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Lotus Bakeries: Half-Yearly Report 2008

Source: Lotus Bakeries
01/09/2008

August 27, 2008
- 15% internal growth in turnover
- REBITDA rises to 18% of turnover
- Successful introduction of caramelized biscuit spread in Belgium

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1.  2008 half-yearly results

Income statement (in EUR thousands)

30/06/2008

30/06/2007

Change (%)

     Turnover

123,707

106,475

      +   16.2

     Depreciation 

(4,978)

(4,798)

      -      3.8

     Recurrent operating result (REBIT)

16,857

12,782

      +   31.9

     Recurrent operating cash flow (REBITDA) (1)

22,574

17,674

      +   27.7

     Non-current operating result

(222)

(627)

      +   64.6

     Operating result (EBIT) (2)

16,635

12,155

      +   36.9

     Financial result

(3,166)

(2,247)

      -    40.9

     Result before taxes

13,469

9,908

      +   35.9

     Taxes

(3,594)

(167)

      - 2052.1

     Result after taxes

9,875

9,741

      +     1.4

     Share in results of equity-consolidated enterprises

122

154

      -    20.8

     Net result

9,997

9,895

      +     1.0

     Net result:  minority interest

74

22

      + 236.4

     Net result:  Group share

9,923

9,873

      +     0.5

Self-financing (in EUR thousands)

 

 

 

     Net cash flow (3)

17,943

13,139

      +   36.6

     Investments (4)

5,196

2,354

      + 120.7

Balance sheet (in EUR thousands)

 

 

 

     Balance sheet total

207,304

195,336

      +     6.1

     Equity

75,602

59,042

      +   28.0

     Net financial debts (5)

43,098

56,579

      -    23.8

Key figures per share (in EUR)

 

 

 

     Recurrent operating result (REBIT)

22.16

16.62

      +   33.3

     Recurrent operating cash flow (REBITDA) (1)

29.67

22.98

      +   29.1

     Net result: Group share

13.04

12.84

      +     1.6

Weighted average number of shares

760,843

769,166

      -      1.1

(1)  Recurrent operating cash flow is defined as recurrent operating result + depreciation + provisions and amounts written off + non-cash costs valuation option- and warrantplan

(2)  EBIT is defined as recurrent operating result + non-current operating result

(3)  Net cash flow is defined as net result + all non-cash costs + all non-cash income items     

(4)  Investments in intangible and tangible fixed assets

(5)  Net financial debts are defined as financial debts - cash investments - liquid assets - own shares

 

2.Explanation

2.1 General

Our new Spanish subsidiary López Market, representing almost EUR 3 million of annual turnover, is consolidated from 1 February 2008.

Apart from this press release, additional financial information, including the balance sheet, income statement and cash flow statement, as prescribed by IAS 34, can be found on our website.

2.2 Turnover

Turnover rose by more than 16% in the first half of 2008. Internal growth, in other words excluding López Market, amounts to 15%. There are several reasons for this significant growth. First of all, sales in all our markets grew strongly in the first half, combined with the successful introduction of caramelized biscuit spread in Belgium. Second, we increased our sales prices at the end of last year, in response to rising raw materials prices.

2.3 Operating result

Recurrent operating result (REBIT) rose by 31.9% compared with H1 2007 and amounts to EUR 16.9 million. REBIT as a percentage of turnover was 13.6% as against 12.0% in H1 2007.

Recurrent operating cash flow (REBITDA) reached 18.2% of turnover, up from 16.6% in H1 2007.

2.4 Financial result

Net financial debts amounts to EUR 43.1 million. This means that they have reduced by EUR 13.5 million over a one-year period.

Despite the high cash flow, debts have fallen less significantly. The significant operating cash flow in the first half was compensated by a number of major aspects. First of all investment activity remained at a high level, mainly as a result of the capacity extensions at the Lembeke caramelized biscuit factory. Secondly, López Market was acquired in the first half of 2008. In addition a one-off cash-out was recorded in rehedging the financial hedging instruments relating to the financing structure for the acquisition of Koninklijke Peijnenburg with an interest rate swap instrument (IRS). This IRS, concluded at the end of the first half, guarantees a fixed interest rate until the end of this financing structure.

The financial result of –EUR 3.2 million represents an increase of nearly EUR 1 million in net financial charges compared with H1 2007. This increase is primarily due to the writing down of market prices of the interest hedges on the external financing of Koninklijke Peijnenburg in line with IFRS rules. A part of this increase is also due to the general rise in interest rates.

2.5 Taxes

The tax burden for the first half of 2008 amounts to EUR 3.6 million or around 27% of the pre-tax profit. In H1 2007 this tax burden exceptionally amounted to only EUR 167,000. This is because the reduction of the general tax rate in the Netherlands resulted in a fall of over EUR 2.3 million in the deferred tax liabilities relating to the “purchase price allocation”. Recognizing this reduction into income explains the low tax burden for the first half of 2007.

2.6 Global result

Net profit for the first half is EUR 10.0 million. The net profit for H1 2007 of EUR 9.9 million does not bear comparison with the present year because of the EUR 2.3 million deferred tax effect as described above.

Net cash flow rose by 36.6% from EUR 13.1 million in H1 2007 to EUR 17.9 million in H1 2008.

3. Cooperation with McVities

It was previously announced that McVities Cake Company, a part of United Biscuits, had decided to manufacture its Jaffa Cake Bars itself in future. In the meanwhile, it has been agreed that the contract between Lotus Bakeries and McVities Cake Company for Lotus Bakeries to produce these cake bars initially until at least March 2008, will be extended until at least the end of 2008.

4. Prospects

The Group expects further growth in turnover during the second half. This expectation is based on further growth in our primary markets, the good sales of caramelized biscuit spread and on the price increase carried out at the end of last year. This expected growth in turnover in the second half will not, however, be as strong as in the first half. It is important to point out in this context that an exceptionally strong sales growth was realized in H2 2007, and also that rising consumer prices could slow sales volumes.

Despite higher marketing costs in the second half than in H2 2007, profit margins for 2008 as a whole are expected to be in line with 2007.



5.Financial calendar

Financial analysts’ meeting (conference call):

28 August 2008
Announcement of the interim declaration covering the period from 1 July 2008:

6 November 2008

Announcement annual results 2008:

13 February 2009

Financial analysts’ meeting:

16 February 2009

Ordinary General Meeting:

8 May 2009

Dividend payable from:

18 May 2009

Announcement of 2009 half-year results:

31 August 2009





Statutory auditor’s report

on review of consolidated condensed financial information

for the period ended 30 June 2008

Introduction

We have reviewed the accompanying consolidated condensed balance sheet of Lotus Bakeries NV and its subsidiaries as of 30 June 2008 and the related consolidated condensed statements of income, changes in equity and cash flows for the six-month period then ended, as well as the explanatory notes. The board of directors is responsible for the preparation and presentation of this consolidated condensed financial information in accordance with IAS 34, as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated condensed financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed financial information is not prepared, in all material respects, in accordance with IAS 34, as adopted by the European Union.

We have also read the financial accounting data presented in tabular form under point 1 of the press release concerning the half-year ended 30 June 2008 and confirm that such data are consistent with the half-yearly condensed consolidated financial statements from which they are derived and which were the subject of our review as described above.

Brussels, 26 August 2008

PricewaterhouseCoopers

Represented by

Lieven AdamsPeter Opsomer

BedrijfsrevisorBedrijfsrevisor




Lotus Bakeries in a nutshell

Lotus Bakeries focuses on authentic specialities from the biscuit and cake world:caramelized biscuits, gingerbread, waffles, frangipane, Madeleine, Breton butter specialities, Enkhuizer biscuits, battenbergs, etc. Lotus Bakeries, with headquarters in Belgium, is a dynamic, internationally oriented enterprise with production facilities in Belgium, the Netherlands and France. It has sales organizations in Belgium, the Netherlands, France, Germany/Austria, UK, Switzerland, Spain, the Czech Republic, the United States of America, and Singapore.With 1161 employees, Lotus Bakeries produces and sells high-quality, tasty products under the Lotus and Peijnenburg brand names.By maintaining a healthy balance between tradition and innovation, Lotus Bakeries indulges consumers with a unique range of products.

The shares of Lotus Bakeries are listed on Euronext Brussels.



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