BONDUELLE - 2016-2017 Annual Results: a key milest

  BONDUELLE

A French SCA (Partnership Limited by Shares) with a capital of 56,000,000 Euros  Head Offices: La Woestyne 59173 Renescure, France 

Business registration number: 447 250 044 (Dunkerque Registrar of Businesses)

2016-2017 Annual Results

A key milestone in the VegeGo! 2025's ambition

• Organic growth at the higher end of the target range and turnover exceeding € 2 billion
• Increase in current operating result, higher than the annual objective set
• Increase in net result at + 11.4%
• Transforming integration of Ready Pac Foods
• Substantial strengthening of the group's financial structure
• Strong growth in the activity and profitability expected for 2017-2018

On the 29th of September 2017, the Supervisory Board, under the chairmanship of Martin Ducroquet, reviewed the statutory and consolidated financial statements for FY 2016 - 2017 as presented by the Executive Board and certified by the company's statutory Auditors.

FY 2016-2017 reflected, once again, for the Bonduelle Group, in a solid organic growth both in terms of turnover and current operating profitability, despite operating in a challenging environment (sluggishness of the consumption in Europe, economic crisis in emerging countries and difficult harvests for 2016). This remarkable performance, confirming the group's strong resilience, is coupled, this FY, with the acquisition of Ready Pac Foods. This major acquisition - the largest ever in terms of size in the group's history - has profoundly changed the group's profile, strengthening its international expansion and highlighting, by the development of its ready-to-eat segment, the search for new sources of growth that are capital employed efficient. The on-going performance increase of the group's historical business scope and the full-year contribution from Ready Pac Foods will result for FY 2017-2018 in strong growth both in terms of turnover and profitability, in line with the VegeGo! 2025 plan's objectives.

Global Turnover

Solid organic growth and very substantial external growth

Activity by Geographic Region

Activity by Operating Segments

Over FY 2016-2017 (1 ^st of July 2016 - 30 ^th of June 2017), the group's turnover reached 2,288.1 million of Euro, an increase of + 16.3% on reported figures. This performance reflects a solid organic growth (+ 2.7%), at the higher range of the announced target (+ 2 to +3%), a positive effect of currency fluctuations (+ 1.-%) and the consolidation of Ready Pac Foods as of the 21 ^st of March 2017.

Europe Zone The Europe zone, representing 55.8 % of this FY turnover, returned to growth: + 0.2% both on reported figures and like for like basis ⁽¹⁾ , driven by a dynamic fourth quarter recording + 1.6%. The lack of products due to the poor harvests observed in summer 2016 (cans and frozen) and early 2017 (fresh-cut bagged salads) was partially offset by a sunny spring promoting the consumption of canned corn and fresh prepared products.

Non-Europe Zone The non-Europe zone recorded an increase of + 45.9% based on reported figures and represents 44.2% of the turnover. This performance was fuelled by a solid organic growth standing at + 7.1% coupled with a positive effect of currency fluctuations of + 3.1% and a + 35.7% contribution from Ready Pac Foods over a quarter. Ready Pac Foods, now Bonduelle Fresh Americas, also recorded very strong growth over 12 months, hence continuing to improve its American market penetration. The strong performance of the canned and frozen segments in North America was partially offset by the difficulties observed in emerging countries (namely in Brazil and Russia). In Russia, the slight pickup in the economic recovery has not yet been translated into an increase in food consumption. Thanks to a wide offer of canned vegetables products and strength of its brands (Bonduelle and Globus), the group has successfully managed to maintain its market share and sales prices, hence its profitability.

Current Operating Profitability

Increase in current operating profitability

For FY 2016-2017, the Bonduelle Group's current operating profitability stood at 108.3 million of Euro, an increase of + 4.6% based on reported figures. The current operating profitability, excluding changes in scope of consolidation, recorded 106.1 million of Euro, an increase of + 2.5% higher than the objective announced in October 2016 and revised upwards in March 2017. The increased caution on the group's cost structure, coupled with continuous marketing-media investments and good performance of the brands of the group, enabled to offset the negative impact of the poor harvests of summer 2016 (canned & frozen) and of early 2017 (salads) and to record, yet again, an increase in profitability.

Net Result

Strong growth in net result

The net expense of non-recurring items stands at 8.1 million of Euro and essentially includes the acquisition costs of Ready Pac Foods. The net financial debt amounts to 18.2 million of Euro against 21.4 million of Euro last financial year, the group benefited from its on-going deleveraging, excluding the Ready Pac Foods acquisition, the latter only impacting on the last quarter. Given the result of the companies consolidated by equity method (+ 0.1 million of Euro), an income tax expense of 22.3 million of Euro i.e. an effective tax rate of 27.2%, stable over the period considered, the net result for this FY stands at 59.8 million of Euro, an increase of + 11.4%, representing 2.6% of the turnover and 3.1%, when excluding Ready Pac Foods, the dilutive impact on the FY being linked to the acquisition costs.

Financial situation

Solid financial structure

The generation of cash-flows from the group's businesses, and the first results of the approach: "Finance for Growth" optimisation of the capitals employed, allow to record another growth of 100 bps on ROCCE ⁽²⁾ of 11.5% and a strong decrease of the group's net debt, its debt leverage ⁽³⁾ stands at 1.67x against 2.47x on the 30 ^th of June 2016, excluding the Ready Pac Foods acquisition. After taking into account the acquisition debt, on a pro forma ⁽⁴⁾ basis the debt leverage ⁽³⁾ stands at 3.1x highlighting the solid financial structure of the group and its investment grade profile.

Considering the group's operational profitability evolution and 2017-2018 outlooks, the General Management will request at the Shareholders' Meeting on the 7 ^th of December 2017, a dividend distribution of € 0.45 per share, versus € 0.43 last FY.

Highlights

Acquisition of Ready Pac Foods in the US On the 21 ^st of March 2017, the Bonduelle Group announced the acquisition of Ready Pac Foods for an amount of 403 million US dollars, net of debt. Based in California, Ready Pac Foods is the #1 producer of single-serve salad bowls in the U.S. through its Bistro® range. Already well-established in the healthy snacking segment, Ready Pac Foods is currently adding wraps and soup kits to its offer. Ready Pac Foods is also a producer of fresh-cut products, offering packaged salads, fresh-cut fruits, and mixed vegetables to its retail and foodservice customers. With 4 production facilities located in Irwindale (CA), Jackson (GA), Florence and Swedesboro (NJ), it employs circa 3,500 regular employees. Ready Pac Foods generates approximately 870 million US dollars ⁽⁴⁾ of revenues and operates nationwide in the U.S. This transaction is a key milestone in Bonduelle's strategic ambition VegeGo! 2025 of being "the world reference in "well living" through vegetable products". This acquisition will strengthen Bonduelle's international footprint and dramatically change its profile, making the U.S. the largest country of operations, continuing a longstanding track record of successful acquisitions in North America, in particular Aliments Carrière, Canada, in 2007 and Allens, USA in 2012, and making of the fresh category, its first business segment. This acquisition, which is fully compatible with Bonduelle's strong financial profile, perfectly fits with its strategic plan and will strengthen its leadership positions in its core business lines: - development of Bonduelle's business in the consumer convenience and healthy food segments, - increasing presence in the fast growing segment of fresh prepared vegetables, - reinforcement of footprint in North America, of a size, post transaction, equivalent to the European Union in Bonduelle's geographical portfolio. Ready Pac Foods has been erected as a business unit, dedicated to the fresh business in North America and is called Bonduelle Fresh Americas (BFA), alongside Bonduelle Long Life Europe (BELL), Bonduelle Fresh Europe (BFE), Bonduelle Americas Long Life (BALL) and Bonduelle EurAsia Markets (BEAM). The role of this business unit, like the others, is to pursuit its expansion both in terms of organic growth and acquisitions for the activity and geographical scope given. Ready Pac Foods' management team attracted by the Bonduelle's ambition, unanimously decided to jump on board.

Refinancing of Ready Pac Foods acquisition Bonduelle finalized, under particularly attractive conditions, the refinancing operations associated with the acquisition of Ready Pac Foods. This operation was financed through a bridge loan of $ 279 million with an initial term of one year and a $ 130 million amortizing bank loan with a five years maturity. This operation was carried out jointly with Crédit Agricole Nord de France and Crédit Agricole CIB. The successful syndication process with the pool of existing banks as well as with 3 new foreign banks, together with the particularly attractive margin conditions have led Bonduelle to increase the total amount of the bank loan from $ 130 million to $ 200 million. At the same time, looking for additional maturity, Bonduelle issued on July the 6 ^th 2017, a new Private Placement in the US market (USPP) split into 2 instalments of respectively € 150 million and $ 50 million. These two instalments both have a final maturity of 10 years and bring the group's total debt average maturity to almost 5 years. Bonduelle, being a repeat issuer on the USPP market since 2000, has been able to deal this private placement under particularly competitive conditions both in euros and US dollars, from a pool of historical investors who have renewed its confidence in the group as well as a new investor. Through this operation, Bonduelle pursues its policy of partial disintermediation and diversification of its financing sources (banks, USPP, EuroPP,...) by further expanding its platform of both banking and non-bank financial partners, guaranteeing independence and competitiveness of its indebtedness' cost, and thus reflects its post Ready Pac Foods acquisition investment grade profile.

Divestiture of the interest in Gelagri On the 23 ^rd of June 2017, the Bonduelle Group divested its minority interests in the Gelagri companies of France and Spain to Triskalia, its joint shareholder in these companies. Born from the respective contributions of the shareholders expertise in frozen for private labels, this joint venture enabled, via industrial efficiency gains, a sharp turnaround of the activity in terms of financial performance. Seen as non-strategic, the activity was divested like the UltraCongelados de la Ribera joint venture during last FY.

The Bonduelle Group received the 1 ^st prize for the Corporate Governance of mid-cap companies On September 2017 the 19 ^th , in Paris, Grégory Sanson, the Chief Financial Officer of the Bonduelle Group, was awarded the 1 ^st prize for the category of "Corporate Governance for Mid-Cap". The jury honored the family-owned group's willingness to maintain an open and independent governance made of highly diversified profiles, notably by adopting, as early as 2008, the Afep/Medef code of corporate governance. Organized by AGEFI (Economic and Financial Agency), in partnership with BNP PARIBAS SECURITIES SERVICES, the Grand Prix for Corporate Governance honors the SBF 120 (French stock market index) stock issuers that best meet investors demands in terms of transparency and best practices. Launched in 2004, they have over the years become the absolute reference in identifying the best practices in terms of corporate governance.

Outlooks

FY 2017-2018 will be characterized by the integration of Ready Pac Foods and its consolidation over 12 months. The group is expected a revenue growth, at constant exchange rates, of circa 3% and a current operating profitability growth of 7 to 8% of its historical business activities. Given revenue and current operating profitability growth of Ready Pac Foods and its consolidation over the entire fiscal year, the group is expecting consolidated revenue and current operating profitability growth of circa 25% at constant exchange rates for FY 2017-2018, the debt ratio ⁽³⁾ dropping back to a ratio lower than 3x excluding new acquisitions.

⁽¹⁾ At constant scope of consolidation and exchange rates ⁽²⁾ Current operating profitability / capital employed ⁽³⁾ Net financial liability / recurring EBITDA ⁽⁴⁾ R eady Pac Foods' activity on a twelve-month pro forma basis ⁽⁵⁾ Net financial debt / equity ⁽⁶⁾ Excluding Ready Pac Foods acquisition

Next financial events:

- 2017-2018 1 ^st Quarter Turnover:                       6 ^th of November 2017 (after stock exchange trading session) - Annual General Meeting:                                 7 ^th of December 2017 - 2017-2018 1 ^st Half Year Turnover:                           5 ^th of February 2018 (after stock exchange trading session) - 2017-2018 1 ^st Half Year Results:                         1 ^st of March 2018 (prior to stock exchange trading session)

Find the complete annual results and the financial notices calendar on www.bonduelle.com

About Bonduelle

Bonduelle, a family business, was established in 1853. Its mission is to be the world reference in "well-living" through vegetable products. Prioritising innovation and long-term vision, the group is diversifying its operations and geographical presence. Its vegetable, grown over more than 130,000 hectares all over the world, are sold in 100 countries under various brand names and through various distribution channels and technologies. Expert in agro-industry with 54 industrial sites or own agricultural production, Bonduelle produces quality products by selecting the best crop areas close to its customers. Bonduelle is listed on Euronext compartment B Euronext indices: CAC MID & SMALL - CAC ALL TRADABLE - CAC ALL SHARES Bonduelle is part of the Gaïa non-financial performance index and employee shareholder index (I.A.S.) Code ISIN : FR0000063935 - Code Reuters : BOND.PA - Code Bloomberg : BON FP

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