Greenyard NV — Interim / Quarterly Report 2013

Nov 21, 2013

Greenyard Foods grows in sales and operating result and invests further in strategic growth

Gent, Belgium, 21st of November 2013 – Greenyard Foods (Euronext Brussels: GRYFO) has announced today its results over the half year ending on 30 September 2013, presented in accordance with IAS 34 'Interim financial statements'.

Operational highlights - first half of the year ending as per 30 September 2013

• The Group has realised a sales growth of +3.1% compared to the previous year. This was due to a growth of +2.2% in the frozen division and +4.7% in the canning division.
• From an agronomic point of view, the start of the year was difficult in all parts of Europe, with late sowing, shorter harvesting periods and an autumn with lots of rain in Western Europe and early frost in Eastern Europe. This results in a season with large fluctuations and, on average more towards a shortage in Europe. The final balance will only be known at the end of December.
• Acquisition of production facilities in order to execute the strategic plan. These allow the Group to optimize investments in the production units and to accelerate efficiency improvements.

Financial highlights - first half of the year ending as per 30 September 2013

• Sales of continuing operations of €295.6 million, +3.1% compared to the first half of the previous accounting year.
• REBITDA of continuing operations amounted to €24.0 million, +6.3% compared to the previous accounting year. +2.5% due to operational results and +3.8% as a result of the discontinuation of rents due to the acquisition of production facilities.
• Net result of €62.2 million.
• Capital decrease of €39.5 million on 30 September 2013.

Quote of Marleen Vaesen, CEO of Greenyard Foods:

"We have made a significant step forward in achieving our strategic priorities. After the sale of the potato division, the Group made a new start with a new name, Greenyard Foods. We have invested heavily in acquiring production facilities to accelerate efficiency improvements and to improve the cash flow.

We are moderately satisfied with the results of the first half of the year. On the one hand, we have achieved growth in sales and operating income and laid the foundations for further improvements. On the other hand, we have realized a significant gain on the sale of the potato division, which has strengthened our equity and has allowed us to perform a capital reduction."

Consolidated results over the first half of the year

Preliminary remark: consolidation scope

The consolidated key figures include the consolidated management figures of both the 'continuing' activities (subconsolidation frozen and canning division) and 'discontinued' activities (subconsolidation potato division). In addition, the key figures of 'continuing' and 'discontinued' operations are presented separately according to 'IFRS 5 discontinued operations'.

In 2013 the consolidated income statement includes 1 month (September 2013) of the results of the acquired production facilities of UFM and Noliko.

The results of the discontinued operations include two months of results of the potato division compared to 6 months in the previous accounting year. As per 31 May 2013 these activities were sold to McCain Foods. In the previous accounting year (closing as per 30 September 2012) these discontinued operations (potato segment) were, according to 'IFRS 5 Discontinued operations' classified and accounted for as a disposal group related to discontinued operations. The results of these discontinued operations are consequently included separately in the consolidated income statement and are disclosed in "Annex 1 Discontinued operations".

Consolidated key figures: half year figures profit and loss as per 30 September 2013 and 30 September 2012 (see annex 1¹ )

(All amounts in € '000)	H1 AY 13/14		01/04/13 - 31/05/13		H1 AY 12/13
	Consol idated	Continuing operations under IFRS 5	Discontinued operations under IFRS 5	Consol idated	Continuing operations under IFRS 5	Discontinued operations under IFRS 5
Sales	346,983	295,559	51,953	417,569	286,792	131,786
REBITDA	24,812	24,034	778	39,041	22,617	16,424
Operating profit before
non-recurrings (REBIT)	13,292	12,605	686	26,216	14,034	12,182
Financial result	-8,363	-8,814	450	-9,640	-10,780	1,140
Profit (loss) from continuing
ope-rations before tax	67,673	1,066	66,608	15,016	1,888	13,128
Profit (loss) for the period	62,171	-3,264	65,435	10,384	1,553	8,831
Share of the Group	62,284	-3,151	65,435	10,307	1,477	8,830
Non-controlling interests	-113	-113		77	76	1

Note: columns 1,4: Consolidated management figures that contain both the 'continuing' activities and 'discontinued' activities, which does not take into account the presentation according to IFRS 5 'Discontinued operations' as applied in the half-year financial statements (IAS 34). The consolidated management figures as per 30 September 2013 were not subject to a limited review of the auditor.

Note: columns 2,3,5,6: Presentation of income statement of Greenyard Foods Group considering 'continuing' activities (frozen segment and canning segment) and 'discontinued' activities (potato segment) according to IFRS 5 'Discontinued operations': see further explanation under 'Consolidation scope' above.

¹ For a further discussion of the figures we refer the reader to the half-year consolidated financial statements (IAS 34) on our website www.greenyardfoods.com under the heading "Financial information > Reports > half-year consolidated financial statements 2013-2014" (available as from 21 November 2013 onwards).

Sales

The increase of sales from continuing operations by +3.1% (or €8.8 million) comprises an increase of sales of 2.2% in the frozen division and of 4.7% in the canning division.

Consolidated sales are not comparable to the previous accounting year due to the deconsolidation of the potato division.

Operating result

The increase of the REBITDA from continuing operations by +6.3% (or €1.4 million) compared to the first half of the previous accounting year can be partly explained, +3.4% (or €0.8 million), by ceasing the rent of production facilities within both divisions following the acquisition of production facilities. The remaining increase of the REBITDA can be mainly explained by the increase of sales within the canning division. Within the continuing operations, the Group succeeded in absorbing the corporate costs that were previously carried by three divisions.

It is expected that the REBITDA from continuing operations for the second half of the year will be affected positively by €5.6 million by ceasing the rent, but the deviation of the REBIT will be limited (€0.5 million) because the rent and depreciation are not significantly different. REBIT is adversely affected by a number of non-cash expenses.

Consolidated REBITDA and REBIT are not comparable to previous accounting year as a result of the deconsolidation of the potato division.

Non-recurring elements

The consolidated results include net non-recurring income of €62.7 million. These consist of the gain realized on the sale of the potato division in an amount of €65.5 million and non-recurring charges from continuing operations in an amount of €-2.8 million. These include an impairment loss on part of machinery within the Belgian subsidiary in an amount of €-1.5 million, €-0.7 million within the British subsidiary and €-0.5 million within the German subsidiary.

Financial result

The improvement of the net financial result from continuing operations for the first 6 months ending as per 30 September 2013 amounts to €2.0 million (€-8.8 million compared to €-10.8 million). This can be mainly explained by the decrease of the interest charges following the repayment of the club deal financing in May 2013. In addition 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.

Taxes

The total tax effect on the result from continuing operations over the first half of the current accounting year amounted to €-4.3 million. The income taxes amount to €-3.4 million whereas the deferred taxes (without cash effect) amount to €-0.9 million.

Consolidated key figures per share

Earnings per share (in € per share)	H1 AY 13/14	H1 AY 13/14	H1 AY 12/13	H1 AY 12/13
	Basic	Diluted 2	Basic	Diluted
Earnings per share	3.79	3.28	0.63	0.55
- Earnings per share from continuing operations	-0.19	-0.19	0.09	0.08
- Earnings per share from discontinued operations	3.98	3.47	0.54	0.47

The earnings per share from discontinued operations in the first half of the accounting year include entirely the earnings per share realised on the sale of the potato division.

² The diluted earnings per share equals the basic earnings per share following the anti-dilutive character of the warrants cfr. IAS 33.41

Consolidated key figures: statement of financial position as per 30 September 2013 and 31 March 2013 ³

The increase of the tangible fixed assets by €109.1 million can be explained by the impact of the acquired production facilities of UFM, Noliko and in Boston (€+108.7 million) and the investments of the accounting period (€+11.7 million). This increase is partially compensated by the depreciation charges in the various entities (€-9.5 million), the impairment losses (€-1.9 million), and the remaining combined impact of transfers, disposals and positive foreign exchange rate fluctuations (€+0.1 million).

Inventories increased by €52.6 million, of which €51.3 million can be explained by the frozen division and only €1.3 million by the canning division. The seasonality and the high production levels during the first half of the accounting year lead to high inventory levels in general in the frozen division as per the end of September.

Globally, equity (including non-controlling interests) amounts to 32.7% of the statement of financial position total and amounted to €212.1 million in total, representing an increase by €30.0 million. Equity as per 30 September 2013 was influenced by the inclusion of the results of the period in an amount of €62.2 million and was compensated partially by the share capital reduction of € 56.5 million as per 30 September 2013 and the other comprehensive income in an amount of €-0.4 million. 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. In accordance with IFRS Standards the costs of the capital decrease of September 2013 were deducted from the capital (€-0.1 million). 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 €7.9 million.

The Group did not own treasury shares as per 31 March 2013 and 30 September 2013.

The financial debts from continuing operations decreased by €6.8 million, which is the effect of several elements. As per the end of May the existing club deal financing has been fully repaid in an amount of €189.7 million (see 'Consolidation scope'). 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. In accordance with IFRS the issuance costs (€-0.3 million) were deducted from the loan. Stock financing has been used for the French affiliates of UFM for an amount of €28.4 million and the existing financial debts of the acquired production facilities have been taken over in an amount of €10.6 million. The subordinated loans amount to €40.0 million as per 30 September 2013, including €35.2 million bond loans with warrants.

The other debts decreased by €55.7 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).

5

³ Presentation according to 'IFRS 5 Discontinued operations', as applied in the half-year financial statements (IAS 34): see annex 3 for the presentation of the statement of financial position in accordance with IFRS 5.

Consolidated key figures: segment information

The frozen division accounts for 64.6% of the consolidated revenue from continuing operations. The REBITDA increased by +4.8% (€0.6 million), of which +4.6% (or €0.5 million) can be explained by ceasing of the rent of the production facilities. The decrease of the REBIT is caused by a number of non-cash costs, whereby the depreciations on the existing assets increased by €0.5 million.

Frozen division (in € '000)	H1 AY 13/14	H1 AY 12/13	Difference
Sales	190,945	186,918	2.20%
REBITDA	13,026	12,429	4.80%
REBITDA-margin	6.82%	6.65%
REBIT	6,694	8,259	-18.90%

The canning division accounts for 35.4% of the consolidated revenue from continuing operations. The REBITDA increased by +8.0% (or €0.8 million), of which +5.0% (or €0.5 million) can be explained by the increase of sales. The remaining +3.0% increase (or €0.3 million) can be explained by the ceasing of the rent following the acquisition of the production facilities. The REBITDA margin remains stable when one does not take into account the ceasing of rent. The net effect of the replacement of the rent by depreciation charges has an immaterial impact on the REBIT.

Canning division (in € '000)	H1 AY 13/14	H1 AY 12/13	Difference
Sales	104,584	99,875	4.70%
REBITDA	11,008	10,188	8.00%
REBITDA-margin	10.52%	10.20%
REBIT	5,912	5,774	2.30%

Consolidated key figures: statement of cash flows based on consolidated management figures

(All amounts in €'000)	30/09/2013 (6 months)	30/09/2012 (6 months)	Evolution
Cash flow from operating activities	19,052	30,486	-11,434
Increase in working capital (-)/ decrease in working capital (+)	-101,290	23,641	-124,931
= Net cash flow from operating activities	-82,238	54,127	-136,365
Cash flow from investing activities	133,857	-14,667	148,524
Cash flow from financing activities	-64,268	-11,779	-52,489
Effect of exchange rate fluctuations	-484	-76	-408
= Free cash flow	-13,133	27,605	-40,738
Cash and cash equivalents, opening balance	21,815	38,356
Cash and cash equivalents, closing balance	8,682	65,962

The free cash flow of the accounting year decreased by €-13.1 million. This free cash flow is strongly influenced by transactions, such as the sale of the potato division, the repayment of the club deal financing, the issuance of the bond loan and the acquisition of production facilities.

Declaration of the auditor

The limited review of the interim financial information executed by the auditor did not reveal any specific remarks.⁴

Events after the balance sheet date

Between 30 September 2013 and the date on which this press release was released for publication, the following significant events after the balance sheet date have occurred:

Working capital financing

A working capital financing in an amount of €150.0 million was approved in November by the Board of Directors and the credit committees of the banks in the bank consortium. At the moment of the press release the documentation phase is finished in order to complete the credit in the coming weeks.

Repayment of the subordinated loan to De Mijnen NV

On 31 October 2013 the subordinated loan of Scana Noliko Group towards De Mijnen NV was repaid in advance in an amount of €4.8 million. The initial repayment date was foreseen for 31 December 2016. Following this repayment, these loans were presented in the balance sheet as short term loans as per 30 September 2013.

Valerie Vanhoutte is appointed as CFO of Greenyard Foods NV

Valerie Vanhoutte (1975) was appointed as CFO of Greenyard Foods NV as from the 1st of November 2013. In her role as CFO, she will also be responsible for investor relations.

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

⁴ For a complete version of the limited review report we refer the reader to the half-year consolidated financial statements (IAS 34) on our website www.greenyardfoods.com under the heading "Financial information > Reports > half-year consolidated financial statements 2013-2014" (available as from 21 November 2013 onwards).

Outlook⁵

The Group expects the REBITDA result from continuing operations to be better than previous year, when the REBITDA result from continuing operations amounted to approximately €43.5 million. In addition the Group continues to build the foundations in order to achieve further growth in sales and profitability for the long term.

Financial calendar

• Trading update Q3 accounting year 2013-2014: 30 January 2014 (17:45 hrs)

• Announcement of annual results of the

• Group (01/04/2013-31/03/2014): 20 May 2014 (17:45 hrs)
• Availability of annual report 2013-2014: 23 July 2014 (17:45 hrs)
• Trading update Q1 accounting year 2014-2015: 23 July 2014 (17:45 hrs)

• Announcement of half-year results of the

• General Assembly 2013-2014: 19 September 2014 (14:00 hrs)

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 statement of financial position in accordance with IFRS 5

Consolidated income statement (in thousands of €)	H1 AY 13/14	H1 AY 12/13
CONTINUING OPERATIONS
Sales	295,559	286,792
Increase/decrease (-) in inventories: finished goods and work in progress	56,605	14,056
Other operating income	7,144	6,405
Raw materials, consumables and goods for resale	-212,954	-165,795
Services and other goods	-75,146	-73,981
Personnel costs	-44,164	-41,681
Depreciation and amortization	-11,235	-9,620
Impairment losses on assets	-2,423
Impairments, write-offs	-196	1,017
Provisions	3	-115
Other operating charges	-3,314	-4,411
Operating result (EBIT)	9,880	12,667
Non-recurring income
Non-recurring expenses	-2,726	-1,366
Operating result before non-recurrings (REBIT)	12,605	14,034
Financial income	1,359	1,369
Financial expenses	-10,172	-12,148
Result before taxes	1,066	1,888
Taxes	-4,330	-335
Profit (loss) of the period from continuing operations	-3,264	1,553
DISCONTINUED OPERATIONS
Profit (loss) of the period from discontinued operations	65,435	8,831
PROFIT (LOSS) OF THE PERIOD	62,172	10,384
Attributable to:
- The shareholders of Greenyard Foods (the 'Group')	62,285	10,307
- Non-controlling interests	-113	77

Profit (loss) from discontinued operations (in thousands of €)	H1 AY 13/14	H1 AY 12/13
Sales	51,953	131,786
Increase/decrease (-) in inventories: finished goods and work in progress	-5,914	-1,636
Other operating income	2,888	2,997
Gain on disposal of potato division	65,471
Expenses (operating and financial)	-47,791	-120,019
Loss on the remeasurement to fair value less costs to sell
Result before taxes	66,607	13,128
Attributable income tax expense	-1,172	-4,297
Profit / (loss) of the period from discontinued operations	65,435	8,831
Attributable to:
- The shareholders of Greenyard Foods (the 'Group')	65,435	8,830
- Non-controlling interests		1

In the accounting period ending 30 September 2013 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)	30/09/2013	31/03/2013	%
Assets
Non-current assets	283,723	180,788	56.94%
Intangible fixed assets	24,802	24,322	1.97%
Goodwill	10,241	10,233	0.08%
Tangible fixed assets	240,565	131,449	83.01%
Financial fixed assets	44	3,350	-98.67%
Other amounts receivable after one year	500	726	-31.18%
Deferred tax asset	7,571	10,708	-29.29%
Current assets	365,174	603,200	-39.46%
Inventories	253,104	200,516	26.23%
Amounts receivable	103,305	85,060	21.45%
Cash at bank and in hand	8,682	21,815	-60.20%
Derivatives	83	561	-85.22%
Assets classified as held for sale		295,248	-100.00%
Total	648,898	783,988	-17.23%
Equity and liabilities
Equity*	212,150	182,181	16.45%
Provisions and deferred tax liabilities	27,009	27,991	-3.51%
Financial debts to credit institutions (ST)	33,861	197,572	-82.86%
Financial debts to credit institutions (LT)	8,892	2,167	310.27%
Subordinated loan (LT)	35,193	39,089	-9.97%
Subordinated loan (ST)	4,802	400	1099.99%
Bond loan (LT)	149,680		100.00%
Other amounts payable (LT)	1,204	3,128	-61.50%
Other amounts payable (ST)	176,106	231,831	-24.04%
Liabilities related to assets classified as held for sale		99,629	-100.00%
Total	648,898	783,988	-17.23%
Net financial debt**	223,663	215,150	5.92%
Working capital	198,907	174,975	13.12%
* 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.
H1 AY 13/14	First half of accounting year 2013/2014.
H1 AY 12/13	First half of accounting year 2012/2013.