TESB Tessenderlo Group

Continued momentum in strategy execution

• In December 2012, Tessenderlo Group completed the sale of its pharmaceutical ingredients activities Farchemia and Calaire Chimie, and in January 2013, the sale of its continental European profiles activities was completed
• On February 27 2013, the group announced an intention to divest its Compounds activities to Mitsubishi Chemical Corporation
• In addition to the above, during 2012 the group announced several other strategic initiatives to optimize its portfolio of activities and accelerate growth of its core activities

2012 operating performance validates strategic choices

• 4Q12 revenue of 503.9 million EUR in 4Q12 was 5.4% above the same period last year; while FY12 revenue grew 3.1% to 2.1 billion EUR
• REBITDA increased by 10.3% to 24.7 million EUR in 4Q12, and decreased by 13.6% to 161.1 million EUR for FY12
• The segments Tessenderlo Kerley and Gelatin & Akiolis, which represent 77% of group REBITDA, combined grew both revenue and REBITDA in the fourth quarter and FY 2012
• Recurrent profit/loss was -1.3 million EUR for 4Q12 and 29.5 million EUR for the full year 2012
• A loss of 148.2 million EUR was recorded in 4Q12, due to a non-recurring charge of 154.6 million EUR.  A summary of this charge, which mainly comprises environmental provisions to be spent over 40 years and non-cash losses on disposal groups classified as held for sale, can be found on the following page.  For the full year 2012, the group had a loss of 197.5 million EUR.

Balance sheet fully in line with expectations

• Net financial debt came in at 314.0 million EUR, resulting in leverage of 1.9x and gearing of 45.3%
• Notional net debt was 393.9 million EUR; on this basis, leverage was 2.4x and gearing 50.9%
• All covenants remain fully respected
• The Board of Directors will propose the dividend to be maintained at 1.00 euro net per share, and the group will continue to offer the choice of dividend payment in cash and/or shares

Outlook

Tessenderlo Group expects 2013 to be another year of substantial progress in the company's journey to become a global specialty group.  

Concretely, this means that we will focus on further strategy execution, being a combination of divesting non-core activities and investing in growth activities.  

It is expected that these further divestments will globally have a positive impact on the group's results.

Secondly, the group anticipates that the market conditions where it is present will be broadly unchanged compared to those experienced in 2012:

• Food and agriculture markets are expected to be strong in the US, and fertilizer volumes should be solid in 2013 albeit with a cautious start
• The group's traditional markets for Inorganics are likely to continue to be difficult
• The requirements to collect and re-purpose bio-residuals show favorable trends in the medium to long term
• However, lower availability of bio-residual volumes in the French market has led to increased competition for collection services, putting pressure on volumes and margins
• The gelatin market is expected to continue to be solid in 2013
• Construction markets in Europe will remain difficult

Given all of these factors, the group is implementing restructuring programs in several countries to align its cost structure and support profitability.

While it is too early to estimate the impact of these market conditions for the whole year, the group believes that its recurrent operating profitability in the first quarter of 2013 will be below the same period one year ago, and is unlikely to be materially higher for the full year 2013 compared to 2012. No substantial non-recurring charges related to either environmental provisions or divestments are expected in the coming years.

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