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PRESS RELEASE

ANNUAL RESULTS 2003

Ter Beke achieves successful 2003
Proposal to increase dividend by 17% to 1.35 € net per share

1. Headlines 2003

• Key Figures

- Gross turnover up from 185.6 to 198.8 million € (+ 7.1 %)
- Net current profit up from 4.6 to 5.4 million € (+ 15.9 %)
- Result before income taxes up from 4.4 to 6.6 million € (+ 53.2 %)
- Net result after income taxes up from 3.5 to 4.2 million (+ 19.0 %)
- Net cash flow up from 16.3 to 16.8 million € (+ 2.8 %)
 

• chilled ready meals continue to grow in all European markets

• further development of the Come a Casa brand with good results

• slight increase in processed meats sales

• stable raw material prices contribute to normalised margins

• acquisition of DiPasto in France (1 July 2003) successfully implemented

• first stone-laying of new R&D centre for chilled pasta meals in Marche-en-Famenne

2. Consolidated key figures 2003

(1) Result from ordinary activities before costs of debts, income from current assets and amortization (including goodwill)
(2) Net result before goodwill amortization and before extraordinary results
(3) Including subordinated automatically convertible debenture ("ACD") of 25.6 million €
(4) Financial debts, excluding ACD after deduction of cash investments and liquid assets
Key figures per share

The Statutory Auditor confirmed that his auditing work, which is essentially completed, did not bring to light any significant correction that would have to be made in the accounting information included in this press release. As last year, an explanatory paragraph will be included in the opinion on the annual accounts concerning the uncertainty with regard to the outcome of the current dispute with the tax administration, to which reference is made in this press release.
 

3. Net dividend up by 17% to 1.35 € per share

The Board of Directors will propose to the General Meeting of Shareholders to distribute a cash dividend over 2003 of 1.35 € per share. This represents an increase of 17% compared to the prior year dividend distribution.
With this increase the Board of Directors wants to express its appreciation to the shareholders for their support to the company and also to express its confidence in the company´s future development.
 

4. Notes to the accounts

1. Turnover

The gross turnover increased by a total of 7.1% to almost 199 million €. Around 1/3rd of this increase is attributable to the acquisition of DiPasto in France, which was included for 6 months in the 2003 consolidation circle.
The turnover increase exclusive of the acquisition effect is the result of the continued strong growth in ready meals; in 2003 they represent approximately 65% of the sold volume, compared with 62% in 2002.
In 2003 Ter Beke confirmed its European market leadership in chilled lasagne and pasta meals. The clear market leadership in the Benelux, Spain, Ireland and Switzerland was further strengthened and - thanks to the acquisition of DiPasto - Ter Beke is now the market leader in France as well.
Ter Beke´s processed meats strategy remains essentially oriented towards the Benelux market. In this stagnating market Ter Beke improved its market share slightly, thanks to a more dynamic commercial approach and innovations in the product range. The total processed meat volumes rose slightly in 2003, thanks to successful pâté sales in the Netherlands and the United Kingdom.
 

2. Come a Casa brand strategy
   
   All investments planned for 2003 in Come a Casa, the consumer brand for chilled ready meals, were implemented. The support was coupled with large-scale promotional activities and television campaigns in Belgium and Ireland. The assortment under the Come a Casa brand was further expanded during 2003 with the addition of new products (pizza, paella and couscous).
   Surveys are demonstrating that Come a Casa has conquered its anticipated place in the Belgian market. In 2004 we are continuing this strategy and are also building up a position in the French and Dutch markets.
    

3. Out-of-Home

As mentioned earlier, since the beginning of 2003 Ter Beke has been developing the market segment of out-of-home consumption, which is new for the group. Over the course of the year the dedicated commercial team was further strengthened and investments were made in a targeted market approach. In 2004 Ter Beke will continue to develop the chosen strategy and will invest further in this segment in the future. Alongside the traditional channels, the so-called "convenience shops" (filling stations, for example) will also be used.
 

4. Acquisition in France

On 1 July 2003, Ter Beke took over the producer of chilled ready meals DiPasto in Alby-sur-Chéran (France). As reported in earlier press releases, this takeover was carried out because it corresponded to several strategically important objectives: the acquisition of a French identity in France, gaining access to all major French retailers, the international spreading of the production risk and attainment of an uncontested market leadership in France.
The operational takeover of DiPasto went precisely as planned. In the meantime one has already commenced with an investment plan whose first phase should be completed by the end of 2004. These investments will expand the capacity and further increase the production standards of the plant.
 

5. Investments

In 2003 Ter Beke contracted for around 12 million € in investments in the expansion and further modernisation of its production equipment. Around 7.5 million € of this was implemented in 2003.
The most important project concerned the completion of the new, fully automated lasagne line in the establishment in Wanze (Huy), which has been fully operational since beginning 2003. This investment doubled the production capacity for lasagne in consumer packaging and is necessary to respond to the growing demand in the various markets. In the autumn one also started on the construction of a new shipping platform.
In the fall of 2003 the first stone was also laid for a new Research and Development Centre in Marche-en-Famenne, which will do research on pasta and sauces. Until now the R&D activities on pasta meals have been scattered throughout the various production sites; construction of the Centre will make it possible to concentrate all of the specialists and skills in one place. At the same time, it will allow one to optimise the efficiency of investments. Ultimately, 12 employees will be employed in the R&D Centre.
In line with the earlier-reported multi-annual plan for processed meats, the group is working on further innovation of the production complex for salami maturing and drying in Waarschoot.
Finally, in 2003 more than 1 million € was invested in the further development of the group´s system applications. The new integrated ERP system continues to be implemented virtually problem-free.
 

6. Operating result

The operating result improved by 23.8% to 9.9 million € (+1.9 million € compared to 2002), which is the effect of several elements. The turnover increase and the relative calm on the raw materials markets explain about half of this increase. The amortizations fell slightly because several investments arrived at the end of the amortization period in 2003. The positive effects of strict cost controls and lower provisions amounted together to more than 2.5 million €. A substantial share of this was applied for developing the marketing and sales organisation and in the brand investment of Come a Casa.
 

7. Financial results and cash flow

The financial result improved for the second successive year by around 0.5 million €. This is firstly due to the net cash flow which in 2003 rose to 16.8 million € (16.3 million € in 2002), which in turn made it possible to finance both the investment programme (see above) and the acquisition of DiPasto without noticeably increasing the net debt position.
 

8. Income taxes

The average tax charge amounts to 36.9% in 2003 compared with 18.9% over 2002. The increase vis-à-vis 2002 is mainly explained by the fact that as of 2003 the group is in a fully taxable position. The average tax burden lies around 2% above the average standard assessment rate, primarily because of disallowed expenditures (e.g. environmental costs which in Belgium are no longer tax deductible from 2003) and because Ter Beke opts for a conservative valuation rule with regard to the booking of deferred tax assets.
There are no major developments to report with regard to the ongoing dispute with the tax administration concerning Ter Beke´s own re-insurance company. This dispute originated in 1996 and is discussed in detail in the consolidated annual accounts.
 

5. Outlook
   
   The successful results of 2003 confirm that Ter Beke has made the right strategic choices. We intend to continue along this path; i.e. further international expansion of the group, strengthening of our position on the domestic market, extension of the consumer brand Come a Casa, constant innovation in the product range, increased efficiency of the production infrastructure and investments in continuous quality improvements by people and systems.
   We do not expect any major fluctuations in the raw material prices.
   If the current trends continue, we expect further improvement in the result.
    

For more information, please contact:

Media Luc De Bruyckere Chairman Telephone: +32 9 370 13 00 E-mail: luc.debruyckere@terbeke.be

Investor Relations Marc Hofman Vice President Telephone: +32 9 370 13 16 E-mail: m.hofman@terbeke.be

 

Ter Beke in a nutshell

Ter Beke

• is a Belgian fresh food group with six production sites, five of which are in Belgium [three in Flanders (processed meat) and two in Wallonia (chilled pasta meals)] and one in France (chilled pasta meals)
• achieved a gross turnover in 2003 of 198,8 million €, a net profit of 4.2 million € and a net cash flow of 16.8 million €.
• is a producer of chilled lasagna and pasta meals and processed meats for the European market
• is European market leader for chilled lasagna
• markets its products under the brand names Come a Casa, L'Ardennaise, Pronto, DiPasto, Daniël Coopman, Vamos and Les Nutons
• is customer-driven and develops and updates products with sustained regularity
• has over 1,100 employees who put their professional skills at the service of the customer.