2020/2021 Annual results (press release)

Press Release

Paris, June 2, 2021

Annual results 2020/21: EBITDA up

and announcement of a strategic plan for 2024

(April 2020 to March 2021)

Audited figures

• Turnover of €4,317 million, up 1% at constant exchange rates (-4% at current exchange rates) reflecting a contrasting agricultural outcome that combined a record sugarcane crop in Brazil in a context of rising sugar prices, while Europe's sugar beet campaign was impacted by bio-aggressors and adverse weather conditions.
• Adjusted EBITDA at €465 million, up 11% at current exchange rates, reflecting the Group's resilience in the context of the health crisis. This improvement was driven by the rise in sugar and alcohol/ethanol prices and operational progress in the face of a poor sugar beet crop and a margin drop for starch activity in Europe.
• Net income at -€133 million, mainly impacted by asset depreciations for €76 million.
• Debt leverage down to 5.5x; net debt of €2,533 million, down €24 million thanks to positive free cash flow of €65 million.
• Announcement of the strategic plan, based on three value creation drivers, which aims to achieve the following objectives in 2024: EBIT margin of 5%; recurring generation of positive free cash flow; net debt below €2 billion and debt leverage below 3x.
• The Group expects to reach the previously disclosed EBITDA target of €600-700 million with a lag of two quarters, i.e. at the end of September 2022 on a rolling 12-month basis.

Gérard Clay, Chairman of the Tereos Supervisory Board, stressed the following:

"Tereos is a cooperative whose primary mission is to ensure and sustain the best possible value for the production of its cooperative members. The Group is at the service of its members, we are therefore determined to enhance the relationship of proximity, trust and transparency that binds us. "

Philippe de Raynal, Chairman of the Management Board of Tereos, says:

"Tereos is turning the page on its former strategy of volume and external growth. The 2020/21 results show that the Group has not yet managed to fully adapt to the post-quota period. There is a lot of room for improvement. With our strategic plan, the focus is clearly on creating value, making our business activities profitable and controlling debt. "

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GROUP RESULTS

	Key figures				19/20			20/21			var		var				19/20			20/21			var		var
								(current		(constant								(current		(constant
	€ m				Q4			Q4							YTD			YTD
								forex)		forex)								forex)		forex)
Revenues	1,255			1,115		-11%	-7%		4,492			4,317		-4%	1%
Adjusted EBITDA1	187			92		-51%	-40%		420			465		11%	29%
Adjusted EBITDA margin	14.9%			8.3%							9.3%			10.8%
Recurring EBIT2	109			(12)		-	-		27			86		218%	344 %
EBIT margin2	8.2%			na							0.6%			2.0%
Net Results		56			(39)		-	-		24			(133)		-	-

Consolidated revenues amounted to €4,317 million for financial year 20/21, down 4% at current exchange rates and up 1% at constant exchange rates compared to €4,492 million last year.

Despite rising global and European sugar prices, rising alcohol and ethanol prices, profits from the record crop in Brazil and rising volumes of starch products, Group revenues were impacted by the 37% depreciation of the Brazilian real against the euro over the financial year, by the drop in volumes caused by the poor sugar beet crop in Europe and by lower trading of sugar and ethanol.

In Q4 20/21, consolidated revenues amounted to €1,115 million, compared to €1,255 million in Q4 19/20, down 11% at current exchange rates and down 7% at constant exchange rates.

Consolidated adjusted EBITDA1 amounted to €465 million for financial year 20/21, up 11% at current exchange rates and 29% at constant exchange rates compared to €420 million last year.

Adjusted EBITDA1 was driven by the turnaround in European sugar prices, the improvement in world sugar prices and alcohol/ethanol prices, a record crop in Brazil, lower energy costs in Europe and finally by the operational progress made across all divisions. Nonetheless, the Group's results reflect the effects of the depreciation of the Brazilian real over the whole financial year. In Europe, results were impacted, particularly in Q4, by the drop in volumes sold due to the poor sugar beet crop, by the decline in margins on starch products in Europe.

Moreover, the Group's adjusted EBITDA1 was impacted by one-off items for €65 million. They included, among others, exceptional charges for €40 million such as covid-19 sanitary crisis overhead costs. They also included a €25 million phasing effect in adjusted EBITDA from Q4 20/21 to H1 21/22 due to the accounting method applied for the low capacity utilization Group's sugar beet processing plants.

In Q4 20/21, adjusted EBITDA1 amounted to €92 million, compared to €187 million in Q4 19/20, down 51% at current exchange rates and 40% at constant exchange rates.

Consolidated recurring operating income2 (EBIT) amounted to €86 million in financial year 20/21 compared to €27 million last year.

In Q4 20/21, the Group posted a loss of €12 million, compared to a profit of €109 million in Q4 19/20.

1. See the definition of adjusted EBITDA in the Appendix.
2. EBIT excluding non-recurring items (€150 million in 19/20 and -€77 million in 2020/21)

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Consolidated financial income amounted to a net financial expense of €128 million for financial year 20/21, an improvement of 17% compared to the net financial expense of €155 million last year due to favorable exchange rate effects and decreasing financial charges.

Consolidated net income amounted to a loss of €133 million for the financial year 20/21 compared to the €24 million profit for the financial year 19/20, mainly impacted by €76 million of asset depreciation.

1. RESULTS BY DIVISION

SUGAR AND RENEWABLES EUROPE

In France, the sugar beet surface areas planted by Tereos' cooperative members increased by 2.3% in 2020 compared to the previous crop. However, the combined impacts of severe attacks of beet yellows virus and unfavorable weather conditions resulted in an average loss of yield for Tereos cooperative members of 26% compared to the average of the last five years with strong regional disparities. Despite a harvest schedule that has had to adapt to this farming reality, manufacturing plants have operated with an increasing level of performance compared to the previous harvest.

In the Czech Republic, yields have been affected by attacks by bio-aggressors.

In Romania, the higher level of surface areas sown has offset disappointing sugar beet yields.

Revenues for the Sugar and Renewables Europe division amounted to €1,705 million for financial year 20/21, down 1% at current exchange rates compared to €1,727 million for financial year 19/20.

Despite the impact of the drop in volumes sold due to the poor yields of the 2020 sugar beet crop, which was particularly pronounced in the last quarter of the financial year, the division's revenues were bolstered by the turnaround in sugar prices (which is still the case, as the European market is maintaining its importer momentum) and by alcohol prices bolstered by strong demand.

In Q4 20/21, the division's revenues stood at €435 million, compared to €533 million in Q4 19/20, down 18% at current exchange rates.

The division's adjusted EBITDA was €149 million for financial year 20/21, compared to €95 million for financial year 19/20, up 56% at current exchange rates.

The division's adjusted EBITDA benefited from higher sugar and alcohol prices as well as improved operating performance and lower energy costs despite combined offsetting factors such as the exceptionally low yields which undermined the last quarter of the financial year and the impact of the health crisis on both operating costs and volumes sold.

In Q4 20/21 the division's adjusted EBITDA was nil, compared to €66 million in Q4 19/20, down 100% at current exchange rates.

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SUGAR AND RENEWABLES INTERNATIONAL

In Brazil, the crop that ended in mid-November posted a record 20.9 million metric tons of processed sugarcane and increased sugar content compared to the previous year. The Group has achieved good levels of agricultural and industrial productivity through performance plans and investments made in recent years.

In Reunion Island, the lack of rain impacted cane volumes, with the loss of yields partially offset by better sugar content and better operational performance.

In Mozambique, volumes produced have increased as a result of operational improvements.

Revenues for the Sugar and Renewables International division amounted to €944 million for financial year 20/21, down 2% at current exchange rates and up 26% at constant exchange rates compared to €959 million for financial year 19/20.

Despite the 37% depreciation over the financial year of the Brazilian real against the euro, the division's revenues were driven by the increase in volumes sold, bolstered by the exceptional yields of the Brazilian crop and by rising sugar and ethanol prices.

In Q4 20/21, the division's revenues amounted to €270 million, compared to €277 million in Q4 19/20, down 3% at current exchange rates and up 22% at constant exchange rates.

The division's adjusted EBITDA stood at €246 million for financial year 20/21, compared to €222 million for financial year 19/20, up 11% at current exchange rates and 45% at constant exchange rates.

The division's adjusted EBITDA was driven by higher volumes sold, higher sugar and ethanol prices and the optimization of operating costs in Brazil despite the depreciation of the Brazilian real.

In Q4 20/21 the division's adjusted EBITDA stood at €71 million, compared to €80 million in Q4 19/20, down 11% at current exchange rates and up 12% at constant exchange rates.

STARCH, SWEETENERS AND RENEWABLES

Revenues for the Starch, Sweeteners and Renewables Products division amounted to €1,449 million for financial year 20/21, down 3% at current exchange rates and 2% at constant exchange rates compared to €1,501 million for financial year 19/20.

Despite the increase in volumes sold for starch and sweeteners and the increase in ethanol prices, the division's revenues were impacted by the fall in the prices of starch products and proteins and by the impact of the depreciation of the Brazilian real.

In Q4 20/21, sales amounted to €381 million, compared to €378 million in Q4 19/20, up 1% at current exchange rates and 2% at constant exchange rates.

The division's adjusted EBITDA was €70 million for financial year 20/21, compared to €93 million for financial year 19/20, down 25% at current exchange rates.

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The division's adjusted EBITDA reflected strong pressure on margins in a context of very slight decline in demand in Europe in addition to pressure on cereal prices, which increased in the final quarter of the financial year. Internationally, both volumes sold and margins rose.

In Q4 20/21 the division's adjusted EBITDA stood at €16 million in Q4 20/21, compared to €33 million in Q4 19/20, down 53% at current exchange rates.

2. NET FINANCIAL DEBT

Net financial debt at March 31, 2021 stood at €2,533 million compared to €2,558 million at March 31, 2020), down by €24 million. Excluding readily marketable inventories (€346 million1 which can be converted into cash at any time), the Group's adjusted net debt amounted to €2,187 million.

The decrease in debt compared to March 31, 2020 reflects positive cash flow (€65 million) thanks to the excellent operational performance of activities in Brazil and enhanced control of capital expenditure and general expenses since the arrival of the new management team in December 2020, in a context of a turnaround in sugar prices and a positive change in the exchange rate. This made it possible to offset the effects of the impact of beet yellows virus on sugar beet yield in France and the underperformance of the Starches, Sweeteners and Renewables Products division, demonstrating the Group's resilience in what has been a difficult year.

At the end of March 2021, the Group's debt leverage stood at 5.5x, down from the previous year (6.1x).

The Group's financial security amounted to €949 million at the end of March 2021, consisting of €468 million in cash and cash equivalents and €481 million in undrawn confirmed long-term credit lines.

During financial year 20/21, the Group carried out several major financing operations, in particular by putting in place:

• In June 2020: a financing line of $105 million with a 5-year maturity, the first positive impact loan in Brazil in the sugar and ethanol sector
• In July 2020: a loan of €230 million guaranteed at 80% by the French State, with a maturity of up to 5 years, at Tereos' discretion - the Group exercised in May 2021 the 5-year extension option
• In October 2020, an issue of €300 million of senior unsecured bonds with a 5-year maturity
• In October 2020: renewal of the Tereos SCA revolving line with the establishment of a positive impact loan facility for €200 million.

Net financial debt at March 31, 2021 breaks down as follows:

	Net Debt				31 march				31 march			Current		Non-current			Cash and cash
	€ m				2020				2021						equivalents
Net Debt	2,558				2,533		410	2,592		(468)
Net Debt excl. IFRS16	2,443				2,421		384	2,505		(468)
Net Debt / EBITDA ratio			6.1x			5.5x
Net Debt / EBITDA ratio excl. RMI*			5.2x			4.7x

*Readily Marketable Inventories: € 358 million as end of March 2020 and €346 million as end of March 2021

1 The amount of "Readily Marketable Inventories" at March 31, 2021 breaks down into (i) €302m of finished products including €275m for sugar and €27m for ethanol (ii) €40m of raw materials including €11m for wheat, €23m for corn, €5m sugar for processing (iii) €5m of coal and gas.

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