Ter Beke : Results first semester 2018

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Regulated information

Waarschoot, 31st August 2018-07:30 am

Consolidated results for the first semester of 2018

Key figures and headlines

Ter Beke group:

The results of the companies acquired in 2017 are included in the income statement in full for the first time. These companies give Ter Beke a production footprint in countries with 170 million consumers and are:

• oFor the Processed Meats Division: Offerman in the Netherlands.

• oFor the Ready Meals Division: Stefano Toselli in France, Pasta Food Company in Poland and KK Fine Foods in the United Kingdom.

In the first half of the year, these four companies contributed jointly and individually to the turnover and result according to plan. The integration activities and the accompanying investments were completed on time, and in some cases even ahead of schedule:

• oThe consolidated turnover increased by EUR 118 million (+55.8%) to EUR 329.6 million.

• oThe recurring business cash flow (REBITDA) increased from EUR 14.4 million in the first half of 2017 to EUR 23.1 million in the same period of 2018.

Raw material prices fluctuated in different directions whereby the changes balanced each other out. The price of pork was lower, while prices of other major purchasing categories (beef, chicken and packaging) were higher than in 2017.

To compare the results of the first semester of 2017 and 2018, it has to be taken into account that the results in 2018 include EUR 3.9 million non-recurring expenses, while a non-recurring income of EUR 7.3 million was achieved during the same period in 2017.

As a result of the above:

• oREBITDA amounts to EUR 23.1 million compared to EUR 14.4 million in 2017 (+60.9%)

• oEBITDA amounts to EUR 19.8 million compared to EUR 21.0 million in 2017 (-5.4%)

• oREBIT amounts to EUR 9.7 million compared to EUR 6.7 million in 2017 (+45.5%)

• oEBIT amounts to EUR 5.7 million compared to EUR 13.3 million in 2017 (-56.6%)

• othe result after taxes amounts to EUR 2.5 million compared to EUR 10.1 million in 2017 (-75.3%).

The cash-flow of the operating activities increased from EUR 13.4 million in 2017 to EUR 23.2 million in 2018.

Nancy De Sy - Group Communication Manager

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Regulated information

Processed Meats Division:

The turnover of the Processed Meats Division increased by EUR 52 million (+34.4%) from EUR 151.3 million to EUR 203.4 million. The acquired Offerman performed according to plan. The other companies realised a slight increase in volume while some raw material prices (pork) decreased.

In Belgium (Veurne) a 'slicing and packaging' project was started for the majorpart of a customer's product range. The focus of this project is to meet the service level objectives. However, the start-up costs put pressure on the initial profitability of the project, but this is now increasing steadily.

It was decided to close the Offerman site in Zoetermeer (Netherlands) sooner than originally planned and to move production to Borculo and Wommelgem. It was also decided to accelerate the transition to the standard Ter Beke ERP package at Offerman, which meant that extra costs were incurred for the analysis and implementation.

The processed meat industry-both for products and slicing activities-is still characterised by fierce competition, which ultimately benefits consumers. For this reason, decreases in raw materials prices (pork) cannot be kept entirely in the margin. The focus for this division therefore remains the profitability of the product range and continued cost control.

A wave of consolidation is noticeable across the Benelux, the most important market for Ter Beke in meat products. This is both driven by industrial groups and companies owned by private equity players. A certain scale is essential to meet ever increasing customer needs in the field of innovation, efficiency, traceability and sustainability.

At the beginning of July and after thorough preparation, the Fairbeleg® brand was rolled out in the Dutch food service channel.

Ready Meals Division:

Turnover increased by EUR 65.9 million (+109.4%) from EUR 60.3 million to EUR 126.2 million.

The lower margin as a percentage of turnover is due to the consolidation of the figures from Stefano Toselli and Pasta Food Company, which are more focused on high volume products.

The strategy for the division's five companies remains to focus on innovation and to continually modify the product range to meet changing customer requirements for our own brands as well as for the private labels that Ter Beke produces, which serve a large proportion of European retailers.

Nancy De Sy - Group Communication Manager

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Unlike the Processed Meats Division, the product focus is sharp and the geographical scope is broad (Europe and initial exports to other parts of the world). Full use will be made of the synergies made possible through the acquisitions, as communicated previously:

• oKK Fine Foods contributes expertise in product development, frozen technology, and experience in the Food Service market segment.

• oStefano Toselli contributes strong positions in the French and German markets.

• oPasta Food Company is the beachhead in Eastern Europe where the popularity of Mediterranean meals is increasing rapidly.

The ready meals industry in Europe continues to offer good prospects in all channels:

• oThe retail segment (including discount) is increasing shelf space to meet demand for convenience and in response to competition from home-delivered meals.

• oThe capacity to prepare meals in the food service channel is diminishing and Ter Beke's products offer a solution.

Nancy De Sy - Group Communication Manager

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Regulated information

Consolidated key figures first semester of 2018

Income statement in 000 EUR 30/06/18

30/06/17

∆%

Revenue (net turnover) REBITDA

329 614

211 613 55,8%

23 129

14 378 60,9%

EBITDA

19 838

20 971 -5,4%

Recurring operating results

• 9 691

  6 659 45,5%

  Result of operating activities (EBIT) Net financing costs

• 5 747

13 252 -56,6%

Result of operating activities after net financing costs (EBT) Taxes

-2 156 3 591

-221 875,6%

13 031 -72,4%

-1 084

-3 455 -68,6%

Result after tax before share in the result of enterprises accounted for using the equity method

2 507

9 576 -73,8%

Share in enterprises accounted for using the equity method Earnings after taxes (EAT)

0

571 -100,0%

2 507 41

10 147 -75,3%

2 466

10 147

Financial position in 000 EUR

30/06/18

31/12/17

Balance sheet total Equity

423 365

399 736 5,9%

120 692

125 308 -3,7%

Net financial debts

123 249

126 925 -2,9%

• Equity/Total assets (in %) 28,5% 31,3%

• Gearing Ratio 102,1% 101,3%

Key figures in EUR per share

30/06/18

30/06/17

Number of shares Average number of shares Net cash flow

1 732 621

1 732 621

1 732 621

1 732 621

9,58

9,98 -4,0%

Earnings after taxes EBITDA

1,42

5,86 -75,8%

11,45

12,10 -5,4%

Notes to the consolidated key figures

IFRS 15 (Revenue from contracts with customers) is applicable from 1 January 2018. Ter Beke hasopted for the 'full retrospective' method for the first time adoption of IFRS 15 for the financial year startingon 1 January 2018. For this reason, EUR 5.7 million was booked from the 2017 turnover and recognised in the services and miscellaneous goods category. So, the application of this standard does not impact the 2017 results.

Nancy De Sy - Group Communication Manager

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Regulated information

Turnover

The consolidated group turnover in the first six months increased by EUR 118 million (+55.8%) from EUR 211.6 million to EUR 329.6 million.

The Processed Meats Division turnover increased by EUR 51.1 million (+34.4%). This is mainly due to the acquisition of Offerman.

The Ready Meals division achieved an increase in turnover of EUR 65.9 million (+109.4%). This increase is also mainly due to the new acquisitions made last year.

Results of operating activities

in '000 EUR

30/06/2018 30/06/2017

EBITDA

Depreciation costs

Impairments, write-downs, and provisionsProfit from operating activities (EBIT)

19 838-13 872 -2195 747

20 971-7 662 -5713 252

in '000 EUR

30/06/2018 30/06/2017

Profit from operating activities (EBIT)

5 747 13 252

Severance payments 1 299 317

Realised added value on sale of property Acquisition costs

0 -721

Results of the phased acquisition

'Strategic study'

242 500 0 -6 689 1 330

Start-up costs of new packaging concept project 420

Restructuring costs Zoetermeer 170

Impairment Zoetermeer 483

Current profit from operating activities (REBIT)

9 691

6 659

EBITDA

19 838

20 971

Severance payments

1 299 317

Realised added value on sale of property

0 -721

Acquisition costs

242 500

Results of the phased acquisition

0 -6 689

'Strategic study'

1 330 0

Start-up costs of new packaging concept projectREBITDA

420 0

23 129

14 378

Nancy De Sy - Group Communication Manager

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