Financial Report

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Financial Report

  1. 1. Financial Report 2006 2007
  2. 2. Contents 2 - Review of operations and annual financial statements Report of the Management Board 2 I. Sales and earnings 2 II. Risk management 9 III. Corporate social and environmental responsibility 12 IV. Share capital 14 V. Shareholders’ agreements 18 VI. Analysis of shareholder structure at June 30 19 VII. Analysis of share capital and voting rights at June 30, 2006 19 VIII. Analysis of share capital and voting rights at June 30, 2007 19 IX. Dividends 19 X. Positions held by directors and officers 20 Report on proposed shareholder resolutions 21 Report of the Supervisory Board 22 Report of the Chairman of the Supervisory Board 23 Report of the Independent Auditors on the report of the Chairman 27 28 - Consolidated financial statements Consolidated income statement 28 Consolidated balance sheet 29 Consolidated cash flow statement 30 Consolidated statement of changes in shareholders’ equity 31 Notes to the annual consolidated financial statements 32 Report of the Independent Auditors on the consolidated financial statements 65 66 - Individual financial statements Income statement 66 Balance sheet 67 Cash flow statement 68 Notes to the annual financial statements 69 Information concerning subsidiaries and affiliates 76 Five-year financial summary 77 Combined Ordinary and Extraordinary Shareholders’ Meeting of December 6, 2007 78 General report of the Independent Auditors 83 Special report of the Independent Auditors on regulated agreements and commitments 84 85 - Other statutory information General information regarding the Company 85 Analysis of changes in share capital 90 Independent Auditors’ fees 91 Bonduelle-Financial report 2006/2007 1
  3. 3. Review of operations and annual financial statements Report of the Management Board Introduction I - Sales and earnings The consolidated financial statements of the Bonduelle Group 1. Group sales for the financial year ended June 30, 2007 are presented in accordance with all International Financial Reporting Standards Consolidated sales increased by 5.1% on a constant exchange (IFRS) adopted within the European Union. For purposes of rate basis, and by 3.6% on a like-for-like basis. comparison, they include historical data for the financial year Each of our major geographical regions posted sales growth. ended June 30, 2006, also prepared in accordance with IFRS, including IAS 32/39, which took effect on July 1, 2005. European Union After two difficult years, the group’s historical region regained In financial year 2006-07, the group’s consolidated sales, oper- its vitality. Sales were up 4%, due in part to the September 2006 ating income and net income all rebounded to post gains. acquisition of Salto (Unilever’s frozen vegetable business) in These performances were even more remarkable insofar as they Spain, as well as to the general, balanced sales growth observed were achieved despite difficult weather conditions, unfavorable in all of our various technological business lines: 5% in canned, exchange rate trends and strong cost inflation for materials and 3% in frozen, and 4% in fresh. supplies. Meanwhile, we safeguarded the group’s medium-term The fresh vegetable business suffered the effects of unfavorable prospects by significantly increasing spending on research and weather conditions, as the very mild winter was not propitious development and communications. to the consumption of fresh cut vegetables, and the cold, damp spring did not help sales of prepared salads, which kept this fresh This good financial health enabled us to lay the foundations for vegetable segment from driving sales growth, as it usually does. a new, vital penetration into the North American market as part Conversely, Bonduelle’s traditional canned and frozen technolo- of the group’s globalization and risk diversification strategy. gies rebounded well, driven by sales of our most recent, promising innovations, including the “sachet fraîcheur” freshness bag for our The group is also pursuing the reorganization first approved foodservice customers; Tetra Recart retortable carton packaging; and begun in 2005. The new scope of the subsidiaries has been Légumes du Soleil line of Mediterranean-style vegetables under the operational since January 2006, which has enabled the group to Cassegrain brand; Famili Balls line of frozen “veggie-puffs”, etc. pool all of the administrative functions within a geographical The growth rates in the last quarter allow us to be optimistic region into a single legal structure, under the so-called “David about the outlook for the coming year. and Goliath” three-year plan, which is part of a continuous progress and cost reduction action plan. Rest of world More than 20% of the group’s sales growth came from outside the European Union, reflecting the relevance of our strategic growth strategies, in particular those involving Eastern Europe. This increase in sales is even more remarkable insofar as it was achieved in spite of unfavorable exchange rates (rise of the euro against the U.S. dollar) and increased competition in sweet corn. 2 Bonduelle-Financial report 2006/2007
  4. 4. 2. Operating income and operating income rate increases in the euro, U.S. dollar, Hungarian forint and from continuing operations Canadian dollar, the currencies in which Bonduelle funds its operations. Operating income rose by 16.2 million euros to 84.0 million euros, or 6.7% of total sales (5.7% in 2005-06). Excluding The interest rate hedges used to hold the cost of our financial the impact of a non-recurring gain that primarily reflects a debt in euros to 3.65% became active during the last months of change of inventory valuation methods, operating income from financial year 2006-07. continuing operations for financial year 2006-07 amounted to 71.9 million euros, up 2% over 2005-06. The increase of the group’s income tax expense from 17.8 million euros in 2005-06 to 23.9 million euros in 2006-07 reflects the The group achieved this improved profitability despite: sizeable increase in income before tax and the change in the G A very significant increase in marketing expenses for brand relative weights of the subsidiaries contributing to the group’s development (10%), which brings our marketing budget in consolidated earnings (it should be noted that the tax losses of line with our capital spending on industrial equipment, the fresh business in Germany have not been capitalized). G Very difficult production conditions in northwestern Europe during the summer of 2006, due to the heat wave in July, G Considerable inflation in the prices of certain materials and 4. Capital expenditure supplies, such as packaging and energy, G Unfavorable changes in foreign exchange rates, due to the Total capital expenditure excluding acquisitions amounted to strength of the euro, Hungarian forint and Polish zloty against 57.9 million euros, compared with 66.5 million euros in 2005-06. the U.S. dollar. These investments are used to improve equipment productivity These results reflect the expertise and tremendous motivation of and safety, promote innovation, improve environmental protec- all of the group’s employees, the pertinence the strategic choices tion and support growth in Eastern Europe and in fresh food the group has made, and the actions we have taken during the technologies. past two years to improve the effectiveness of our organizations: G Restructuring of production facilities, In 2006-07, the program for the deployment of the ERP system G Consolidation of back-offices by geographical region, continued to weigh heavily upon the capital expenditure G Investments in competitive advantages and information systems. budget, as the project will not be completed until late 2007. Our capital spending on research and development represented 3. Net income - Group share 1% of total sales, and allowed the group to maintain its dynamic policy of promoting innovative projects –such as the Total consolidated net income rose by 28.1% to 51.7 million sachets fraîcheur freshness bags for food service professionals and euros, or 4.1% of total sales, compared with 40.4 million euros Tetra Recart for consumer canned goods– and perfecting and in 2005-06. introducing new products and processes, such as the Légumes du Soleil range under the Cassegrain brand, the Famili Balls line in Net income - Group share increased by 32.1% to 51.8 million frozen foods, etc. euros, compared with 39.2 million euros in 2005-06. In addi- tion to the non-recurring 9.5 million euro net gain on the Bonduelle also made several new acquisitions totaling 10 million change of inventory valuation methods, net income - Group euros in 2006-07, purchasing Unilever’s Salto brand of frozen share benefited from the 3.9 million euro earnings contribution vegetables in Spain and demonstrating our ongoing interest in from our minority interest in Aliments Carrière (accounted for the Canadian company Aliments Carrière by increasing our under the equity method). stake in that company from 13% to 23%. Net financial expense rose by 27.4% to 12.3 million euros, from 9.6 million euros in 2005-06. Excluding the impact of IAS 32/39, the group would have reported net financial expense of 24.3 million euros for 2006-07, compared with 20.3 million euros for 2005-06, i.e. a 4.0 million euro increase. This increase is attributable primarily to interest Bonduelle-Financial report 2006/2007 3
  5. 5. 5. Cyclical increase in working capital 7. Highlights The group’s 31 million euro increase in working capital included Products the following: Italy – healthful products In order to highlight the natural nutritional qualities of its G A 39 million euro cyclical increase in inventories to 319 million vegetables, Bonduelle has developed three new products in Italy euros at June 30, 2007, i.e. 25% of total sales, compared with in the Agita & Gusta range. These innovations offer consumers 280 million euros at June 30, 2006. a pleasurable taste experience that is good for their health at the This change is attributable to both the change of inventory same time. The Italian company has developed a recipe rich in valuation methods at June 30, 2007 (14 million euros) and beta-carotene for healthy skin, a fiber-rich mixture for intestinal the early start of the pea harvest in June 2007. regularity, and a product rich in Omega 3 to improve protection of the vascular system. G The off-setting of the 39 million euro increase in trade accounts receivable, due in large part to the high sales recorded during Tetra RecartTM the last three months of financial year 2006-07, by a compa- The world leader in vegetables, Bonduelle invests heavily in rable increase in trade accounts payable. research in order to provide consumers with products that are always increasingly consistent with their expectations. One symbol of this dynamic trend in innovation is the commercial 6. Debt-equity ratio continues to fall launch of the new Tetra RecartTM non-metallic containers. Each year, the good performances posted by this new type of pack- The group reported gross financial debt of 360.4 million euros. aging enable Bonduelle to pursue its international rollout. Less cash and 21.3 million euros in other and financial assets, net financial debt represented 277.9 million euros, i.e. 73% of Sachet fraîcheur [freshness bag] total shareholders’ equity, compared with 84% at June 30, 2006. Bonduelle is multiplying its innovations in all of its distribution channels. For example, in the past several years the Company has developed a new type of “canned” packaging called the A. Net financial debt sachet fraîcheur, or freshness bag, for its foodservice customers (restaurants, school cafeterias, etc.). This innovative, ecological, At June 30 economic and simple-to-use system has strengthened the (in millions of euros) 2005* 2005 2006 2007 group’s leadership in the food service market. Net financial debt 261.5 274.6 281.3 277.9 Sustainable development Shareholders’ equity 310.4 303.5 333.1 381.8 Net financial debt/ Dissemination of the new sourcing charter shareholders’ equity 0.84 0.90 0.84 0.73 Bonduelle’s sourcing charter allows the Company to formalize its relationships with the farmers that produce vegetables for the * Excluding IFRS and IAS 32/39. group and defines the conditions required for environmentally- friendly farming, thereby promoting precision agriculture. On July 10, a new, optimized charter was launched in France and B. Analysis of net financial debt will now be disseminated throughout the rest of the world. after interest rate and currency swaps What distinguishes the new charter from the previous versions is that it is organized on the basis of the analysis of risks (chem- At June 30 ical, physical, etc.). (in %) 2005 2006 2007 Strong improvement in workplace safety Fixed rate 2.5 5.7 5.1 As a result of the safety awareness policy set in place as part of Variable rate 97.5 94.3 94.9 Euro 88 93 75 the group’s commitment to sustainable development, the U.S. dollar 10 (4) 3 number of accidents in the workplace recorded this year fell by Other currencies 2 11 22 23%. The formalization of the sustainable development action plan in 2002, the establishment of safety-related metrics and the exchange of best practices all contributed to this good performance. 4 Bonduelle-Financial report 2006/2007
  6. 6. Review of operations and annual financial statements Group market in North America, compared with 13.5% in Western Outcome of the David & Goliath plan Europe*. The retail grocery sector is nevertheless very important As part of its continuous improvement strategy, Bonduelle is for Aliments Carrière, thanks notably to sales of its popular pursuing the measures it undertook under its David & Goliath Arctic Gardens brand, the market leader in Quebec. plan, and is extending it to the establishment of shared services Sales of canned vegetables are distributed between Canada centers (SSC) within the group. These entities, which simplify (86%) and the United States (14%), and most sales (71%) are the administration of shared services for several group divisions, through the retail grocery channel. fulfill two major objectives: compliance with the requirements applicable to publicly held companies, and optimization of Industrial sites costs through the centralization of expertise. This year, the The acquisition of Aliments Carrière, which since July 2007 has group’s efforts resulted in the creation of SSCs in Germany, been incorporated into the group as the new Bonduelle North Italy, Benelux and France (excluding the prepared foods scope). American subsidiary, diversifies the geographical distribution of the group’s production regions, adding seven production facilities –four Cultivation in Quebec and three in Ontario– to the 23 existing production sites Because of its involvement in the primary transformation industry, in Western, Central and Eastern Europe. Located near the largest Bonduelle must continuously deal with the impact of weather- Canadian cities and population centers on the East Coast of the related risks. A very mild spring and a cool and rainy summer United States, the seven production facilities –two of which are throughout Western Europe affected the effectiveness of seeding specialized in canned, three in frozen and two hybrids– produce and harvesting operations. However, given the geographical distri- close to 300,000 metric tons of vegetables for a market that includes bution of the agricultural regions supplying Bonduelle –which 190 million inhabitants, i.e. a population three times that of France. extend from Portugal to Russia– these climatic risks were success- fully managed, and the Company met its 2007 harvest needs. Potential growth opportunities arising Nevertheless, unpredictable weather conditions in recent years from the acquisition and the increase of the amount of arable land used for the The entry of Aliments Carrière entry into the group means the production of bioethanol created strong market tensions. addition of 985 new employees from a non-European culture – Accordingly, the prices of many agricultural products such as a first for Bonduelle. In addition to the exciting challenge faced wheat and corn increased considerably. In response to this new by the Human Resources Department, the arrival of these economic reality, Bonduelle is maintaining its productivity and Canadian colleagues represents a potential opportunity for cost reduction efforts in order to lessen the impact of these exchanges of good practices on both sides of the Atlantic. increases on its production costs. Potential synergies are being analyzed, and certain have already been clearly identified in various areas such as production, water and energy consumption, innovation and new products. 8. Events after the balance sheet date The first success was the launch in Canada, of three different Aliments Carrière: the event of the year mixes of ‘steamed’ in the microwave frozen vegetables under the On July 12, 2007, the Bonduelle Group announced that it had Steammm! line of the Arctic Gardens brand. These products acquired full control of Aliments Carrière, the Canadian leader were developed with the help of Bonduelle’s agro-industrial in canned and frozen vegetables. This acquisition is a significant expertise, and are already a big hit with Canadian consumers. step in the Company’s international expansion, providing They were elected “products of the year” in Quebec, and are Bonduelle with a long-term North American presence. finalists for an award for innovation in Canada –encouraging rewards that are indicative of great promise for the future. With commercial operations in the United States and Canada generating the equivalent of 220 million euros in sales, the Bond issue (OBSAAR) family-owned Aliments Carrière group’s business is comprised In early July 2007, the Bonduelle Group issued a 150 million of two of Bonduelle’s “traditional” technologies: canned (39% euro bond with share subscription and/or purchase warrants of total sales) and frozen (61% of total sales). (OBSAAR), with a lump sum maturity at the end of six years. The dominant frozen business is positioned mainly in Canada Bonduelle issued these OBSAAR-type bonds with a par value of (63%), with sales through three types of distribution channels 1,000 euros to take advantage of favorable market conditions by specifically proportioned to North America. With only 44% of optimizing the cost of its debt and thereby further strengthen sales through the retail grocery industry, this activity reflects the its balance sheet. importance of the B2B market and notably of the food service industry, which accounts for nearly 31% of the total vegetable * Etude food for thought. Bonduelle-Financial report 2006/2007 5
  7. 7. The funds raised will be used to meet the group’s general 9. Change of valuation method funding needs and support its targeted acquisition strategy. This transaction will also enable Bonduelle to strengthen its equity During the financial year, the Bonduelle Group changed the base, in the event that some of the warrants are exercised and method used to measure its inventories. This modification new shares are subscribed. concerned the incorporation of all fixed production costs into inventories. At June 30, 2007, this change of method increased both closing inventories and operating income by 14 million euros. 10. Share price and trading information Share data (in euros) 2003/2004 2004/2005 2005/2006 2006/2007 Highest 80 78.05 68.30 99.55 Lowest 67.8 58.4 55.15 66.60 Financial-year-end closing price 78 58.4 67.50 91.70 Market capitalization at June 30 (in millions of euros) 624 467 540 733.6 Average monthly trading volume (in number of shares) 201,005 236,080 239,424 289,576 11. Outlook 12. Compensation of directors and officers A climate of considerable uncertainty is being generated by the The following amounts were paid by the Company and the increase in agricultural prices around the globe due to the companies its controls in compensation and directors’ fees to change in the EU common agricultural policy (CAP), the sharp directors and officers in respect of financial year 2006-07: increase in world demand for food, the explosion in the amount of arable land used for non-food purposes (biofuels) and the (in euros) Bonduelle SCA low level of grain inventories. Damien Bonduelle 1,200 Daniel Bracquart 3,600 Our performances in 2007-08 and the years to come will Olivier Cavrois 1,200 depend on our ability to pass these inflationary phenomena André Crespel 3,600 along in our selling prices. Stanislas Dalle 1,200 Francis Danjou 600 The consolidation of Aliments Carrière, effective July 1, 2007, Isabelle Danjou 300 should nevertheless provide a substantial boost to the group’s Jean Gueguen 3,600 sales and earnings, starting in the coming financial year, and Yves Tack 3,600 promote growth in North America in the ensuing years. Pierre and Benoît Bonduelle SAS 980,700 The directors’ fees allocated to members of the Supervisory Board and the Audit Committee are determined by the Shareholders’ Meeting. The company that controls Bonduelle SCA and the companies controlled, in turn, by the latter, did not pay any other compen- sation to the directors and officers and have not assumed any commitments as regards any future termination or change of these functions, or subsequent to any such events. 6 Bonduelle-Financial report 2006/2007
  8. 8. Review of operations and annual financial statements 13. Annual financial statements (in euros per share) 2003/2004 2004/2005 2005/2006 of Bonduelle SCA Net dividend paid 1.25 1.12 1.25 A. Income statement Gross dividend 1.25 1.12 1.25 The Bonduelle SCA holding company reported net income of Amount qualifying for a tax allowance 1.25 1.12 1.25 30.6 million euros. Total payout (in thousands of euros) 10,000 8,960 10,000 This includes primarily: 1. Net financial income of 30.6 million euros: C. Share capital – Dividends received from Bonduelle SA +30.1 At June 30, 2007, the share capital of the Company consisted – Other interest and financial income +0.7 of 8,000,000 shares with a par value of 7 euros per share, repre- – Financial expenses and provisions (0.2) senting a total of 11,982,090 voting rights. To the best of the Company’s knowledge, the following shareholders 2. Operating expenses of 1.5 million euros. own at least 5% of the Company’s capital: Baie d’Audierne SA, with 22.4% of the capital and 29.9% of the voting rights. B. Balance sheet Group employees held a 2.7% share of the capital through The main balance sheet headings are: mutual funds. 1. Non-current assets of 278 million euros, During the financial year, the Management Board, exercising comprised essentially of financial holdings; the authorization received from the Extraordinary Shareholders’ Meeting of June 9, 2005, granted 9,226 stock options with an 2. Shareholders’ equity of 261.6 million euros. exercise price of 83.30 euros per share to 29 employees. Non-current financial assets Analysis of changes in gross values and provisions: Gross values Acquisition Sales Redemptions, Gross values at June 30, reclassifications at June 30, (in thousands of euros) 2006 and other (1) 2007 Investments in subsidiaries 207,770 69,000 276,770 Bonduelle SA 207,770 69,000 276,770 Other non-current receivables 143 39 182 Loans to affiliates 143 39 182 Other non-current financial assets Loans Treasury stock held under a liquidity contract 1,581 27,236 (27,267) (466) 1,084 209,493 96,275 (27,267) (466) 278,035 Gross values Provisions Charges Recoveries Carrying at June 30, at June 30, amounts at (in thousands of euros) 2007 2006 June 30, 2007 Investments in subsidiaries 276,770 276,770 Other non-current receivables 182 182 Other non-current financial assets Treasury stock held under a liquidity contract 1,084 1,084 278,035 278,035 Value at year end Treasury stock 1,791 (1) When the exercise period expires, should any options have not been exercised, the corresponding treasury stock is reclassified under non-current financial assets. Bonduelle-Financial report 2006/2007 7
  9. 9. Marketable securities At June 30, 2006 At June 30, 2007 Treasury stock held for stock options 6,358 6,156 Impairment of treasury stock held for stock options 6,358 6,156 Value at year-end Treasury stock held for stock options 9,052 9,953 (in number of shares) At June 30, 2006 Increase Decrease Reclassification At June 30, 2007 Treasury stock held for stock options 134,099 9,226 31,984 (3,400) 107,941 Treasury stock held under a liquidity contract 25,892 317,511 318,151 (5,826) 19,426 Five-year financial summary (in thousands of euros) 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 FINANCIAL POSITION AT YEAR-END Share capital 56,000 56,000 56,000 56,000 56,000 Number of shares issued 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 TOTAL INCOME FROM OPERATIONS Income from subsidiaries 5,025 23,718 29,481 49,365 30,100 Net sales Income before taxes, employee profit-sharing, depreciation, amortization and provisions 5,186 25,726 30,826 48,252 30,041 Income tax (109) 452 (667) (8,605) (490) French legal profit-sharing Income after taxes, employee profit-sharing, depreciation, amortization and provisions 4,773 26,156 35,323 57,189 30,555 Dividends paid 10,047 10,000 8,960 10,000 INCOME FROM OPERATIONS PER SHARE (in euros) Income after taxes and employee profit-sharing, but before depreciation, amortization and provisions 0.66 3.16 3.94 7.11 3.82 Income after taxes, employee profit-sharing, depreciation, amortization and provisions 0.60 3.27 4.42 7.15 3.82 Dividend paid per share 1.25 1.25 1.12 1.25 1.35 (1) Proposal submitted to the Shareholders’ Meeting. 8 Bonduelle-Financial report 2006/2007
  10. 10. Review of operations and annual financial statements II - Risk management B. Market risks a. Currency risk In line with the objectives defined by the group’s senior manage- G Risks related to changes in foreign exchange rates ment (including durability, independence and employee develop- The group publishes its consolidated financial statements in ment), Bonduelle takes a conservative and responsible approach euros, and in 2006-07 86% of its sales and 64% of its operating to its risks. income was denominated in euros. The share of assets, liabilities, sales and earnings denominated in other currencies –essentially the Polish zloty, Hungarian 1. Financial risks forint and U.S. dollar– fluctuates continuously, but still does not have a material impact on the consolidated balance sheet. The group has established an organization that provides for This being the case, the group is subject to the impacts of fluc- centralized management of all of its liquidity, currency, interest tuations in the relative value of these currencies to the euro rate and counterparty credit risks. The Finance Department has when they are translated into euros in its consolidated financial assigned the Group Treasury Department responsibility for risk statements, but is still impacted only slightly by a translation management, and provided it with all of the expertise and tools effect –for example, when the euro appreciates against these needed to participate in the various financial markets as effec- currencies– that reduces the earnings contribution from those tively and safely as possible. The organization and procedures subsidiaries whose financial statements are denominated in utilized are regularly reviewed by the Internal Audit these currencies. Department. At Financial Business Reviews, the group’s senior management validates all of the guidelines set in place in rela- All sales and expenses of group subsidiaries are generally tion to previously authorized risk management strategies. expressed in their local currency, with the exception of imports, exports and financial transactions covered by foreign currency In a global economic environment that is experiencing rapid hedges: Bonduelle believes that its local exposure to currency change, characterized by market volatility and changes in finan- fluctuations was and will remain slight. cial techniques, the role of the Group Treasury Department is to: However, the group’s international growth strategy should increase the weight of non-French activities in sales, operating G Guarantee optimum and sufficient funding to finance the income and consolidated net income. expansion and growth of the group’s activities, and G Identify, evaluate and hedge all financial risks in close collab- G Hedging policy for currency risk oration with the operations teams. The group seeks to hedge, on a budgeted annual basis, all risks relating to the sales of its subsidiaries denominated in a currency The objective is to minimize, at the lowest possible cost, the other than their functional currency, and the risks regarding the impact of financial market fluctuations on the group’s income, net assets of certain subsidiaries conducting business in coun- in order to reduce the capital allocation required to manage tries with a functional currency other than the euro. these financial risks as much as possible. The group uses only over-the-counter financial instruments to The group forbids the taking of speculative positions. hedge the financial risks generated by its production and sales activities. All hedging transactions entered into must comply A. Liquidity risk with the objectives and procedures established by the Bonduelle The Group Finance Department is responsible for maintaining group’s senior management. These transactions are centralized sufficient liquidity at all times. It accomplishes this by effi- within the Group Treasury Department. ciently managing the group’s cash balances and ensuring that the maturity and legal conditions of the financing obtained are The group’s policy regarding fluctuations in foreign exchange both appropriate. It also arranges confirmed lines of credit to rates consists of periodically calculating its net exposure to foreign maximize the flexibility of the group’s financing; details currencies and using financial derivatives to reduce this risk. regarding these confirmed lines are provided in Note 22 of the notes to the consolidated financial statements at June 30, 2007. The group makes use above all of forward foreign exchange contracts, foreign currency swaps and options entered into with AAA rated bank counterparties. An analysis of the portfolio at June 30, 2007 is provided in Note 20 of the notes to the consol- idated financial statements at June 30, 2007. Bonduelle-Financial report 2006/2007 9
  11. 11. b. Interest rate risk 3. Legal risks The interest rate management policy is centrally coordinated, controlled and managed, with the goal of protecting future cash A. Compliance flow and reducing the volatility of financial expenses. The Bonduelle complies with all applicable laws and regulations in group uses various instruments available in the market, notably the conduct of its business and its relationships with its part- interest rate options and swaps contracts. An analysis of the ners. portfolio at June 30, 2007 is provided in Note 20 of the notes As a member of the food industry, Bonduelle is subject to to the consolidated financial statements at June 30, 2007. national and international regulations concerning health, quality control, food products and packaging. 2. Equity risks There are legal risks associated with the manufacture and distri- bution of food products. Every year, the Company buys and sells its own shares, in Bonduelle considers that the measures it has implemented are compliance with the provisions of the prospectus issued in sufficient to meet regulatory requirements and prevent and connection with the share repurchase program as voted by manage these risks. shareholders. B. Trademarks and intellectual property In ascending order of priority, the objectives of this program are to: Rigorous measures are deployed to protect Bonduelle trade- marks. Internal legal teams assisted by industrial property G Ensure secondary market-making and the liquidity of consultants monitor group trademarks, especially the Bonduelle shares by an investment services provider; Bonduelle, Cassegrain and Frudesa brands, register and renew G Hold the shares acquired for subsequent use in exchange or as trademark registrations and take actions against third parties in payment in connection with any potential acquisition; the event of trademark infringements. G Ensure that sufficient shares are available to cover needs generated by stock option plans and any other form of alloca- C. Other legal risks tion of shares to employees and/or the directors and officers Bonduelle’s sales and industrial activities are not significantly of the group; dependent upon other companies, customers or suppliers, and G Ensure that sufficient shares are available to cover needs it has all of the assets required to guarantee the independence of generated by marketable securities giving right to the alloca- its activities. tion of shares of the Company in accordance with all regula- tions in effect; G Cancel any of the shares acquired, subject to the prior author- 4. Industrial and environmental risks ization of the Shareholders’ Meeting. Bonduelle’s activities are regulated by numerous provisions Within this framework, at June 30, 2007, the Company held regarding water, air, soil and environmental waste. 127,367 treasury shares, of which 107,941 were destined for stock The group’s risk management policy seeks above all to: options exercisable in part starting in 2007. Voting rights attached G Guarantee the quality and safety of its food products by effec- to these shares are suspended, and the shares are recorded under tively managing the agricultural and industrial processes, securities available for sale. G Reduce to the greatest extent possible the adverse conse- The Company is not, moreover, exposed to any equity risks insofar quences of its activities on the environment and people. as it does not engage in any cash management transactions involving investments in equity funds or other financial instruments with an equity component. 10 Bonduelle-Financial report 2006/2007
  12. 12. Review of operations and annual financial statements A. Agriculture 5. Hedging of non-financial risks Agriculture provides the major share of raw materials required to produce the group’s products. To guarantee the quality of its Three strategic objectives have been set for the Company by the products and protect the environment, Bonduelle has adopted shareholder, the stability of which contributes to a long-term a sourcing charter that establishes criteria for selecting agricul- approach: durability, independence and employee development. tural land and crop management that farmers working with the The primary objective of the non-financial risk management group must apply. policy is to protect the group’s strategic assets. The broad Combining the most stringent European standards, and strategic guidelines governing capital spending on industrial notably on those taken from French precision agriculture prac- assets, the development of our processes, and the recruitment tices, 100% of the Polish, Portuguese, Italian, and French and training of our workforce all take account on a permanent farmers accounting for three quarters of our supplies have basis of this objective of safeguarding our industrial, financial signed this charter. The remaining 25% of supplies are subject and human resources. to special contract specifications. The aim of this approach is to limit industrial or other risks such as those mentioned above to which the group is naturally B. Product quality and safety exposed. Food safety is a key priority of Bonduelle’s quality policy. To this purpose, it has established Hazard Analysis and Critical To the best of the Company’s knowledge, there are no extraor- Control Point procedures (HACCP) to control identified risks dinary events or disputes that are likely to have a material at various stages of the preparation of its products. These proce- impact on the group’s earnings or assets. dures, which have been implemented throughout the group, provide an audit trail of its products from the planting phase to To this end, the group’s insurance strategy is based on two main our customers’ initial points of delivery. Risk analysis proce- principles. dures and controls at critical points have been set in place throughout the production process. Assessment of risks Of the group’s 26 industrial sites, 17 have been ISO 9001 certi- The Insurance Department, part of the Group Finance fied, 16 have been BRC and/or IFS certified, and 6 produce Department, is responsible for identifying and assessing all products certified as “organic.” In 2006-07, many controls were risks, and collaborates closely with the operating entities. carried out at the sites by both internal and external auditors on The scope and amounts of insurance coverage are set at the the basis of the various standards. group level, based on objectives defined by Bonduelle’s senior management. C. Natural resources The insurance programs are negotiated by the Group Insurance Continuous efforts are devoted to the optimization of natural Department and placed with top tier insurance companies. resources and environmental protection, focusing on the following areas: Transfer of risks G Control over water and energy consumption, Global integrated programs have been set in place for major G Improvement of wastewater treatment equipment, risks with potentially significant strategic and financial impacts, G Pursuit of the industrial waste and vegetable matter manage- to the extent permitted by the insurance and reinsurance ment policy. markets. These concern primarily “damage and business inter- Bonduelle has 21 treatment plants, to guarantee that water is ruption”, “liability”, and “contamination and brand image” returned in pristine condition to the natural environment: coverage. G 7 biological waste treatment plants; G 2 agricultural fertilizer systems; Other insurance programs covering less significant risks have G 12 systems for pre-treatment before discharge into external also been subscribed. systems. Actions conducted at the different industrial sites have reduced consumption of polluting energies (low-sulphur fuel) in favor of cleaner energies (electricity, natural gas). Bonduelle-Financial report 2006/2007 11
  13. 13. III – Corporate social and environmental responsibility Areas Metrics Scope AGRICULTURAL PRODUCTION GROUP Biodiversity Nearly 500 varieties of vegetables distributed through various product lines, 119 collections of varieties made it possible to observe 509 varieties in June 2007 Agronomic services 84 field managers Sourcing charter 100% of all farmers have signed the charter Soil analysis 72% of all nitrogenous fertilizers have been calculated using the residual method Agricultural intensity 19.5 hectares of vegetables raised by each producer NATURAL RESOURCES GROUP Water consumption 13,041,067m3 consumes, or 17.35m3 per metric tonne of product produced Energy consumption Electricity: 280GWh Natural gas: 436GWh PCs Fuel (very low sulphur content): 45 metric tonnes Propane: 861 metric tonnes Domestic fuel oil: 612 metric tonnes Production of ordinary wastes 24,263 metric tonnes, equal to 32.28kg per metric tonne of product produced Recovery: Landfill sites: 33% Recovery of energy: 14% Recycling: 53% Production of special wastes 158 metric tonnes, or 0.21kg per metric tonne of product produced Production of composite plant wastes 259,361 metric tonnes, or 345kg per metric tonne of product produced Recovery: Agricultural fertilizer: 3% Animal feed: 75% Other: 21% Biosolids 38,820m3, or 1,951 metric tonnes of dry matter Packaging 110,705 metric tonnes Analysis by type of material: Glass jars: 8.5% Metal cans: 56% Plastic films: 9% Cardboard boxes: 22% Plastic trays: 3% Lids: 0.5% Labels: 1% Expenses incurred to prevent Water and sludge from wastewater processing plants: 1,436,077 euros environmental impacts of group activities Industrial and composite plant wastes: 338,837 euros Air and energy: 2,809,685 euros 12 Bonduelle-Financial report 2006/2007
  14. 14. Review of operations and annual financial statements Areas Metrics Scope QUALITY/NUTRITION GROUP Total quality control staff 408 employees (in full-time equivalents), of which: 7.5% in the Quality Departments of the subsidiaries and the Group Purchasing Department 30.5% in the Quality Departments of the production sites 42% in the quality control function on the production lines 20% in final receiving controls Certified sites 17 are ISO 9001 certified 16 are BRC and/or IFS certified 6 produce products that are certified “organic” Customer service 1 customer service department has been established in each country other than Russia EMPLOYEE/SAFETY DATA GROUP Employees 5,598 permanent employees 7,166 full-time equivalents under long-term, short-term and seasonal employment contracts Senority: 0 to 3 years: 753 3 to 9 years: 1,747 > 9 years: 3,098 Turn-over rates: Managers: 12.21% Administrative employees and technical supervisors: 12.85% Workers: 7.45% New hires by type of employment contract: Long-term: 348 Short-term: 879 Seasonal: 6,094 Training 2.39% of total payroll Safety conditions Accident frequency rate: 23.04 Coefficient of seriousness of accidents: 0.72 Departures and transfers Departures: 566 persons Resignations: 217 persons Dismissals: 193 persons Transfers to other establishments: 25 persons Work week and overtime Hours worked: 11,850,526 Absenteeism rate: 5.11% Compensation and career advancement Total compensation (l/t, s/t and seasonal contracts): 172,180,083 euros (excluding payroll taxes) Bonduelle-Financial report 2006/2007 13
  15. 15. IV – Share capital This limit includes the total par value of additional shares that may be issued, in compliance with the law, to safeguard the The conditions under which the Articles of Incorporation provide interests of holders of securities conferring rights to the capital. for the modification of the share capital and voting rights comply with all applicable legal provisions. Furthermore, the aggregate par value of shares issued, directly or not by virtue of the following resolution shall be subject to The Articles of Incorporation do not provide for any special this limit. dispensations. 4. If the Management Board decides to use this authorization in connection with the issues described above in 1.a-: Subscribed capital a- decides that the issue or issues shall be reserved in priority The share capital amounts to 56,000,000 euros, consisting of to shareholders who may subscribe for shares on the basis of 8,000,000 fully paid-up shares of a single class of stock, with a their exact, proportional preemptive rights; par value of 7 euros per share. b- decides that in the event that existing shareholders do not subscribe to a sufficient number of new shares –by exercising Authorized share capital not issued their exact, proportional preemptive rights and, if appropriate, subscribing to additional shares on the basis of their preemp- The Combined Ordinary and Extraordinary Shareholders’ tive rights– to account for the entire issue, the Management Meeting of December 7, 2006 granted the following delega- Board may have recourse to the options provided by law tions to the Management Board: involving notably the offering to the public of part of the shares issued but not subscribed; G The Shareholders’ Meeting, after reviewing the report of the Management Board and the special report of the Independent c- concerning the capitalization of additional paid-in capital, Auditors and in accordance with dispositions of the French reserves, net income or other items, resolves that when appli- Commercial Code and notably Article L. 225-129-2 thereof: cable, rights corresponding to fractional amounts will not be negotiable, and the corresponding shares will be sold with any 1. Authorizes the Management Board to increase the capital, in amounts resulting from the sale allocated to holders of these one or more transactions, in amounts and at such times it rights within the period provided for by law. chooses: a- through the issue, in euros, foreign currencies or units 5. Decides that the Management Board shall be vested, within composed of a basket of currencies, of ordinary shares and/or the limits established above, with all powers necessary to deter- securities conferring present or future rights, at any time or on mine the conditions of the issue or issues, record the resulting a fixed date, to ordinary shares of the company or, in accor- increase in capital, amend the Articles of Incorporation in dance with Article L. 228-93 of the French Commercial consequence, charge on its own initiative the expenses of capital Code, any company in which it directly or indirectly owns increases to the corresponding premiums and deduct from such more than half of the capital, whether by subscription for premiums amounts necessary to increase the legal reserve to one shares, conversion, exchange, reimbursement, presentation of tenth the new amount of authorized capital after each increase, a warrant or any other means; and in general undertake everything that is required. b- and/or by the capitalization of paid-in capital, reserves or net income or other means in the form of bonus issues or 6. Duly notes that this authorization cancels and replaces the increasing the nominal value of existing shares; previous authorization with the same purpose. 2. Grants this authorization for twenty-six months as from the G The Shareholders’ Meeting, after reviewing the report to the date of this Meeting. Management Board and the special report of the Independent Auditors, and in accordance with dispositions of the French 3. Decides to set, as follows, the total aggregate amount of Commercial Code and notably Article L. 225-129-2 thereof: shares that may be issued under this authorization granted to the general partners by Management Board: 1. Authorizes the Management Board to increase the capital, in one or more transactions, in amounts and at such times it chooses, The aggregate par value of shares that may be issued under this on the French market and/or on international financial markets authorization may not exceed 17,500,000 euros. through public offerings by issuing in euros, foreign currencies 14 Bonduelle-Financial report 2006/2007
  16. 16. Review of operations and annual financial statements or units composed of a basket of currencies, ordinary shares in capital, amend the Articles of Incorporation in consequence, and/or securities conferring present or future rights, at any time charge when necessary, the expenses of capital increases to the or on a fixed date, to ordinary shares of the company whether by corresponding premium and deduct from such premium subscription for shares, conversion, exchange, reimbursement, amounts necessary to increase the legal reserve to one tenth the presentation of a warrant or any other means; it being specified new amount of authorized capital after each increase, and in that the securities may be issued in payment for shares general undertake everything that is required. contributed to the Company in connection with public exchange offers for shares in accordance with the provisions of Article 8. Duly notes that this authorization cancels and replaces the L. 225-148 of the French Commercial Code. previous authorization with the same purpose. In accordance with Article L. 228-93 of the French Commercial G For each of the issues decided under Resolutions 16 and 17, the Code, the securities to be issued may confer rights to ordinary number of shares to be issued may be increased in accordance shares of any company in which it directly or indirectly owns with the conditions provided for by Article L. 225-135-1 of more than half of the capital. the French Commercial Code and within the limits author- ized by the General Meeting, when the Management Board 2. Grants this authorization for twenty-six months as from the determines that there is excess demand. date of this Meeting. G The Shareholders’ Meeting, after reviewing the report of the 3. Decides to set, as follows, the limits of issues authorized by Management Board and in accordance with Article L. 225-147 virtue of this authorization granted to the Management Board: of the French Commercial Code: The total aggregate par value of ordinary shares that may be 1. Authorizes the Management Board, pursuant to the report of issued by virtue of this authorization may not exceed the expert appraiser, to increase the capital in payment for the 17,500,000 euros. contribution in kind to the Company consisting of equity shares or securities conferring rights in the share capital when Furthermore, shares that may be issued by virtue of the preceding the provisions of Article L. 225-148 of the French Commercial resolution shall also be subject to this maximum amount. Code are not applicable. 4. Decides to cancel the preemptive subscription right of existing 2. Grants this authorization for twenty-six months as from the shareholders to the shares covered by this resolution, while date of this Meeting. granting the Management Board the authority to confer on shareholders, preferential rights as provided by law. 3. Decides that the total par value of ordinary shares that may be issued under this authorization shall not exceed 10% of the 5. Decides that the amount reverting or that shall revert to the share capital. Company for each of the ordinary shares issued by virtue of this authorization, after taking into account, in the case of the issue This limit shall be independent of the limits imposed by the of straight stock warrants, of the price of said warrants, will at other resolutions of the Shareholders’ Meeting. least equal the minimum price provided for by applicable laws and regulations at the time the Management Board implemented 4. Decides that the Management Board shall be vested with, this authorization. within the limits fixed above, all powers necessary to determine the conditions of the issue or issues, record the resulting 6. Decides, if shares are issued in payment for shares contributed increase in capital, amend the Articles of Incorporation in in connection with a public exchange offer, that the Management consequence, charge at its sole initiative the expenses of capital Board shall, within the limits fixed above, be vested with all increases to the corresponding premiums and deduct from such powers necessary to determine the list of shares contributed premiums amounts necessary to increase the legal reserve to within the framework of the exchange offer, set the conditions one-tenth the new amount of authorized capital after each of the issue, as well as, when necessary, the amount of cash to increase, and in general undertake everything that is required. be paid for the difference, and determine the terms and condi- tions of the issue. G The Shareholders’ Meeting, after reviewing the report of the Management Board and the special report of the Inde- 7. Decides that the Management Board shall be vested, within pendent Auditors, in accordance with the provisions of the limits fixed above, with all powers necessary to determine Articles L. 225-129-6 and L. 225-138-1 of the French the conditions of the issue or issues, record the resulting increases Commercial Code and L. 443-5 of the French Labor Code: Bonduelle-Financial report 2006/2007 15
  17. 17. 1. Authorizes the Management Board, if it considers appropriate, G Decides that the beneficiaries of these warrants may include at its sole initiative, to increase the share capital in one or more employees (or selected employees) or certain categories of transactions by issuing ordinary shares for cash and, when appli- personnel, and directors and officers as defined by law, both cable, through bonus issues of ordinary shares or other securities of the Company or economic interest groupings in which it conferring rights to the share capital reserved to employees partic- participates, as provided for by Article L. 225-180 of the French ipating in an employee stock ownership plan. Commercial Code; 2. Cancels in favor of these persons the preemptive right to G Decides that the total number of warrants outstanding subscribe for shares that may be issued by virtue of this author- granted by the Management Board under this authorization, ization. and not yet exercised, may not confer rights to acquire shares corresponding to more than 3% of the share capital; 3. Grants this authorization for twenty-six months as from the date of this Meeting authorization. G Decides that the purchase price of the shares for beneficiaries shall be set on the date the warrants are granted by the 4. Limits the aggregate amount of capital increases under this Management Board and may not be less than 95% the authorization to 3% of the share capital on the date the Manage- average opening price of the 20 trading sessions preceding the ment Board decides to proceed with this capital increase. date the warrant is granted; 5. Decides that the price of shares to be issued, by virtue of 1. G Establishes a warrant period of five years from the date of their of this authorization, may not be less than 20% (or 30% when allocation, including a vesting period of forty-eight months from the vesting period provided for by the plan in accordance with the same date during which the warrants may not be exercised; Article L. 443-6 is greater than or equal to ten years) of the average opening price of the share of the 20 trading days G Grants full powers to the Management Board, within the limits preceding the decision of the Management Board concerning defined above, to set the other conditions and procedures the capital increase and the corresponding issue nor greater than concerning the options and their exercise, notably to: this average. – Determine the conditions under which the warrants may be granted, which may include resale restrictions for all or part 6. Grants full powers to the Management Board to implement of the shares that may not exceed three years from the this authorization, to perform all measures and necessary warrant exercise date, formalities. – Determine the list or categories of beneficiaries of options as provided for above and the quantity of shares to which Share subscription and/or purchase warrants they will confer rights, The Combined Ordinary and Extraordinary Shareholders’ Meeting – Determine the exercise period or periods for the warrants of June 9, 2005 granted the following delegation to the Manage- granted, ment Board: – Provide for the possibility of temporarily suspending the exercise period for a maximum of three months in the event The Shareholders’ Meeting, after reviewing the report of the of financial transactions involving the exercise of rights Management Board and the special report of the Independent attached to the shares, Auditors: – Determine the conditions under which the price and number of the shares may be adjusted, in accordance with G Authorizes the Management Board, in accordance with the the various assumptions provided for in Articles 174-8 to provisions of Articles L.225-177 to L. 225-185 of the French 174-16 of Decree 67-236 of March 23, 1967. Commercial Code, to grant in one or more transactions in favor of the beneficiaries indicated below, warrants to Bonus share issues purchase existing shares of the Company repurchased through The Combined Ordinary and Extraordinary Shareholders’ share buyback programs as provided for by law; Meeting of June 9, 2005 granted the following delegation to the Management Board: G Grants this authorization for thirty-eight months as from the date of this Shareholders’ Meeting; The Extraordinary Shareholders’ Meeting, after reviewing the report of the Management Board and the special report of the Independent Auditors, authorizes the Management Board to 16 Bonduelle-Financial report 2006/2007
  18. 18. Review of operations and annual financial statements carry out, in one or more transactions, in accordance with – Undertake all measures to ensure that beneficiaries comply Articles L. 225-197-1 and L. 225-197-2 of the French with the obligation to retain their shares; and, generally, Commercial Code, bonus issues of existing ordinary shares of – Perform all acts required by this authorization under all existing the Company or shares to be issued in favor of: laws and regulations. G Members of personnel of the Company or companies directly This authorization constitutes the express waiver by existing or indirectly affiliated as defined by Article L. 225-197-2 of shareholders to their rights to the percentage of reserves, addi- the French Commercial Code, or certain categories of this tional paid-in capital and net income to be capitalized for the personnel; payment of the bonus shares. G And/or of the directors and officers, within the meaning of This authorization is granted for thirty-eight months as from Article L. 225-197-1 of the French Commercial Code. the date of this Meeting. The total number of bonus shares may not exceed 3% of the Cancellation of shares share capital existing on the day the first bonus issue is decided The Combined Ordinary and Extraordinary Shareholders’ by the Management Board. Meeting of December 7, 2006 granted the following delegation to the Management Board: The allocation of shares to beneficiaries will become fully vested after a minimum period of two years. Furthermore, the benefi- The Shareholders’ Meeting, after reviewing the report of the ciaries must hold said shares for at least two years. Management Board and the report of the Independent Auditors: The Management Board has the option of increasing the dura- 1. Authorizes the Management Board, at its sole discretion, tion of these two periods. through one or more transactions within the limit of 10% of the share capital or 800,000 shares, to cancel shares of the It is furthermore granted full authority to: Company that it holds or may hold pursuant to shares repur- chased in accordance with Article L. 225-209 of the French G Establish the conditions and, when applicable, the criteria for Commercial Code and reduce the share capital by the corre- allocating bonus shares; sponding amount in accordance with the provisions of all appli- cable laws and regulations, G Determine the identity of the beneficiaries and the number of shares allocated to each of them; 2. Grants this authorization for twenty-four months as from the date of this Meeting, i.e. until December 7, 2008, G Determine the impact on the rights of beneficiaries of trans- actions affecting the share capital or that may affect the value 3. Grants full powers to the Management Board to take the of shares granted carried out during the acquisition and actions necessary to cancel the shares and reduce the share holding periods and in consequence, modify or adjust, if capital and modify the Articles of Incorporation and carry out necessary, the number of bonus shares issued to safeguard the all necessary formalities. rights of beneficiaries; Share repurchase program G And, when applicable: The Combined Ordinary and Extraordinary Shareholders’ – Determine the existence of sufficient reserves and for each Meeting of December 7, 2006 granted the following delegation bonus issue transfer from a special restricted reserve amounts to the Management Board: necessary for the payment of the new shares to be allotted, – Decide, in time, to increase the capital through the capital- The Shareholders’ Meeting, after reviewing the report of the ization of reserves, additional paid-in capital or net income Management Board, authorizes the latter, for eighteen months, corresponding to the issue of bonus shares, with the amount in accordance with Articles L. 225-209 et seq. of the French of this increase or increases subject to the maximum author- Commercial Code, to repurchase, through one or more trans- ized amount under Resolution 8, actions at times of its choosing, shares of the Company not to – Acquire shares under a share buyback program to be allo- exceed 10% of the current capital stock, or 800,000 shares. cated to the bonus issue, This authorization cancels the previous authorization granted to the Management Board by the Ordinary Shareholders’ Meeting of June 9, 2005. Bonduelle-Financial report 2006/2007 17
  19. 19. Shares may be repurchased to: V - Shareholders’ agreements G Ensure the secondary market-making and liquidity of Escrow agreement Bonduelle shares by an investment services provider through a liquidity agreement in compliance with the rules of conduct Bonduelle is a French limited partnership with shares (société en of the French Association of Investment Firms (AFEI) as commandite par actions, or SCA). recognized by the French Financial Markets Authority The General Partner is “Pierre et Benoît Bonduelle SAS,” a (AMF); French simplified joint stock company whose shares are held directly by 15 members of the Bonduelle family. G Hold the shares acquired, to subsequently use them in Pierre et Benoît Bonduelle SAS is represented as General exchange or as payment in connection with any acquisition Partner by its Chairman, Christophe Bonduelle. that may take place, as long as the shares acquired in this In accordance with Article 14.3 of the Articles of Incorporation manner do not exceed 5% of the Company’s share capital; of Bonduelle SCA, at least 1,520,000 stripped share rights or 760,000 Bonduelle shares (with beneficial ownership or full G Ensure that sufficient shares are available to cover needs ownership rights, or both) were deposited in escrow on behalf generated by stock option plans and any other form of alloca- of Pierre et Benoît Bonduelle SAS until December 2007. These tion of shares to employees and/or the directors and officers shares held in escrow represent 9.5% of the share capital. of the group, under the conditions and in accordance with the methods provided for by law, notably with regard to the Lock-up agreement French legal profit-sharing requirement, employee savings plans or bonus shares; In addition to escrow commitments, the first lock-up agreement was signed on May 26, 1998 by 101 family shareholders “with the G Ensure that sufficient shares are available to cover needs gener- purpose of creating a stable and long-lasting core shareholding.” ated by marketable securities giving right to the allocation of Under this agreement, the signatories undertook to hold a portion shares of the Company in accordance with all regulations in of their shares for ten years. At June 30, 2007, the shares concerned effect; by this agreement represented 25.51% of the Company’s capital. This agreement was concluded for ten years and parties undertook G Cancel any of the shares acquired, subject to the authorization to jointly reassess the situation two years prior to its expiration. to be granted by this Meeting in Resolution 15 falling within The second agreement was concluded between 137 family the purview of the Extraordinary Shareholder Meeting. shareholders with the purpose of stabilizing the volume of shares traded on the market, ensuring continuity in the company’s Shares may be repurchased by all means including through management and maintaining the undertaking to cooperate in block trades at time of the Management Board’s choosing, a partnership and oversee its administration (affectio societatis) during public offerings in accordance with security market by the family shareholding group. regulations. However, the Company does not intend to use This agreement was signed on March 27, 1998 for five years and derivatives. has been renewed annually; each party to the agreement may withdraw from the agreement one year prior to each renewal date. The maximum purchase price must not exceed 110 euros per In its meeting of July 1, 1998, the French Financial Markets share. In the event of capital transactions including notably Council (Conseil des Marchés Financiers, or CMF), considered that stock splits, reverse splits or bonus issues, this amount will be under the provisions of the agreement when considered together adjusted in the same proportions (whereby the adjustment or separately, the signatories were acting in concert and subject to multiplier equals the ratio between the number of shares before specific disclosure obligations under French law. At June 30, 2007, and after the transaction). these Bonduelle shareholders represented 48.61% of the capital and 67.24% of the 11,982,090 existing voting rights. This share buyback authorization is limited to 88,000,000 euros. Dutreil agreement The Shareholders’ Meeting grants full powers to the Manage- ment Board to carry out the transactions, determine the terms Bonduelle informs its shareholders that, pursuant to the adoption of and conditions, conclude all necessary agreements and perform the economic initiative law (the so-called Dutreil Act) in 2003, all legal formalities. Bonduelle SCA concluded a lock-up agreement for the total amount of its shareholdings in Bonduelle SA for six years. This agreement was renewed in December 2004, and again in December 2006. As provided for by law, Bonduelle SCA shareholders may adhere to this agreement and benefit from its provisions. 18 Bonduelle-Financial report 2006/2007

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