Kemin 2014 Annual Review

2014 Annual Review

Stories of Lives Touched

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2014 Letter to Stakeholders

LETTER to stakeholders At Kemin, change is a way of life, a core value of our company. That’s especially important today as the scale and pace of change throughout the world is accelerating exponentially. Consider the following: • The number of Internet users worldwide increased tenfold from 1999 to 2013. The first billion

users was reached in 2005, the second billion in 2010, and the third billion in 2014.

• Global population is estimated to reach 9 billion people by 2050. The largest regional percentage increase will be in Africa, whose population is expected to double from 1.1 billion to 2.3 billion.

• By 2050, this expanded global population will consume two thirds more animal protein than it does today. This is being driven by income growth across the globe.

These changes, and many others, will mark incredible change in what you – our customers, partners, and stakeholders – need, as together, we help improve the daily lives of people around the globe.

In the following pages, we highlight stories of hope, innovation, and success in creating a better quality of life for people through our molecular science. In 2014, our six business units provided more than 500 ingredients to serve our customers and delivered net sales of $585 million.

As we look to the future and the ever changing needs of the marketplace, we have challenged ourselves to:

• Ensure we are positioned to most effectively serve our customers by instituting 52 new business processes to drive growth and efficiency across our entire business.

• Stay true to our founding entrepreneurial spirit by encouraging employees to identify and develop new business opportunities that will benefit our customers in the future.

Together, we can be successful in our efforts to improve the quality of life in our shared and changing world.

Christopher E. Nelson, Ph.D.CEO and president

2014 Introduction

Improving health, feeding a growing population, protecting our resources, and being a resource for others in need . . . these

comprise our purpose. They’re our passion. They’re what move us forward and drive us constantly to do more. They’re

about touching lives and improving life.

And as we see our world continue to change and grow, we continue to change, to foster new ways of thinking, to redefine

our focus, and to expand our reach.

These are our stories: stories of partnership, innovation, growth, new discovery, and, most importantly, of lives changed.

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Each day brings new changes to the world. Each sunrise is met with a larger

population, new bacteria and diseases, droughts and other

environmental crises, and a myriad of other new

challenges across many fronts. Helping to maintain

the Earth’s fragile equilibrium is why Kemin innovation is

constantly in action around the world.

NEW SOLUTIONS for a changing world

Our network of specialists and scientists worldwide stays attuned to the needs of each region by being on site, experiencing them firsthand, and speaking with government officials, farmers, ranchers, and local industries to learn their concerns and needs.

Staying abreast of these developments drives Kemin innovation, directing our efforts to solve the most critical, current, and impending problems first, allowing us to introduce timely food production solutions that will have the most benefit for producers and consumers, and, ultimately, helping abate issues such as food insecurity.

Our innovative leadership affects more than agriculture. We’re originators of countless products that improve the health and lives of humans, their pets, and animals. Some of these innovations include new food technologies that keep edibles fresher and more flavorful, pharmaceutical dyes with colorants that are naturally derived, and nutraceuticals that maintain wellness, improve eye and cognitive health, aid weight loss, and enhance athletic prowess.

Kemin innovation never stops in its mission to improve the quality of life.

“Innovation is throughout our organization and all of it is focused on serving the customer better. We add value to our customers through our ability to create technology at a molecular level.” Dr. Alissa Jourdan, director, discovery research and worldwide director of research and development

2014 New Solutions Kemin innovation is constantly in action.

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During the past year, Kemin had seven patents issue in various countries.

Heat-stable enzyme composition

Use of Bacillus amyloliquefaciens PB6 for the prophylaxis or treatment of gastrointestinal and immuno-related diseases

Method of improving cardiovascular health

Use of a multi-protease system to improve the protein digestibility of animal feeds containing vegetable meals

Enzyme product for ruminants

Mycotoxin binder

Method of treating ocular disorders

• Our human nutrition and health division went to market with XSurge™, a natural sports performance product, and Neumentix™ Phenolix Complex K110-42, a dietary ingredient derived from a natural source for enhancing cognitive performance.

• The personal care division launched MicroCurb™, a broad-spectrum preservative, made from oregano extract. It offers an effective, natural alternative to parabens and phenoxyethanol.

• We introduced EnerFAT™, a source of rumen protected saturated fat, into the South America market. EnerFAT helps increase the availability of fatty acids for intestinal absorption and provides more energy availability for milk production.

2014 New Solutions

Actions to Affect the Future

• Recognizing that feed ingredients differ in all regions of the world and fluctuate based on many factors, we continued to build a robust portfolio of enzyme products and introduced three new solutions this year — KEMZYME® XPF, NUTRIKEM™ XL PRO, and KEMZYME® PROTEASE.

• Adding to our intensive range of solutions for intestinal health management, COZANTE™ was launched in the Indian broiler market. To help ensure the anticoccidial solution is delivered at the right dose and place within the intestine, COZANTE uses our company’s proprietary encapsulation technology.

• At VIV Europe, an international trade show for animal husbandry and processing, Kemin received the Innovation Award for our lipid evaluation test, which assesses the oxidative quality and nutritional value of fats and oils in feed.

• We are proud to offer ORGANIC ORO GLO®, a USDA certified organic additive, to help organic egg producers intensify the color of egg yolks and add lutein content. For years, the traditional layer industry has relied on ORO GLO for both producer and consumer benefits.

• In July, we were notified by the National Health and Family Planning Commission of China (NHFPC) that tea polyphenol palmitate was approved as a new food antioxidant. This regulatory achievement now allows our customers to use the ingredient in oil and fat products.

“Kemin is currently the only company offering a coated enzyme, KEMZYME Protease, with specific targeted release in an animal.” Dr. Monika Bieber, lead worldwide senior global product manager

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It’s simply not enough to develop and sell products, no matter how smart or world- changing they are. As an industry leader, we offer honest, open dialogues with our customers. We engage them through education, product demonstrations, and research.

To be of more benefit to our customers, we regularly bring them together with regional experts throughout the world to learn what their conditions and needs are, now and in the future. This constant exchange of ideas drives Kemin innovation, allowing our scientific specialists to address client concerns through new products that enhance animal nutrition, produce more food at lower cost, improve the quality of life, and guarantee the safety and quality of ingredients.

Through ongoing dialogue and engagement, we’re able to create what customers want and need. This not only makes us a stronger company, but also a trusted, vital world resource.

Our inspired molecular solutions are employed daily around the globe to improve

the health of people and animals everywhere.

As populations rise and environmental conditions

shift, we at Kemin are creating new ways to

meet the demands of tomorrow.

CONNECTING with the world

“Every investment we make in research, equipment, and talent is made to achieve our vision of improving the quality of life by touching half the people of the world every day with our products and services.” Dr. Chris Nelson, CEO

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2014 Meeting Demands As an industry leader, we offer honest, open dialogues with our customers.

Active supporter and particpant of the World Food Prize.

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• In collaboration with a longtime partner, we coordinated an inaugural Petfood Symposium for petfood customers and colleagues in Chile. It featured presentations from industry, academic, and regulatory professionals. Kemin experts reviewed a patent-pending palatant technology — the use of organic acids as palatability enhancers — and also presented information on the use of animal proteins in petfood and managing petfood palatability and stability.

• One of our food technology scientists presented “Tea Polyphenol Palmitate in Oil and Fat” at an event organized by the Oil and Fat SubCouncil of Chinese Cereals and Oils Association and shared knowledge on how the ingredient can extend the life of grain-based oils.

• As the manufacturer of BactoCEASE™ liquid buffered propionic acid, we commissioned Harris Poll to help the industry better understand the attitude of primary grocery shoppers in regards to ingredients found on meat labels. The research showed that the majority of grocery shoppers read ingredient labels before making meat purchases at least sometimes.

The study investigated how certain preservatives found in processed meats can influence consumer purchase decisions. In a side-by-side comparison of ingredient legends for deli-style turkey breast, consumers preferred a shorter list featuring “propionic acid” versus the longer list with “sodium lactate, sodium diacetate” as the active ingredient for controlling Listeria.

SODIUM 31%29%

28%16%16%

14%3%

44%

PRESERVATIVE

NITRITE/NITRATE

PHOSPHATE

BENZOATE

ACID

OTHER

NONE OF THE ABOVE

14%NEVER

52%SOMETIMES

34%ALWAYS

Consumers read the ingredient label before purchasing meat. (One out of three people always check the label before purchasing meat)

Source: Kemin Shopper Evaluation, Harris Poll, April 2014

Consumers avoid the word sodium 50% more than they avoid the word acid.

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2014 Meeting Demands

Active Involvement

The growing demand for protein around the world provides opportunities for producers to continuously improve their operations and profitability.

• In November 2014, we broke ground in North America for a new facility that will allow more dairy and beef producers to have access to encapsulated amino acids globally.

• To help increase protein production to meet the projected population growth in the Middle East and North Africa, we hosted a three-day conference in Turkey regarding animal nutrition and feed production.

• We conducted seminars in Vietnam and Brazil on ruminant nutrition to help customers improve the intestinal health and overall growth of cattle.

• Working alongside 100 customers from India and Asia, we provided hands-on training at our “Avian Intestinal Health” seminar in Bangkok, Thailand. Our specialists also shared insights on diagnoses, screening, and treatment.

• In June, the animal nutrition and health divisions hosted customers from around the world at our first Global Executive Leadership Summit entitled “Winning in 2014 and Beyond — A Business Focus on Swine.”

• Our Total Nutrition™ series, comprised of innovative papers written by leading industry and academic experts, continued with the publishing of two additional books in 2014: Lipid Digestion and Absorption in Animal Nutrition and Unraveling the Secrets of Amino Acid Nutrition for Efficient Dairy Farming.

• Product Application Departments from around the world gathered in Singapore to share feed mill knowledge, market experiences, and techniques. Highlights included a customer panel featuring key opinion leaders and a customer demonstration of one of our newest innovations, the MillSMART™ system.

Our strong relationships are based on sharing information and resources, and this added value is largely responsible for Kemin becoming a worldwide industry leader. By hiring the best specialists and experts in the field, by sharing their research results, and by answering questions honestly and openly, we can be assured that high quality Kemin products are being used properly and to our clients’ best advantage.

Some of our added value may be unseen, but it’s never unappreciated. From the consistent quality and sustainable growth of many of our plant-based ingredients to our bio-security and traceability efforts, our clients are assured of responsible actions throughout our supply chain.

The additional value we provide our clients across our wide-ranging portfolio contributes to better understanding and a fulfilled expectation that Kemin addresses their multiple needs.

Kemin is more than a supplier to our worldwide

customers; we’re an information clearinghouse,

an answer line, a second laboratory, a researcher, a

resource, and a partner. Customers come to us for

answers – and solutions – to everything from animal health

to human nutrition.

greater value for the GREATER GOOD

“We’re extremely proud to offer our customers the same or higher level of service when compared to many of the commercial laboratories around the world.” Ben Bowen, worldwide customer laboratory services director, petfood division

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Some of our added value may be unseen, but it’s never unappreciated.

2014 Partnership

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imagineA BETTER WORLD

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Partners in Action

• We expanded our longtime lutein partnership with DSM to deliver high-quality, naturally-sourced zeaxanthin.

• The Customer Laboratory Services (CLS) team for our petfood division performed nearly 89,000 analyses in 2014. In operation since 1994, this tailor-made customer support service hopes to perform its 1 millionth test next year.

• We conducted our first European Advisory Board meeting with ophthalmic surgeons from Brazil, Poland, France, Portugal, and Italy to create a consensus document regarding the use of our pharma dyes in ophthalmic surgery.

• Reaching 11,000 North American agricultural professionals, our FeedForward™ magazine was launched to help the industry navigate the future of food safety. The first issue covered the Global Food Safety Initiative (GFSI), the impact of the U.S. Food & Drug Administration’s Food Safety Modernization Act (FSMA), and the importance of a comprehensive Salmonella control program.

• As a preferred supplier to the leading agro-industrial and food conglomerate in the Asia Pacific region, Kemin began conducting Salmonella controls for the company’s broiler chicken exports.

• We traveled to 168 dairy farms in India during a 10-day period to help detect subclinical ketosis and the presence of mycotoxins. Using on-the-spot detection kits, developed by CLS scientists, we empowered farmers with solutions to ensure optimum herd health and profitability.

2014 Partnership 2014 - 2018 Lives Touched

Across Kemin, we are working together to find

new, innovative solutions to serve our customers

and partners better in order to fulfill our vision.

Every section of our company – from

research to information technology – is being called on

for new creativity.

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2,300,000,000on average

approaching

approximately

number of livestouched in 2014 every day as we strive to improve the quality of life around the globe

2,000 number of employeesdedicated to bringing the benefits of molecular science to a growing global population

200 number of patents and applicationsdiscovered by our talented employees

1out of 2 number of peoplewho will benefit from our products and services in 2018 when we achieve our vision

LIVES touched

In fast food cultures, it can seem inconceivable that

millions around the globe suffer from malnutrition and

starvation. Extreme food shortages can be longstanding or occur

overnight due to floods, drought, war, and

displacement. Whatever the cause, where there is no

food, often, there is no hope.

HELP IN GIVING everyone a chance

This daily suffering drives Kemin humanitarian efforts to improve international food security. As a responsible world citizen blessed with the resources to affect positive change, we at Kemin have eagerly joined with organizations to supply both sustenance and hope. Our partners include Scaling Up Nutrition, the United Nations Zero Hunger Challenge, the World Food Prize, and the World Food Programme (WFP), the largest humanitarian agency in the global war against hunger.

We apply our bioscience expertise to not only produce more food, but also to improve its nutritional value whether fresh from the ground or stored months on the shelf. We dedicate scientific staff to work exclusively on humanitarian food solutions with WFP by assisting in strategic planning, including the 2014 Partnership Report: Collaboration on Food Technology and Quality, “Feeding More People Better Food.”

Our work has resulted in a system of safety and quality standards that analyze the microbial and oxidative stability of food procured by WFP. We also recommend necessary changes to raw materials, manufacturing, and handling in order to improve nutritional quality. We have developed testing kits for use in the field to detect mycotoxins in food supplies, keeping existing supplies from potentially harming those already compromised.

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Pictured left to right: Kemin CEO, Dr. Chris Nelson, signed the company’s pledge to the United Nations Zero Hunger Challenge. | Vandana Srivastava, Kemin senior research associate, helped host Dr. Sanjaya Rajaram, 2014 World Food Prize recipient. | Dr. Nelson hosted a panel at the 2014 World Economic Forum in Davos, Switzerland.

Photo

court

esy o

f WFP

: Rein

Skull

erud

Photo

court

esy o

f WFP

: Rein

Skull

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2014 Giving Everyone a Chance Improving international food security

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2014 Giving Everyone a Chance

Compassionate Actions

• We continued our work with the World Food Programme, developing protocols that assure ingredient and nutritional quality and extend the nutritional life of super cereals and high energy biscuits. These efforts helped to feed those caught in the Ebola outbreak in West Africa.

• Kemin joined in the United Nations Zero Hunger Challenge in its efforts to create 100% access to adequate food supplies worldwide.

• To reverse the number of children stunted by insufficient protein, we have been working with Indian farmers to produce milk and eggs higher in protein.

• We helped sponsor the 2014 World Food Prize Borlaug Dialogue international symposium which addressed “The Greatest Challenge in Human History: Can we sustainably feed 9 billion people by 2050?”

Please join Kemin in the global war on hunger by going to WFP.org and clicking on the donate button in the upper right hand corner of the site.

2,600 number of hours per yeardedicated by Kemin employees to sharing technical expertise and to supporting WFP’s product improvement process.

5 number of years (2012 - 2017)committed to a partnership with the World Food Programme (WFP) to improve the safety and quality of WFP’s food basket.1,000 number of days

accounted for in the time from the start of a woman’s pregnancy until her child’s second birthday. This is the time to shape a child’s future by improving maternal and child nutrition and by preventing stunting. India has the highest rate of children with stunted growth in the world.

15,000 number of boiled eggsdistributed by Kemin in India during World Egg Day. Stunting in children is primarily caused by a lack of protein during their first 1,000 days. We educated the public on the benefits of eggs, the second most bioavailable protein next to mother’s milk.

8,100,000 number of childrenafflicted in India with severe acute malnutrition. The best way to overcome malnutrition is through animal protein sources, such as milk and eggs.

90,000,000 number of peopleprovided with food assistance from WFP in 2014.

We’ve taken a number of initiatives to improve food security and food nutrition to those in the greatest need around the globe.

“We provide time, money, and talent to the World Food Programme — with an emphasis on sharing our food safety and quality expertise — in order to better serve those around the world who are food insecure.” Dr. Will Schroeder, research and development director, food technology division

2014 Giving Everyone a Chance

achieving a PERPETUAL BALANCE

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After years of developing a fully sustainable approach to

growing specialized plants, 2014 was an extremely

successful year at Kemin. Our breakthrough approach

combines science, agronomy, and profitability

for the betterment of the planet’s

resources and people.

It starts with our partnerships with family farmers who grow rosemary and spearmint under precise, sustainable conditions. These partnerships not only increase the quality and quantity of crops, but also improve farming practices and promote healthy working conditions. We began by focusing on our proprietary rosemary, which we use in products like FORTIUM® to protect food and prolong the shelf life of foods with high fat and oil content and Verdilox™ to stabilize a wide range of petfood products and ingredients. This year, we became the first company in the world to obtain a third-party certification for Sustainably Grown rosemary. Sustainability Action Items

• After stringent audits, 100% of our rosemary and spearmint crop production were certified Sustainably Grown by SCS Global Services (SCS), a leader in third-party environmental and sustainability certification. Our patent-pending lines of spearmint, developed through traditional plant breeding methods, optimize the production of phytochemicals for flavoring preservation in food and health benefits in dietary ingredients like Neumentix™ Phenolic Complex K110-42.

• Our personal care customers benefit from additional sustainable products. Last year, the industry faced concerns when there were discoveries of water pollution from the use of polyethylene beads in products such as facial and body scrubs. As an alternative, we’ve introduced XFoliPEARL™, a natural and biodegradable exfoliation bead.

“We’re at the threshold of a new era…we’re producing chemistry in a very renewable way. These plants harvest sunlight, sequester carbon dioxide, and synthesize complex molecules.” Dr. John Greaves, vice president of specialty crops

Dr. John Greaves and a spearmint grower visit one of the fields they farm. | Opposite page: Kemin contracts with family farmers to grow its rosemary varieties.

2014 Balance Our vertically integrated system uses the best environmental and socially responsible practices to enhance the agro-ecosystem.

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GLOBAL and localConducting business in

more than 90 countries, we connect globally to apply our

technology to local conditions. In addition to

our corporate headquarters in Des Moines, Iowa, where Kemin was founded in 1961,

we have regional headquarters in Europe, China, India, Singapore,

and South America. Each location boasts its own

research and development facility,

manufacturing, and office space.

WORLDWIDE HEADQUARTERS USA

BrazilSingapore

ItalyBelgium South Africa

India ChinaPortugal

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2014 Global Reach

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Applying technology to local conditions

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• We opened a new state-of-the-art natural antioxidant manufacturing facility and warehouse in Veronella, Italy. The 700-square- meter facility will enable Kemin to fulfill customer orders more quickly and efficiently.

• In Verona, Missouri, we had further expansion at the palatant manufacturing facility including the opening of an onsite, newly renovated quality laboratory.

• Kemin opened a fully equipped customer service laboratory in Moscow to better serve the feed industry and customers in Russia and neighboring Common Wealth of Independent States (CIS). As one of the industry’s first laboratories of its type in the region, it will deliver tailored services to meet each customer’s unique needs: screening raw materials and finished feed for mycotoxin risks, qualifying the nutritional and oxidative status of oils and fats, and evaluating a variety of chemical analyses to assess the quality of feed and raw materials.

• We opened a new facility in South Africa and announced further expansion plans to strengthen the company’s presence and better serve customers in sub-Saharan Africa. Kemin has relocated its South African operations from Modderfontein to Pretoria to meet growing demand for its products and services, while allowing for future expansion. South Africa is the largest developing market in the world and a landscape in which we are dedicated to providing quality ingredients that improve nutrition and health for humans and animals.

“This new investment is for the hardworking farmers and producers who need help improving the nutritional efficiency of their feed. Together, we can provide safer, nutritious food to a growing world.”

Dr. Chris Nelson, CEO, in reference to the new encapsulation facility

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2014 Global Reach

Around the globe, Kemin has been

expanding our laboratories and manufacturing facilities to service

our customers better.

Actions to Meet Growing Demand

• We broke ground for a new encapsulation facility for amino acids in Des Moines. The 16,000 square foot facility is scheduled to open in November 2015. Our animal nutrition and health customers look for feed ingredients that provide the most consistent and efficient way to deliver nutrients to their animals. Our encapsulation technology protects and delivers these nutrients through targeted release in an animal’s intestinal tract.

• Our pharma division celebrated the grand opening of its Portugal office in April. Attendees included government representatives from the Institute of Labor and Training and the Agency for Investment and Foreign Trade of Portugal, as well as more than 100 participants from suppliers to health and pharmacy institutions.

• Several of our scientists completed their first year at our new Molecular Advancement Center (MAC), accelerating innovation in the collaborative new space. The $16.7 million facility is a direct reflection of our expanding business around the globe. In 2015, we plan to break ground on our new corporate headquarters building that will adjoin the MAC. The building is expected to be move-in ready by the first quarter of 2017.

As a leader in the production of encapsulated amino acids, a new $17 million facility in North America will allow us to increase our manufacturing capacity.

Active supporter and particpant of the World Food Prize.2014 Online Locations

You can connect with us online in many ways.

Kemin.com Look for our enhanced website in 2015, featuring new and improved functionality, including:

• A fresh new look and feel

• An upgraded experience on mobile devices

• A blog with advice from our experts across the company

• Better navigation to help you find more of the content you like

Kemin Industries

@KeminInd

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BOARD of advisors

WORLDWIDE

Dr. Lynda ApplegateDr. Ted CrosbieRusty GoodeArt KentP.C. (Babu) MathewDavid NelsonPierre-Etienne Weber

ASIA

Hai Chwee ChewChou Yuen ChongSiew Loong Leong

CHINA

Guiseppa AbrateDr. Anning WeiGeorge Zhang

INDIA

Vidur BehalRanjit JacobPrem KamathP.C. (Babu) MathewP Rajagopalan (Raj)K. RavishankarMarkos Vellapally

2100 Maury Street

Des Moines, Iowa 50317

United States

Tel: +1 515.559.5100

Toll-free: 800.777.8307

KEMIN.COM

© Kemin Industries, Inc. and its group of companies 2015. All rights reserved ® ™ Trademarks of Kemin Industries, Inc., U.S.A. Certain statements may not be applicable in all geographical regions. Product labeling and associated claims may differ based upon government requirements.