46 2016 ANNUAL REPORT 2016 ANNUAL REPORT 47

GOVERNANCE AND RESULTSGOVERNANCE AND RESULTS

Euronext Paris Eurolist Compartment B ISIN code FR0000120107 Par value: 1 Number of shares: 14,032,930 Market capitalization at 12.31.2015: 838.19 million Euronext closing market price on 12.31.2016: 66.90 Market capitalization at 12.31.2016: 938.80 million

SAVENCIA Fromage & Dairy is a member of the leading Gaïa socially responsible enterprise index of mid-caps listed on the Paris Stock Exchange. Selection for the index is performed by the non-financial rating agency EthiFinance.

Shareholders agenda Annual general meeting April 27, 2017

Dividend payment May 16, 2017

Financial information Annual net sales for 2016 February 2017 Annual results for 2016 March 2017 1st quarter net sales April 2017 Half-yearly results September 2017 3rd quarter net sales October 2017 Annual results March 2018

Data per share

In euro 2016 2015 2014 2013 2012 Equity 97.04 90.57 86.92 85.89 78.20 Net income 7.48 4.07 2.79 3.49 4.49 Net dividend (1) 1.6 1 0.8 1 1.3 Global yield (2) 2.39% 1.67% 1.54% 1.78% 2.84%

(1) Proposed at the AGM held on April 27, 2017. (2) Based on the share price at December 31.

Stock market data per share

In euro 2016 2015 2014 2013 2012 Highest adjusted price 68.8 64.8 65 58.3 53.5 Lowest adjusted price 54.35 49.5 51.3 45.8 42 Price at December 31 66.9 59.7 51.9 56.3 45.8 Market capitalization at December 31 in millions of euro

938.80 838.19 728.73 790.05 706.80

STOCK MARKET ACTIVITY IN 2016

66.64% 2.87%

29.44%

1.05%

Composition of the share capital in 2016

Soparind SCA Employee savings plan

Treasury shares Other shareholders

69

64

59

54

49

01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/16 10/16 11/16 12/16

CAC all tradableSAVENCIA Adjusted share price in 2016

The net sales trend of SAVENCIA Fromage & Dairy (the trade name of SAVENCIA SA) has been impacted, during 2016, by a fall in selling prices imputable to the fall in the price for milk and in the world prices for industrial products. But the favorable trend in current operating profit demonstrates the resistance of the Group founded in the strength of its major brands, its international development and its continuing efforts of competitiveness.

THE ECONOMIC ENVIRONMENT The reduction in world milk production observed since May 2016 and the increase in world demand, in particular for butter and whey, have produced a rise in the world prices for industrial products which had been falling since 2014. In this context and despite the rising price for milk, the price for skim milk powder has remained low given the significant level of private and public inventories. With the exception of a small number of countries, the European market for dairy products remains slack and the ongoing price war between distributors continues to have strong impact on selling prices. Internationally, the Group s subsidiaries in Latin America are faced with highly inflationary economies resulting in lower levels of consumption and impacting of their competitiveness.

The UK s intention of exiting the European Union should not have much impact on the Group s operating activities. The same is true of the current Middle East conflicts given the reduced presence of SAVENCIA Fromage & Dairy in the region.

Within this context SAVENCIA SA, hereafter denominated SAVENCIA Fromage & Dairy, has demonstrated its capacity of resistance by pursuing its international development and deriving benefit from the buoyancy of volume of most of its major brands supported by appropriate advertising, promo- tion and marketing.

ACCOUNTING STANDARDS The Group s consolidated financial statements have been prepared in accordance with IFRS as adopted by the Euro- pean Union.

The Group has applied the new amendments to and inter- pretations of standards applicable with effect from January 1, 2016.

CONSOLIDATION SCOPE During 2016 (on June 15), the Group divested its minority interest (accounted for under the equity method) in Lacto Serum France SA.

During 2015, the Group divested its minority interests (accounted for using the equity method) in Capsa (Spain) on May 28 and Andechser Molkerei Scheitz Gmbh (Germany) on October 1. On December 31, the Group acquired the residual minority interest in the share capital of Advanced Foods Prod- ucts LLC in the USA, by exercise of its purchase option. The company is thus now a 100% subsidiary.

ACTIVITY AND RESULTS The geographical dispersion of the Group s markets, and the diversity of its businesses, enable SAVENCIA Fromage & Dairy to absorb the impact of the temporary shocks liable to affect levels of consumption or the various components of its production costs. Indeed, consumer demand does not evolve in the same way in mature markets and in developing zones. Consumer demand is also responsive to type of retail product and to retail the intensity of commercial actions undertaken. Changes in world prices for industrial products do not generally affect Cheese Products and Other Dairy Products at the same time, with the same amplitude and in the same direction. The Group s capacity to pass on increases in its costs is also conditioned by the strength of its brands and the often innovative nature of our consumer product offerings.

Other developments in respect of the risks to which the Group is exposed are included in the section of the annual report devoted to internal control and risk management (page 64).

2016 may be characterized by two different periods: An initial period during which the price of milk and world prices for industrial products remained very low under the influence of rising world production of milk; A subsequent period during which some rebalancing took place under the influence of a slowdown in world produc- tion of milk and growth in consumption.

SAVENCIA Fromage & Dairy s consolidated net sales for 2016 amounted to 4,418.4 million, compared with 4,441.9 mil- lion for 2015, a fall of 0.5%.

Like-for-like for Group structure(1) and foreign exchange rates(2), net sales grew by 2.2%. The sales trend was penalized by the very unfavorable -2.7% foreign exchange impact reflecting the weakening against the euro of the currencies of Latin America, of the yuan and of the pound sterling.

MANAGEMENT REPORT

(1) The scope adjustment for newly consolidated entities involves: - For new entrants of the current period, deducting the entrant s contribution to the reported aggregates of the current period; - For new entrants of the prior year, deducting the entrant s contribution from January 1 of the current period to the end of the month of the current year in which the acquisition took place the year before. The scope adjustment for newly deconsolidated entities involves: - For exiting companies of the current period, deducting the entity s contribution to the reported aggregates of the prior year from the 1st day of the month of divestment and till the end of the year; - For exiting companies of the prior year, deducting the entity s contribution to the reported aggregates of the prior year. (2) The foreign exchange adjustment involves calculating the reported aggregates of the current period using the foreign exchange rates of the prior year.