Van de Velde NV

Quarterly Report • Aug 26, 2011

FINANCIAL REPORT ON CONSOLIDATED RESULTS FOR FIRST HALF YEAR 2011

REGULATED INFORMATION

CONSOLIDATED INCOME STATEMENT

(in 000 €)	30.06.2011 incl.	30.06.2011 excl.	30.06.2010 incl.	30.06.2010 excl.
	Intimacy	Intimacy	Intimacy	Intimacy
Turnover	97,852	86,213	83,403	79,007
Other operating income	2,548	2,548	2,002	2,002
Cost of materials	-22,711	-18,272	-18,758	-17,275
Other expenses	-24,673	-20,916	-21,917	-20,272
Personnel expenses	-19,060	-15,967	-16,258	-15,161
Depreciation and amortisation	-2,117	-1,766	-1,789	-1,671
Operating profit	31,839	31,840	26,683	26,630
Finance income	1,909	1,939	7,177	2,810
Finance costs	-1,480	-1,478	-1,213	-1,213
Share of profit of associates	695	695	325	325
Profit before taxes	32,963	32,996	32,972	28,552
Income taxes	-8,328	-8,317	-7,662	-7,662
Profit for the period	24,635	24,679	25,310	20,890
Attributable to the owners of the company	24,611	24,679	25,268	20,890
Attributable to non-controlling interests	24	0	42	0
Currency translation adjustments	61		1,756
Net movement on cash flow hedges	0		0
Total other comprehensive income	61		1,756
Total of profit for the period and other comprehensive income	24,696		27,066
Basic earnings per share (in euro)	1.86	1.86	1.91	1.58
Diluted earnings per share (in euro)	1.85	1.86	1.91	1.58

The consolidated income statement is reported "excluding Intimacy" and "including Intimacy". The figures "excluding Intimacy" are only provided to facilitate comparison with 2010.

"Excluding Intimacy" means that the operating results of Intimacy as well as the intercompany eliminations are not included. "Including Intimacy" means that Intimacy is included based on the full consolidation method at 85% (in 2010 this concerned the last 2 months of the half-year).

TURNOVER GROWTH FIRST HALF-YEAR 2011

Turnover grew in the first half-year 2011 by 9% (from €79.0m to €86.2m). In June 2011 more of the autumn/winter collection (the collection for the second half of the year) was delivered than was the case the previous year. On a comparable basis with 2010, turnover growth was approximately 7%. These figures are excluding the retail turnover of Intimacy.

Turnover growth was primarily due to a rise in volume. There was fairly generalised growth, but clearly not in Northern Europe and Greece. Otherwise, there was a positive price and exchange rate effect of approximately 2% in total.

With retail turnover of Intimacy included, turnover rose by 17% (from €83.4m to €97.9m). Only two months of Intimacy were included in the first half of 2010.

The retail turnover of Intimacy for the first half of 2011 was \$20.6m. This is a rise of 20% compared with the same period the year before, mainly thanks to the opening of new stores. Intimacy experienced a tough spring. The general economic conditions are tough in the United States.

Oreia continued to grow in Germany. On a store-to-store basis (5 stores), Oreia grew by 12.5% in Germany.

GROSS MARGIN AND STABLE COSTS

The gross margin (excluding Intimacy) was higher in the first half of 2011 than in the first half of 2010. This was primarily due to efficiency improvements (including lower stitching costs and write-downs) and to the positive price and exchange rate effect.

Fixed costs remained relatively stable, as did all cost factors that promote growth (marketing, sales programmes, prospecting new zones).

STRONG EBITDA AND PROFIT GROWTH

EBITDA (excluding Intimacy) rose by 19% along with turnover growth of 9%. However, if turnover growth is pegged at 7% (see above) the rise in EBITDA for the first half of 2011 was 14%.

Excluding Intimacy, net profit rose by 18% (11% on a comparable basis). Including Intimacy, net profit rose by 18% (not taking into account the non-recurring financial result from the Intimacy participation in 2010).

MINORITY PARTICIPATIONS AND FINANCIAL CHARGES

The contribution of Top Form was €1,077k, of which €382k was recognised as dividend and €695k as profit based on the equity method.

The financial result was lower than it was the year before. The financial result in 2010 also included a non-recurring profit relating to the revaluation of the Intimacy participation (€4,367k).

CONSOLIDATED BALANCE SHEET

(in 000 €)	30.06.2011	31.12.2010
Total fixed assets	87,300	89,023
Goodwill	26,133	28,658
Intangible assets	21,580	22,159
Tangible fixed assets	20,698	20,726
Participations (equity method)	15,820	15,125
Deferred tax assets	641	1,227
Other fixed assets	2,428	1,128
Current assets	89,822	92,885
Inventories	31,643	32,814
Trade and other receivables	22,430	14,222
Other current assets	6,959	7,602
Cash and cash equivalents	28,790	38,247
Total assets	177,122	181,908
Shareholders' equity	150,894	153,643
Share capital	1,936	1,936
Treasury shares	-1,699	-2,506
Share premium	743	743
Other comprehensive income	-9,731	-9,792
Retained earnings	159,645	163,262
Non-controlling interest	7,468	8,089
Total non-current liabilities	2,193	3,286
Provisions	809	519
Pensions	36	36
Deferred tax liabilities	0	0
Other borrowings	1,348	2,731
Total current liabilities	16,567	16,890
Trade and other payables	15,704	16,436
Other current liabilities	814	431
Income taxes payable	49	23
Total equity and liabilities	177,122	181,908

FIXED ASSETS

The fixed assets fell by 1.9% compared with the end of 2010 for the following reasons:

• Revision of the goodwill as a result of the business combination with Intimacy. Within the framework of this business combination, outstanding balances between Van de Velde and the shareholders have been reassessed. This results at 30/06/2011 in a reduction of the goodwill by \$3.4m.
• The rise in other fixed assets is connected with the fall in goodwill.
• The fixed assets at Intimacy were consolidated at a lower exchange rate for USD than at the end of 2010.
• Deferred tax assets were lower.

CURRENT ASSETS

The current assets fell by 3.3% for the following reasons:

• Fall in inventories.
• Rise in trade receivables due to the cyclic character of the sales.
• The fall in other current assets is connected with a time difference with regard to tax.
• A substantial fall in the cash position, to a large degree explained by the paying out of a higher dividend and the advance payment of corporate income tax.

SHAREHOLDERS' EQUITY

• Shareholders" equity accounts for 85% of total equity and obligations.
• The fall in shareholders" equity is solely due to the paying out of the higher dividend in the first half of 2011.

NON-CONTROLLING INTEREST

The fall in the non-controlling interest is mainly due to the lower exchange rate for USD at which the non-controlling interest is consolidated.

NON-CURRENT AND CURRENT LIABILITIES

• The fall in the other borrowings should be linked to the fall in the goodwill as referred to above.
• The fall in the trade and other payables is mainly connected with a lower outstanding balance of trade payables than at the end of 2010.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to the shareholders of the parent
(in 000 €)	Share capital	Share premium	Treasury shares	Retained earnings	Share based payments	Other comprehensive income	Equity	Non controlling interests	Total equity
Equity at 31.12.2009	1,936	743	-2,625	144,456	493	-9,271	135,732	0	135,732
Non-controlling interests on business combinations								8,221	8,221
Profit for the period				25,268			25,268	42	25,310
Other comprehensive income						1,756	1,756	677	2,433
Treasury shares			-412				-412		-412
Sale of treasury shares for stock options			132				132		132
Amortisation deferred stock compensation					176		176		176
Granted and accepted stock options					259		259		259
Deferred stock compensation					-259		-259		-259
Dividends				-21,840			-21,840		-21,840
Equity at 30.06.2010	1,936	743	-2,905	147,884	669	-7,515	140,812	8,940	149,752

Attributable to the shareholders of the parent
(in 000 €)	Share capital	Share premium	Treasury shares	Retained earnings	Share based payments	Other comprehensive income	Equity	Non controlling interests	Total equity
Equity at 31.12.2010	1,936	743	-2,506	162,481	781	-9,792	153,643	8,089	161,732
Profit for the period				24,611			24,611	24	24,635
Other comprehensive income						61	61	-645	-584
Treasury shares							0		0
Sale of treasury shares for stock options			807				807		807
Amortisation deferred stock compensation					126		126		126
Granted and accepted stock options				221	-221		0		0
Deferred stock compensation							0		0
Dividends				-28,354			-28,354		-28,354
Equity at 30.06.2011	1,936	743	-1,699	158,959	686	-9,731	150,894	7,468	158,362

The main changes are stated above in the notes to the balance sheet.

CONSOLIDATED STATEMENT OF CASH FLOWS

(in 000 €)	30.06.2011	30.06.2010
Cash flows from operating activities
Cash receipts from customers	101,607	83,192
Cash paid to suppliers and employees	-72,149	-58,425
Cash generated from operations	29,458	24,767
Income taxes paid	-7,070	-337
Other taxes paid	-2,108	-3,268
Interest and bank costs paid	-88	-85
Net cash from operating activities	20,192	21,077
Cash flows from investing activities
Interests received	325	265
Received dividends	392	353
Proceeds from sale of equipment	33	2
Purchase of fixed assets	-2,636	-3,138
Net sale / (purchase) of treasury shares	963	-280
Investments in subsidiary, net of cash acquired	0	-10,165
Net cash used in investing activities	-923	-12,963
Cash flows from financing activities
Dividends paid	-28,427	-21,481
Repayment of long-term borrowings / increase in financial debt	-92	-127
Financing of customer growth fund	-147	-556
Net cash used in financing activities	-28,666	-22,164
Net increase / (decrease) in cash and cash equivalents	-9,397	-14,050
Cash and cash equivalents at beginning of period	38,247	40,361
Exchange rate differences	-60	756
Net increase / (decrease) in cash and cash equivalents	-9,397	-14,050
Cash and cash equivalents at end of period	28,790	27,067

SEGMENT INFORMATION

Van de Velde is a single product business and distinguishes two segments: eurozone and elsewhere. Van de Velde operates in a single reporting business segment, i.e. the production and sale of luxury lingerie. Van de Velde has no transactions with a single customer worth more than 10% of the total turnover.

The segment information is shown for the period closed on 30 June 2011 and 30 June 2010 in the following tables:

Segment Income Statement
(in 000 €)		2011				2010
	Eurozone Elsewhere Total			Eurozone	Elsewhere	Total
Segment revenues	64,463	33,389	97,852	60,406	22,997	83,403
Results by segment	28,846	10,159	39,005	25,623	8,269	33,892
Unallocated results			-7,166			-7,209
Net finance profit			429			5,964
Income from associates			695			325
Income taxes			-8,328			-7,662
Non-controlling interests			-24			-42
Net income			24,611			25,268

Segment Balance Sheet
(in 000 €)		2011
	Eurozone	Elsewhere	Total	Eurozone	Elsewhere	Total
Segment assets	62,928	33,423	96,351	63,274	34,508	97,782
Unallocated assets			80,771			79,330
Consolidated total assets	62,928	33,423	177,122	63,274	34,508	177,112
Segment liabilities	10,389	5,315	15,704	10,186	5,202	15,388
Unallocated liabilities			161,418			161,724
Consolidated total liabilities	10,389	5,315	177,122	10,186	5,202	177,112

Other segment information
(in 000 €)		2011			2010
	Eurozone	Elsewhere	Total	Eurozone	Elsewhere	Total
Capital expenditure
Tangible fixed assets	1,469	454	1,923	770	4,552	5,322
Intangible assets	408	126	534	1,796	8,577	10,373
Depreciation	1,617	500	2,117	1,342	447	1,789

Further information about the assets of the company - location
(in 000 €)	BE	Outside BE	Total
Tangible fixed assets	13,107	7,591	20,698
Intangible fixed assets	12,690	8,890	21,580
Inventories	28,372	3,271	31,643

PROSPECTS

Van de Velde expects the autumn to be tougher. The economic developments in Europe and North America do not stimulate consumer confidence.

Excluding Intimacy, the expectation is that turnover growth for the whole year will be 2% to 3%. This percentage will be highly dependent (as always) on the follow-up orders in the second half of the year. EBITDA is expected to grow on an annual basis at the same rate as turnover.

For Intimacy, we expect annual turnover of about \$40m and EBITDA higher than \$1.6m.

From August Rigby & Peller will be included in the consolidated figures (based on the full consolidation method at 87%). The impact of this enlargement in the consolidation will be explained in the annual figures.

Oreia and LinCHérie are developing well. A new Oreia store will open in the centre of Berlin and the partnership with the LinCHérie independent retailers is going very well.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This interim consolidated financial information was prepared in compliance with the applicable international standard for interim consolidated financial information, IAS 34.

Intimacy has been included in the consolidation since May 2010. Intimacy is fully consolidated with recognition of a non-controlling interest.

The same accounting policies and calculation methods were used as in the consolidated financial statements at 31 December 2010.

The General Meeting of 27 April 2011 approved the dividend as proposed by the Board of Directors (€2.15/share). The allocated dividend was €28,508k, which was almost entirely paid out at 30 June 2011.

As of the date of this interim financial report there was one important event after the balance sheet date. This was the acquisition of 87% of the shares in Rigby & Peller, which was announced in the press release of 16 August 2011. Rigby & Peller will be included in the consolidated figures based on the full consolidation method at 87% from August.

In addition to risks described in the above notes, the material risks and uncertainties with regard to the rest of 2011 were primarily the same as described on pages 65-66 ("Business risks under IFRS 7") of the 2010 annual report.

In the first half of 2011, there were no material transactions with associated companies other than those described in this report or within the normal course of events.

DECLARATION OF THE RESPONSIBLE PERSONS

The undersigned declare that:

• The financial overviews in this report, which have been prepared in compliance with the applicable standards, faithfully reflect the equity, the financial situation and the results of Van de Velde and the companies included in the consolidation.
• The interim financial report faithfully reflects the development, the results and the position of Van de Velde and the companies included in the consolidation, as well as providing a description of the main risks and uncertainties Van de Velde has to deal with.

Schellebelle, 23 August 2011

Ignace Van Doorselaere Stefaan Vandamme Chief Executive Officer Chief Financial Officer

REPORT OF THE STATUTORY AUDITOR ON THE HALF YEAR INFORMATION

Report of the statutory auditor to the shareholders of Van de Velde NV on the review of the interim condensed consolidated financial statements as of 30 June 2011 and for the six months then ended

Introduction

We have reviewed the accompanying interim condensed consolidated balance sheet of Van de Velde NV (the "Company") as at 30 June 2011 and the related interim condensed consolidated statements of income, changes in equity and cash flows for the six-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34") as adopted for use in the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review ("revue limitée/beperkt nazicht" as defined by the "Institut des Reviseurs d"Entreprises/Instituut der Bedrijfsrevisoren") in accordance with the recommendation of the "Institut des Reviseurs d"Entreprises/Instituut der Bedrijfsrevisoren" applicable to review engagements. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards of the "Institut des Reviseurs d"Entreprises/Instituut der Bedrijfsrevisoren" and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as adopted for use in the European Union.

Ghent, 23 August 2011

Ernst & Young Reviseurs d"Entreprises SCC Statutory auditor represented by

Jan De Luyck Partner

CONTACTS

For more information, please contact:

Van de Velde NV – Lageweg 4 – 9260 Schellebelle – 09 365 21 00

www.vandevelde.eu

Ignace Van Doorselaere Stefaan Vandamme Chief Executive Officer Chief Financial Officer

FINANCIAL CALENDAR

18.11.2011 Second interim statement 2011

31.12.2011 End of fiscal year 2011

05.01.2012 Announcement of turnover for 2011

17.02.2012 Announcement of results for 2011

25.04.2012 Ordinary General Meeting First interim statement 2012

VAN DE VELDE

Van de Velde NV is a leading player in the luxury and fashionable women"s lingerie sector. Van de Velde is convinced of a long-term strategy based on developing and expanding brands around the Lingerie Styling concept (fit, style and fashion), especially in Europe and North America.