Lotus Bakeries : 2020 Annual Results

Press release

Regulated information 08 February 2021 5.45 PM

LOTUS BAKERIES: 2020 ANNUAL RESULTS

1. Lotus Bakeries realises turnover of EUR 663.3 million, an increase of 8.3%.

1. The setting-up of new international Natural Foods headquarters marks heavy investment in the internationalisation of the Natural Foods brands.

1. Recurrent EBITDA rises to EUR 135.6 million, almost 10% growth. o Net financial debt brought back to 0.8 times REBITDA.
   o Proposal to increase the gross dividend by more than 10% to EUR 35.5 per share.

1. 2020 results

Income statement (1) (in thousands of EUR)	2020	2019			Evolution %
Turnover	663,289	612,737		+	8.3
Recurrent operating result (REBIT) (2)	111,114	102,891		+	8.0
Recurrent operating cash flow (REBITDA) (3)	135,683	123,580		+	9.8
Non-recurrent operating result	(4,593)	(2,292)		+	100.4
Operating result (EBIT) (4)	106,521	100,600		+	5.9
Financial result	(3,004)	(2,514)		+	19.5
Profit for the year before taxes	103,517	98,086		+	5.5
Taxes	(20,972)	(22,317)	-	-	6.0
Net result	82,545	75,769		+	8.9
Recurrent net result	86,208	77,539		+	11.2
Total number of shares on 31 December (5)	810,471	806,332		+	0.5
Key figures per share (in EUR)
Recurrent operating result (REBIT)	137.10	127.60		+	7.4
Recurrent operating cash flow (REBITDA) (3)	167.41	153.26		+	9.2
Balance sheet (in thousands of EUR)
Balance sheet total	844,227	812,629		+	3.9
Equity	433,744	402,477		+	7.8
Investments (6)	47,971	95,586	-	-	49.8
Net financial debts (7)	110,457	129,691	-	14.8
Gross dividend (8) (in EUR per share)	35.5	32.00		+	10.9

1. The balance sheet and income statement for 2020 are appended to this Press Release.
2. REBIT is defined as the recurrent operating result, consisting of all the proceeds and costs relating to normal business.
3. Recurrent operating cash flow is defined as recurrent operating result + depreciations + provisions and amounts written off + non-cash costs valuation option and warrant plan.
4. EBIT is defined as recurrent operating result + non-recurrent operating result.
5. Total number of shares on 31 December, excluding treasury shares.
6. Investments in tangible fixed assets, intangible fixed assets and participating interests.
7. Net financial debts are defined as interest bearing financial debts - investments - cash and cash equivalents - treasury shares, and
   are reported excluding the that results from the implementation of the new IFRS 16 Leases standard. Including this
   the net financial debts amount to kEUR 117,973.
8. For 2020: dividend will be proposed to the Ordinary General Shareholders' Meeting of 18 May 2021.

The statutory auditor, PwC Bedrijfsrevisoren, represented by Lien Winne, has confirmed that its audit work on the consolidated balance sheet and consolidated income statement, which has been substantially completed, has not revealed the need for any material deviations to the accounting information contained in this press release.

Press release	08 February 2021 5.45 PM
	Regulated information

2. Management explanation

2.1 Group turnover increases by more than EUR 50 million

In 2020, Lotus Bakeries

consolidated turnover increased by more than EUR 50 million to EUR

663.3 million, representing 8.3% growth. The growth in the first half of the year therefore continued in the second half. Without negative exchange rate effects, turnover growth in 2020 would have been 9%. In the final quarter, there was also increased demand for stockbuilding among customers in the United Kingdom. This was due to the uncertain outcome of the Brexit negotiations and possible problems at the border.

This solid growth is mainly due to double-digit growth for Lotus Biscoff®, the first and largest strategic pillar. The international expansion of Lotus Biscoff®, Lotus Biscoff® Spread and Lotus Biscoff® Ice Cream accelerated once more this year with substantial increases in the level of penetration in many countries.

The growth of Biscoff® was also supported by two successful innovations. In the first half of 2020, Biscoff® Sandwich Cookie went on sale. Following an initial launch in four countries, Biscoff® Sandwich Cookie is now being rolled out globally. To that end, the new, state-of-the-art Biscoff® Sandwich Cookie production line in Lembeke recently came on line - one of the key investments in 2020. In the second half of the year, Lotus Bakeries made its debut in the chocolate category. As of September, Lotus Biscoff® Chocolate is available in Belgian supermarkets and has proved an instant hit with consumers.

Biscoff® experienced strong global growth in all countries and continents in 2020. Growth was realised

both in Lotus traditional major markets and in several promising newer markets for the Group, namely Australia, Indonesia, Malaysia, United Arab Emirates, Morocco, Egypt, Turkey and Canada.

Biscoff® saw slightly slower growth in countries with more significant share of sales in the out-of-home channel. They were obviously hit by the negative impact of the pandemic and the introduction of lockdowns. The out-of-home channel comprises all sales, direct or indirect, to cafés and cafeterias, airlines, hotels, restaurants, cruise ships, cinemas, events, theme parks, schools, hospitals, etc.

Press release

Regulated information 08 February 2021 5.45 PM

Lotus second strategic pillar is natural snacking within Natural Foods. After a very strong first quarter, sales of Natural Foods brands Nākd, TREK and BEAR fell sharply with the introduction of lockdowns. All products for which on-the-go is a significant consumption moment were affected by the closure of offices and schools and the restriction of travel to work, to visit family or out of the home. From July, the Natural Foods brands recovered significantly and systematically to 2019 levels. Kiddylicious achieved good growth in 2020, due partly to internationalisation and the success in the UK of its innovations, Juicy Fruit Bars, Melty Buttons & Rice Crispy Sticks. The BEAR brand also experienced an increase in turnover in 2020, driven by strong growth in the US and a strong third quarter in the UK.

The third pillar of the Lotus Bakeries strategy is the focus on local heroesin the home markets of Belgium, the Netherlands, France and Sweden.

Within this pillar of local specialities, Annas Pepparkakor achieved remarkable growth of more than 20% this year. This makes Annas the undisputed market leader in Sweden in the pepparkakor category, a cookie that is traditionally consumed over the Christmas period. The exceptional growth this year is the result of strong sales of the biscuit range, aided by the successful launch of the new Annas Pepparkakor ice cream.

Annas Pepparkakor ice cream

Press release

Regulated information 08 February 2021 5.45 PM

In Belgium, Lotus grew its already high market share and general level of household penetration even

further. Besides Biscoff®, the products in the waffle and cake ranges also recorded solid growth. Waffles were supported by a new media campaign for Suzy in the second half of the year. There were also product innovations with Blueberry Tartélice and Lotus honey waffle.

In the Netherlands, during the first few months of 2020, Peijnenburg focussed strongly on the introduction of the new packaging design and the launch of the new media campaign starring Dutch

singer Frans Bauer, with the baseline Happen word je (Eating Peijnenburg makes you happy). With the outbreak of the pandemic, the campaign was temporarily paused, but since November Peijnenburg is back on TV. The campaigns to revive growth in the gingerbread category and for the Peijnenburg brand are starting to bear fruit. As a result, Peijnenburg recorded slight growth again in 2020. Also in the Netherlands, the on-the-go gingerbread brand Snelle Jelle experienced the negative impact of the lockdowns.

In France, waffles continued to grow unabated in 2020, supported partly by the Liège milk chocolate waffle, which was launched in the second half of 2019.

2.2 Recurrent operating cash flow rises by almost 10%

In 2020, Lotus Bakeries achieved a recurrent operating result (REBIT) of EUR 111.1 million and a recurrent operating cash flow (REBITDA) of EUR 135.7 million. Both profitability parameters rose, by EUR 8.2 million and EUR 12.1 million respectively.

The turnover and volume growth bring about a positive sales and operating margin contribution. While the Group still invested strongly in media support for Biscoff® in Belgium, France, the UK and Spain, for Nākd in the UK and Belgium, for Peijnenburg in the Netherlands and for waffles and cakes in France and Belgium during the first quarter, the campaigns were suspended temporarily on the announcement of the first lockdowns. During the second half of the year, certain media campaigns were relaunched and new commercials were developed for 2021.

Year on year, depreciation charges increased by EUR 3.7 million, mainly due to the factory in the US. The Lotus Biscoff® factory in the US has been operational since August last year and will scale up further in 2021. The BEAR factory in South Africa officially became part of the Group in the second half of 2019. In 2020, this factory made a positive contribution to results thanks to growing volumes and a strong operating performance.

The non-recurrent operating result amounts to EUR -4.6 million and is primarily made up of COVID-19- related costs in order to guarantee continuity and safety in the factories. In addition, further expenses were incurred in the first half of the year in the US to support the Biscoff® factory and for the installation and start-up of the BEAR packaging line.

The financial result of EUR -3 million consists primarily of interest expenses and foreign exchange results on balance sheet positions held in foreign currencies. Interest expenses fell year on year due to the refinancing of long-term debt at the end of 2019.