Greenyard NV — Earnings Release 2014

May 20, 2014

PRESS RELEASE

Greenyard Foods realises sales growth, with a strong improvement of the operating result, and further implements its growth strategy

Gent, Belgium, 20th of May 2014 – Greenyard Foods (Euronext Brussels: GRYFO) has announced today its results over the year ending on 31 March 2014.

Operational highlights – accounting year ending as per 31 March 2014

• Sales growth of +1.8%, or +3.1% at stable exchange rates, to €623.1 million.
• The harvest season 2013 can be evaluated as a normal season and inventories increase again towards a normal level.
• Important efficiency improvements have been realised, which more than compensate the cost inflation.
• Further international integration of processes in the frozen division.
• Acquisition of several production facilities in order to execute the strategic plan. These allow the Group to optimize investments and to accelerate efficiency improvements.

Financial highlights - accounting year ending as per 31 March 2014

• REBITDA of continuing operations amounted to €51.4 million, +18.2% compared to the previous accounting year: +7.8% due to the improvement of the operational results; +13.6% as a result of the discontinuation of rents; and -3.2% as a result of a reduction of the economies of scale of corporate costs following the sale of the potato division.
• REBITDA margin increases from 7.1% to 8.3%.
• Due to the strengthening of equity by €29.8 million, the balance sheet of the Group is reinforced and as a result, financial ratios improved.
• The medium term financing is assured thanks to the successful issuance of a bond loan (€ 150 million) and the agreement on a working capital financing with a bank syndicate (€158 million).
• Net result of €61.8 million.
• Capital decrease of €39.5 million (€2.4 per share) on 30 September 2013.

Quote of Marleen Vaesen, CEO of Greenyard Foods:

'2013/14 was a good year of transformation for Greenyard Foods. We have realised a sales increase in stable markets and a strong increase in REBITDA and margin. This was largely achieved by an improvement of the operational results, thanks to a clear focus on operational excellence and customer management. The efficiency improvements are important to help offset the cost inflation. The success factor for this is the consistent follow-up of results and improvement processes, as well as efficiency-enhancing investments and the acquisition of production facilities. This is all done in the context of further international integration in the frozen division.

This good operating profit could be achieved because we are evolving to a more high-performance, goal-oriented organisation with unambiguous, aligned strategic priorities. Therefore, we have invested heavily in training for our people. We are confident that we have the right basis for further profitable growth in the years to come.'

Consolidated key figures profit and loss from continuing operations

(In €'000)	AY 13/14	AY 12/13
Sales REBITDA	623,120 51,439	612,087 43,524
REBIT EBIT	25,595 20,695	22,488 20,055
Financial result Profit / (loss) before tax Net profit / (loss) from continuing operations	-16,670 4,025 -3,515	-19,360 695 629
Net profit from discontinued operations	65,271	10,957
Consolidated profit	61,756	11,586

The condensed consolidated income statement in accordance with IFRS 5 is included in annex 1.

The results of the discontinued operations include two months of results of the potato division in AY 13/14, compared to 12 months in AY 12/13.

The results of continuing operations of AY 13/14 include 7 months of the results of the acquired production facilities of UFM and Noliko.

Comments on the annual results of continuing operations of 2013/2014

Sales

The increase of sales from continuing operations by +1.8% (or €11.0 million) comprises an increase of sales of 0.5% in the frozen division and of 4.4% in the canning division. At stable exchange rates, the sales increase would amount to +3.1%.

Operating result

The increase of the REBITDA from continuing operations by +18.2% (or €7.9 million) compared to the previous accounting year can be partly explained, +7.8% (or €3.4 million), due to the operational results including commercial results, both within the frozen and canning division. In addition, ceasing the rent of production facilities following the acquisition of production facilities had an impact of +13.6% (or €5.9 million) on the REBITDA and negative economies of scale of corporate charges have been absorbed by the continuing operations, following the deconsolidation of the potato division, in an amount of €-1.4 million (-3.2%).

Ceasing the rent of the acquired production facilities will have an impact of €10.0 million over an entire accounting year.

The REBIT from continuing operations increased by +13.8% (or € 3.1 million) compared to the previous accounting year. This increase can be nearly entirely explained by the operational results both within the frozen and canning division.

Non-recurring elements

The non-recurring charges from continuing operations amount to €-4.9 million. These include an impairment loss on part of machinery within the Belgian subsidiaries in an amount of €-3.4 million.

The remaining amount consists mainly of impairment losses in subsidiaries. The consolidated results include net non-recurring income of €60.4 million. These consist mainly of the gain realized on the sale of the potato division in an amount of €65.3 million.

Financial result

The improvement of the net financial result from continuing operations amounts to €2.7 million (€-16.7 million compared to €-19.4 million). This can be mainly explained by the decrease of the interest charges on average lower financial debts. The recurring financial result improved by €4.8 million compared to previous accounting year. In addition the financial result includes non-recurring charges (charges of the club deal financing which were previously capitalised) in an amount of €-2.1 million that were taken into charges at the repayment of the club deal financing.

Taxes

The total tax effect on the result from continuing operations amounted to €-7.5 million. During accounting year 2013/2014 no additional deferred tax assets have been recognized on tax losses carried forward.

Consolidated key figures per share

Earnings per share (in € per share)	AY 13/14	AY 13/14	AY 12/13
	Basic	Diluted 1	Basic	Diluted
Earnings per share	3.78	3.28	0.68	0.59
- Earnings per share from continuing operations	-0.18	-0.18	0.01	0.01
- Earnings per share from discontinued operations	3.96	3.46	0.67	0.58

The earnings per share from discontinued operations include entirely the earnings per share realised on the sale of the potato division.

1 The diluted earnings per share equals the basic earnings per share following the anti-dilutive character of the warrants cfr. IAS 33.41

Comments on the statement of financial position as per 31 March 2014 and 31 March 2013 ²

The increase of the tangible fixed assets by €107.1 million can be explained by the impact of the acquired production facilities of UFM, Noliko and in Boston (€+106.6 million) and the investments of the accounting period (€+29.0 million). This increase is partially compensated by the depreciation charges in the various entities (€-21.5 million), the impairment losses (€-3.9 million), and the remaining combined impact of transfers, disposals and foreign exchange rate fluctuations (€-3.1 million).

Inventories increased by €24.4 million, of which €16.7 million can be explained by the frozen division and €7.7 million by the canning division. The increase of inventories in both divisions is caused by an increased production volumes compared to previous accounting year. These increased production volumes, which are due to a normal production season, bring inventories back to normal levels.

Globally, equity (including non-controlling interests) amounts to 35.1% of the statement of financial position total and amounted to €211.9 million in total, representing an increase by €29.8 million. Equity as per 31 March 2014 was influenced positively by the inclusion of the results of the period in an amount of €61.8 million and was compensated partially by the share capital reduction of € 56.5 million as per 30 September 2013. This capital reduction includes a 'real' capital reduction in an amount of €39.5 million in total (or €2.4 per share) and a formal capital reduction in an amount of €17.0 million in order to compensate accumulated losses. Following the partial acquisition of the French production facilities of UFM as per end of August 2013, non-controlling interests were additionally acquired in an amount of €7.8 million.

The Group did not own treasury shares as per 31 March 2014 and 31 March 2013.

The financial debts from continuing operations increased slightly by €3.1 million compared to end of March 2013. However the composition of the financial debt in both accounting periods is different: as per the end of May 2013 the existing club deal financing has been fully repaid in an amount of €189.7 million and in addition, the related financial hedging instruments in an amount of €6.5 million have been repaid. As per 5 July 2013 a bond loan has been issued with a gross coupon of 5.0% fixed interest for a nominal amount of €150.0 million. On 16 December 2013 a working capital financing in an amount of €158.5 million was signed, of which as per year end an amount of €25.2 million was drawn as financial debt. This working capital financing was signed on the one hand to finance the peaks in working capital needs and on the other hand to support the growth of the Group. By issuing the bond loan and signing of the working capital financing, the foundations have been built for a stable financing structure in the medium term in order to realize the strategic plan.

The other debts decreased by €72.5 million, mainly due to the total payment of the outstanding debts with the potato division.

There are no changes in valuation rules with a significant impact on the Group's reported results or financial position (see annex 1).

² Presentation according to 'IFRS 5 Discontinued operations', as applied in the annual financial statements: see annex 2 for the presentation of the statement of financial position in accordance with IFRS 5.

Comments on the segment information

Frozen division (in € '000)	AY 13/14	AY 12/13	Difference
Sales	409,817	407,722	0.51%
REBITDA	26,149	21,289	22.83%
REBITDA-margin	6.38%	5.22%
REBIT	11,659	9,675	20.51%

The frozen division accounts for 65.8% of the consolidated revenue from continuing operations. Sales increased by +0.5% compared to previous accounting year, but would have increased by +2.4% in the case of stable exchange rates.

The REBITDA increased by +22.8% (+€4.9 million), of which +9.9% (or €2.4 million) can be explained by the operational results. In addition, important efficiency improvements have been realised, which help to compensate the cost inflation of the accounting year. These improvements are also reflected in an improvement of the REBITDA margin. In addition, +17.8% of the increase of the REBITDA can be explained by ceasing of the rent of the production facilities. Of this increase, -4.7% (or €-1.0 million) was compensated by the reduction of the economies of scale of corporate costs following the sale of the potato division.

The increase of the REBIT by +20.5% (or €2.0 million) can almost entirely be explained by the operational results of the division.

Canning division (in € '000)	AY 13/14	AY 12/13	Difference
Sales	213,303	204,346	4.38%
REBITDA	25,290	22,234	13.74%
REBITDA-margin	11.86%	10.88%
REBIT	13,936	12,813	8.76%

The canning division accounts for 34.2% of the consolidated revenue from continuing operations. Sales increased by +4.4% compared to previous accounting year.

The REBITDA increased by +13.7% (or €3.1 million), of which +3.9% (or €1.0 million) can be explained by the increase of sales compared to previous accounting year. The remaining +9.8% increase (or €2.1 million) can be explained by the ceasing of the rent following the acquisition of the production facilities.

The REBITDA margin of the canning division also increased from 10.9% to 11.9%. The increase of REBIT by 8.8% can be largely explained (4.4% or €0.5 million) by the increase of sales and the remaining part (4.4%) by the net effect of the replacement of the rent by depreciation charges.

Comments on statement of cash flows from continuing operations³

(All amounts in €'000)	31/03/2014 (12 months)	31/03/2013 (12 months)4	Evolution
Cash flow from operating activities	44,069	39,706	4,363
Increase in working capital (-)/ decrease in working capital (+)	-57,680	1,836	-59,516
= Net cash flow from operating activities	-13,612	41,542	-55,153
Cash flow from investing activities	62,095	-20,894	82,989
Cash flow from financing activities	-54,704	-14,268	-40,436
Effect of exchange rate fluctuations	-570	-146	-424
= Free cash flow	-6,792	6,234	-13,026
Cash and cash equivalents, opening balance	21,815	15,581
Cash and cash equivalents, closing balance	15,023	21,815

The free cash flow of the accounting year 2013/2014 amounted to €-6.8 million.

The increase of the working capital by €59.5 million can be mainly explained by the working capital of the acquired CECAB entities. This was previously financed by UFM and is included in the working capital of the group as from acquisition date onwards. In addition, inventories increased again to a normal level following a normal harvest season.

The positive cash flow from investing activities of €62.1 million includes €244.0 million for the sale of the potato division, but this amount has been reduced on the one hand by the settlement of the outstanding debts following the sale and on the other hand by €-122.9 million of investments, including the acquisition of production facilities.

The decreased cash flow from financing activities is mainly due to the repayment of the club deal financing of €201.1 million and the capital decrease of €39.5 million. In addition, there is an increase of €150.0 million following the issuance of the bond loan and €46.0 million which was drawn from the working capital financing agreement.

Declaration of the auditor

The auditor confirms that the audit, which is substantially completed, did not reveal any significant adjustments to the financial information included in the press release. Unless the circumstances would change, the auditor expects to issue an unqualified opinion.

Events after the balance sheet date

Between 31 March 2014 and the date on which this press release was released for publication, no significant events after the balance sheet date have occurred.

³ The production facilities of CECAB and Noliko are included in the cash flow statements for the period starting as from acquisition date 31 August 2013.

⁴ A reclassification has been made in the cash flow statement of 2012/2013 in order to correspond to the cash flow statement of accounting year 2013/2014.

Outlook⁵

The management and the Board of Directors are confident that the foundations have been built for further profitable growth in the years to come.

The publication of the quarterly results will be stopped in accordance with the Royal Decree of 26 March 2014. We will communicate on an occasional basis if applicable.

Financial calendar

• Availability of annual report 2013-2014: 23 July 2014 (17:45 hrs)
• General Assembly accounting year 2013-2014: 19 September 2014 (14:00 hrs)
• Announcement of half-year results of the

Group (01/04/2014-30/09/2014): 20 November 2014 (17:45 hrs)

For additional information, please contact Greenyard Foods:

Marleen Vaesen, CEO: Tel. +32 (0)9/255.32.30 E-mail: marleen.vaesen@greenyardfoods.com

Valerie Vanhoutte, CFO: Tel. + 32 (0)9/255.32.35 E-mail: valerie.vanhoutte@greenyardfoods.com

About Greenyard Foods

Greenyard Foods NV is active predominantly in the processing and commercialization of fruit and vegetables and ready-to-eat food, both deep-frozen and canned. The Group has 15 production sites in 6 different countries (Belgium, France, United Kingdom, Poland, Germany and Hungary) and subsidiaries and sales offices on five continents. (www.greenyardfoods.com)

⁵ 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.

Annex 1: Condensed consolidated income statement in accordance with IFRS 5

Consolidated income statement (in thousands of €)	AY 13/14	AY 12/13
CONTINUING OPERATIONS
Sales	623,120	612,087
Increase/decrease (-) in inventories: finished goods and work in progress	22,925	3,714
Other operating income	12,962	12,012
Raw materials, consumables and goods for resale	-370,152	-344,424
Services and other goods	-143,681	-148,293
Personnel costs	-87,818	-85,296
Depreciation and amortization	-25,897	-20,271
Impairment losses on assets	-4,440
Impairments, write-offs	243	-681
Provisions	-3,323	-1,128
Other operating charges	-3,244	-7,665
Operating result (EBIT)	20,695	20,055
Non-recurring income
Non-recurring expenses	-4,900	-2,433
Operating result before non-recurrings (REBIT)	25,595	22,488
Financial income	2,611	2,201
Financial expenses	-19,281	-21,561
Result before taxes	4,025	695
Taxes	-7,540	-66
Profit (loss) of the period from continuing operations	-3,515	629
DISCONTINUED OPERATIONS
Profit (loss) of the period from discontinued operations	65,271	10,957
PROFIT (LOSS) OF THE PERIOD	61,756	11,586
Attributable to:
- The shareholders of Greenyard Foods (the 'Group')	62,306	11,102
- Non-controlling interests	-550	484

Profit (loss) from discontinued operations (in thousands of €)	AY 13/14	AY 12/13
Sales	51,953	267,490
Increase/decrease (-) in inventories: finished goods and work in progress	-5,914	15,685
Other operating income	2,888	6,682
Gain on disposal of potato division	65,471
Expenses (operating and financial)	-47,791	-273,210
Loss on the remeasurement to fair value less costs to sell
Result before taxes	66,443	16,647
Attributable income tax expense	-1,172	-5,690
Profit / (loss) of the period from discontinued operations	65,271	10,957
Attributable to:
- The shareholders of Greenyard Foods (the 'Group')	65,271	10,956
- Non-controlling interests

In the accounting period ending 31 March 2014 no major changes took place in the valuation rules compared with the previous reporting period.

Annex 2: Condensed consolidated statement of financial position in accordance with IFRS 5

In accordance with the planned sale of the potato division, which was announced at the end of October 2012, the assets and liabilities related to the assets of the potato division were as per 31 March 2013 included as 'assets classified as held for sale' and 'liabilities related to assets classified as held for sale'. As per 31 May 2013 the Lutosa division has been sold to McCain.

			Evolution in
(All amounts in € '000)	31/03/2014	31/03/2013	%
Assets
Non-current assets	280,831	180,788	55.34%
Intangible fixed assets	22,977	24,322	-5.53%
Goodwill	10,258	10,233	0.25%
Tangible fixed assets	238,597	131,449	81.51%
Financial fixed assets	39	3,350	-98.85%
Other amounts receivable after one year	72	726	-90.07%
Deferred tax asset	8,888	10,708	-17.00%
Current assets	323,944	603,200	-46.30%
Inventories	224,905	200,516	12.16%
Amounts receivable	84,015	85,060	-1.23%
Cash at bank and in hand	15,023	21,815	-31.13%
Derivatives		561	-100.00%
Assets classified as held for sale		295,248	-100.00%
Total	604,775	783,988	-22.86%
Equity and liabilities
Equity*	211,936	182,181	16.33%
Provisions and deferred tax liabilities	28,454	27,991	1.66%
Financial debts to credit institutions (ST)	49,560	197,572	-74.92%
Financial debts to credit institutions (LT)	7,444	2,167	243.46%
Subordinated loan (LT)	35,707	39,089	-8.65%
Subordinated loan (ST)		400	-100.00%
Bond loan (LT)	149,621		#DIV/0!
Other amounts payable (LT)	371	3,128	-88.12%
Other amounts payable (ST)	121,682	231,831	-47.51%
Liabilities related to assets classified as held for sale		99,629	-100.00%
Total	604,775	783,988	-22.86%
Net financial debt**	227,308	215,150	5.65%
Working capital	206,630	174,975	18.09%
* including non-controlling interests
** including (subordinated) bond loans

Annex 3: Definitions

Liquidity	Current assets / current liabilities.
Non-recurring elements	Operating charges and revenue that are related to restructuring programs, impairment losses, environmental provisions or other events and transactions that are clearly distinct from the normal activities of the Group.
REBIT	EBIT + non-recurring result.
REBITDA	EBITDA + non-recurring result.
AY 13/14	Accounting year 2013/2014.
AY 12/13	Accounting year 2012/2013.
REBITDA-margin	REBITDA/ sales