Lotus Bakeries: announces half-yearly report 2008

Lembeke / BE. (lb) Belgian Lotus Bakeries NV saw first-half of 2008 net profit edge up slightly helped by the acquisition of Spanish subsidiary López Market.

Turnover: Turnover rose by more than 16 percent in the H1/2008. Internal growth, in other words excluding López Market, amounts to 15 percent. There are several reasons for this significant growth, the company said in a statement. First of all, sales in all its markets grew strongly in the first half, combined with the successful introduction of caramelized biscuit spread in Belgium. Second, Lotus increased its sales prices at the end of last year, in response to rising raw materials prices.

Operating result: Recurrent operating result (REBIT) rose by 31,9 percent compared with H1/2007 and amounts to 16,9 million EUR. REBIT as a percentage of turnover was 13,6 percent as against twelve percent in H1/2007. Recurrent operating cash flow (REBITDA) reached 18, 2 percent of turnover, up from 16,6 percent in H1/2007.

Financial result: Net financial debts amounts to 43,1 million EUR. This means that they have reduced by 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 –3,2 million EUR represents an increase of nearly one million EUR 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.

Taxes: The tax burden for the first half of 2008 amounts to 3,6 million EUR or around 27 percent of the pre-tax profit. In H1/2007 this tax burden exceptionally amounted to only 167’000 EUR. This is because the reduction of the general tax rate in the Netherlands resulted in a fall of over 2,3 million EUR 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.

Global result: Net profit for the first half is 10,0 million EUR. The net profit for H1/2007 of 9,9 million EUR does not bear comparison with the present year because of the 2,3 million EUR deferred tax effect as described above. Net cash flow rose by 36,6 percent from 13,1 million EUR in H1/2007 to 17,9 million EUR in H1/2008 (source).