in d e x [bib.kuleuven.be] filecorporate governance 15 ... marketing strategy 19 product policy 19...

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Consolidated key figures 3

Key events in 2007 4

I. Message of the Chairman and the CEO 7

II. Mission Statement and Corporate Strategy 9

III. Group Profile 11

1. Products and markets 112. Sales organizations 123. Production facilities 124. Logistics centre 135. Group functions and country organization 13

IV. Corporate Governance 15

V. Report of the Board of Directors 19

1. Activities in 2007 19 1. Marketing strategy 19

Product policy 19 Marketing and sales policy 19

2. Investments and industrial operation 24 3. Research and development 25 4. Quality management 25 5. Environment 27 6. Personnel and organization 27 7. Social responsibility 28 8. Evolution of costs 29 9. Profitability 2910. Principal risks and uncertainties 3011. Use of financial instruments 3112. Significant events after 31 December 2007 31

2. Prospects for 2008 333. Results and proposal for division of profits 354. Other company information 37

VI. Stock market information 41

VII. Board of Directors, Committees and Auditor 45 Management Lotus Bakeries Group 48

VIII. Financial statements 51 Consolidated financial statements 52 Five year financial summary Lotus Bakeries Group 54

IX. General information 55

In d e x

333

Consolidated key fi gures of the Lotus Bakeries Group

in millions of EUR

2007 2006 2005 2004 2003

INCOME STATEMENT IFRS IFRS IFRS IFRS BGAAP

Turnover 224.53 179.25 152.34 153.17 152.53

Depreciation (9.69) (8.46) (7.93) (7.73) (10.59)

Current operating result (REBIT) 28.70 19.94 15.05 13.99 8.07

Current operating cash fl ow (REBITDA) (1) 38.75 28.46 23.08 21.10 19.87

Non-current operating result (0.94) (1.12) 0.18 (0.09) (1.15)

Operating result (EBIT) (2) 27.76 18.82 15.23 13.90 6.92

Financial result (3.97) (3.19) (1.25) (1.35) (2.18)

Result before taxation 23.79 15.63 13.98 12.55 4.75

Income taxes (3.44) (4.52) (4.52) (4.29) (1.85)

Result after taxation 20.35 11.11 9.46 8.26 2.90

Result of equity method 0.31 0.29 0.13 0.12 0.14

Net result 20.66 11.40 9.59 8.38 3.04

Net result: share of third parties 0.14 0.03 0.08 0.08 0.08

Net result: share of the Group 20.52 11.37 9.51 8.30 2.96

OWN FINANCING AND INVESTMENTS IFRS IFRS IFRS IFRS BGAAP

Net cash fl ow 29.71 22.03 18.43 16.36 17.01

Investments (3) 7.33 10.33 9.71 7.91 6.90

BALANCE IFRS IFRS IFRS IFRS IFRS

Balance total 195.33 199.50 105.18 104.94 108.24

Equity 68.92 54.68 48.43 40.33 33.40

Net fi nancial debts (4) 42.25 63.41 9.01 19.43 33.22

NUMBER OF PERSONS EMPLOYED (5) 1,152 1,159 959 970 1,074

CONSOLIDATED KEY FIGURES 2007 2006 2005 2004 2003

PER SHARE in EUR (6) IFRS IFRS IFRS IFRS BGAAP

Current operating result (REBIT) 37.64 25.62 19.30 18.06 10.05

Current operating cash fl ow (REBITDA) 50.82 36.56 29.60 27.24 24.74

Net result: share of the Group 26.90 14.61 12.19 10.72 3.69

Net dividend (7) 4.05 3.30 2.25 1.80 1.05

Weighted average number of shares 762,453 778,385 779,689 774,672 -

TOTAL NUMBER OF SHARES

PER 31 DECEMBER 803,037 803,037 803,037 803,037 803,037

(1) REBITDA is defi ned as current operating result + depreciations + provisions and amounts written off + non-cash costs valuation option- and warrantplan.

(2) EBIT is defi ned as current operating result + non-current operating result. (3) Includes investments in tangible and intangible fi xed assets.(4) Net fi nancial debts are defi ned as fi nancial debts - investments - cash at bank and in hand - own shares.(5) For the joint ventures all members of personnel are taken into account for one hundred percent.(6) From 2004: compared to the weighted average number of shares. Up to and including 2003: compared to the total

number of shares.(7) For 2007: proposed dividend to the Ordinary General Meeting of 9 May 2008.

< Launch of caramelized biscuit spread in Belgium under the Lotus brand

4

Key events in 2007

New products

Launch of Koffi eleutjes/caramelized biscuits in the Netherlands under the Peijnenburg brand

Launch of gingerbread in Belgium under the Lotus brand

5

Markante gebeurtenissen in 2007

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FR

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BENL DE

CHAT

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Announcement of the ending of production of Jaffa Cake Bars for Mc Vities in 2008

New organizational structure

Signifi cant price increases of various basic ingredients (including fl our, fats, chocolate, syrups) and packaging material

Production record at Lembeke plant taking it past 20 million kilograms.

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19991998 2000 2001 2002 2003 2004 2005 2006 2007 2008jan to mrch

Evolution of flour price - Lotus Bakeries - EUR/kg

Country organizations:• Belgium-Luxemburg• Netherlands• France

Sales organizations:• Germany/Austria/

Switzerland• Czech Republic/Slovakia• UK/Ireland• Spain/Portugal• USA• Asia Pacifi c• New Markets Europe• Middle East/India/Africa

6

Karel Boone, Chairman en Matthieu Boone, CEO

7

istrengthening of commercial organizations on export markets. Another major task area is increasing product innovation by developing new and innovative products in 2008. For 2008 we are also planning major investments to expand our production capacity for caramelized biscuits and gin-gerbread and to make productivity improvements. This constant improvement of our efficiency and productivity is essential for maintaining our competitiveness in order to extend our position in the international biscuits mar-ket.

Lotus Bakeries’ management and employees have set to work with determination and commitment to implement these plans and are - as in the past - strongly motivated to achieve the company’s strategic ambitions.

2007 was a good year for Lotus Bakeries. Turnover rose considerably, especially in the second half of the year. Internal growth of 5% in the first half and of 14% in the second half was above expectations.

Structurally our products are well placed in the market. We have a portfolio of tasty, highly reputed products with a heavy emphasis on convenience. Many products such as gingerbread also have strong “health” profiles.

Lotus and Peijnenburg are both very strong brands radi-ating seriousness and solidity, identities which again proved their very great worth in 2007.Lotus caramelized biscuits continued on their way to becoming an internationally recognized product. Turno-ver was also helped by the poor summer weather, which resulted in very high summer sales in the Benelux and neighbouring countries.

Organizationally 2007 was a good year. Following the takeover of Koninklijke Peijnenburg in mid-2006 we have rapidly grown into a tight, well-streamlined organiza-tion. The associated adaptations at group level have pro-ceeded very successfully.The integration of the Lotus Bakeries Netherlands organ-ization into that of Koninklijke Peijnenburg took place very rapidly and efficiently, with major savings in the Netherlands.

Another feature of 2007 was the very marked upward movements in many raw materials prices. The unprece-dented sharp and fast rises for essential ingredients like grains, syrups and margarines are structural in nature. Lotus Bakeries therefore adjusted its prices as fast as possible in the course of the fourth quarter of 2007. This was necessary and timely.

2008 faces us with new and major challenges. The big-gest of these will be handling consumer reactions to our higher prices and the strong rise of the euro against the US dollar and most other foreign currencies. Lotus Bak-eries will cushion these effects by further increasing its commercial efforts: more advertising and further

Me s s ag e f r o M t h e Ch a I r M a n a n d t h e Ceo

Matthieu Boone Karel BooneCEO Chairman

8

Jan Boone, managing director and Jan Vander Stichele, managing director

9

ii- Outside the Netherlands, Lotus will be the brand for

all specialty products, chosen with care. In the Neth-erlands, Peijnenburg will remain the brand for gin-gerbread, and of other specialties concordant with its market image “Happen naar Peijnenburg (mag elke dag)”.

• Product ranges in Belgium, the Netherlands and France centred around local specialties and strength-ened by those from the other countries. In the other countries these specialties are valued for their innova-tiveness and specificity.

• Specialized production centres with the technology to produce price-competitive products that consum-ers value for their quality and unique character.

• An expanding commercial organization targeted at specific market segments and consumer groups in dif-ferent countries. Retail is the primary sales channel in most markets, but out-of-home consumption (whole-sale and catering) is of growing importance. In the Group’s key markets (Belgium, Netherlands, France), the Lotus and Peijnenburg brands and sales are stimu-lated by active advertising and promotional activities. In other countries an active commercial policy is applied, adapted to Lotus’s specialist position in the country in question.

• New product developments and changing consumer nutritional requirements (low trans margarine, low sat margarine, fibre-rich products, less fat, etc.) call for a strong team in areas like product improvement and product development. For this Lotus Bakeries has a specialist team that supports plants in implementing well-targeted market and marketing changes.

• Lotus Bakeries uses a highly efficient integrated MIS (Management Information System), enabling strategic control and daily management of the company’s activ-ities to be based on concrete data.

In this way Lotus Bakeries will achieve further growth and profitability by strengthening its market and brand position and through the further internationalization of its products.

Mission statement

Lotus Bakeries will base its sustainable growth and profitability on:• a focus on authentic products from the biscuit and

cake world: caramelized biscuits, gingerbread, waffles and galettes and bakery specialties. Products that are distinctive in terms of both quality and customer satis-faction. Customers are entitled to expect the very best from Lotus Bakeries in these specialty areas.

• a targeted brand policy: building brands with real content. Lotus and Peijnenburg are strong brands, which radiate pride and in which consumers have con-stant trust and feel good when consuming.

• clear leadership in its specialties.The size and organization of Lotus Bakeries must be adapted to the volume and foreseeable evolution of its market.

Corporate strategy

Lotus Bakeries’ business is producing and selling authen-tic specialty biscuits and cakes.Lotus Bakeries seeks to strengthen (or consolidate) each product’s leadership in its local region and create an international market for it. This leadership is expressed in the strong market positions of the Lotus and Peijnen-burg brands.

To achieve this, Lotus Bakeries has the following essen-tial resources:• Brand positions: Lotus Bakeries has two very strong

brands, both with strong content in their home mar-kets (Lotus in Belgium and Peijnenburg in the Nether-lands), and highly regarded as specialist producers by consumers in other countries.- Brands now represent 82% of total annual turnover.- Market investment is systematically targeted at

increasing brand awareness and supporting brand growth.

MIss Ion s tateMent and Corp or ate s tr ategy

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iiigr o U p pr o f I l e

1. Products and markets

Lotus Bakeries has opted for a brand policy based on authentic specialties from the biscuit and cake world: caramelized biscuits, gingerbread, waffl es and galettes and cake specialties. This policy is implemented by strengthening Lotus Bakeries’ leadership in these prod-ucts in their regions of origin, and stimulating their inter-nationalization.

Caramelized biscuits

Caramelized biscuits are an original Belgian specialty. They owe their typical taste to the caramelization of the sugar during the baking process. In Belgium, Lotus cara-melized biscuits are a top product across the biscuit mar-ket. Lotus caramelized biscuits are providing increasingly popular internationally, so that today 65% of sales are realized outside Belgium. The main foreign markets are France, USA, UK and Germany. In June 2007, caramelized biscuits were launched in the Netherlands under the Peijnenburg “Koffi eleutjes” brand name. This introduc-tion proved to be very successful. Lotus caramelized biscuits are also a strongly growing success in South Korea, Japan, the Czech Republic, Swit-zerland, Austria, Israel, Spain and Italy. The other export markets are also developing very well.

Waffles and galettes

Belgium has long been famed for its waffl es. Lotus Bak-eries has a very wide range here consisting primarily of Liège waffl es, soft waffl es, fi lled waffl es, galettes (thin, crispy waffl es) and vanilla waffl es. By clearly distinguish-ing its brand features, Lotus Bakeries is able to persuade consumers to opt for quality and specifi city when pur-chasing these products in Belgium. 60% of all Lotus waf-fl es are sold outside Belgium, primarily in France, Ger-many and the Netherlands.

Cake specialties

This group of authentic products is diffi cult to bring under a common denominator. In almost every case these are specialties that are very popular in their region and country of origin, and which outstanding quality and strong branding have deeply anchored in consumer behaviour and consumption patterns. These products, like frangipane, madeleine, carré confi ture and Zebra in Belgium, Glacés and Enkhuizer cookies in the Nether-lands and Breton butter specialties are therefore main-stays for the popularity of the Lotus brand.

Gingerbread

This authentic product from the Low Countries (modern-day Belgium and Holland) has developed very strongly in the Netherlands where strong brands like Peijnenburg and Wieger Ketellapper have been turned into modern, contemporary concepts that match the consumption patterns of today’s conscious consumers. Gingerbread is very popular in the Netherlands, thanks to the quality of the product itself and the sense of dynamism inherent in the brands, with over 30 million kg consumed every year. Koninklijke Peijnenburg has over 60% of the Dutch mar-ket. The current dynamism on the Dutch market will obviously be carried forward by the ‘Peijnenburg’ fl ag-ship.In Belgium just 5 million kilos a year are consumed. Gin-gerbread is also popular in France. Lotus wants to mar-ket these products more strongly, fi rst of all in Belgium and France. This product will be redynamized, with prod-uct development and innovative packaging, under the Lotus brand. Gingerbread was successfully launched in Belgium in June 2007 under the Lotus brand name. The set target of 10% market share in six months was exceeded, and unlike previously, the gingerbread market has taken on a new dynamism, turning it from a stagnating into a growth market.

< Cosy breakfast with Lotus gingerbread

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2. Sales organizations

Lotus products are consumed both at home and away from home. Lotus has specialist sales teams working intensively in each market: retail, catering (schools and clinics) and food service (hotels, restaurants, cafés and petrol stations).

Lotus has its own sales organizations for Belgium, the Netherlands, France, Germany/Austria/Switzerland, Czech Republic/Slovakia, UK and, since 1 February 2008, also for Spain.

In the United States Lotus Bakeries has a joint venture organizing both mail order (catalogue) and retail sales. A specialist US company also sells Lotus products to airline companies.

In South Korea, Japan, Israel, Taiwan, Cyprus, Leba-non, Greece, China, Kuweit and other export countries Lotus Services relies on specialist importers which are professionally and successfully selling our products. In Singapore a separate export department has been set up for Asian and Oceanic countries.

Harry’s Benelux is a joint venture with Harry’s, market leader in France in prepacked bakery products. In Bel-gium the company markets a range of bread products with a shelf life of four to six weeks.

3. Production facilities

Lotus Bakeries’ product range involves in a wide range of different production technologies. Understanding, mas-tering and further developing these product technolo-gies is a constant challenge. The additional need to limit the number of products and technologies per produc-tion unit requires us to concentrate the products and production processes in specialist plants.

Our production sites are:

Belgium• At Kaprijke (Lembeke) in East Flanders we produce

the full range of caramelized biscuits, as well as fran-gipane.

• In Ghent (Oostakker) in East Flanders, we produce madeleine, Amico, Zebra and Midi. This production plant also specializes in snack cakes (Marshmallow, Bimbo) and carré confiture.

• The production of waffles and galettes is split between Meise in Flemish Brabant and Courcelles in Hainault.

France• Our plant at Comines, Le Nord, specializes in filled

waffles, coconut products and frangipane under the Cremers brand and for distribution labels.

• In Briec-de-l’Odet, Brittany, Le Glazik produces the Breton butter products: 4/4 bars, demi lunes, mini 4/4s, madeleine, Gâteaux bretons, Galettes bretonnes, Palets and luxury butter biscuits (almond biscuits and hearts).

Netherlands• Geldrop, North Brabant, where the famous Peijnen-

burg gingerbread is produced at two plants, P1 and P2, on the same site.

• Sintjohannesga, Friesland, the Sintjohannesga site (previously Wieger Ketellapper) produces Frisian cook-ies under the Wieger Ketellapper brand and ginger-bread under the Peijnenburg brand.

• Enkhuizen, North Holland, produces Glacés, batten-bergs and Enkhuizer cookies.

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3 g r o u p p r o f i l e

4. Logistics centre

The products from the various production facilities form a single range that can be ordered by customers. The logistics centre at Lokeren (East Flanders, Belgium) col-lects products from the various production sites and delivers them to customers in every country and region except the Netherlands and Brittany. In the Netherlands products are delivered by an outside logistics partner.

5. Group functions and country organization

In order to implement the strategy and achieve the Group’s objectives as coherently and efficiently as pos-sible, the entire group organization is designed around them.

A key word here is ‘coherence’, with a fundamental option for a clear group approach. This group approach is important given that Lotus Bakeries applies a general brand strategy, is looking to follow certain customers internationally, and wants to have its expertise in various areas available across the Group (Corporate Finance, Corporate Human Resources, Corporate Services Opera-tions and Secretariat General).A second keyword is ‘efficiency’: a key condition for tak-ing maximum advantage of the commercial particulari-ties of each market and of each country’s own culture. For this reason it is crucial to enable each country to make its own decisions as far as possible in the concrete interpretation and application of the policy lines set at group level (country organization Belgium, country organization Netherlands, country organization France and Sales Offices in countries whithout production sites).

The Executive Committee (EXCO) submits the strategy, approves the action plans and determines the corporate policies. EXCO is the most important coordination and managing corporate body. Apart from the three execu-tive directors, EXCO consists of the corporate director finance, the corporate director human resources, the general manager Belgium and the general manager Netherlands.

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iVCo r p o r at e goV e r n a n Ce

(1) Appointed by the Ordinary General Meeting of 11 May 2007.

Lotus Bakeries has adopted a Corporate Governance Charter. This document, the text of which is published on its website (www.lotusbakeries.com), is a commit-ment to apply the principles of the Corporate Govern-ance Code dated 9 December 2004. This charter is adapted when necessary to refl ect changes in the com-pany’s business. The Charter describes the most impor-tant aspects of Corporate Governance at Lotus Bakeries and the internal regulations of the Board of Directors, Committees and the Executive Committee.

This annual report gives details of the application of Lotus Bakeries Corporate Governance Charter. It also provides explanations for any deviations from the provi-sions of the Corporate Governance Code.

1. Board of Directors and Committees

of the Board of Directors

1.1 Board of Directors

1.1.1 Composition

• From 01/01/2007 to 31/12/2007, the board consisted of:

- Baron Karel Boone until 11 May 2007 and Charlofi n NV from 11 May 2007, represented by their perma-nent representative, Karel Boone, non-executive Chairman, represent the majority shareholder, Bisin-vest NV.

- Beukenlaan NV, represented by its permanent repre-sentative, Matthieu Boone, CEO, represents the majority shareholder, Bisinvest NV.

- Cofi goMM BVBA, represented by its permanent rep-resentative, Jan Vander Stichele, executive director.

- Mercuur Consult NV, represented by its permanent representative, Jan Boone, executive director.

- Stanislas Boone, non-executive director, represents the majority shareholder, Bisinvest NV.

- PMF NV, represented by its permanent representa-tive, Johan Boone, non-executive director, represents the majority shareholder, Bisinvest NV.

- Anton Stevens, non-executive director, represents the majority shareholder, Bisinvest NV.

- Michaël Boone & Co BVBA, represented by its perma-nent representative, Michaël Boone, non-executive director, represents the majority shareholder, Bisin-vest NV.

- Count Paul Lippens, independent director.- Christulf BVBA, represented by its permanent repre-

sentative, Chris Dewulf, independent director.- Jean-Luc Dehaene, independent director.- Herman Van de Velde NV, represented by its perma-

nent representative, Herman Van de Velde, inde-pendent director.

- Wolferen BV (1), represented by its permanent repre-sentative, Johan Lokhorst, non-executive director.

This gives us a balanced Board of Directors in which the majority shareholders, the independent directors and executive management are adequately represented. All directors’ mandates expire immediately after the Annual General Meeting of 2009, except for that of Wol-feren BV, that expires directly after the Annual General Meeting of 2011.

Paul Lippens has been a non-executive, independent director since 1988. He is also Chairman of the Board of Directors of Iscal Sugar NV, a sugar manufacturer and a Lotus Bakeries supplier. The Board of Directors believes that the independence of Paul Lippens is not jeopardized by this fact, as there is no interference between the pur-chase of sugar and the position as director at Lotus Bakeries. In addition, the fact that Paul Lippens was appointed for a fourth mandate in May 2005, is in this case not considered by the Board of Directors as adverse-ly affecting his independence.

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• Proposal to the Ordinary General Meeting of 9 May 2008- Proposal to appoint Christavest Comm. VA, repre-

sented by its permanent representative, Stanislas Boone, as a director instead of Stanislas Boone.

• The CVs of the directors are available on p. 45-46 of this annual report and on the corporate website of Lotus Bakeries

• The secretary of the Board of Directors is Filip Standaert, Secretary-General.

1.1.2 Activities of the Board of Directors

The Board of Directors met six times in 2007. All directors were present at all meetings, except for two directors on one occasion.

The subjects dealt with at the meetings were:- recent sales and financial results- results at 30/06 and 31/12 and proposed press

releases- investment budget and global budget- proposed subjects for the annual report- process of integrating Peijnenburg- the new legislation on public takeover bids - stock options and warrants- agendas for the General Meetings- acquisition projects- reports and recommendations from the Committees- new product introductions - information on concrete activities and organization- evolution basic ingredients.

• One situation occurred in the course of 2007 in which the procedure of Article 523 of the Companies’ Code on conflicts of interest was applied in the Board of Directors. This concerned the approval of the 2007 warrant plan, including the distribution of the number of warrants to be allocated by function category. This was the case in the Board meetings of 22 June 2007 and 18 July 2007. Beukenlaan NV, Mercuur Consult NV and CofigoMM BVBA did not take part in the discussion and approval of this agenda item.

• In the course of 2007 no conflicts of interest occurred between Lotus Bakeries NV (including its associated companies) and its directors or members of the Execu-tive Committee, not falling under the conflict of inter-est rules of articles 523 and 524 ter of the Companies Code.

• The newly appointed Board member, Wolferen BV, has received information and visiting sessions tailored to his needs, giving him an understanding of the Lotus Bakeries strategy, organization and primary activities.All transactions involving shares of Lotus Bakeries NV carried out in the course of 2007 by persons consid-ered as insiders and by persons with executive respon-sibility were undertaken in accordance with the rules of Lotus Bakeries for the prevention of market abuse.

1.2 Audit Committee

The Audit Committee includes two independent direc-tors: Paul Lippens (Chairman) and Christulf BVBA, repre-sented by its permanent representative, Chris Dewulf. Michaël Boone & Co BVBA, represented by its permanent representative, Michaël Boone and Charlofin NV, repre-sented by its permanent representative, Karel Boone, both non-executive directors, are the two other mem-bers of the Audit Committee. In the case of a tied vote the Chairman has the casting vote. This ensures that the independent directors have sufficient influence. The Audit Committee met three times in 2007 and all mem-bers were present. The external Auditor participated in part of all three meetings, at which he presented his findings to the Audit Committee.

The subjects examined were:- systematic handling of a risk area as part of a global

audit approach- Auditor’s findings and recommendations- IFRS accounting principles- discussion of the external Auditor’s reports in various

fields- proposal to appoint the new statutory Auditor.

1.3 Remuneration and Nomination Committee

The Remuneration and Nomination Committee has four members who are all non-executive directors: Christulf BVBA (Chairman), represented by its permanent repre-sentative, Chris Dewulf, Jean-Luc Dehaene and Paul Lip-pens are independent directors. Charlofin NV, represent-ed by its permanent representative, Karel Boone is a non-executive, not independent member. The Commit-tee met three times in 2007, with all members present.

The subjects examined were:- salaries, bonuses and benefits for 2007: systems for

managers and executives, and concrete application to Executive Committee members

- appointment of two new members of the Executive Committee.

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4 c o r p o r a t e g o v e r n a n c e

1.4 Director compensation

The members of the Board of Directors each receive EUR 12,500 a year. The Chairman receives EUR 25,000 a year. Each member of the Audit and Remuneration and Nomi-nation Committees receives compensation of EUR 5,000 a year.

2. Executive Committee

• The Executive Committee consists of the following members:

- Beukenlaan NV, represented by its permanent repre-sentative, Matthieu Boone: CEO and Chairman

- CofigoMM BVBA, represented by its permanent rep-resentative, Jan Vander Stichele, managing director

- Mercuur Consult NV, represented by its permanent representative, Jan Boone, managing director

- Wilfried Deleye, corporate director finance- William Du Pré, general manager Belgium- Jos Destrooper, corporate director human resources- Marco de Leeuw, general manager Netherlands

(from May 2007).

• The secretary of the Executive Committee is Filip Stan-daert, Secretary-General.

• The Executive Committee met twenty-two times in 2007. All members were present at all meetings. There were no transactions between Lotus Bakeries and the members of the Executive Committee that were in conflict with the interests of Lotus Bakeries.

• As result of the nature of their positions, the members of the Executive Committee have different employ-ment statuses, in Belgium as well as in other countries. Therefore, where necessary, the remuneration is transposed into a gross salary before social charges assumed by the employer.

In 2007 the CEO received the following remuneration:- Fixed compensation: 282,287 EUR- Variable compensation: 127,027 EUR- Other: 62,160 EUR

In 2007 the members of the Executive Committee, not including the CEO, together received the following remu-neration:- Fixed compensation: 858,380 EUR- Variable compensation: 307,422 EUR- Other (group insurance

and miscellaneous): 182,061 EUR

In 2007 the following number of options were allocated

and accepted: - Karel Boone 750- Matthieu Boone 1,000- Jan Vander Stichele 750- Jan Boone 750- Wilfried Deleye 500- William Du Pré 500- Jos Destrooper 500- Marco de Leeuw 500

In 2007 the following warrants, replacing the share option plans, were allocated and accepted for the com-ing years: - Matthieu Boone 5,000- Jan Vander Stichele 5,000- Jan Boone 5,000- Wilfried Deleye 2,500- William Du Pré 2,500- Jos Destrooper 2,500- Marco de Leeuw 2,500

• No special recruitment or departure regulations have been agreed with the members of the Executive Com-mittee.

3. External audit

PricewaterhouseCoopers Bedrijfsrevisoren BCVBA, rep-resented by Mr Lieven Adams, “bedrijfsrevisor”, and Mr Peter Opsomer, “bedrijfsrevisor”, was appointed as Audi-tor of Lotus Bakeries NV on 11 May 2007 by the General Meeting for a term of three years. Its mandate expires immediately after the Annual General Meeting of 2010. The compensation received in 2007 for auditing and non-auditing services by PricewaterhouseCoopers Bedrijfs revisoren BCVBA and by people connected to PricewaterhouseCoopers Bedrijfsrevisoren BCVBA, is described on p. 34 of the financial supplement.

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V1. Marketing strategy

Global turnover rose in 2007 by 25% to EUR 224.5 million. This very strong increase also refl ects the consolidation of Koninklijke Peijnenburg from 1 July 2007 onwards. Comparison on a like-for-like basis with 2006 and 2007 fi gures shows overall sales growing by 10% and sales of Lotus and Peijnenburg brand products rising by 11%.

Product policy

Lotus Bakeries is striving to be a leading brand manufac-turer with a range of authentic biscuit and cake prod-ucts. The basis for this strong market position must be distinctive quality, with consumers experiencing Lotus Bakeries products as quality products which offer them satisfaction and pleasure.

For each product Lotus Bakeries seeks to combine very high quality with features specifi c to the identity of the Lotus and Peijnenburg brands.

As part of this policy, all necessary measures have been taken to retain this high quality and guarantee a very high level of product safety. This quality management is sustained by the systems and rules governing delivery selection, specifi cation and control systems for raw materials and packaging, by production process descrip-tions and the approach taken to hygiene, backed by ISO, HACCP, BRC and similar certifi cation.

In addition to our constant search for better product quality, we actively adapt to the changing needs of our customers, who are increasingly asking for nutritional information. We have therefore systematically extend-ed the information on the back of our packaging with data for persons with allergies to eggs, milk, nuts, etc. Packaging also clearly states the nutritional value per 100 g. This information is also available on the Lotus Bak-eries website. Consumers with more specifi c product questions can address our consumer services in the dif-ferent countries.

A second dimension of our product policy is conven-ience. Sales of our products are closely bound up with their suitability for consumption in a very wide and var-ied range of times and situations. In addition to the tra-ditional use at home, there is strongly growing need for products adapted to more individual use, such as with a cup of coffee, during a break at school or at work, during leisure activities, etc. Lotus Bakeries is not only the company behind the legen-dary caramelized biscuit accompanying one’s cup of cof-fee, but has also specialized in portion-sized packs of all its products. Consumers see portion packages as handy to use and a way of avoiding waste of the product itself.

Nutritional and health aspects fi gure ever prominently in our product policy. We are constantly striving for con-tinuous improvement by applying the best available know-how and technologies. A whole series of measures contribute to this: low levels of transfatty acids, use of eggs from organically-fed chickens, vegetable fats only, and more and more low saturated fat products like madeleine. This policy will be systematically extended, as knowledge and technology evolve in this area.

New products based on authentic recipes offer contem-porary responses to consumer’s nutritional wishes and calls for ‘more fi bres, more fruit, less saturated fat, less sugar, etc.’.Recent product developments in this area include low sugar (-30%) Peijnenburg gingerbread, which is proving increasingly successful, and ‘rich in fi bres and fruit’ Nutrigo caramelized biscuits. Innovative products, but always retaining the rich taste of the original product.In 2008 Lotus is planning to introduce a low sugar (-30%) madeleine.

Marketing and sales policy

In markets where our products are known to large num-bers of consumers, we seek a broad presence in all mar-ket channels: retail, hotels and restaurants, catering, food service. This visible presence forms a strong basis for consumers’ brand and product familiarity, and Lotus

re p o r t o f t h e Boa r d o f d I r e C to r s1. Activities in 2007

< Launch of Mega Mindy gingerbread

20202020

TV commercial for Peijnenburg - “Happen naar Peijnenburg (mag elke dag).”

TV commercial for Lotus - “Want een zwak moment komt altijd ongelegen.”

2121212121

5 r e p o r t o f t H e B o a r D o f D i r e c t o r S

Our commercial efforts in Belgium were focused on four main activities:

• TV advertising. Our theme for 2007 was: “Lotus Peperkoek, da’s straffe koek”.

• Three issues of our Lotus-Lekkers magazine were pub-lished and distributed to over 300,000 families, with interesting information on new and existing Lotus products and attractive promotions.

• Five action waves with promotions and special POS presentations (Gingerbread launch, A healthy start to the day, Enjoying summer, Lotus waffl es: Best Choice, St Nicholas).

• Product updating and improvement initiatives: launch of NutriGo caramelized biscuits, gingerbread range and Lotus premium range.

Harry’s Benelux sells prepacked bread products in Bel-gium under the Harry’s brand. Turnover grew by 2.7%.

Bakeries adapts its products and packaging to a wide variety of consumption occasions.

In many markets, however, our specialties and brands are still not generally known to fi nal consumers. Here we try and build up a positive image for our products through their use along with a cup of coffee in catering and food service. This familiarity and popularity can in turn stimulate retail demand for these products for home use. Sales organizations in a number of countries are being extended step by step to effectively address all sales channels. Sales are additionally supported by spe-cial promotional displays and marketing campaigns and, in major markets, by direct marketing and mass media publicity, such as TV advertising and sponsoring.

In 2007 we achieved the following results:

Belgium

In Belgium, turnover rose by 4.4% to EUR 75.9 million. Sales under the Lotus and Harry’s brands rose more strongly, slightly increasing our market share.

2323

evolution of turnover (1)

in millions of EUR

(1) 2007, 2006, 2005 and 2004 are in accordance with IFRS, 2003 is in accordance with BGAAP.

geographical turnover distribution

Launch of Bumba madeleine

export/new markets

4.3%uSa3.4%

B2B3.1%

uk2.2%

germany/austria/Switzerland4.1%

france15.3%

netherlands33.8%

Belgium33.8%

France

Total turnover was up 11% to EUR 34.4 million. Lotus brand products scored even better with an increase of 13.5%. The Lotus brand has done very well in France for a number of years with a dynamic approach to product policy, innovative packaging and strong promotional and advertising support, which are much appreciated by our customers and consumers.

Netherlands

Here we grew by a very strong 15% (2007 turnover com-pared with combined 2006 turnover of Koninklijke Peijnenburg and Lotus Bakeries Nederland).

The reasons for this success include:

1) The successful integration of the commercial activities of Lotus Bakeries Nederland and of Koninklijke Peijnenburg in the Netherlands

2) The successful launch of “Koffi eleutjes” caramelized biscuits in the Netherlands under the Peijnenburg brand name.

We opted to replace the name “speculoos” used in Bel-gium and elsewhere by “Koffi eleutjes”, in order to avoid any confusion with the Dutch “speculaas”, which is a biscuit with a totally different taste.

3) Further successful growth of gingerbread in the Netherlands thanks to the dynamic approach of the Peijnenburg brand.

4) Continuing TV support for the Peijnenburg brand, leading to over 80% spontaneous brand recognition and a market share of more than 60%.

5) Powerful POS promotional activities through excellent cooperation with customers.

Germany/Austria/Switzerland

Here our turnover grew by 11.7% to EUR 9.2 million, with caramelized biscuits and waffl es standing out as two strong growth categories.

United Kingdom and B2B

Growth of 3.8% to EUR 12 million was carried by strong growth of Lotus brand sales.

< Launch of madeleine 30% less sugar

20072006200520042003

224.5

179.2

152.3153.2152.5

2424

2. Investments and industrial operation

Investments in tangible and intangible fi xed assets amounted in 2007 to EUR 7.3 million. This fi gure is sig-nifi cantly lower than in 2006 (EUR 10.3 million) and ear-lier years.

Rising sales volumes of both caramelized biscuits and gingerbread led us to examine and decide on capacity extensions at Lembeke (additional lines and a further building) and Geldrop. An initial, preparatory part of these investments was already undertaken in 2007.

Other major projects are:• the new Snelle Jelle line at Sintjohannesga• the extension of cake conditioning at Sintjohnannesga

and Geldrop.

All plants operate to unambiguously defi ned and chal-lenging standards in terms of yields and quality, hygiene and safety. A number of parameters are remeasured daily so that each department has the right information with which to make any necessary adjustments. In 2007 a number of smaller investments were made to help the plants achieve or even exceed these criteria. Operating safety at the plants in 2007 was high, and almost all plants successfully achieved or even exceeded their quality and yield objectives. The Enkhuizen plant was also successful here, despite a diffi cult start. The Courcelles plant has not yet been able to regain the lost volumes, but a revitalized production team is beginning to achieve better results. Certain lines are already achiev-ing their targets, but globally speaking, results are still below objectives in Courcelles, but the upward trend is clearly visible and can be expected to continue in 2008.

Every plant can count on a strongly motivated team that pays constant attention to the good functioning of the departments and the continuous optimization and/or improvement of the production processes.

The investment budget for 2008 will be a lot higher than in 2007. The capacity extension at Lembeke will be near-ly completed in 2008. The investments in 2008 for expanding gingerbread production will be substantial. Lotus Bakeries will also be investing in new projects, rationalization and improvements in connection with ergonomics, infrastructure and explosion-proofi ng.The total investment budget for 2008 is EUR 13 million.

Export/New Markets

Very strong growth in most markets is turning the Lotus caramelized biscuit even more into a genuine interna-tional biscuit.Despite the high cost of the euro against most other countries outside the Eurozone, our export turnover grew by an impressive 27%. Spectacular growth fi gures were recorded by countries like South Korea, Japan, Israel, the Czech Republic, Spain, Italy, Taiwan, Romania, Croatia, etc.

USA

Despite the fall of the US dollar against the euro, sales to the U.S.A. developed very positively. Caramelized bis-cuits, sold under the “Biscoff” brand name, are becom-ing increasingly popular in the USA, through both cata-logue and retail (supermarket) channels.Marketing to these two channels is undertaken in a joint venture with The Gourmet Center Inc. The Gourmet Center Inc is a major specialist in airline catering and also sells Lotus products to the airline industry.

investments in millions of EUR

Launch of Mega Mindy waffl e

20072006200520042003

7.3

10.39.7

7.96.9

2525


3. Research and development

Lotus Bakeries’ corporate strategy is based on the funda-mental choice to pursue a brand policy. A direct conse-quence is that consumers need to attach positive value to products for their specific and distinctive character-istics. To achieve this, Lotus works permanently to improve and update all its products and maintain their positive dis-tinction from other products on the market. As part of this policy products are at times fundamentally changed, or totally new products are developed to accommodate changing consumer tastes.

Each of our nine factories has staff with a fundamental knowledge of the technologies used there. With this know-how and the attendant experience, all factories make a significant contribution to the process of con-stant improvement and innovation.

The Research & Development department is system-atically building a knowledge base covering all products, allowing individual factories’ know-how and experience to be used throughout the Lotus Bakeries Group. This know-how is supplemented with original research and where necessary with external research and/or training. In this way the R&D department plays a key role in all research and improvement projects in the factories.

In both Belgium and the Netherlands we have specialist capacity for developing new products (NPD). A funda-mental priority is adapting existing products and devel-oping new products in response to growing market demand for responsible nutrition products (health aspects, nutritional claims). To meet this need we have invested extensively in basic and applied know-how in this area.

A similar approach is applied in the technical field. Every factory has employees on site with the necessary knowledge to manage the entire production apparatus. The Engineering Services department is familiar with all the equipment and production processes in the vari-ous factories. This broad technical knowledge and expe-rience, supplemented with specific research for particu-lar projects, forms the basis for the major investments and automation projects undertaken in cooperation with the factories concerned.

4. Quality management

Quality management plays a clear and important role in stimulating improvements. To strengthen its role, it was decided in 2007 to bring the quality management and R&D departments into a single Quality and Research department.

As a branded products company it is essential for Lotus Bakeries that its products be distinctive in terms of qual-ity and customer satisfaction. Effective quality manage-ment is therefore a permanent task for every plant and the Quality and Research department group-wide. Inspection and maintenance are two important aspects in ensuring that established quality levels are constantly achieved.

Lotus Bakeries has therefore established a quality man-agement system that is applied in all production cen-tres. Clear guidelines are defined in a number of areas:

• selection criteria for suppliers: suppliers are approved on the basis of structured supplier audits and of annual performance assessments.

• specifications and control systems for raw materi-als and packaging: in addition to the established specifications, all incoming raw materials and packag-ing are controlled for product safety on the basis of detailed product safety. Every site has a traceability system linking finished products to the original raw materials.

• production process descriptions: complete descrip-tions of all production processes have been prepared in order to be able to ensure constant quality.

• finished product quality: systematic quality control is integrated into various parts of the production proc-ess. A central assessment process also exists, with products given quality ratings.

• quality and customer relations: customer com-plaints are systematically followed up. Scenarios have been developed for any serious complaints or crisis situations.

• hygiene approach: HACCP plans exist for every prod-uct line and production process. Systematic audits are carried out on the basis of hygiene checklists.

2626

Production team plant Courcelles

Production team plant Lembeke

2727


The Koninklijke Peijnenburg plants have a similar, well functioning quality system. Work on integrating the two systems began in 2007. The respective quality officers are collaborating very closely in order to achieve the goal (complete integration of the two systems by the end of 2008.

In addition to internal auditing of these various aspects, all plants are externally certified to ISO-9001:2000 and/or BRC higher level certificate. We regard external certifi-cation as very valuable support for the continuous improvement of products and processes.

5. Environment

The activities of Lotus Bakeries impact the environment in two main areas: packaging and factory production processes. In both fields Lotus Bakeries is working con-tinuously to improve its environmental performance.

Environment and packaging

Lotus Bakeries is constantly looking for ways to limit the quantity of packaging material per product unit, and for materials that meet all safety, reliability and consumer requirements and are at the same time more environ-mentally friendly.

Responsibility for packaging lies with marketing. In this way environmental objectives play an important role in developing new products and renewing existing ones. Lotus Bakeries has always been a proponent of practica-ble solutions - in cooperation between the various play-ers concerned - that integrate packaging waste manage-ment into good environmental management. Lotus Bakeries has always played an active role here. In Ger-many, Belgium, France and the Netherlands companies are required to take back waste packaging. This is under-taken by means of structured cooperation between con-sumer goods manufacturers, distribution companies and the packaging industry: Duales-System in Germany, Fost Plus in Belgium, Eco-Emballages in France and Eco-ver-pakking in the Netherlands.

Environment and production processes

This field involves very diverse environmental aspects. The environmental effects of our production processes are systematically investigated and, based on the out-come, appropriate measures are taken to reduce or put an end to negative effects.

The basic ideas in this area are societal ones and deeply anchored in Lotus Bakeries’ corporate values and objec-tives. These special measures are, however, to a large extent tied to local regulations. Overall, however, Lotus Bakeries strives to encourage a broad awareness within the Group of the environmental effects of its operating activities. It seeks maximum results in areas like preven-tion (e.g. waste water), recycling (including paper and cardboard) or responsible destruction (for example incin-eration of packaging film waste in specialist centres).

6. Personnel and organization

Evolution of the workforce

The total number of employees decreased by 7 during the year to 1,152 at 31/12/2007. The number of full-time employees fell by 20, and the number of part-time employees rose by 13.

There are 639 employees in Belgium (= -18), 126 in France (= -5), 341 in the Netherlands (= +19), 27 in the USA (= -4), 10 in Germany (= +1), 3 in the UK (unchanged), 1 in Swit-zerland (unchanged), 4 in the Czech Republic (unchanged) and 1 in Singapore (unchanged). Joint venture employ-ees are included 100%.

49% of employees are male, 51% female.349 employees work part-time, equal to 220 full-time equivalents.

Leadership @ Lotus Bakeries

In 2007 a “Leadership @ Lotus Bakeries” project was started up in order to meet future challenges with all employees.

The objective of the project is to clarify the role of our senior and middle management population as a whole. The project is contributing to the further integration of Koninklijke Peijnenburg into the Group and serves as a basis for developing the culture of the organization.

2828

7. Social responsibility

Lotus Bakeries is fully aware of its social responsibility and actively pursues its social role.

For many years Lotus Bakeries has supported a wide range of social and cultural projects, activities and organ-izations. These include donations and support for devel-opment projects, cultural sponsoring and financial sup-port for activities in local communities in which the company is active.Lotus Bakeries has defined policy lines whereby the level of its financial support for local and development projects is tied to its net profit.

Alongside existing projects Lotus Bakeries also supports the CFP (Corporate Funding Programme). More spe-cifically it is helping the “Boat to Kinshasa” project, also supported by the Belgian government, which aims to create a central organization for transporting and mar-keting agricultural and other basic products along Lake Mai-Ndombe and the River Congo to and from Kinshasa. Lotus Bakeries employees have already organized vari-ous activities to support this project, with Lotus Bakeries matching the funds raised by its personnel. This amount is doubled a second time by the food industry develop-ment fund. A great deal of local progress has already been made in this way. Efforts to support this magnifi-cent project will continue in 2008.

Lotus Bakeries has drawn up a company code for all employees. This code outlines the corporate values that make for a positive enterprise culture and describes Lotus Bakeries’ responsibilities towards its various stake-holders.

The leadership model has been developed and imple-mented together with members of management and now offers clear and transparent answers to important questions like:

1. What values do we expect from our employees in response to the question “How do we do things at Lotus Bakeries?”

2. What specific Lotus core competences are expected from management staff? These core competences are also culture-defining.

3. What specific competences are expected from me in my particular function?

The leadership model is also integrated into various HR processes. This leadership model will serve in 2008 as the basis for an internal Lotus management develop-ment programme.

The desired cultural development is a future priority in the HR area.

personnel

Total Part-timeFull-time

20072006200520042003

1,074

781

293

970

679

291

959

662

297

1,159

823

336

1,152

803

349

2929


8. Evolution of costs

Prices for key raw materials, including flour, marga-rines, butter and syrups, rose sharply in the course of 2007. Packaging and energy prices also rose markedly.

Personnel costs reduced as a percentage of turnover compared with 2007 as a result of the strong rise in turn-over.

Depreciation and amortization were together EUR 1.2 million higher than in 2006, with Koninklijke Peijnen-burg consolidated for a full year in 2007, compared with half a year in 2006.

9. Profitability

Current operating result (REBIT) rose sharply from EUR 19.9 million to EUR 28.7 million (+ 44%), owing in large part to the consolidation of a full year’s results from Koninklijke Peijnenburg in 2007, compared with just the second half in 2006.

Profitability margins widened markedly. REBIT as a per-centage of turnover was up from 11.1% to 12.8%. REBITDA as a percentage of turnover reached 17.3% from 15.9% in 2006.

evolution of reBitDa and reBit (1)

in millions of EUR

(1) 2007, 2006, 2005 and 2004 are in accordance with IFRS, 2003 is in accordance with BGAAP.(2) REBITDA is defined as current operating result + depreciations + provisions and amounts written off + non-cash costs valuations option- and warrantplan.(3) REBIT is defined as current operating result.

REBITDA (2) REBIT (3) Depreciation + amounts written off

This increase reflects the exceptionally good growth fig-ures in 2007, mainly under the Lotus and Peijnenburg brands.

The non-current operating result of EUR -0.94 million reflects primarily the cost of integration and restructur-ing in the Netherlands and the amortization of amortiz-able brand names from the Peijnenburg “purchase price allocation”.

The change in financial result to - EUR 4.0 million from - EUR 3.2 million in 2006 is explained by the external financing of the acquisition of Koninklijke Peijnenburg, which in 2007 impacted the entire year, and by the nega-tive market value produced by the application of IFRS rules to the interest rate hedging of this financing. This latter accounting requirement negatively impacts pre-tax results by almost EUR 1.3 million.

Net profit rose 81.2% to EUR 20.7 million from EUR 11.4 million in 2006.Explaining this substantial increase are the strongly increased operating results and the effect of the lower-ing of the tax rate in the Netherlands from 29.6% to 25.5% on the deferred tax liabilities relating to the “pur-chase price allocation”. This tax reduction is recognized in the income statement, with an effect of more than EUR 2.3 million.

20072006200520042003

19.9

8.1

11.8

21.1

14.0

7.1

23.1

15.1

8.0

28.5

19.9

8.6

38.8

28.7

10.1

3030

The negative market value of interest rate hedges, on the other hand, negatively impacts the net result.

Net cash flow rose 34.8% from EUR 22.03 million to EUR 29.7 million in 2007.

10. Principal risks and uncertainties

The principal market risks to which the Group is exposed are fluctuations in the cost of raw materials and packag-ing, and in exchange and interest rates.

1. Raw materials and packaging costs

The risk of negative consequences on financial results of fluctuations in raw materials prices is limited by conclud-ing forward contracts with fixed prices in euro for major volatile raw materials. For other raw materials and for packaging, the Group works where possible with annual contracts.

2. Foreign exchange risk

Purchases are made predominantly in euros. Most sales are also settled in euro. The main sales transactions involving foreign currencies are in USD and GBP. The exchange risk on these two currencies is largely covered by option contracts.

The CZK-denominated receivable from the sale of the Group’s shareholding in Lotus-Delta in the Czech Repub-lic is also hedged at a fixed exchange rate.

3. Interest rate risk

Long term financial liabilities carry either fixed interest rates or variable interest rates based on Euribor up to one year. The interest risk on variable rate borrowings, including short-term debt, is hedged with interest rate option contracts.

evolution of added value (1)

in millions of EUR


2007 2006 2005 2004 2003

in % of operating income (1)

Added value 43.2 43.4 42.9 42.3 38.8

REBITDA 17.3 15.9 15.2 13.8 13.1

Net cash flow 13.2 12.3 12.1 10.7 11.2

REBIT 12.8 11.1 9.9 9.1 5.3

Net profit 9.2 6.4 6.3 5.5 2.0

in % of added value (1)

Personnel expenses 58.1 61.0 62.1 64.6 64.6

Depreciations (2) 10.0 10.9 12.2 11.9 17.9

Taxes 3.6 5.8 6.9 6.6 3.1

Net financial charges (3) 4.1 4.1 1.9 2.1 3.7

Net profit 21.3 14.7 14.7 12.9 5.1

(1) 2007, 2006, 2005 and 2004 are in accordance with IFRS, 2003 is in accordance with BGAAP.(2) Not included depreciations on consolidation differences.(3) Net financial charges is defined as financial result excluding depreciations on consolidation differences.

financial ratios

20072006200520042003

97.0

77.8

65.364.859.1

3131


4. Credit risk

The Group has a diversified international customer port-folio with a relatively low number of days’ receivables outstanding (27 days in 2007). Strict procedures and rules exist within the Group to track customers accurate-ly and to limit and control any potential risk situations as fast and appropriately as possible.

5. Liquidity risk

Given the substantial operating and net cash flow as against the net financial position, the Group’s liquidity risk is limited.

6. Product liability risks

The production, packing and sale of food products give rise to product liability risks.Lotus Bakeries applies the highest product safety stand-ards to the entire production and distribution process, from raw materials through to the distribution of the final product, supported and guaranteed by structured procedures and systematic internal quality audits. Exter-nal ISO, BRC and other audits take place at regular inter-vals.The necessary product liability insurance has been sub-scribed within reasonable limits.

7. Pension scheme risks

The form of and benefits under pension schemes exist-ing within the Group depend on the conditions and cus-toms in the countries involved.A major portion of these pension schemes are defined contribution schemes, including in Belgium and France. These are funded by employer and employee contribu-tions and charged to the income statement of the year in question.

Defined benefit pension schemes exist in the Dutch and German subsidiaries. In certain companies provisions also exist for early retirement (“bridge”) pensions and pension obligations resulting from legal requirements (France).

11. Financial instruments

The Group uses derivative financial instruments to hedge the risk of unfavourable movements in exchange and interest rates. No derivatives are used for business pur-poses. Derivatives are initially valued at cost price and thereafter at real value.Given their nature, these contracts do not fall under the application of IAS 39 (hedge accounting) and changes in the fair value are recognized in the income statement.

12. Significant events since 31 december 2007

At the end of January 2008 Lotus Bakeries took over its Spanish importer, López Market. López Market, located close to Madrid, sells waffles, caramelized and other bis-cuits, and other original specialties on the Spanish mar-ket, mainly to the retail market, and in particular to super and hypermarkets. Lotus Bakeries had already for many years been López Market’s largest supplier. López Mar-ket expects to achieve sales of almost EUR 3 million in 2008, and an operating profit of almost 5% of sales. López Market will be consolidated into the Lotus Bakeries Group as from 1 February 2008.

financial ratios (1)

2007 2006 2005 2004 2003

Days customer credit 27 34 36 39 45

Solvency ratio (%) 35.3 27.4 46.1 38.4 27.7

Liquidity ratio (Current ratio) 0.7 0.8 1.0 0.9 0.9

Gross sales margin (%) 17.4 15.6 14.9 13.5 12.8

Net cash flow/Net financial debts (%) 70.3 34.8 204.6 84.2 51.2

Net cost-effectiveness of equity (%) 30.0 20.9 19.8 20.8 11.5


3232323232

3333


Despite consumer confi dence in the Lotus and Peijnen-burg brands is positive and the internationalization of caramelized biscuits is continuing, 10% internal growth in a relatively mature market like biscuits and related products is exceptional. For this reason earnings pros-pects for 2008 cannot be extrapolated from the 2007 fi gures. In 2008 a number of signifi cant elements are set to affect the Group’s turnover and profi tability:

• In the course of 2007 various raw materials prices rose sharply, including fl our, margarines, syrups and pack-aging material. Consumer prices have therefore risen signifi cantly, and pressure on volumes is therefore to be expected.

• For a number of years, Lotus Bakeries has produced various products for the McVities Cake Company, which is a part of United Biscuits. As already announced in our end-August 2007 press release, this coopera-tion for Jaffa Cake Bars will be stopped and Lotus Bak-eries will be producing these Cake Bars for McVities only until the end of March 2008. On an annual basis the production of Jaffa Cake bars represents a turno-ver of around EUR 5.5 million and an EBIT and cover-age of fi xed costs of around EUR 1.5 million.

• The strong euro against the US dollar and pound ster-ling negatively impacts the profi tability of sales in the respective markets.

2. Prospects for 2008

The Group intends, nonetheless, to invest further in its brands and production facilities.

• In 2008, media budgets for Belgium, the Netherlands and France will be increased. The Group is convinced that it is strategically important to continue to invest in the long term in the Lotus and Peijnenburg brands.

• The investment level in 2007 was relatively low at around EUR 7 million. In 2008 the Group is planning to spend around double this amount in expanding cara-melized biscuit capacity in Lembeke and gingerbread capacity at Geldrop and Sintjohannesga.

In short, for 2008, Lotus Bakeries expects a small growth in turnover. Given the items discussed above, earnings as a percentage of turnover will be slightly lower in 2008.

< Launch of Koffi eleutjes/caramelized biscuits in the Netherlands under the Peijnenburg brand

3434

Corporate ICT & SAP team

34

Employees Sales Office Lotus Bakeries Germany/Austria/Switzerland

Corporate ICT & SAP team

3535


20072006200520042003

4.05

3.30

2.251.80

1.05

3. Results and proposal for division of profits

CONSOLIDATED

The consolidated net profit of the year 2007 amounted to EUR 20.7 million as compared to EUR 11.4 million last year.

STATUTORY

The results of the year 2007 of the parent company Lotus Bakeries NV are as follows: in EUR

• Profit of the financial year 3,998,781.79• Transfer from untaxed reserves 41,064.07• Transfer to untaxed reserves (22,028.79)Profit for the year available for appropriation 4,017,817.07

The Board of Directors proposes to appropriate the profit balance as follows: • Transfer fom reserves available for distribution (508,582.73)• Distribution of a gross dividend of 5.40 EUR per share to 803,037 shares (1) 4,336,399.80• Distribution of emoluments to directors 190,000.00

TOTAL 4,017,817.07

(1) The dividends on the purchased Lotus Bakeries shares will be paid to Lotus Bakeries NV and Lotus Bakeries Group Services NV and, as a consequence, will not be suspended.

evolution of net dividend per sharein EUR

In line with legal requirements, the balance presented for the approval of the shareholders has been drawn up based on this distribution.

If the Ordinary General Meeting of shareholders of 9 May 2008 accepts the Board of Directors’ proposal, the net dividend per share will amount to EUR 4.05, after deducting a withholding tax of 25%. This net dividend will be payable as from 19 May 2008 on surrender of coupon n°20 at the Bank Degroof, Fortis Bank, Dexia Bank, ING Bank, KBC Bank and Petercam.

3737


4. Other company information

3. Share options as per 31 December 2007

In the context of the Lotus Bakeries share option scheme there were 13,150 new share options issued in 2007. Per 31 December 2007 the total number of unexercised share options was 41,454.

Year of issue Number of Number of Total of allocated options of available the options options exercised options

1999 4,590 4,590 -

2000 5,560 5,560 -

2001 5,120 4,733 387

2002 3,727 3,441 286

2003 4,635 2,680 1,955

2004 7,126 - 7,126

2005 8,400 - 8,400

2006 10,150 - 10,150

2007 13,150 - 13,150

Total 62,458 21,004 41,454

4. Issue of warrants

• To replace the share option plans the Board of Direc-tors of Lotus Bakeries NV resolved on 18 July 2007 to issue 50,000 warrants for the coming years in the framework of the authorized capital. The principal conditions governing the issue and exercise of the warrants and the most important consequences of the lifting of the pre-emption right of existing sharehold-ers are mentioned in part 2 in note 25 to the consoli-dated fi nancial statements.

• The persons to whom they were offered have sub-scribed a total of 49,700 warrants.

1. Changes in the capital

In the fi nancial year 2007 there were no changes in the company capital.The Board of Directors of Lotus Bakeries NV resolved on 18 July 2007 to increase capital within the framework of the authorized capital subject to the exercise of the issued warrants, by means of an issue of up to 50,000 shares.

2. Purchase of own shares

The Extraordinary General Shareholders’ Meeting of 11 May 2007 granted the Board of Directors of Lotus Baker-ies NV and of the direct subsidiaries an additional man-date to purchase over a period of 18 months a maximum of 20,000 Lotus Bakeries shares, at a price equivalent to the average stock exchange listing of the Lotus Bakeries share for the thirty calendar days prior to the date of purchase reduced by twenty percent as a minimum price and increased by 10 percent as a maximum price.

The purchases are intended, within the context of the share option scheme, the principles of which were approved by the Board of Directors on 11 February 2005 and the General Shareholders’ Meeting of 13 May 2005, to be able to supply shares at the time at which the option holder exercises his options.

In the course of 2007, 15,607 own shares were pur-chased, representing a fractional value of EUR 29,100 or 1.94% of issued capital. The total number of shares pur-chased held in portfolio at the end of the fi nancial year is 44,411, representing a fractional value of EUR 82,950 or 5.53% of issued capital.

All stock market transactions were executed in accord-ance with the various mandates granted by the Extraor-dinary General Meetings of Shareholders to the Board of Directors.

3838

5. Legal conflicts of interest

No situations of conflict of interest covered by Article 523 of the Companies Code occurred in 2007. No situations of conflict of interest covered by Article 524 of the Compa-nies Code occurred in 2007.

The procedure of Article 523 of the Companies Code was applied by the Board of Directors at its meetings of 22 June 2007 and 18 July 2007, in both cases in relation to the approval of the warrant plan, including the distribu-tion by functional category of the number of warrants to be offered.

The minutes of both said meetings of the Board of Direc-tors read as follows:

• The directors noted the declarations of Beukenlaan NV (permanently represented by Matthieu Boone), Mer-cuur Consult NV (permanently represented by Jan Boone) and CofigoMM BVBA (permanently represented by Jan Vander Stichele), that they have an interest of a financial nature that is in conflict with the decision belonging to the competence of the Board of Direc-tors.

• The Board of Directors, with the exception of Beuken-laan, Mercuur Consult and CofigoMM, discussed this conflicting interest and resolved as follows:

1. Nature of the resolution

1) The Board of Directors will offer no further tranches within the existing 2005 Share Option Plan.

2) The Board of Directors unanimously approves the principles of the proposed warrant plan.

The number of warrants to be proposed per person and per functional category is:- executive directors: 5,000- Executive Committee members: 2,500- directors: 1,000- members of senior management: 500

2. Justification:

The entire remuneration policy of Lotus Bakeries is based on the really exercised professional function, regardless of whether a person has director or employee status. The intention is, by means of the warrant plan, to involve persons who exercise a professional activity within the Group and who contribute to its success as shareholders in the growth and development of the value of the com-pany and thereby motivate them to cooperate in the long term in improving the company’s results and in the positive evolution of the value of the existing shares. This applies to all participants in the plan, as well as to the executive directors.

Given their important front-runner role, both inside the company and towards the outside world, it is important that the executive directors be also able to take part in the plan.

3. Financial consequences

1) The disadvantages attached to the granting of share options will disappear. The replacing of the share option plan with a warrant plan will reduce the com-pany’s debt by doing away with the prefinancing for the purchase of own shares and will reduce the finan-cial costs.

2) Given that the number of warrants to be granted is known, and given that the exercise price of the war-rants will be known at the time of issue, the maximum number of new Lotus Bakery shares to be created is known at the time of issue, as well as the maximum amount by which capital will increase. On the assump-tion that all warrants allocated to executive directors are subscribed and that they are all exercised, a total of 15,000 new shares can be issued, equal to 1.87% of the total number of shares existing at the date of the Board of Directors’ resolution.

4. Resolutions

The meeting, excluding the three executive directors, has resolved to grant the warrants.

3939


6. Announcements in the framework of article 34 of the Royal Decree of

14 November 2007 - Protective constructions

1. The Board of Directors of Lotus Bakeries NV is author-ized by the General Meeting of Shareholders, in the event of a public takeover bid on the shares of the company, and by application of the authorized capital, to increase the capital of the company under the con-ditions of Article 607 of the Companies Code. This authorisation is granted for a period of three years from 5 June 2007 and is renewable.

2. By resolution of the Extraordinary General Meeting of Shareholders of 12 May 2006 the Board of Directors is authorized, in accordance with the provisions of Arti-cle 620 of the Companies Code, to acquire shares in the company for the account of the same, whenever such acquisition is necessary to prevent the company from suffering serious and imminent disadvantage. This authorization is granted for a period of three years from 2 June 2006 and is renewable.

7. Communication in the framework of article 74§7 of the law of 1

April 2007 on public takeover bids

Lotus Bakeries NV has received a communication in the context of Article 74§7 of the law of 1 April 2007 on pub-lic takeover bids.

This communication shows that on 1 September 2007 Bisinvest NV held 470,175 voting shares in Lotus Baker-ies, corresponding to a participation of 58.55%, and that Stichting Administratiekantoor van aandelen Bisinvest en Lotus Bakeries held 81,549 voting shares in Lotus Baker-ies, corresponding to a participation of 10.16%. These two associated companies together held on 1 September 2007 551,724 voting shares in Lotus Bakeries, corre-sponding to a participation of 68.70%.

41

Vi4. Liquidity and visibility of the share

Lotus Bakeries has appointed the stock market company Petercam NV as “liquidity provider”. The liquidity and market activation agreement that was agreed with Petercam lies within the context of the care taken by Lotus Bakeries to ensure a suffi ciently active market in the share so that in normal circumstances adequate liquidity can be maintained.

5. Structure of shareholdings

Based on the transparency notices received by Lotus Bakeries, the shareholding in Lotus Bakeries NV as of 31 March 2008 is as follows:

• Bisinvest NV 58.55% • Stichting Administratiekantoor van Aandelen Bisinvest en Lotus Bakeries 10.16% • Lotus Bakeries NV (1) 0.35% • Lotus Bakeries Group Services NV 2.16%• Public 28.78%

Total 100.00%

1. Number of shares

• On 31 December 2007 the number of shares in Lotus Bakeries NV totalled 803,037. There were no changes in the number of Lotus Bakeries shares during the course of 2007.

• Shares are nominal, bearer or dematerialized, in denominations of 1-10-50. For the conversion of shares into nominal or dematerialized shares, the Sec-retariat-General should be contacted.

2. Stock market listing

• The Lotus Bakeries shares have been listed since the beginning of January 2002 on the continuous market of Euronext (Brussels). Previously, the shares were listed on the spot market with double fi xing. The share code is LOTB (ISIN code 0003604155).

• As a consequence of a revision of the share listings on Euronext and the switch to a single regulated list “Eurolist” on 4 April 2005, the Lotus Bakeries shares have been included in the Bel-Small index. Inclusion in this list increases the visibility of the Lotus Bakeries shares among investors. It is also a guarantee of a minimum marketability.

3. Financial service

Financial servicing for the Lotus Bakeries share is pro-vided by Bank Degroof, Dexia Bank, Fortis Bank, ING Bank, KBC Bank and Petercam.

sto CK M a r K e t I n f o r M at I o n

< Launch of NutriGo caramelized biscuit and NutriGo biscuit ‘fruit and fi bre-rich’

(1) The voting rights associated with the shares held by Lotus Bakeries NV and Lotus Bakeries Group Services NV have been suspended. The dividends have not been suspended and will be paid out to Lotus Bakeries NV and Lotus Bakeries Group Services NV.

4242

6. Market capitalization

On 31 December 2007, market capitalization of Lotus Bakeries amounted to EUR 188.63 million.

7. Evolution of the Lotus Bakeries share

The graph on page 43 shows the evolution of the share price with reinvested net dividend as from 31 December 1988 of the Lotus Bakeries share in comparison to the BASR (Brussels All Share Return) index. The BASR-index reflects the price of the total Belgian market.

8. Stock data on the Lotus Bakeries share

Charts with the consolidated key figures per share and the stock market performance of the Lotus Bakeries share can be found on pages 3 and 42 of this annual report.

9. Corporate website

A substantial portion of the corporate website (www.lotusbakeries.com) is reserved for investor relations. The website thus plays an increasingly important role in the Group’s financial communication.

10. Financial calendar

Wednesday 23 April 2008Annual report 2007 available on www.lotusbakeries.com

Friday 9 May 2008• Ordinary General Meeting of Shareholders at

4.30 p.m• Extraordinary General Meeting of Shareholders at

6.00 p.m.• Announcement of the interim declaration covering

the period from 1 January 2008.

Monday 19 May 2008Payment of dividend for the 2007 financial year

Wednesday 27 August 2008Announcement of the half-year results for 2008

Friday 13 February 2009Announcement of the year results for 2008

Friday 8 May 2009General Meeting of Shareholders.

2008 2007 2006 2005 2004 2003

Highest price till 31/03 in 2008 250.00 255.88 225.00 139.50 104.50 60.00

Lowest price till 31/03 in 2008 194.00 201.50 135.20 97.00 56.50 46.50

Price per 31/12 - per 31/03 in 2008 242.00 234.90 208.40 136.00 101.90 60.00

Market capitalization per 31/12 - per 31/03 in 2008 in millions of EUR 194.33 188.63 167.35 109.21 81.83 48.18

Number of shares per 31/12 - per 31/03 in 2008 803,037 803,037 803,037 803,037 803,037 803,037

Ratio price/earning (PER) (1) 9.41 9.13 14.68 11.39 9.76 15.85

Ratio price/cash flow (PCF) (2) 6.54 6.35 7.60 5.92 5.00 2.83

(1) PER: Price Earnings Ratio: The price at the end of the year (per 31 March in 2008 respectively) divided by net result, per share at the end of the year.(2) PCF: Price Cash flow Ratio: The price at the end of the year (per 31 March in 2008 respectively) divided by net cash flow, per share at the end of the year.

Stock data about the lotus Bakeries share in eur

4343

6 S t o c k m a r k e t i n f o r m a t i o n

4. Noting of Mr Stanislas Boone’s resignation as a direc-tor, and proposal to appoint for the remaining one year period of his mandate Christavest Comm. VA, represented by its permanent representative, Mr Stanislas Boone.

5. Directors’ remuneration Proposal to approval the pro-posed remuneration• of EUR 17,500 per person per year for directors • of EUR 35,000 per year for the Chairman of the Board

of Directors • of EUR 5,000 per person per year for the members

of the Audit Committee and of the Remuneration and Nomination Committee.

11. Proposals to the Ordinary General Meeting

of 9 may 2008

1. Proposal to approve the statutory financial statements dated 31 December 2007.

2. Proposal to approve the proposed distribution of prof-its which is detailed on page 35.

3. Proposal to discharge by separate vote the directors and the Auditor from their mandate during the year 2007.

evolution of the lotus Bakeries share in comparison to the BaSr-index

lotus Bakeries

BaSr-index (Brussels all Share return-index)

Both share evolutions are with reinvested net dividend.

45

ViiComposition of the Board of Directors

Charlofi n NV, represented by its permanent representative,Baron Karel Boone Non-executive Chairman Karel Boone holds a degree in Commercial Engineering (KUL). He is the Chairman of the Board of

Directors of Lotus Bakeries. He has been a director of Lotus Bakeries since 1966. He was CEO of Lotus Bakeries since 1973 until October 2006. He also holds other directorships with Axa Belgium, Bank Degroof, UCB (Chairman) and Vandemoortele (Chairman). He is a member of the Corporate Governance Committee for Belgian listed companies. He is also Honorary Chairman of the Asso-ciation of Belgian Companies.

Beukenlaan NV, represented by its permanent representative, Matthieu Boone CEO Matthieu Boone holds a degree in Commercial Engineering (KUL). He is CEO of Lotus Bakeries. He

has been a director of Lotus Bakeries since 1970. He is also a member of the Board of Directors of ACG.

Cofi goMM BVBA, represented by its permanent representative, Jan Vander Stichele Executive director Jan Vander Stichele holds a degree in Civil Engineering (KUL) and has a Candidate degree in Applied

Economics (KUL). His most important function was as technical director of the Verlipack Group. Since the end of 1996 he has been active in the Lotus Bakeries Group, initially as general manager Lotus Bakeries France, and thereafter as general manager operations and current as managing director. He is a member of the Board of Directors since May 2005. In addition he holds a director-ship of Team Industries (Chairman).

Mercuur Consult NV, represented by its permanent representative, Jan Boone Executive director Jan Boone holds a licentiate degree in Applied Economics (KUL), as well as a “Licence Spéciale en

Révisorat” (UMH). He started his career in the Audit department of PricewaterhouseCoopers. In 2000 he started at Omega Pharma. Until May 2005 he was Head of Corporate Controlling and a member of the Corporate Executive Committee and Board of Directors. Since May 2005, he has been active at Lotus Bakeries and is currently managing director of Lotus Bakeries. Since May 2005, he has also been a member of the Board of Directors of Lotus Bakeries. In addition he is a (non-executive) director of Omega Pharma and Durabrik.

Christavest Comm. VA, represented by its permanent representative,Stanislas Boone (1) Non-executive director Stanislas Boone is a graduate in Industrial Biochemical Engineering (HTISL), Business Economics

(KUL) and Labour Organization (KUL). He was managing director and Group director operations with Lotus Bakeries until July 1998. He is currently a consultant. He has been a director of Lotus Bakeries since 1970. In addition he is a member of the Board of Directors of DesleeClama Textiles and Chairman of the Business Angels Network (BAN-Flanders).

< Launch of Snelle Jelle less sugar (1) Proposal to appoint at the Ordinary General Meeting of 9 May 2008.

Boa r d o f d I r e C to r s , Co M M I t t e e s a n d aU d I to r

4646

PMF NV, represented by its permanent representative, Johan Boone Non-executive director Johan Boone graduated in dentistry (KUL) and is a practising dentist. He has been a member of the

Board of Directors of Lotus Bakeries since 1996.

Anton Stevens Non-executive director Anton Stevens holds a licentiate degree in Law (RUG) and in Notarial Law (RUG). He has been a

director of Lotus Bakeries since 2002.

Michaël Boone & Co BVBA, represented by its permanent representative, Michaël Boone Non-executive director Michaël Boone holds a licentiate in Economics (RUG) and an MBA (KUL). He is honorary “bedrijfs-

revisor” and currently acts as director of various companies, both in Belgium and France. These companies are active in the sustainable energy sector, and in particular in everything relating to the building of hydro-electric power stations and the related mechanization of hydraulic installa-tions. He has been a director of Lotus Bakeries since 2003.

Count Paul Lippens Independent director Paul Lippens holds a degree in Commercial Engineering (ULB). He is Chairman of the Board of

Directors of Finasucre, Suikergroep and Iscal Sugar. He has been a director of Lotus Bakeries since 1988. He also holds directorships with Fountain and Compagnie Het Zoute.

Christulf BVBA, represented by its permanent representative, Chris Dewulf Independent director Chris Dewulf graduated in Industrial Psychology (RUG). His most important functions were: man-

aging director of Volvo Cars Gent, President of Netherlands Cars in Born (NL) and general director of the Industriebank LIOF in Maastricht. In 2005 he became managing director of Picanol. He has been a director of Lotus Bakeries since 1996. In addition he holds directorships of Bosal and Filliers (Chairman).

Jean-Luc Dehaene Independent director Jean-Luc Dehaene holds a doctorate in Law (KUL). He has held various ministerial posts, was Prime

Minister of Belgium from 1992 to 1999 and was Deputy Chairman of the European Convention. Currently he is a member of the European Parliament. He has been a director of Lotus Bakeries since 2000. He is also a member of the Board of Directors of Inbev, Umicore, Thrombogenics and Chairman of the Board of Directors of the Europa College in Bruges.

Herman Van de Velde NV, represented by its permanent representative, Herman Van de Velde Independent director Herman Van de Velde is Licentiate in Economics (KUL) and since 1989 he has been managing direc-

tor of the stock-exchange listed lingerie group Van de Velde. He is a member of the Board of Directors of Lotus Bakeries as from May 2005. He is also Chairman of VKW Oost-Vlaanderen.

Wolferen BV, represented by its permanent representative, Johan Lokhorst Non-executive director Johan Lokhorst holds degrees in Industrial Management, Market Management and Market

Research (Landbouw Hogeschool Wageningen) and in Financing and Financial Analysis (Technische Hogeschool Enschede). He was general manager of Koninklijke Peijnenburg since 1999 till 2007. He is also Chairman of the Supervisory Boards of De Banket Groep BV, Hespri Holding BV and Bart’s Retail Food Group BV, Chairman of the Board of Salad Signature NV, Chairman of the Sector Board Horses and a member of the Advisory Board of the Wageningen Business Generator. He is a member of the Board of Directors of Lotus Bakeries NV since May 2007.

4747

7 B o a r D o f D i r e c t o r S , c o m m i t t e e S a n D a u D i t o r

Composition of the Committees

Remuneration Christulf BVBA, represented by Chris Dewulf, Chairmanand Nomination Charlofin NV, represented by Karel Boone Committee Jean-Luc Dehaene Paul Lippens

Audit Committee Paul Lippens, Chairman Michaël Boone & Co BVBA, represented by Michaël Boone Charlofin NV, represented by Karel Boone Christulf BVBA, represented by Chris Dewulf

Auditor PricewaterhouseCoopers Bedrijfsrevisoren BCVBA represented by Mr Lieven Adams, “bedrijfsrevisor” and Mr Peter Opsomer, “bedrijfsrevisor”.

4848

Management Lotus Bakeries Group

Group management Chief Executive Officer (CEO) Matthieu BooneManaging director Jan Boone Managing director Jan Vander Stichele

Corporate Finance Wilfried Deleye

Finance and administration international Joseph Bultynck ICT & SAP Luc De BackerConsolidation & MIS Denis Pieters

Corporate Human Resources Jos Destrooper

Corporate Services OperationsQuality & Research Katrien De VosFood law & Nutrition Etienne GeirnaertPurchase Karel TackResearch & Development Els Van ParijsEngineering Services Dirk Verstraeten

Technical service plant Lembeke Eddy Thijs

Secretariat General Filip Standaert

Managementteam BelgiumGeneral manager William Du Pré

Plant Courcelles Yves BoisdenghienLogistics Johan Claerhout Plant Oostakker Erik Claeyssens Human Resources Mia Desmet Marketing Ignace HeymanPlant Meise Toon Hubrechts Plant Lembeke Jean-Paul Van HoydonckFinance and administration Karel Vercruysse Sales Geert Verkinderen

Managementteam NetherlandsGeneral manager Marco de Leeuw Purchase and innovation John DétillonFinance and administration John van de ParOperations Josja van Isterdael

Sales retail Joost de BruynPlant Geldrop P1 Bert De WitPlant Enkhuizen Nicole EijbergenHuman Resources Norbert HaansPlant Geldrop P2 Brigitte ten VoordeMarketing Sipke van der WerfPlant Sintjohannesga Frank van HartenTechnical service Geldrop John van Hoorn

4949

7 B o a r D o f D i r e c t o r S , c o m m i t t e e S a n D a u D i t o r

Managementteam FranceGeneral manager Martin Watrelot

Finance and administration Patrick AlexandrePlant Briec-de-l’Odet Marc BergerSales Corentin DelsautMarketing Thierry RoosePlant Comines Ludovic Valente

Sales OfficesInternational Bart BauwensUK Paul HunterIberica Ángel LópezGermany/Austria/Switzerland Stefan WagemannsCzech Republic/Slovakia Tomáš Zbořílek

Joint ventures

Margarinerie Hinnekens NVBoard of Directors Jan Vander Stichele Chairman Matthieu Boone Jan Boone Hervé Hinnekens Luc HinnekensProduction manager Els Van Parijs

Corona-Lotus Inc. (USA)Board of Directors Matthieu Boone Chairman Sandra E. Gale President & CEO Jan Boone Vice-President & Treasurer Bill Stoebenau Vice-President & SecretaryGeneral manager Gary E. Payne

Harry’s Benelux NV (Belgium)Board of Directors Francis Bon Chairman Matthieu Boone Miloud Benaouda Geert VerkinderenProduct manager Brigitte Tytgadt

51

ViiiThe full statutory annual fi nancial statements, together with the statutory annual report of the Board of Direc-tors and the statutory audit report of the Auditor, will be submitted to the National Bank of Belgium within the legally prescribed term. These documents are available on the website www.lotusbakeries.com (Investor Rela-tions) or can be obtained for free from the Secretariat-General of Lotus Bakeries on simple request.

The Auditor has issued an unqualifi ed audit opinion with-out reservation with respect to the consolidated and the statutory annual fi nancial statements of Lotus Bakeries NV.

INDEX

Consolidated fi nancial statements 52 Consolidated balance sheet 52 Consolidated income statement 53 Five year fi nancial summary Lotus Bakeries Group 54

In this section of the 2007 annual report, only the con-solidated balance sheet, the consolidated income state-ment and the fi ve year fi nancial summary for the Lotus Bakeries Group are presented. The fi nancial supplement to this annual report contains all the fi nancial data, including the consolidated external Auditor’s report, and is available in Dutch and English.

The consolidated fi nancial statements for 2007 shown hereafter have been prepared in accordance with IFRS rules with comparative IFRS fi gures for 2006.

The statutory fi nancial statements that have been con-densed are presented in the fi nancial supplement and are prepared in accordance with Belgian accounting standards (BGAAP).

Only the consolidated annual fi nancial statements present a faithful picture of the assets, fi nancial position and results of the Lotus Bakeries Group.

In light of the fact that the statutory annual fi nancial statements give only a limited picture of the fi nancial situation of the Group, the Board of Directors considers it appropriate to only present an abridged version of the statutory annual fi nancial statements of Lotus Bakeries NV, in accordance with Article 105 of the Belgian Compa-nies Code.

fI n a n C I a l s tat e M e n t s

5252

CONSOLIDATED BALANCE SHEET in thousands of EUR 31-12-07 31-12-06 IFRS IFRS ASSETS

Non current assets 156,227 161,535

Tangible assets 83,441 85,986

Goodwill 17,151 17,151

Intangible assets 54,727 55,252

Investment in associated companies 410 230

Investment in other companies 32 32

Deferred tax assets 163 1,954

Other non current assets including derivative financial instruments 303 930

Current assets 39,100 37,967

Stocks 10,319 9,145

Trade receivables 16,489 16,903

Other amounts receivable 3,534 5,144

Derivative financial instruments 218 61

Cash and cash equivalents 7,384 5,884

Deferred charges and accrued income 1,156 830

TOTAL ASSETS 195,327 199,502

EQUITY AND LIABILITIES

Equity 68,924 54,678

Issued capital 1,500 1,500

Share premium 2,298 2,298

Consolidated reserves 71,973 54,301

Translation differences (135) (17)

Own shares (7,848) (4,459)

Minority interests 1,136 1,055

Non-current liabilities 72,545 94,788

Interest-bearing loans and borrowings 43,603 59,640

Deferred tax liabilities 26,389 30,649

Pensions 1,629 1,776

Provisions 828 1,306

Other non-current liabilities including derivative financial instruments 96 1,417

Current liabilities 53,858 50,036

Interest-bearing loans and borrowings 13,879 14,125

Provisions 1,208 1,286

Trade payables 23,082 19,356

Remuneration and social security 6,717 7,433

Tax payables 3,191 3,652

Derivative financial instruments 2,626 35

Other current liabilities 2,313 3,181

Accrued charges and deferred income 842 968

TOTAL EQUITY AND LIABILITIES 195,327 199,502

Consolidated financial statements

5353

8 f i n a n c i a l S t a t e m e n t S

CONSOLIDATED INCOME STATEMENT in thousands of EUR 2007 2006 IFRS IFRS

Turnover 224,528 179,245

Raw materials, consumables and goods for resale (75,314) (60,354)

Services and other goods (56,237) (44,750)

Personnel costs (56,337) (47,503)

Depreciation and amortization (9,693) (8,462)

Decrease/(Increase) in amounts written off stocks,

contracts in progress and trade debtors (670) (595)

Other operating income and operating charges 2,418 2,363

Current operating result (REBIT) (1) 28,695 19,944

Non-current operating result (937) (1,120)

Operating result (EBIT) (2) 27,758 18,824

Financial result (3,970) (3,187)

Financial income 557 567

Financial charges (4,527) (3,754)

Result before taxation 23,788 15,637

Income taxes (3,440) (4,523)

Result after taxation 20,348 11,114

Share in the result of the enterprises accounted for using the equity method 309 288

Net result 20,657 11,402

Net result : share of third parties 144 27

Net result : share of the Group 20,513 11,375

Earnings per share

Basic earnings per share (EUR) 26.90 14.61

Diluted earnings per share (EUR) 26.44 14.55

(1) REBIT is defined as current operating result. (2) EBIT is defined as current operating result + non-current operating result.

5454

Five year financial summary Lotus Bakeries Group

CONSOLIDATED BALANCE SHEET in thousands of EUR

2007 2006 2005 2004 2003 IFRS IFRS IFRS IFRS IFRS

Non current assets 156,227 161,535 73,928 72,629 74,686

Tangible assets 83,441 85,986 69,535 68,248 71,648

Goodwill 17,151 17,151 - - -

Intangible assets 54,727 55,252 1,132 1,234 1,109

Deferred tax assets 163 1,954 1,172 628 1,054

Other non current assets including

derivative financial instruments 303 930 1,716 2,156 215

Current assets 39,100 37,967 31,248 32,308 33,554

Stocks 10,319 9,145 6,629 6,787 7,041

Trade receivables 16,489 16,903 15,109 16,469 18,707

Cash and cash equivalents 7,384 5,884 5,554 4,499 3,320

TOTAL ASSETS 195,327 199,502 105,176 104,937 108,240

Equity 68,924 54,678 48,434 40,331 33,403

Non-current liabilities 72,545 94,788 25,001 27,929 34,254

Interest-bearing loans and borrowings 43,603 59,640 9,797 13,380 20,205

Deferred tax liabilities 26,389 30,649 12,363 11,251 10,814

Current liabilities 53,858 50,036 31,741 36,677 40,583

Interest-bearing loans and borrowings 13,879 14,125 6,466 12,473 17,859

Trade payables 23,082 19,356 16,329 14,782 14,214

Remuneration and social security 6,717 7,433 6,338 6,250 4,399

TOTAL EQUITY AND LIABILITIES 195,327 199,502 105,176 104,937 108,240

CONSOLIDATED INCOME STATEMENT in thousands of EUR 2007 2006 2005 2004 2003 IFRS IFRS IFRS IFRS BGAAP

Turnover 224,528 179,245 152,337 153,168 152,527

Current operating result (REBIT) 28,695 19,944 15,045 13,990 8,074

Non-current operating result (937) (1,120) 179 (92) (1,146)

Operating result (EBIT) 27,758 18,824 15,224 13,898 6,928

Financial result (3,970) (3,187) (1,250) (1,347) (2,182)

Result before taxation 23,788 15,637 13,974 12,551 4,746

Income taxes (3,440) (4,523) (4,520) (4,294) (1,848)

Result after taxation 20,348 11,114 9,454 8,257 2,898

Share in the result of the enterprises

accounted for using the equity method 309 288 131 124 141

Net result 20,657 11,402 9,585 8,380 3,039

Net result : share of third parties 144 27 82 78 85

Net result : share of the Group 20,513 11,375 9,503 8,302 2,954

55

ixContactFor further information about the data of the annual report or more information about the Lotus Bakeries Group, please contact:Filip StandaertSecretary-GeneralGentstraat 529971 LembekeTel.: +32 (0) 9/ 376.26.11Fax: +32 (0) 9/ [email protected]

ColophonConcept and realization: ColorStudiowww.colorstudio.be

Translation Lomax BVBA

PhotosColorStudio p. 5, 6, 8, 26, 34Duval Guillaume p. 20, 21JJM p. 4Kicknow Helikopter p. 4Leuk werkt worldwide p. 20Quadri p. 4, 23, 24Tequila p. 10, 36Thys Luk cover + p. 2, 22, 32, 40, 44, 50Vandekerckhove & Devos p. 14

Registered OfficeLotus Bakeries NVGentstraat 52B- 9971 Lembeke

Tel.: +32 (0) 9/ 376.26.11Fax: +32 (0) 9/ 376.26.26www.lotusbakeries.com

Register of legal persons of Ghent,Enterprise number 0.401.030.860

Annual reportThis annual report 2007 is also available on the internet-site: www.lotusbakeries.com

• Dit jaarverslag is eveneens verkrijgbaar in het Neder-lands.

• De financiële bijlage bij het jaarverslag 2007 is beschik-baar in het Nederlands en het Engels.

• The financial supplement to the annual report 2007 is available in Dutch and in English.

ge n e r a l I n f o r M at I o n

5656

Notes

in d e x [bib.kuleuven.be] filecorporate governance 15 ... marketing strategy 19 product policy 19...

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