Greenyard NV — Earnings Release 2010

Mar 22, 2011

Press release

PinguinLutosa: results 2010

Financial highlights for 2010:

* Strong growth in sales based on strong growth in sales volumes;

* Positive net result of €2.8 million;

* Sharp fall of net financial debt by €25.4 million compared to 31/12/2009;

* Integration of CECAB, closing of acquisition and integration of Scana Noliko have top priority in 2011.

Consolidated key figures: income statement for the twelve months to 31 December 2010 and 2009 (see annex 1)1

(All amounts in € '000)	31/12/2010	31/12/2009
Sales 2	483,564	436,838
Operating income	474,907	446,798
EBITDA	27,106	36,101
EBIT	7,323	15,041
REBITDA	25,924	36,101
REBIT	6,436	16,095
Interest earned and paid	-5,750	-6,100
Other financial income and charges	1,070	-1,915
Profit (loss) from continuing operations before tax	2,643	7,026
Income taxes	-1,915	-7,477
Withdrawal from deferred taxes	2,027	10,781
Profit (loss) for the period	2,755	10,330
- Share of the Group - Non-controlling interests	2,813 -58	10,012 318

¹ For a further discussion of the figures we refer the reader to the consolidated financial statements on our website www.pinguinlutosa.com under the heading "Financial information > Reports > consolidated financial statements 2010" (available as from 27 April 2011 onwards).

² In accordance with the IFRS standards, in 2010 the transport costs charged on to customers have been posted under the heading 'sales' and the prior period figures have been adjusted accordingly (see annex 1).

Sales

During the 2010 financial year the Group's consolidated sales increased by 10.7% from €436.8 million at 31 December 2009 to €483.6 million at 31 December 2010.

Sales for the deep-frozen vegetable division amounted to €245.2 million during the 2010 financial year, representing 50.7% of total sales. The increase in sales of 9.3% in this division compared to last year is primarily due to the organic growth of PinguinLutosa in 2010. Volumes sold in the deep-frozen vegetable division actually rose by 10.8% during the past year.

The potato division was responsible for €234.4 million of the sales during the 2010 financial year. This represented 49.3% of total sales. Sales in the potato division increased by 12.2% compared to the 2009 financial year. This increase can be mainly attributed to the higher sales volume (+13.8%) during 2010.

Results

The operating result (EBIT) amounts to €7.3 million per 31 December 2010, compared to €15.0 million per 31 December 2009. The EBIT-margin (compared to operating income) now amounts to 1.5%, compared to 3.4% in December 2009.

The recurring operating cash flow (REBITDA) shows a similar pattern, and now amounts to €25.9 million compared to €36.1 million in the prior year. The REBITDA now constitutes 5.4% of the operating income, which is a decline compared to last year (8.1%).

As per 31 December 2010, the recurring operating cash flow (REBITDA) of the deep-frozen vegetable division amounted to €15.3 million, which is a decrease of €3.2 million compared to the previous year. The decrease in recurring operating cash flow can mainly be ascribed to the planned lower production that lessened the margin improvements which had resulted from lower raw material prices.

As per 31 December 2010, the recurring operating cash flow (REBITDA) of the potato division amounted to €10.6 million compared to €17.6 million during the previous year (€-6.9 million). The decline in the REBITDA is primarily attributable to the strong rise in the raw material prices that could not be recovered quickly enough via the higher selling prices. The price increases originate from the difficult harvest conditions in autumn with rain and frost and are reinforced further by the large demand for fresh potatoes from Russia.

An improved product mix, further optimisation of the supply chain and continuous control of costs were able to compensate for those price pressures to a great extent, though not entirely.

One-time elements

The one-time costs that have been incorporated in the operating profit per 31 December 2010 totaling €1.9 million, relate firstly to additional costs (€0.2 million) when the rented site in Easton (United Kingdom) was vacated. In the United Kingdom also a number of works have been performed in order to make the vacation of part of the site at King's Lynn (€0.4 million) possible. Following this vacation, an impairment loss on fixed assets has also been booked for the amount of €0.4 million. In Pinguin Aquitaine an additional provision has been recorded for the claim received, which relates to cleaning and repair works on the premises and waterpurification installation of third parties. In the Belgian deep-frozen vegetable division, the operating result has been negatively influenced by non-recurring acquisition costs related to D'aucy Frozen Foods, which will be part of the Group as from 1 May 2011 onwards. In addition there are one-time costs in the United Kingdom (€0.2 million) that mainly relate to a fire on the site at King's Lynn and the vacation of a number of cold stores because of danger of collapse on the site at King's Lynn.

The one-time income items included in the operating result for the year to 31 December 2010, totaling €2.8 million mainly relate to a compensation that the Group has received for the vacation of part of the site at King's Lynn for the construction of a supermarket.

In 2009, the EBIT figures were influenced by several one-time events in the United Kingdom and Pinguin Aquitaine (France). These are primarily related to a provision which was made with respect to a claim related to clearing and repair costs associated with leaving the leased site at Easton (negative impact), the restructuring of the site in Boston (negative impact) and provisions which were made relating to pending local disputes concerning the clean-up of water basins and the possibility of having received excess subsidies in Pinguin Aquitaine (negative impact).

The one-time costs and revenues last year had a net negative impact of €-1.1 million on the operating results. This year, as stated above, the positive impact was €0.9 million.

Financial result

At the end of December 2010 the financial result amounts to €-4.7 million compared to €-8.0 million for the same period last year. The improvement of the financial result is primarily due to the decline of interest charges and the positive change of the fair value of the financial instruments (IRS). PinguinLutosa's strategy is to hedge part of the interest rate and exchange rate risks. The effect of foreign exchange rates on trade receivables and payables have been included in the financial results but owe to operational activities.

Taxes

In addition to the income taxes on the results for the current financial year of €1.9 million, deferred tax assets of €2.0 million were also recorded. This had a total positive effect of €0.1 million.

Consolidated net result after taxes

The consolidated result after tax is now €2.8 million. The Group's share in the net result is €2.8 million.

Key consolidated figures per share

Earnings per share	31/12/2010 Basic	31/12/2009 Basic
Weighted average number of ordinary shares (in numbers)	10,863,984	10,713,333
Net profit (loss) (part of the Group) to be allocated to ordinary shareholders (in '000 of euro)	2,813	10,012
Profit (loss) per share (in euro)	0.26	0.93

Key consolidated figures: statement of financial position per 31 December 2010 and 31 December

2009 3

(All amounts in € '000)	31/12/2010	31/12/2009	Evolution in %
Assets
Non-current assets	188,301	192,034	-1.94%
Intangible fixed assets	4,206	4,483	-6.18%
Goodwill	52,832	52,773	0.11%
Tangible fixed assets	131,120	134,660	-2.63%
Other amounts receivable after one year	143	118	22.03%
Current assets	231,936	208,447	11.27%
Inventories	112,566	122,152	-7.85%
Amounts receivable	64,380	48,307	33.27%
Cash at bank and in hand	54,990	37,988	44.76%
Total	420,237	400,481	4.93%
Equity and liabilities
Equity*	138,714	125,148	10.84%
Provisions and deferred tax liabilities	28,712	30,715	-6.52%
Financial debts to credit institutions	121,786	130,183	-6.45%
Other amounts payable	131,025	114,435	14.50%
Total	420,237	400,481	4.93%
Net financial debt	66,796	92,195	-27.55%
Working capital	100,053	94,169	6.25%

* including non-controlling interests

The intangible fixed assets comprise primarily the valuation of the brand and the client relationships of the potato division that was acquired (Lutosa Group), as well as software licences. The decrease is due to the write-offs during the financial year, which were only partially offset by the investments of €0.7 million in software.

The goodwill shown is the goodwill from the acquisition of Salvesen (€1.2 million) and the goodwill related to the acquisition of the potato division (Lutosa Group) (€51.6 million). The increase in the goodwill figure is attributable to the higher closing value of the British pound for the conversion of the Salvesen goodwill. The result is that the value of the Salvesen goodwill is higher in Euros.

³ For a further discussion of the figures we refer the reader to the consolidated financial statements on our website www.pinguinlutosa.com under the heading "Financial information > Reports > consolidated financial statements 2010" (available as from 27 April 2011 onwards).

The tangible fixed assets declined slightly and amount to €131.1 million per 31 December 2010. Investments in tangible fixed assets amounted to €14.5 million. The depreciation charges in the various entities, the acquisitions in the financial year and the foreign exchange rate fluctuations resulted in a net decrease of €3.5 million compared to 31 December 2009.

During 2010, inventories fell from €122.2 million per 31 December 2009 to €112.6 million per 31 December 2010, mainly following the decrease in volumes, both in Belgium and the United Kingdom.

Globally, equity increased by €13.6 million and (including non-controlling interests) amounts to €138.6 million per 31 December 2010. Equity now amounts to 33.0% of the total statement of financial position, versus 31.2% last year. On 28 October 2010, a private capital increase within the framework of authorized capital in an amount of €10 million was approved and established by the Board of Directors.

The consolidated equity was positively influenced by the private capital increase, the €2.8 million result for the current period and by positive translation differences due to the strengthening of the British Pound.

The net financial debts declined by €25.4 million, from €92.2 million per 31 December 2009 to €66.8 million per 31 December 2010.

The changes in valuation rules have no significant impact on the Group's reported results or financial position (see annex 1).

Key consolidated figures: segment information

(All amounts in € '000)	31/12/2010	31/12/2010	31/12/2009	31/12/2009
	Deep-frozen vegetable division	Potato division	Deep-frozen vegetable division	Potato division
Operating income REBITDA REBITDA-margin	238,449 15,286 6.41%	236,458 10,638 4.50%	240,104 18,515 7.7%	206,694 17,586 8.5%

Consolidated sales of the Group amounted to €483.6 million in 2010, which is an increase by 10.7%. In 2010 the deep-frozen vegetable division contributes 50.2% of total operating revenue to the Group, whereas the potato division contributed 49.8%.

Sales in the potato division amount to €238.4 million in 2010, representing 49.3% of total sales. The sales increase in the potato division by 12.2% compared to 2009 can be mainly attributed to the higher sales volume in 2010 (+13.8%). This increase, together with the increase in inventory, explains the significant increase in operating income in the potato division.

The contribution of the deep-frozen vegetable division to the consolidated sales of the Group represented 50.7% of total turnover and amounted to €245.2 million in 2010. The increase in sales in this division compared to last year is also largely due to the organic growth PinguinLutosa has experienced in 2010. Sales volumes in the deep-frozen vegetable division rose by 10.8% during the last year. The decrease in operating income (€-1.7 million) is mainly explained by the sharp fall in inventories and the loss of rental income in the deep-frozen vegetable division.

2010 was a difficult year, especially for the potato division, since raw material prices for potatoes were in December even three times higher than the year before. Following the closing of sales contracts in the autumn 2009 (contracts for one year until the end of summer 2010), the sales prices realized were too low and therefore the margins until the end of September 2010 were also too low. Margins needed to recover in the fourth quarter of 2010. This indeed happened, though not sufficiently. The new sales contracts were negotiated with diligence and foresight and PinguinLutosa opted for contracts with shorter timeframes until the end of January 2011. Meanwhile, raw material prices rose faster than expected. The EBITDA of the potato division reached €10.6 million.

In the deep-frozen vegetable division, performance during the first half of the year was, as expected, comparatively not so good due to the low prices in sales contracts and the high inventory prices in 2009. Traditionally, the second half of the year is better than the first half. A good production, combined with changing market conditions, was needed to ensure a turnaround. Raw material prices did indeed decrease but due to the planned fall in production this advantage and the margin improvement could not be fully maintained. PinguinLutosa however succeeded to slightly improve the average sales price by selecting the right product mix and optimizing the product portfolio and consequently to limit the margin decrease. The EBITDA of the deep-frozen vegetable division amounted to €16.5 million.

Key consolidated figures: statement of cash flows

(All figures in € '000)	31/12/2010	31/12/2009	Change
Cash flow from operating activities	25,410	28,825	-3,415
Change in working capital	8,696	13,215	-4,519
= Net cash flow from operating activities	34,106	42,040	-7,934
Cash flow from investing activities	-12,290	-12,198	-92
Cash flow from financing activities	-4,633	-12,170	7,537
Effect of exchange rate fluctuations	-182	-93	-89
= Free cash flow	17,001	17,579	-578
Cash and cash equivalents, opening balance	37,988	20,409
Cash and cash equivalents, closing balance	54,989	37,988	17,001

Net cash flow from operating activities decreased to €34.1 million compared to €42.0 million in 2009. This decline can mainly be explained by the decrease of cash flow from operating activities following the decline in the results and by the fact that the decrease in the need for working capital in the past year was less than the prior year.

The improved cash flow from financing activities resulted in a free cash flow that remains on the same level as in 2009.

Declaration of the auditor

The auditor confirms that the audit is substantially completed, and did not reveal any significant adjustments to the financial information included in the press release.

Dividends

The Board of Directors has proposed to the Annual General Meeting of Shareholders that no dividend will be paid.

Update: CECAB-group

As already stated in previous press releases, PinguinLutosa has acquired the deep-frozen vegetable activities of the French group CECAB. These activities will be included in the consolidation scope of

PinguinLutosa as from 1 May 2011 onwards, as was initially planned. Therefore during the previous months a number of new companies have been founded in Poland, Hungary and France. The local management structures have been adjusted where necessary and the necessary investments have been approved. The 730 employees and the rented sites will become part of the PinguinLutosa group as from this date onwards. CECAB will continue to guarantee the working capital financing and became shareholder of PinguinLutosa following the capital increase of 28 October 2010. Expected sales will approximately amount to €130 million on an annual basis and these activities will not contribute positively to the results during the first year.

Events after the balance sheet date

On 14 March 2011, PinguinLutosa announced the acquisition of Scana Noliko. The acquisition is related to all the shares in the companies (including the real estate company). The acquisition price amounts to €155 million. The transaction is expected to be completed before 30 June 2011. In the press release dated 14 March 2011, further details regarding this transaction are explained.

There are no other major events subsequent to the balance sheet date which have a major impact on the further evolution of the company.

Outlook4

The emphasis for PinguinLutosa will remain on developing innovative and profitable products that are highly customer oriented. The extensive sales network of PinguinLutosa suits as a perfect platform to provide solutions to our customers.

Therefore PinguinLutosa will continue to invest in order to improve the performance and efficiency of its production capacity. The integration of the deep-frozen activities of CECAB will be our major point of attention and both the acquisition and the integration of Scana Noliko will be a high priority.

The Board of Directors and the management are fully confident that the foundations are present in order to achieve further growth in sales and profitability. Consequently PinguinLutosa is confident that, taking into account the changing market conditions, a further improvement of the results can be achieved during 2011. The continuing uncertain economic conditions, however, make it difficult to make a specific prediction for 2011 and the years to follow.

⁴ Disclaimer: this press release contains forward-looking information that is based on current internal estimates and expectations and as well as market expectations. The forward-looking statements contain inherent risks and are valid only on the day on which they are made. Actual results may differ substantially from the results included in forward-looking statements.

Financial calendar

• Availability of annual report 2010: 27 April 2011 (17:45 hrs)
• Trading update Q1 2011: 27 April 2011 (17:45 hrs)
• Announcement of 2011 half year results: 18 August 2011 (17:45 hrs)

• Trading update Q3 2011: 27 October 2011 (17:45 hrs)

• General Meeting: 20 May 2011 at 14:00 hrs at Langemark, Poelkapellestraat 71

For additional information, please contact PinguinLutosa:

Herwig Dejonghe, CEO
Mobile	: +32 (0)475/27.05.62
Fixed line	: +32 (0)57/48.72.22
E-mail	: investorrelations@pinguin.be
Steven D'haene, CFO:
Fixed line	: +32 (0)56/62.27.41

PinguinLutosa in a nutshell

PinguinLutosa (www.pinguinlutosa.com) is specialized in the development, production and sales of frozen products: vegetables, potato products (fries and specialities) and ready-to-use culinary preparations. Including the takeover of the deep-frozen vegetable activities of the French CECAB group (01-05-2011), announced in October 2010, and the takeover of Scana Noliko, announced in March 2011, the group will have 17 production sites in five different countries (Belgium, France, United Kingdom, Poland and Hungary) and sales offices on four continents.

In 2010 PinguinLutosa realised €483.6 million of sales. A total of 15 subsidiaries and sales offices in 4 continents are entirely dedicated to all customer segmentations: food industry, catering as well as large and medium commercial outlets and fast food. The Group maintains its own R&D centre for product and process innovation.

ANNEX 1: CONSOLIDATED INCOME STATEMENT

Consolidated income statement	31/12/2010	31/12/2009
(in thousands of €)
Sales	483,564	436,838
Increase/decrease (-) in inventories	-15,214	6,133
Other operating income	6,557	3,826
Raw materials, consumables and goods for resale	-264,797	-236,440
Services and other goods	-121,811	-113,276
Personnel costs	-58,253	-57,804
Depreciation and amortization	-18,912	-19,432
Impairment losses on assets	-382
Impairments, write-offs	-554	-578
Provisions	65	-1,050
Other operating charges	-2,940	-3,177
Operating result (EBIT)	7,323	15,041
Non-recurring income	2,774
Non-recurring expenses	-1,887	-1,054
Operating result before non-recurrings (REBIT)	6,436	16,095
Financial income	2,708	3,437
Financial expenses	-7,388	-11,452
Operating profit after net finance costs	2,643	7,026
Taxes	112	3,304
PROFIT (LOSS) OF THE PERIOD	2,755	10,330
Attributable to:
- The shareholders of PinguinLutosa (the 'Group')	2,813	10,012
- Non-controlling interests	-58	318

In 2010 no major changes took place in the valuation rules compared with the previous reporting period apart from the application of the revised Standards IFRS 3 "Business Combinations" and IAS 27 "Consolidated and Separate Financial Statements" and the changed presentation of the transport costs charged on to customers. In accordance with the IFRS standards, the transport costs charged on to customers have no longer been posted under the heading 'other operating income' in 2010 (impact: €7.9 million) and 2009 (impact: €5.5 million), but have been included under the heading 'sales'.