share divestment. 4. The long-term financial targets were updated in February Please refer to pp Least developed countries, as defined by the UN, where Novo Nordisk sells insulin at or below 20% of the average prices for insulin in the western world. 6. Based on evoice, an employee survey using a scale of 1 5, with 5 being the best score. 7. Diverse in terms of gender and nationality. 8. Company reputation is measured by an independent external consultancy firm using a scale of 0 100, with 100 being the best score. Novo Nordisk Annual Report Share ratios Basic earnings per share/adr in DKK Diluted earnings per share/adr in DKK Integrated Dividend Reporting per share in The DKK Future of Corporate Reporting Total dividend 2,221 2,795 3,650 4,400 5,700 Integrated Reporting The Future of Corporate Reporting accomplishments and results

35 buildings and the production of raw materials affects society by making virgin land more scarce and increasingly fragmented, and hence reducing the services that land can provide to society. Other air pollution: Air pollutants include particulates, sulphur dioxide, ammonia, nitrogen oxide, carbon monoxide, and volatile organic compounds (VOCs) and are emitted principally as a result of the burning of fossil fuels, as well as through the drying and processing of timber. These emissions can result in smog and acid rain, with associated impacts on health (particularly respiratory conditions), agricultural production, property, and the With the preparation and publication of an environmental profit and loss account, acidification of waterways and soils. which shows the economic value of the environmental impacts caused by greenhouse and gas emissions supply chain and water produces consumption a varietyalong of different the value hazardous chain, Puma (e.g. has dyestuff, adhesives, Waste: PUMA s operations petroleum products) and started non-hazardous integrating its (e.g. financial paper and and non-financial fabric) waste performance products. on The a quantitative impacts of waste disposal are dependent on thebasis, disposal which method. is groundbreaking Landfills result for future in visual integrated disamenity reporting. for local populations, greenhouse gas emissions and, if the site is not well managed, the pollution of watercourses through leachate. Incineration also results in some greenhouse gas emissions, and disamenity, along with other types of air pollution. Illustration of processes and impacts through PUMA s supply chain 2010 Non-financial performance PUMA Operations: Greenhouse Gases (ktc0 2 e) Water ('000 m 3 ) Economic value million Connectivity Economic value % 7.6% 0.1% Materiality and reliability PUMA Operations Tier 1 suppliers Greenhouse Gases (ktc0 2 e) Water ('000 m 3 ) , % 0.8% GHGs from energy use, product distribution and travel Tier 1 Manufacturing Nitrous and sulphur oxides from energy use, product distribution and travel Tier 2-4 suppliers Greenhouse Gases (ktc0 2 e) Water ('000 m 3 ) Total: Greenhouse Gases (ktc0 2 e) Water ('000 m 3 ) , , % 49.3% 49.8% 50.2% Total economic value % Waste from material cutting GHGs from energy use and transport of products Nitrous and sulphur oxides from energy use and transport of products Source: Puma, Tier 2 Outsourcing Waste from material cutting GHGs from energy use and transport of components Nitrous and sulphur oxides from energy use and transport of components Tier 3 Processing Water use in leather tanning and industry GHGs from energy use and transport of materials Nitrous and sulphur oxides from energy use and transport of materials Tier 4 Raw Materials Methane from cattle ranching and nitrous oxides in agriculture Irrigation water use in agriculture Conversion of ecosystems for agricultural land GHGs Water Land use Air pollution Waste Source: Puma Annual Report 2010, page 7 66 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 67

36 WATERCARE SERVICES LIMITED ANNUAL REPORT 2010 Watercare, a bulk water and wastewater service provider in New Zealand, uses Policy 1 Environmental a very Care concise method to communicate its sustainability performance. Each performance section starts with an overview of the development of objectives Watercare s commitment to protecting the environment is embedded in its business practices and operations. The company is focused concerning this section (1). Furthermore, each objective is divided into on reducing its carbon footprint by increasingly using water and wastewater to generate electricity through hydroelectric and biogas subcategories target achievements, shown in a Sustainability Performance Ruler cogeneration facilities. Initiatives in power generation are coupled with practical steps to reduce energy consumption, encourage recycling (2). The cover of the integrated report describes how to read this sustainability and reduce paper use. performance ruler. This method gives a detailed but concise insight into the company s performance. WATERCARE SERVICES LIMITED ANNUAL REPORT 2010 Policy 1 Overall WATERCARE AT WORk: performance Case Study Policy 1 Environmental Care out of 10 Milestone passes in a gush of water Watercare s commitment to protecting the environment is embedded in its business practices and operations. The company is focused OBJECTIVE 1 on reducing its carbon footprint by increasingly using water and wastewater to generate electricity through hydroelectric and biogas cogeneration facilities. Initiatives in power generation are coupled with practical steps to reduce energy consumption, encourage recycling and 5reduce 5 paper use carbon Policy footprint 1 Minimise emissions and reduce OBJECTIVE Overall performance out of 10 1 WATERCARE AT WORk: Milestone passes in a gush of water Case Study Company Vision Outstanding and affordable water services for all the people of Auckland. Front cover: The ageing sewer that crosses Hobson Bay is demolished as part of Project Hobson. It has been replaced with a high-capacity storage tunnel that runs from Parnell to a pump station in Orakei. WATERCARE WATERCARE SERVICES SERVICES LIMITED LIMITED ANNUAL ANNUAL REPORT REPORT Atmospheric Emissions Carbon Carbon Reduction Some Some projects projects identified identified as part as part of the of future the future capital capital works works programme programme beyond beyond Watercare How continued to Read its work to the reduce Sustainability atmospheric emissions of carbon. Performance Watercare continued its work to reduce atmospheric emissions of carbon. will also will also provide provide Rulers opportunities to lower to lower greenhouse greenhouse gas emissions gas emissions and in and the in process the process The company The (PAGES company has 23 now has 60) now achieved achieved an 86 an per 86 cent per cent reduction reduction in carbon in carbon dioxide dioxide (CO (CO 2 ) reduce our carbon footprint. Re-roofing of the digesters at the Mangere Wastewater 2 ) reduce our carbon footprint. Re-roofing of the digesters at the Mangere Wastewater equivalent equivalent emissions emissions since since 1990, 1990, largely largely as a as result a result of improved of improved wastewater wastewater Treatment Treatment Plant Plant and the and proposed the proposed development development of a biogas of a biogas storage storage unit will unit help will help to to treatment treatment processes. processes. The single The single largest largest contributing contributing factor factor since since has been has been reduce reduce gas emissions gas emissions and the and unnecessary the unnecessary flaring flaring of gas. of gas. These These initiatives initiatives will help will help Watercare uses sustainability rulers to measure achievements against 19 objectives in six key policy areas. These are intended to allow stakeholders to compare our the decommissioning the of the of oxidation the oxidation ponds ponds and sludge and sludge lagoons lagoons at the at Mangere the Mangere to increase to increase the volume the volume of biogas of biogas captured captured and the and amount the amount of electricity of electricity generated generated performance against that of previous years. Each ruler comprises 10 units, which are either a measure or an action to be achieved, giving Watercare s performance Wastewater Wastewater Treatment Treatment Plant. Plant. Other Other company company initiatives initiatives such such as collecting as collecting methane methane at the at plant. the plant. a score out of 10. for electricity for electricity generation generation and optimising and optimising the efficiency the efficiency of hydro of hydro generation generation water water A graph A graph of Watercare s of Watercare s greenhouse greenhouse gas emissions gas emissions from from to today, today, with with storage storage dams has also helped to reduce reliance on the use of external energy. dams address has also to helped gain to further reduce reliance on the use of external energy. projections projections to 2050 to 2050 and the and company s the company s G3 long-term table long-term reference target, target, is shown is shown below. below. The slight The slight increase increase COin 2 production CO 2 production this year this year was due was to due the to greater the greater quantity Achieved quantity of of This year s performance information about the ruler wastewater wastewater treated treated as a as result a result of a growing of a growing population. population. Furthermore, Furthermore, operational operational Biogas Partially Biogas Utilisation achieved Not achieved (out of 10) requirements A. Objective of the of plant the plant resulted ([email protected]) resulted in a need in a need for increased for increased volumes volumes of natural of natural gas. gas. Biogas Biogas is a by-product is a by-product of the of wastewater the wastewater treatment treatment process process and comprises and comprises Unit of measure Watercare Watercare has continued has continued to review to review its approach its approach to measuring to measuring greenhouse greenhouse gas gas approximately 60 per 60 cent per cent methane. methane. If it escapes If it escapes into the into atmosphere, the atmosphere, emissions emissions to ensure to ensure consistency consistency with with best best practice practice as methods as methods for carbon for carbon it is 21 it is times 21 times more more damaging damaging than than CO 2. CO accounting accounting develop. develop. g3 At the At wastewater the wastewater treatment treatment plant, plant, biogas biogas is captured is captured and used and TABLE used to run to four run four gas gas engines engines that that this year this year met 56 met per 56 cent per cent of the of plant s the plant s energy energy needs. needs. Watercare Watercare 9/10 Management of Carbon of Carbon Footprint Footprint is looking is looking to increase to increase the amount the amount of energy of energy produced produced using using biogas. biogas. This 2006This will 2007 be will be Watercare Watercare is continuing is continuing to measure to measure its performance its performance against against 10 initiatives 10 initiatives of practical of practical achieved achieved through through the construction the construction of biogas of biogas holders holders to reduce to reduce the quantity the quantity of gas of gas value value to minimise to minimise the company s the company s carbon carbon footprint. footprint. The company The company is seeking Benchmark is seeking ways ways to to that that flares, Previous flares, and by and four re-roofing by years re-roofing results the digesters the for digesters comparison to reduce to reduce gas emissions. gas emissions. 5.5 These These 6.5initiatives reduce reduce its carbon its carbon footprint footprint and is and working is working with with customers customers and suppliers and suppliers in this in area. this area. are included are included future in future capital capital works works programmes programmes beyond beyond Watercare s Watercare s greenhouse greenhouse gas emissions gas emissions , , with with projections projections and and targets targets to 2050 to 2050 of Auckland it is recognised that our services contribute significantly to the health and well-being of our community. However, it is acknowledged also that our operations can have both positive and negative impacts on people and the environment. It is due to this belief and a commitment to transparency that Watercare s Annual Report is following the objectives of integrated reporting as outlined by the Prince of Wales Accounting for Sustainability Project and the Global Reporting Initiative providing integrated information on the company s environmental, social and governance issues. Results in each policy area are summarised at the start of the chapter in which they are covered. For ease of reading, Watercare s performance against targets in all six policy areas is presented in chart form on page 5. TargeT OBJECTIVE Promote cleaner production to industry and minimise waste Minimise OBJECTIVE emissions 3 and reduce carbon footprint OBJECTIVE Promote OBJECTIVE cleaner 4 production to industry and minimise waste OBJECTIVE Promote the preservation of species and protection of places of significant heritage value impacted by operations Minimise the impact of treated biosolids and OBJECTIVE effluent 5 OBJECTIVE Use energy efficiently and, where practical, recover energy from operational activities Promote the preservation of species and protection of places of significant heritage value OBJECTIVE impacted 6by operations Reduce and control odours, overflows, noise and other nuisances Use energy efficiently and, where practical, recover energy from operational activities OBJECTIVE Minimise the impact of treated biosolids and effluent OBJECTIVE A gush of water signalled the start of a new era for Nihotupu Stream in the Waitakere Ranges. For over 70 years, the stream had been affected by the Upper Nihotupu Dam which had blocked its major tributary and reduced its water level. Now, thanks to the installation of a compensation valve, flows are making it past the dam. Headworks Engineer Suzanne Naylor opened the new valve for the first time on 30 September 2009, releasing water into the plunge pool at the base of the dam s spillway which flows into the stream below. She says the compensation flows are significant for the local community. A When gush new of water resource signalled consents the start were of granted a new era in 2005, for Nihotupu one thing Stream the public in the and Waitakere council Ranges. were For really over concerned 70 years, about the stream was making had been sure affected we released by the flow Upper continuously Nihotupu from Dam the which dam had to mimic blocked its what major would tributary happen and if it reduced wasn t there, its water says level. Suzanne. Now, thanks to the installation of a compensation valve, This valve flows has are the making ability it past to release the dam. 30, 60 or 90 litres of water a second, depending on the Headworks combined water Engineer levels Suzanne in all of Naylor Watercare s opened dams the new if they valve are for full, the more first time will be on released 30 September because 2009, it assumes releasing greater water rainfall into and the plunge higher natural pool the water base levels. of the dam s spillway which flows into the stream Watercare s below. Project She says Engineer the compensation Neil Jacka managed flows are the significant upgrade. for He the says local the work community. also included When the installation new resource of a free consents discharge were valve granted to enable in 2005, Watercare one thing to drain the public the lake and in council an emergency. were really This valve concerned can be about used was to flush making water sure downstream we released during flow continuously the summer from months the dam as well, to mimic as Neil what explains: would In happen summer, if it the wasn t low there, stream says flows Suzanne. and increased sunlight can cause algae growth This which valve reduces has the available ability to release oxygen 30, in the 60 water, or 90 litres affecting of water the fish. a second, With the depending free discharge on the combined valves we can water mimic levels the in all summer of Watercare s storms that dams naturally if they flush are full, away more the will algae, be released and therefore because it improve assumes aquatic greater life. rainfall and higher natural water levels. Watercare s The work was Project undertaken Engineer as Neil part Jacka of the managed Western Dams the upgrade. Upgrade He Project. says the Compensation work also included and free the discharge installation valves of have a free also discharge been installed valve to at enable Lower Watercare Huia, Lower to drain Nihotupu the lake and in Waitakere an emergency. dams This and work valve has can commenced be used to flush at Upper water Huia downstream Dam. during the summer months as well, as Neil explains: In summer, the low stream flows and increased sunlight can cause algae growth which reduces the available oxygen in the water, affecting the fish. With the free discharge valves we can mimic the summer storms that naturally flush away the algae, and therefore 68 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting improve aquatic life. The work was undertaken as part of the Western Dams Upgrade Project. Compensation and free Source: Watercare Annual Report 2010, page 2 120, ,000 Decommissioning of oxidation of oxidation ponds ponds Greenhouse gas emissions (tonnes CO 2 e) Greenhouse gas emissions (tonnes CO 2 e) Conciseness Objective 1 Minimise 1 Minimise Emissions and and Reduce Reduce Carbon Carbon Footprint Footprint A. Atmospheric A. emissions carbon carbon reduction reduction ([email protected]) % CO% 2 equivalent CO 2 equivalent reduction reduction from 1990 from 1990 levels levels % 10% 20% 20% 30% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% B. Carbon B. Carbon footprint footprint management ([email protected]) Develop Develop objective objective 100, ,000 80,000 80,000 60,000 60,000 40,000 40,000 Connectivity 20,000 20, Identify Identify targets targets Influence Influence suppliers suppliers Impact Impact on key on areas: key areas: Social Social Economic Economic Environmental Environmental Influence Influence customers customers C. Biogas C. Biogas utilisation utilisation ([email protected]) % of WTP % of energy WTP energy supplied supplied by methane by methane capture capture Kyoto target Kyoto target 5% reduction 5% reduction Further Further capital capital works works to reduce to reduce emissions emissions Source: Watercare Annual Report 2010, pages Scope Scope 1: Fossil 1: Fossil fuels, nitrogen fuels, nitrogen compounds compounds and methane and methane releases releases Scope Scope 2: Energy 2: Energy imports imports and exports and exports Watercare1990 Watercare1990 level level Step change Step change in energy in energy use use to meet to future meet future growth growth as as identified identified in in AMP AMP Aspirational Aspirational Global Global Target Target (50% reduction (50% reduction from 1990 from levels 1990 by levels 2050) by 2050) Watercare Watercare Level (22% Level of (22% 1990 of levels) 1990 levels) Watercare Watercare Level (10% Level of (10% 1990 of levels) 1990 levels) Year Year Verify carbon Verify carbon Identify Identify studies studies Implement Implement Implement Implement Staff education Staff education External External accounting accounting and opportunities and opportunities studies studies opportunities opportunities and initiatives and initiativesrecognition recognition % 10% 20% 20% 30% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% Minimise Minimise emissions emissions and and reduce reduce carbon carbon footprint footprint Overall Overall performance scores scores out of out 10of 10 Figures: Figures: Sustainability Sustainability accounting accounting analysis analysis Fig. 10Fig. 10 Watercare s Watercare s greenhouse greenhouse gas emissions gas emissions Fig. 11Fig. 11 Initiatives Initiatives to reduce to reduce greenhouse greenhouse gas emissions gas emissions Fig. 12Fig. 12 Significant Significant gaseous gaseous emissions emissions by weight by weight Fig. 13Fig. 13 Watercare s Watercare s ecological ecological footprint footprint Fig. 14Fig. 14 Sources Sources of emissions of emissions Fig. 15Fig. 15 TargeT TargeT TargeT g3 g3 EN EN TargeT TargeT TargeT /10 8.5/ /10 7/ /10 5.5/ Weblinks Weblinks Reliability 25

37 SOLARWORLD 2010FORECAST REPORT Future outlook SOLARWORLD 2010FORECAST REPORT Future outlook This content element aims to present the opportunities, challenges and uncertainties the organisation is likely to encounter, and the resulting implications for its strategies and future performance. Solarworld thoroughly covers its expectations about the development of the market and the possible development of the company in narrative form. The report addresses not only possible risks but also opportunities, and explains the company s strategic objectives and concrete plans in relevant areas covering the 131 overall organisation of the group, research and development, products and services, procurement and human resources. SOLARWORLD With the anticipated positive development of the global economy and a rise in global production, the demand for energy will continue to rise worldwide. The Energy Information Administration (EIA) forecasts the demand for oil to grow by 1.4m barrels/day in 2011, and by 1.6m barrels/day for As a result, demand would amount to 88.0m barrels/day in 2011, and to 89.6m barrels/day in The rise in energy demand is expected to trigger some minor bottlenecks in the energy market so that oil prices are expected to rise. The EIA therefore presumes that the average monthly price for oil (WTI) will rise to US$ (2010: US$ 79.41) per barrel for This trend is expected to continue in 2012: The EIA expects the average price of oil to stand at US$ per barrel. Bottlenecks respecting refinery capacities, reductions in oil production volumes by OPEC, and a shortage of oil supplies might again trigger strong price volatility during the course of the year. In 2010, the global economy recovered from the recession and entered a phase of moderate expansion. A growing number of countries will initiate the first few steps to reduce their budget deficits in 2011 so that fiscal policies overall are expected to tighten. According to estimates by the German Global Economy Institute (IfW), the global trade volume is expected to grow by around five (2009: 11.5) percent in In 2012 it is expected to rise slightly to 6.5 percent. Overall, the global economy is expected to grow further in 2011 and 2012, albeit less swiftly than in Expected economic development in SolarWorld s key sales markets IfW also expects moderate economic growth in our production and sales regions for the next two fiscal years. Private consumption, however, might decline year-on-year since private households in some countries in the Eurozone and the U.S. are trying to reduce their debts. Overall, however, both production and trade are expected to continue to grow in This trend might strengthen in 2012 since the growth-curbing effect of fiscal policies driven by debt reduction will lose momentum, according to IfW. 77 Source: German Global Economy Institute, Jan Region Germany Euro area U.S World 020 STRATEGY AND ACTION 27 SolarWorld Corporate Strategy 2010/ Corporate Structure/Corporate Technology/ Corporate Brand 29 Strategic financing 2010/ CORPORATE MANAGEMENT AND CONTROL BUSINESS AND GENERAL CONDITIONS 34 GROUP STRUCTURE AND SEGMENTS 35 IMPORTANT PRODUCTS, SERVICES AND BUSINESS PROCESSES 37 WORLDWIDE LOCATIONS OF THE GROUP 37 MARKET POSITION // INFLUENCING FACTORS 37 Competitive position and main sales markets 38 Legal and economic influencing factors 40 CORPORATE GOVERNANCE DECLARATION 40 Corporate governance at SolarWorld 40 Corporate governance report Remuneration report BUSINESS DEVELOPMENT IN THE YEAR SOLARWORLD STOCK Capital market development Development of the SolarWorld stock Shareholders and communication 59 Take-over directive law 60 MARKET Economic environment 61 The world energy market 61 The solar power market 65 Repercussions of backgound conditions on business development 66 SOLAR VALUE CREATION 2010: FROM SILICON TO MODULE 66 Procurement 68 Production Germany and Production U.S. segments 70 SALES MARKETS, BRAND AND PRODUCT Trade segment 72 Brand proposition and investments 77 Products Made by SolarWorld 80 ENERGY AND CLIMATE PROTECTION 80 Energy amortization time 81 Positive CO2eq. balance 82 INNOVATION REPORT Strategic and organizational development approach 89 EARNINGS, FINANCE AND ASSETS SITUATION 89 Income situation 93 Financial position 97 Financial standing Global demand for electricity will grow faster than all other final energy sectors such as heat or transportation over the next two fiscal years. According to EIA forecasts, the average annual growth rate in the electricity sector is 1.9 percent, while the overall final energy sector will only grow by 1.3 percent annually. Renewable energy sources are contributing an increasingly large portion to the power mix: With average growth of 3.0 percent, they are growing considerably faster than all other sources of energy (gas: 2.1 percent; coal: 2.3 percent; nuclear power: 2.0 percent; oil: 0.4 percent). Renewable energies will therefore gain additional market shares in the global power mix over the next few years. 100 HUMAN RESOURCES 2010 This trend will strengthen since prices for conventional energies will rise with an increase in demand, while the cost of renewable energies will continue to fall; the reason for this is that the primary energy SUPPLEMENTARY REPORT sources (sun, wind, water, geothermal energy) of renewable energies are free of charge costs are 106 DISCLOSURE OF EVENTS OF PARTICULAR IMPORTANCE limited to technology, and these will tend to fall. 106 IMPACT OF EVENTS OF PARTICULAR IMPORTANCE 107 OVERALL STATEMENT BY THE MANAGEMENT BOARD ON THE ECONOMIC SITUATION AT THE TIME OF THE REPORT REPORT ON EXPECTED DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES On AND the AND way RISKS to achieving grid parity, the years 2011 and 2012 will be crucial. According to a forecast by Bank Sarasin, the solar sector will continue to grow in 2011, although RISK somewhat REPORT more slowly than in the period under review. Newly installed solar power capacity 108 is expected Opportunity to rise and by risk 10 management percent to system 15.2 (2010: 13.8) GW in In 2012, the market is expected to 108 grow Internal more quickly control and at risk around management 20 percent system and achieve newly installed capacity of 18.3 GW. The European Risk Photovoltaic management Industry system regarding Association financing (EPIA) also expects newly installed solar power capacity of up regarding the group accounting process 111 to 15.4 instruments GW for For 2012, however, it expects more moderate growth than Bank Sarasin at up to 111 Corporate rating GW. Individual risks 122 Overall statement by the management board on the risk situation of the group FORECAST REPORT OPPORTUNITIES 127 Opportunities from the development of general conditions 129 Strategic 0pportunities 129 Economic performance opportunities 131 MARKET Future economic environment 132 The future global electricity market 132 The future solar power market 136 DEVELOPMENT OF BUSINESS Future orientation of the group 136 Future legal goup stucture 136 Future development of Production Germany and Production U.S. segments 137 Future sales markets // Trade segment 138 Future research and development activities // Other segment 139 Future products and services 140 Future procurement 140 Human Resources Future development 141 Expected earnings and financial situation 142 GENERAL STATEMENT OF THE MANAGEMENT BOARD ON FUTURE GROUP DEVELOPMENT Source: Solarworld AG Annual Group Report 2010, pages 20, = Future orientation Strategic focus and connectivity 70 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 71

38 7 Risk management n e 7.4 Operational risks e g r in s ht e al 7.2 Failure to achieve improvements in Philips solution Philips and publishes a detailed risk report with probabilities for the occurrence of product creation process and/or increased speed inrisks and their possible impact. Following the table overview below, relevant risks innovation-to-market could hamper Philips profitable are explored in more detail by an explanatory narrative, which is also well growth ambitions. structured. Further improvements in Philips solution and product creation process, ensuring timely delivery of new solutions and products at lower cost and upgrading of 7 Risk management Conciseness, reliability, materiality customer service levels to create sustainable competitive and future orientation advantages, are important in realizing Philips profitable growth ambitions. The emergence of new low-cost competitors, particularly in Asia, further underlines the Risk importance of categories improvements in the product creation and factors process. The success of new solution and product creation, however, depends on a number of factors, including timely and successful completion of Risks / Opportunities development efforts, market acceptance, Philips s ability Strategic Operational to manage the risks associated with new products and Compliance Financial production Macroeconomic ramp-up changes issues, the availability Innovation of process products in Treasury Changes in industry/market Value chain Accounting and reporting the right quantities and at appropriate costs to meet Acquisitions People Pensions anticipated Intellectual demand, property and rights the risk that Information new products technology and Tax services Brand may promise have quality or other Business defects disruption in the early Legal Market practices Regulatory General business principles Internal controls Data privacy / Product security stages Growth of introduction. emerging markets Accordingly, Reputation Philips cannot determine in advance the ultimate effect that new Corporate Governance solutions and product creations will have on its financial condition and operating results. If Philips fails to Philips accelerate Business Control Framework its innovation-to-market processes and fails to ensure that end-user insights are fully captured and translated Philips into General Business Principles solution and product creations that improve product mix and consequently contribution, it may face an erosion of Taking its market risks share is an and inherent competitiveness, part of entrepreneurial which could have a appropriate policies and procedures. Within the area of Source: Philips Annual Report 2010, page 107 behavior. material adverse A structured affect risk on its management financial condition process 7 Risk management and Financial 7.4 risks, - 7.4Philips identifies risks related to Treasury, encourages operating results. management to take risks in a controlled Accounting and reporting, Pensions and Tax. manner. In order to provide a comprehensive view of Philips business activities, risks and opportunities are Philips describes the risk factors within each risk category If Philips is unable to ensure effective supply chain supplier that is not able to meet its demand. Shortages or identified in a structured way combining elements of a in order of Philips current view of expected significance, management, e.g. facing an interruption of its supply chain, delays could materially harm its business. Philips maintains top-down and bottom-up approach. Risks are reported to give stakeholders an insight into which risks and including the inability of third parties to deliver parts, a regular review of its strategic and critical suppliers to on a regular basis as part of the Business Performance opportunities it considers more prominent than others at components and services on time, and if it is subject to assess financial stability. Management process. All relevant risks and opportunities present. The risk overview highlights the main risks and rising raw material prices, it may be unable to sustain its are prioritized in terms of impact and likelihood, opportunities known to Philips, which could hinder it in competitiveness in its markets. Most of Philips activities are conducted outside of the considering quantitative and/or qualitative aspects. The achieving its strategic and financial business objectives. Philips is continuing the process of creating a leaner supply Netherlands, and international operations bring bottom-up identification and prioritization process is The risk overview may, however, not include all the risks base with fewer suppliers, while maintaining dual sourcing challenges. For example, production and procurement of supported by workshops with the respective management that may ultimately affect Philips. Describing risk factors in strategies where possible. This strategy very much products and parts in Asian countries are increasing, and at Sector and Corporate Function level. The top-down their order of expected significance within each risk requires close cooperation with suppliers to enhance, this creates a risk that production and shipping of element ensures that potential new risks and category does not mean that a lower listed risk factor may amongst other things, time to market and quality. In products and parts could be interrupted by a natural opportunities are discussed on management level and are not have a material and adverse impact on Philips addition, Philips is continuing its initiatives to reduce disaster in that region. included in the subsequent reporting process, if found to business, strategic objectives, revenues, income, assets, assets through outsourcing. These processes may result in be applicable. Reported risks and opportunities are liquidity or capital resources. Furthermore, a risk factor increased dependency. Although Philips works closely Due to the fact that Philips is dependent on its personnel analyzed regarding potential cumulative effects and are described after other risk factors may ultimately prove to with its suppliers to avoid supply-related problems, there for leadership and specialized skills, the loss of its ability to aggregated on Sector, Cross-Sector/Region and have more significant adverse consequences than those can be no assurance that it will not encounter supply attract and retain such personnel would have an adverse Corporate level. Philips has a structured risk management other risk factors. Over time Philips may change its view problems in the future or that it will be able to replace a effect on its business. process to address different risk categories: Strategic, as to the relative significance of each risk factor. Philips The attraction and retention of talented employees in Operational, Compliance and Financial risks. does not classify the risk categories themselves in order of Source: Philips Annual Report 2010, pages sales and marketing, research and development, finance importance. and general management, as well as of highly specialized Strategic risks and opportunities may affect Philips Annual Report technical personnel, especially in transferring technologies strategic ambitions. Operational risks include adverse to low-cost countries, is critical to Philips success. This is unexpected developments resulting from internal particularly valid in times of economic recovery. The loss processes, people and systems, or from external events of specialized skills could also result in business that are linked to the actual running of each business interruptions. There can be no assurance that Philips will (examples are solution and product creation, and supply continue to be successful in attracting and retaining all the chain management). Compliance risks cover highly qualified employees and key personnel needed in unanticipated failures to implement, or comply with, the future. 72 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 73 Diversity in information technology (IT) could result in ineffective or inefficient business management. IT On the other hand, within the presentation of its strategy at the beginning of the report, Philips addresses opportunities arising from fundamental trends, which, seen together, gives a good overall picture. 2 Vision our 2 strategic Vision 2015 focus - our 2 - strategic 2 focus 2-2 Portfolio Portfolio leverages leverages critical global critical trends global trends Fundamental growth Fundamental trends growth trends Global trendsglobal trends Population growth, Population aging, higher growth, healthcare aging, higher aspirations healthcare and aspirations and lifestyle-related diseases lifestyle-related mean that diseases healthcare mean costs that healthcare will costs will become unsustainable become unsustainable Efficient health diagnostics Efficient health diagnostics and treatment and treatment Home healthcare Home healthcare Increased welfare Increased and changing welfare lifestyles and changing will drive lifestyles consumer will drive consumer focus on health and focus well-being on health and well-being Healthy lifestyle Healthy and lifestyle and preventive healthpreventive health Personal well-being Personal well-being The fundamental The need fundamental to reduce our need eco-footprint to reduce our drives eco-footprint drives Light for health Light for health demand for energy demand efficiency for energy and sustainability efficiency and sustainability and well-being and well-being Energy-efficient Energy-efficient lighting lighting The lighting industry The lighting will face industry a massive will shift face from a massive shift from Emerging markets Emerging markets conventional to digital, conventional dynamic to lighting digital, dynamic and the entry lighting of and the entry of new, non-traditional new, players non-traditional players Sustainability Sustainability The relative importance The relative of emerging importance markets of emerging the world markets in the world economy continues economy to risecontinues to rise Our opportunities Our opportunities Strengthen existing Strengthen leadership existing positions leadership whilepositions while sustainability through sustainability the lenses through of our the sectors lenses and of our define sectors and define Source: Philips Annual Report 2010, page 14 and successful outsourcing of business expanding processes promising areexpanding businesses promising to become businesses to become specific ambitions specific for each ambitions of them: for bring each care of them: to 500bring care to 500 highly dependent on secure and well-controlled leaders: In our IT leaders: three sectors, In our we three aim sectors, strengthen we aim our to strengthen million our people; improve million people; the energy improve efficiency the energy of ourefficiency of our systems. existing leadership existing positions leadership while developing positions while promising developing promising overall portfolio overall by 50%; portfolio double the by 50%; amount double of recycled the amount of recycled businesses to become businesses leaders. to become In 2015, leaders. we want In to 2015, be the we want to be materials the in our materials products in as our well products as double as the well collection as double the collection Warranty and product liability claims market against share Philips leader could market in at share least leader half of in all at our least businesses. half of all In our businesses. and In recycling of and Philips recycling products. of Philips products. cause Philips to incur significant costs Healthcare, and affect we Philips will Healthcare, further differentiate we will further our differentiate portfolio, our portfolio, results as well as its reputation and relationships continue with with our continue key care-cycle with approach our care-cycle and expand approach home and expand home Our Vision 2015 Our aspirations Vision 2015 aspirations customers. healthcare. In Lighting, healthcare. we will In Lighting, further strengthen we will further our strengthen our Comparable sales Comparable growth on sales annual growth average on basis annual at average basis at Philips is from time to time subject leading to warranty position andleading LED position to capture in LED the opportunities to capture the of opportunities a of least a 2 percentage least points 2 percentage higher than points real higher GDP growth than real GDP growth product liability claims with regard to fast-changing product market. fast-changing In Consumer market. Lifestyle, In Consumer we willlifestyle, we will Reported EBITA Reported margin between EBITA margin 10% and between 13% of 10% salesand 13% of sales performance and effects. Philips could continue incur product to expand continue those to businesses expand those that provide businesses higher that provide higher Growth of EPS at Growth double of the EPS rate of double comparable the rate annual of comparable annual liability losses as a result of repair and growth replacement and profitability costs growth and potential. profitability potential. sales growth sales growth in response to customer complaints or in connection with Return on invested Return capital on at invested least 4 capital percentage at least points 4 percentage points the resolution of contemplated or actual Continued legal proceedings focus Continued emerging focus markets: on emerging Emerging markets: Emerging above weighted above average weighted cost of capital average cost of capital relating to such claims. In addition to markets potential are losses becoming markets more are becoming and more more important and more to important to arising from claims and related legal Philips. proceedings, As the product number Philips. of As middle-class the number households of middle-class in these households in these liability claims could affect Philips reputation markets grows, and itsmarkets we expect grows, demand we for expect our demand products for will our products will relationships with key customers, both increase customers as people for increase end have more as people money have to more spend money feeling to spend on feeling products and customers that use Philips and staying products healthy. in and their Therefore, staying healthy. we will Therefore, continue we to will focus continue to focus production process. As a result, product on emerging liability markets claims on emerging by making markets sure we by making address sure localwe address local could materially impact Philips financial needs condition effectively and needs and continue effectively to invest and continue having to the invest right in having the right operating results. capabilities in place capabilities to win in in these place fast-growing to these fast-growing economies. We economies. aim to generate We aim at least to generate 40% of sales at least in 40% of sales in Any damage to Philips reputation could emerging have markets an adverse emerging by markets by effect on its businesses. Philips is exposed to developments We which want could to affect be We seen itswant as clear to be leaders seen as inclear leaders in reputation. Such developments could sustainability: be of an sustainability: We are committed We to are being committed a leading to being a leading environmental or social nature, or connected company in to matters thecompany of sustainability. matters of We sustainability. look at We look at behavior of individual employees or suppliers and could relate to adherence with regulations related to labor, health and safety, environmental and chemical Conciseness, materiality and future orientation

39 Mobile telecommunications industry An industry with 5.6 billion customers with growth driven by increasing global demand for data services and rising mobile penetration in emerging markets In the Business review of its Annual Report 2011, Vodafone Group concisely reflects where the telecommunications industry is now and where it is going. This outlook is based on market trends, which follows the guiding principle of reliability. A growing industry Data traffic has more than doubled yearon-year due to usage of smart connected devices and significant progress in mobile network technology. A multiplicity of connected devices Reliability, future orientation Conciseness, materiality Where the industry is now Where the industry is going Revenue and customers The mobile industry generates around US$900 billion of annual revenue and accounts for around 1.5% of world GDP. There are 5.6 billion mobile customers which is equivalent to around 80% of the world population. Approximately 75% of mobile customers are in emerging markets such as India and China. Mobile services account for around 60% of telecommunications revenue with the remainder coming from fixed. Within mobile the majority of income comes from voice calls in mature markets such as Europe. However, the fastest growing revenue segment is data services such as access to the internet through laptops, tablets and smartphones. The number of mobile customers far exceeds other forms of electronic communication. Only 1.3 billion people have fixed line telephones, 2.1 billion have access to the internet and 1.2 billion have televisions. The mobile proportion of voice calls has increased over the last five years and now accounts for 82% of all calls made, with the remainder over fixed lines, reflecting the benefits of mobility, lower cost handsets and cheaper calling plans. Competition and regulation There are typically between three to five mobile network operators per market, although in some markets, such as India, there are considerably more. Regulators continue to seek to impose policies to lower the cost of access to mobile networks. The telecommunications industry is competitive with consumers having a large choice of mobile and fixed line operators from which to select services. Newer competitors, including handset manufacturers, internet companies and software providers, are also entering the market offering integrated communication services. Industry regulators continue to impose lower mobile termination rates (the fees mobile companies charge for calls received from other companies networks) and lower roaming prices. The combination of competition and regulatory pressures contributed to a 10% decline in the global average price per minute in the 2010 calendar year. However, price pressures are being partly offset by increased mobile usage leading to a 6% increase in mobile service revenue over the same period. Mobile data and networks Mobile data traffic is driving revenue growth. Network speeds are increasing dramatically because of improving technology. The pace of product innovation remains high. In 2006 data accounted for 3% of industry revenue, in 2010 it reached 13% and by 2014 it is expected to be 21%. Demand is being driven by the widening range of smart connected devices, such as mobile broadband sticks, smartphones and tablets, greater network speeds and an increased range of applications with greater functionality. Smartphone sales grew by 66% in the 2010 calendar year, compared to a 16% increase in the 2009 calendar year, and are expected to continue to grow due to lower entry prices, device innovation and attractive applications. Today s 3G networks offer typically achieved data download speeds of up to 4 Mbps which is around 100 times faster than that delivered by 2G networks ten years ago. The industry has recently begun to deploy 4G/LTE networks which will provide typically achieved rates of up to 12 Mbps, depending on the capability of the devices and the network. Device innovation is a key feature of our industry. Recent developments include femtocells which enhance customers indoor 3G signals via a fixed line broadband connection and mobile Wi-Fi devices which allow customers to share their mobile broadband connection with others. Emerging markets Mobile phone usage continues to grow rapidly. Data represents a significant growth opportunity. The number of customers using mobile services in emerging markets such as India and Africa has grown rapidly over the last ten years, increasing by over 17 times, compared to nearly 130% in more mature markets such as Europe. The key driver of growth has been a fundamental need for communication services against a background of often low quality alternative fixed line infrastructure and strong economic growth. Most of the future growth in mobile customers is expected to continue to be in emerging markets where mobile penetration is only around 70% compared to approximately 130% in mature markets such as Europe, supported by the expectation of continued strong economic growth. Data also represents a substantial growth opportunity in emerging markets both in terms of mobile broadband and mobile internet services. It is being driven partly by the lack of fixed line broadband infrastructure but also by locally relevant content and services in local languages, and software innovations that give customers a high-quality mobile internet experience on affordable handsets. Mobile customers March 2011: 5.6 billion (%) Mobile Mobile penetration penetration March March 2011 (%) 2011 (%) Mobile data demand is being accelerated by devices and network improvements Smartphone share of industry handset shipments (%) 8 21 Typically achieved data download speeds (Mbps) Emerging market customer growth will be driven by rising mobile penetration and GDP growth Market customers growth ( estimated cumulative annual growth rate) (%) 6% 7% 18% Europe US/Canada India China Other Asia Pacific Africa Other Europe US/Canada India China Africa South Africa Egypt India The industry data on pages 8 and 9 has been sourced from Wireless Intelligence, Strategy Analytics, Merrill Lynch, Informa WCIS and CISCO. The industry data on pages 8 and 9 has been sourced from Wireless Intelligence, Strategy Analytics, Merrill Lynch, Informa WCIS and CISCO. Source: Vodafone Group Annual Report 2011, pages Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 75

40 or fertiliziness seg- economic PerForMance opportunities A decrease in the energy price level would specifically ts product have a favourable impact on the cost structure and thus legacy is a greenfield project for the construction of potash gives us the business success of the energy-sensitive Potash production on the basis of solution mining. K+S acquired the et 8 growth, 4.14 ForeCast report and Magnesium Products and Salt business segments. canadian exploration and development company POtaSh One, K+S supports the owner its revenue of the legacy and Project, EBIT expectations the start of 2011, for and the thoroughly comprehensive revised the existing discussion feasibility regarding study over the following underlying assumptions against upcoming two years by business On going measures to boost energy efficiency and their means of a eness and effects are presented in the Important Non-financial months. a concept was developed, which is optimally consistent with the production and market forecasts of K+S and dem- current economic developments relevant to its business. Issues section on page 75. onstrates attractive economic viability. in the first two expansion phases of the new potash site, K+S feasibil near ForeCast report lowering input costs, the gas supply contracts, which umes should be available at the end of 2015 and the two-mil- Within Future the framework orientation of creating greater flexibility and will invest a total of 3.25 billion canadian dollars. the Conciseness, first vol- reliability, materiality 8ine ding how were previously largely linked to the oil price, are being lion-tonne mark be achieved in this will be followed by the summer renegotiated, overview so in that table future ForM price of revenue opportunities and on earnings the gradual trends expansion described of production capacity to 2.86 million tonnes 1 tab: a sales volume of crystallised salt of about 22 million a year in in the third expansion phase, about ten years later, total output of a maximum complementary 4 million tonnes of potassium ranting of gas spot markets can be exploited for part of the volumes obtained. nesium products fertilizers chloride a year would salt then Business be possible. segments the product k+ portfolio s group under 13 million tonnes (normal year), tonnes, of which de-icing salt will account for just potash and mag- nitrogen permits, er us the in million will comprise potassium chloride standard, granulated potassium + a us dollar exchange rate of 1.32 usd/eur for both or the loss revenues other opportunities ,131.9 chloride and 1,710.1 high-quality industrial 150.4products. 1, ,150.9 years and an oil price level of usd 115 per barrel in revenues the + first infrastructure works in the areas o of water supply, electricity and road construction as well as first drilling activities closure of For the K+S group, the usd/eur currency relationship o 2012 and usd 110 per barrel in 2013, revenues o + ome necion is fundamentally overview in table of high ForM importance, of revenue since particularly and earnings were trends already described undertaken in Forty-five employees tab: from different countries are currently working at K+S POtaSh Canada + a tonnes, slightly of higher which adjusted de-icing Group salt will tax account rate of for 27 % just to + a largely sales volume unchanged of crystallised financial salt result, of about 22 million ebit i potash sales, with the exception of the European market and a few overseas regions, nesium are invoiced products in us dol- in saskatoon on the construction of the new site. By 2023, ebit i 2012 potash and mag- o nitrogen o complementary + fertilizers salt Business segments k+ s group 28 under % (2011: 13 million 26.1 %). tonnes (normal year), ebit i more than 300 jobs + + will + be created for highly o qualified employees. : significant with this to strong. project, we are drawing on experience in solu- + in lars. million Our corporate planning for the years 2012 and a us dollar exchange rate of 1.32 usd/eur for both 1 trend year on year; o: unchanged; +/ : slight to moderate; ++/ : tangible; +++/ revenues is based 2011 on a us dollar exchange rate of 2, usd/eur. 1, , ,150.9 tion mining gained by esco in germany and the netherlands, Moreover, years and further an oil growth price level in our of core usd business 115 per barrel sectors in of the revenues as + well as the know-how of morton Salt, o which operates ten o remains 2012 and the usd focal 110 point per barrel of our in strategy 2013, which encom- ssociated revenues plants on the basis of + solution mining in o the united states and + passes + a largely both unchanged acquisitions financial and cooperation result, arrangements. + a slightly higher adjusted Group tax rate of 27 % to ebit i in canada. the legacy Project will supplement 17.9 the existing le mining tive General income statement prospects for farmers on the and expected should, in particular DeVelopMent in the sales of regions the relevant k+s Group to K+S, lead to a to the previous year. As regards operating earnings, we 28 % (2011: 26.1 %). In 2013, revenues should increase slightly in comparison ebit i 2012 o german o production network of K+S with + an important north he Potash ebit i american location o + gments in good development of fertilizer demand. However, for see realistic chances of a moderate increase. guarantee of the legal representatives tics knowcurement 1 trend year on year; o: unchanged; +/ : slight to moderate; ++/ : tangible; +++/ : significant to strong. the Despite Salt business all macroeconomic segment, due uncertainties, to the weather-related 2012 should of k+s aktien gesellschaft Moreover, further growth in our core business sectors extraordinarily again be a good weak year for start our to K+S the group. de-icing The salt current busi- Our estimate for 2012 and 2013 is based, among other To remains the best the of focal our point knowledge, of our and strategy in accordance which encom- with ness, price we level are for anticipating agricultural significantly raw materials lower offers volumes attrac- things, on a number of factors, including: the passes applicable both acquisitions principles for and financial cooperation reporting, arrangements. the consolidated of tive business income compared prospects both for farmers to the and above-average should, in particular performance + In 2013, the expectation revenues should of consistently increase slightly attractive in comparison agricultural financial statements give a true and fair view in in the 2011 sales and regions the multi-year relevant average. to K+S, In lead sum, to we a to the prices, previous year. As regards operating earnings, we of the assets, liabilities, financial position and profit or are good antici development pating K+S of group s fertilizer total demand. revenues However, to remain for + see our realistic customary, chances purely of a technical moderate forecast increase. policy, which loss guarantee of the legal representatives of the Group, and the Group Management Report stable the Salt for business As segment, regards operating due to the earnings weather-related and maintains the currently achieved potash price level includes of k+s aktien gesellschafta fair review of the development and performance adjusted extraordinarily earnings weak after start taxes to the the figures de-icing will salt be moderatelness, busi- Our unchanged, estimate for 2012 and 2013 is based, among other To the best of the of business our knowledge, and the and position in accordance of the Group, with we lower are anticipating due primarily significantly to the reduced lower demand volumes for + things, a sales on volume a number in 2012 of factors, at about including: the level of the previ- together the applicable with principles a description for financial of the principal reporting, opportu- the con- de-icing of business salt. compared / Tab: both to the above-average performance + ous the expectation year (2011: 6.9 of million consistently tonnes) attractive in the agricultural Potash and nities solidated and financial risks associated statements with give the a expected true and fair develop- view in 2011 and the multi-year average. In sum, we Magnesium prices, Products business segment and a slight ment of the of assets, the Group. liabilities, financial position and profit or are antici pating K+S group s total revenues to remain + increase our customary, in 2013, purely technical forecast policy, which loss of the Group, and the Group Management Report stable for As regards operating earnings and the + a maintains sales volume the of currently crystallised achieved salt of potash a good price 19 million level Kassel, includes 2 March a fair review 2012 of the development and performance adjusted earnings after taxes the figures will be moderately tonnes unchanged, in 2012 (2011: 22.7 million tonnes), of which of the business and the position of the Group, lower due primarily to the reduced demand for + about a sales 10 volume million in 2012 tonnes at about will be the de-icing level of salt the previ- (2011: K+S together aktiengesellschaft with a description of the principal opportu- de-icing salt. / Tab: ous million year (2011: tonnes). 6.9 million In 2013, tonnes) we are in again the Potash expecting and the nities BOard and risks Of associated executive with directors the expected development nd earnings trends described 1 tab: a Magnesium sales volume Products of crystallised business salt segment of about and 22 a million slight of the Group. tonnes, increase of in which 2013, de-icing salt will account for just nitrogen complementary fertilizers salt Business segments k+ s group + under a sales 13 volume million of tonnes crystallised (normal salt year), of a good 19 million Kassel, 2 March a tonnes us dollar in 2012 exchange (2011: 22.7 rate million of 1.32 usd/eur tonnes), of for which both 1, , ,150.9 years about and 10 million an oil price tonnes level will of be usd de-icing 115 per salt barrel (2011: in K+S aktiengesellschaft + o o million and usd tonnes). 110 per In barrel 2013, in we 2013, are again expecting the BOard Of executive directors + o + + a largely unchanged financial result, a slightly higher adjusted Group tax rate of 27 % to o + 28 % (2011: 26.1 %) o + the legacy Project: new Potash deposits Boost international competitiveness Closing thoughts on integrated reporting From a PwC survey on integrated reporting Interviewee: If a company produces an (integrated) report, then it should be a good one. Interviewer: What does good mean in this context? Interviewee: Complete, detailed, credible, verifiable. Interviewer: And what about showing how the main material elements are connected? Interviewee: That will be the most difficult thing to do, as we still lack best practice examples. We have a long way to go here. : tangible; +++/ : significant to strong. ld, in parlead to a In 2013, revenues should increase slightly in comparison to the previous year. As regards operating earnings, we Moreover, further growth in our core business sectors remains the focal point of our strategy which encompasses both acquisitions and cooperation arrangements. guarantee of the legal representatives of k+s aktien gesellschaft To the best of our knowledge, and in accordance with ever, for Source: see realistic K+S Financial chances Report of a moderate 2011, pages increase er-related salt busi- Our estimate for 2012 and 2013 is based, among other volumes things, on a number of factors, including: the applicable principles for financial reporting, the consolidated 76 Integrated Reporting The Future of Corporate Reporting rage pern + the expectation of consistently attractive agricultural financial statements give a true and fair view Integrated Reporting The Future of Corporate Reporting 77 sum, we prices, of the assets, liabilities, financial position and profit or to remain + our customary, purely technical forecast policy, which loss of the Group, and the Group Management Report

41 C Further insights C Further insights C Further insights What does your reporting say about you? Take a strategic look at reporting and areas you should be investing in to raise value, gain a competitive advantage and meet your internal and external needs. Integrated reporting For over a decade, we have been looking at the information needs of report preparers and users, the economic benefits of transparency, and current and best reporting practices worldwide. We have worked with many companies to align their interests with those who make investment decisions using the information they provide. We understand what effective reporting looks like and have practical insights into the critical building blocks of one integrated information set. Take a look at to find out more or contact us directly. What does your reporting say about you? Disconnected reporting raises questions about the quality of management and governance. Stay ahead. Your source for PwC views on reporting and research. Practical guides and good-practice examples. corporatereporting.com Auf dem Weg zum Integrated Reporting Since the publication of the IIRC discussion paper, integrated reporting has been the predominant theme for experts discussing relevant reporting trends. Our survey provides an overview of current integrated reporting considerations. Auf dem Weg zum Integrated Reporting Corporate reporting blog Updated twice a month with hot topics in corporate reporting, the blog is aimed at all those with responsibility for communicating and analysing corporate performance. Eine aktuelle Studie über die Zukunft der Unternehmens bericht erstattung. 78 Integrated Reporting The Future of Corporate Reporting Integrated Reporting The Future of Corporate Reporting 79

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