Valsoia — Earnings Release 2019

Sep 16, 2019

PRESS RELEASE

Valsoia Board of Directors approve 6-month Interim Report (January - June 2019)

6.6% sales revenues decrease on like-for-like basis

EBITDA Margin increases to 14.4%

Positive net financial position of € 20.4 million in line with NFP at year end 2018 - up € 5.3 million vs year end June 2018

Bologna, 16 September 2019

Today the Board of Directors of Valsoia S.p.A. (MTA: VLS) met under the chairmanship of Lorenzo Sassoli de Bianchi, and approved the Interim Report at June 30, 2019.

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Chairman Lorenzo Sassoli de Bianchi commented: "We are satisfied with the results of the first half of 2019 which are mainly characterized by a positive NFP and growth in the Ebitda Margin, despite a slight contraction in Group revenues, mainly due to the negative trend of the alternative vegetable markets and the negative seasonality of the ice cream market. These indices show how the measures implemented in the period and in previous years in terms of efficiency of the business go in the right direction, also evidenced, by the good and continuous annual cash generation".

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MAIN ECONOMIC AND FINANCIAL FIGURES

Income Statement Ratios	June 30, 2019		June 30, 2018		Change
(Euro 000)	Euro	%	Euro	%	Euro	%
Sales revenues (like for like)	37,074	100.0	39,709	93.2	(2,635)	(6.6)
Sales revenues (Pomodorissimo Santa Rosa) (*)	-3	0	2,918	6.8	(2,921)	n.a
Sales revenues (total)	37,071	100.0	42,627	100.0	(5,556)	(13.0)
Value of Production	38,651	104.3	42,586	99.9	(3,935)	(9.2)
Gross operating result (Ebitda) (**)	5,355	14.4	5,908	13.9	(553)	(9.4)
Operating result (Ebit)	4,183	11.3	4,867	11.4	(684)	(14.0)
Net profit for the period	3,002	8.1	3,475	8.2	(473)	(13.6)

(*) The Company has discontinued sales of the "Pomodorissimo Santa Rosa" Line starting from November 2018 following the Licensing concession of the relevant brand to third parties

(**) Interim result not defined as an accounting measure under the IFRS accounting standards and therefore the criteria for defining this parameter may not be consistent with those adopted by other companies.

Description (Euro 000)	June 30, 2019	December 31, 2018	June 30, 2018
Cash	2	3	4
C/C and bank deposits	28,477	29,278	25,995
Short-term financial assets	3,000	3,000	0
Total liquidity (A)	31,479	32,281	25,999
Current financial payables (B)	(2,587)	(1,962)	(720)
Short-term payables for operating leases (IFRS 16)	(535)	0	0
Short-term net financial position (C=A-B)	28,357	30,319	25,279
Medium long-term financial payables (D)	(7,503)	(8,745)	(10,087)
Medium long-term payables for operating leases (IFRS 16)	(421)	0	0
NET FINANCIAL POSITION (E=C+D)	20,433	21,574	15,192

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IFRS 16 ADOPTION

Starting from the 2019 financial year, the adoption of the new accounting standard IFRS 16 – Leasing – has become mandatory, therefore the preparation of this Half-Year Report was carried out in line with the provisions of this new accounting standard.

From 1 January 2019, the Company adopted IFRS 16 Leasing using the modified retroactive application method, therefore, information relating to 2018 has not been restated.

Regarding the impacts deriving from the application of IFRS 16, at June 30, 2019 there was an increase in the rightof-use assets and a corresponding negative effect on net financial debt of 956 thousand euros

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INCOME STATEMENT AND BALANCE SHEET DATA AT 30 JUNE 2019

In the first half of 2019, like for like sales revenues - net of sales of the "Pomodorissimo" Santa Rosa brand owned by Valsoia S.p.A., granted in licensing to third parties since November 2018 - amounted to 37.1 million euros compared to 39.7 million euros for the same period in 2018 showing a 6.6% decrease.

Revenues from the "Pomodorissimo" brand amounted to 2.9 million euros for the first half of 2018.

The slowdown in revenues in the first 6 months of the year is attributable to the current negative performance of the "alternative vegetable" food markets, where the Company operates as a leader with the "Valsoia Bontà & Salute" brand, which has, in fact, in the six-month period ending in June 2019, showed a trend in consumption that decreased significantly.

Despite the temporarily complex and settling scenario for "alternative vegetable", the positive performance of the "Valsoia Bontà & Salute" brand emerges, as it continues to report a marked growth in its market shares in each segment it belongs to. Furthermore, it is important to highlight that the fundamentals of the " alternative vegetable" markets are healthy, with the number of consuming families still constantly growing.

With regards to the food markets controlled by the company (jams, cereals and sweeteners), the consumption trend

was instead stable as were the corresponding trends in the Company's Food brands.

During the period, the Company managed and improved, consistent with the performance of the markets and revenues, both the costs of sales and operations, the commercial expenses (marketing, trade marketing and sales) together with the control of structural costs and to the improvement of Net Working Capital.

The EBITDA for the first half amounted to 5.4 million euros, decreasing in absolute terms by 0.5 million euros compared to the same period of 2018, but improving in terms of EBITDA margin equal to 14.4% versus 13.9% as at 30 June 2018.

The Net Profit for the period, as a result of the foregoing, amounts to 3 million euros, down compared the same period in 2018 for 0.5 million euros.

As of June 30, the Company's overall net financial position is positive, substantially in line with December 31, 2018 if considering the total effect of 956 thousand euros that "weighs" on the Net Financial Position on 06.30.2019 due to the representation of the accounting effects of the application of IFRS 16 for the first time, with regard to existing operating leases.

The increase in the Net Financial Position compared to the same period of the previous year is essentially due to the net cash flows generated by the management of the company in the previous 12 months, net of investments and dividend distribution.

In the first half of 2019, current operations continued the positive cash generation with an operating cash flow of € 5.3 million. In the same period, the increase in net working capital, physiological considering the seasonal nature of the activities related to ice cream, absorbed liquidity for around 300 thousand euros and investments were made for 1.1 million euros. Valsoia, in line with its policy, distributed dividends for 4.03 million euros in the period.

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PERFORMANCE OF PRODUCT FAMILIES AT 30 JUNE 2019

Descrizione	June 30, 2019		June 30, 2019	Change
(dati in migliaia di Euro)	Euro	%	Euro	%	%
Health division products (a)	21,867	59.0%	24,273	56.9%	-9.9%
Food division products (b)	10,448	28.2%	10,483	24.6%	-0.3%
Others	2,301	6.2%	2,213	5.2%	+4.0%
TOTAL REVENUES ITALY	34,616	93.4%	36,969	86.7%	-6.4%
Foreign revenues	2,458	6.6%	2,740	6.4%	-10.3%
TOTAL REVENUES (c)	37,074	100.0%	39,709	93.1%	-6.6%
Pomodorissimo Santa Rosa	-3	Ns	2,918	6.9%	Ns
TOTAL REVENUES	37,071	100.0%	42,627	100.0%	-13.0%

(a) Brands: Valsoia Bontà e Salute, Vitasoya, Naturattiva

(b) Brands: SantaRosa (jams), Diete.Tic, Weetabix

(c) Total revenues excluding the "Pomodorissimo" Santa Rosa brand (italian and foreign)

The Health Division reported a decrease in sales revenues of € 2.4 million compared to the first half of 2018, essentially due to the reduction on the "drinks" and "ice cream" lines.

In particular, for this reason the negative trend is a consequence of the adverse weather conditions recorded in the month of May which negatively affected the entire market of packaged ice cream (dairy and non-dairy) without the possibility of a recovery in June.

The delay of the "drinks" line is instead due to a slowdown in the reference market due to the trend adjustments and the anomalous crowding already mentioned several times. In the segments of soya-based and rice-based beverages, the consumption shares of Valsoia Bontà & Salute are up compared to the same period of the previous year.

Foreign sales also fell behind in the first half of the year, for around - 200,000 euros, due to the lower sale of ice cream in Germany, again due to bad weather in May. On the other hand, regarding exports, sales in the remaining countries subject to exports by the Company are positive.

The Company continued its Consumer and Trade Marketing policies in line with the Plans, optimizing the related costs and expenses in line with market trends. The following are some of the actions implemented by the company during the first half of the year:

• began the presentation and the insertions at the Retailers of an important Premium Vegetable Line ("con il cuore" line) with health contents related to protein contribution and to cholesterol control;
• launched a line of vegetable ice creams, based on coconut and rice, on the market, characterized by a reduced calorie content;
• gradually started the distribution of a line of jams with a lower sugar content.
• Continued the distribution of a new natural super supplement in the pharmaceutical channel under the BlueNyx Brand, which favors the natural and regenerating path of sleep. This new launch is also supported by a significant advertising investment from the second half of May until the end of December.
• in foreign markets and, in particular, in the United States of America, distribution expansion continued with new retailers together with the launch of some novelties in the ice-cream market in terms of new tastes and formats.
• Continued the penetration into the Out Of Home channel with some interesting agreements also in the field of on-board suppliers, such as, for example, Costa Cruises and MSC.
• finally, a "reputational" research was carried out conducted on 388 Italian companies through personal interviews conducted on a sample of 30,000 individuals. The reputation level of the Valsoia Company (year 2018) was very positive and up compared to the previous year; the Company is in 17th place in the decreasing ranking of the main Groups active in the Fast Moving Consumer Goods Italy.

/ EVENTS AFTER THE CLOSURE OF THE PERIOD AND OUTLOOK

In the period following the closing of the Half-Year Financial Report, there was a substantial stability in sales revenues, with a recovery, compared to the same period of the previous year, of sales abroad.

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The Manager Responsible for Preparing the Company's Financial Reports, Mr. Nicola Mastacchi, hereby declares, pursuant to Article 154 bis, paragraph 2 of the Consolidated Law on Finance, that the accounting information contained in this press release matches the documentary results, books and accounting records.

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The Interim Management Report at June 30, 2019 will be made available to the public at the Company's registered office and the storage mechanism () within the terms and in the manner prescribed by current legislation. The aforementioned documents will also be available for consultation in the Investor Relations section of the website (www.valsoiaspa.com).

Valsoia S.p.A. (www.valsoia.it) founded in 1990, has developed the Italian market of soy-based vegetable products growing from an initial turnover of around 350,000 euros (1990) to the current 83.5 million euros1 and today is one of the reference companies in the health food market in Italy. For the consumer, the Valsoia brand represents innovation and attention to health through good, natural and healthy products. From 14 July 2006, Valsoia S.p.A. is listed on the MTA market organized and managed by Borsa Italiana S.p.A.

For more information:
Valsoia S.p.A.
Nicola Mastacchi	Tel. +39 051 6086800
CDR Communication
Silvia Di Rosa	Cell +39 335 78 64209
Martina Zuccherini/Angelo Brunello	Cell +39 329 211 77752

Attachments:

• Balance Sheet
• Income Statement
• Comprehensive income statement
• Statement of Cash Flows
• Statement of changes in Shareholders' Equity

¹ Source: 2018 Financial Statements

FIGURES IN EUROS

STATEMENT OF FINANCIAL POSITION	Notes	June 30, 2019	December 31, 2018 (*)
CURRENT ASSETS
Cash and cash equivalents	(1)	28,479,308.0	29,281,198.0
Current financial assets	(2)	3,000,000.0	3,000,000.0
Trade receivables, net	(3)	13,133,875.0	8,665,370.0
Inventories	(4)	8,000,560.0	6,493,156.0
Deferred tax assets			0.0
Other current assets	(5)	3,427,311.0	3,681,509.0
Total current assets		56,041,054.0	51,121,233.0
NON-CURRENT ASSETS
Goodwill	(6)	8,198,307.0	8,198,307.0
Intangible assets	(7)	23,602,681.0	23,743,606.0
Property, plant and equipment	(8)	9,939,990.0	9,862,570.0
Rights of use assets	(9)	955,188.0	0.0
Financial assets	(10)	110,000.0	110,000.0
Deferred tax assets	(11)	0.0	324,357.0
Other non-current assets	(12)	157,078.0	153,078.0
Total non-current assets		42,963,244.0	42,391,918.0
TOTAL ASSETS		99,004,298.0	93,513,151.0

STATEMENT OF FINANCIAL POSITION	Notes	June 30, 2019	December 31, 2018 (*)
CURRENT LIABILITIES
Current payables due to banks	(13)	2,587,325	1,962,684
Short term payables for operating leases (IFRS 16)	(14)	534,831	-
Trade payables	(15)	15,952,895	11,241,350
Tax payables	(16)	2,231,629	1,669,948
Provision for risks	(17)	52,647	51,973
Other current liabilities	(18)	2,526,973	2,069,040
Total current liabilities		23,886,300	16,994,995
NON-CURRENT LIABILITIES
Non-current payables due to banks	(19)	7,503,454	8,745,310
Other non-current payables (IFRS16)	(20)	421,033	-
Provision for deferred taxes	(21)	365,959	-
Provision for post-employment benefits	(22)	390,603	418,287
Total non-current liabilities		8,681,049	9,163,597
SHAREHOLDERS' EQUITY	(23)
Share Capital		3,517,141	3,503,025
Legal Reserve		700,605	700,605
Revaluation reserve		23,103,715	16,765,093
IAS/IFRS adjustments reserve		(1,202,290)	(1,202,290)
Other reserves		37,315,897	37,490,166
Profit/(loss) for the period		3,001,881	10,097,960
Total Shareholders' equity		66,436,949	67,354,559
TOTAL		99,004,298	93,513,151

FIGURES IN EUROS

INCOME STATEMENT	Notes	June 30, 2019	June 30, 2018 (*)
VALUE OF PRODUCTION	(24)
Revenue from sales and services		37,070,871	42,626,826
Changes in inventories of finished goods		997,789	(235,716)
Other revenue and income		582,234	195,246
Total value of production		38,650,894	42,586,356
OPERATING COSTS	(25)
Purchases		(19,465,829)	(21,898,996)
Services		(8,652,060)	(9,488,580)
Cost of use of assets owned by other, of third party assets		(41,252)	(275,025)
Labour costs		(5,041,381)	(4,868,044)
Changes in raw materials inventory		509,616	456,824
Other overheads		(604,547)	(604,831)
Total operating costs		(33,295,453)	(36,678,652)
GROSS OPERATING RESULT		5,355,441	5,907,704
Amortisation, depreciation and write-downs of fixed assets	(26)	(1,172,008)	(1,040,381)
NET OPERATING RESULT		4,183,433	4,867,323
Net financial income/(charges)	(27)	(80,495)	(94,459)
PRE-TAX PROFIT (LOSS)		4,102,938	4,772,864
TAXES	(28)
Income taxes		(410,741)	(592,153)
Deferred tax assets/liabilities		(690,316)	(705,931)
Total taxes		(1,101,057)	(1,298,084)
PROFIT/(LOSS) FOR THE PERIOD		3,001,881	3,474,780
Basic EPS	(29)	0.282	0.327
Diluted EPS	(29)	0.282	0.327

FIGURES IN EUROS

STATEMENT OF COMPREHENSIVE INCOME	Note (26)	June 30, 2019	June 30, 2018
PROFIT (LOSS) FOR THE PERIOD		3,001,881	3,474,780
OTHER COMPREHENSIVE INCOME/(EXPENSE) WHICH MAY BE SUBSEQUENTLY
RECLASSIFIED TO PROFIT/(LOSS) FOR THE PERIOD		0	0
Total		0	0
OTHER COMPREHENSIVE INCOME/(EXPENSE) WHICH WILL NOT BE SUBSEQUENTLY
RECLASSIFIED TO PROFIT/(LOSS) FOR THE PERIOD		0	0
Total		0	0
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (LOSS)		3,001,881	3,474,780

FIGURES IN EUROS

	STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED AT	June 30, 2019	June 30, 2018
	(EUR 000)
A	Opening current net cash	30,318,514	15,836,571
B	Cash flow from operating activities for the period
	. Profit/(Loss) for the period	3,001,881	3,474,780
	. Net financial (income)/charges and Taxes for the period	1,181,552	1,392,542
	. Amortisation, depreciation and write-down of fixed assets	1,172,008	1,040,381
	. Capital (gains) - Losses from asset disposal	2,069	6,366
	. Charges for SOP (Stock Option Plans)	100,000	0
	. Net change in other provisions	(138,503)	(111,027)
-	Cash flow from operating activities before changes in working capital	5,319,007	5,803,042
	(Increase)/Decrease in trade receivables	(4,443,905)	(3,651,282)
	(Increase)/Decrease in Inventories	(1,392,827)	(413,115)
	Increase/(Decrease) in trade payables	4,711,545	2,575,371
	Net change in other current assets/liabilities	863,071	245,469
-	Change in Working Capital	(262,116)	(1,243,557)
-	Changes in other operating assets/liabilities	(12,713)	(70,898)
	Total (B)	5,044,178	4,488,587
C	Taxes paid	0	0
D	Cash flow used in investment activities
-	Net increases in property, plant and equipment	(1,004,482)	(759,492)
-	Net increases in intangible assets	(106,090)	(57,833)
-	Net change in other non-current assets/liabilities	(4,000)	(100)
	Total (D)	(1,114,572)	(817,425)
E	Cash flow from (used in) financial activities
	Increase/(decrease) in medium/long-term loans	(1,241,856)	9,368,612
	Net financial income/(charges)	(80,495)	(94,459)
	Dividends	(4,033,786)	(3,503,025)
	Total (E)	(5,356,137)	5,771,128
F	Cash flow for the period (B+C+D+E)	(1,426,531)	9,442,290

G Closing current net cash (A+F) 28,891,983 25,278,861

FIGURES IN EUROS

STATEMENT OF CHANGES IN EQUITY	SHARE CAPITAL	LEGAL RESERVE	REVALUATION RESERVE	ADJ. RESERVE IAS/IFRS	OTHER RESERVES	PROFIT/(LOSS) FOR THE PERIOD	TOTAL SHAREHOLDERS' EQUITY
BALANCE AT JANUARY 1, 2018	3,503,025	690,082	16,765,093	-1,001,591	33,263,297	6,923,462	60,143,368
FTA IFRS 15 adjustments				(200,699)		68,193	(132,506)
BALANCE AT JANUARY 1, 2018 RECLASSIFIED	3,503,025	690,082	16,765,093	(1,202,290)	33,263,297	6,991,655	60,010,862
Changes 1st half 2018
Allocation of 2017 profit		10,523			3,409,914	(3,420,437)	0
distribution of dividends						(3,503,025)	(3,503,025)
IFRS 15 effect - reclassification of 2017 profit					68,193	(68,193)	0
Comprehensive income/(loss)
- Result for the period						3,474,780	3,474,780
BALANCE AT JUNE 30, 2018	3,503,025	700,605	16,765,093	(1,202,290)	36,741,404	3,474,780	59,982,617
STATEMENT OF CHANGES IN EQUITY	SHARE CAPITAL	LEGAL RESERVE	REVALUATION RESERVE	ADJ. RESERVE IAS/IFRS	OTHER RESERVES	PROFIT/(LOSS) FOR THE PERIOD	TOTAL SHAREHOLDERS' EQUITY
BALANCE AT JANUARY 1, 2019	3,503,025	700,605	16,765,093	(1,202,290)	37,490,166	10,097,960	67,354,559
Changes 1st half 2019
Allocation of 2018 profit					6,064,173	(6,064,173)	0
Realignment reserve art. 1 law 145/2018			6,338,622		(6,338,622)		0
Dividends						(4,033,787)	(4,033,787)
SOP Charges					100,180		100,180
Share Capital Increase	14,116						14,116
Comprehensive income/(loss)
- Result for the period						3,001,881	3,001,881
BALANCE AT JUNE 30, 2019	3,517,141	700,605	23,103,715	(1,202,290)	37,315,897	3,001,881	66,436,949