VISCOFAN : Faits marquants du 1er semestre 2007

Consolidated revenues in 1H07 equalled €254.7million, or 3.4% more than in the same period the previous year, despite the strong depreciation of certain currencies against the euro and particularly the US dollar (8.1% in 1H07 vs. 1H06). Excluding the effect of exchange rates in consolidation, consolidated Group revenue growth would have totalled 6.1%.

In the second quarter, consolidated revenues expanded by 3.5% against 2Q06, to €130.5 million. During this period, has continued the stability in casing business growth (+2.4% vs. 2Q06), and the large expansion in preserved vegetables (+8.8%).

For yet another quarter, the Group benefited from large savings in raw material use thanks to production efficiency improvements in the casing business and the containment on expenses in preserved vegetables. For the half-year, therefore, the savings in 2Q07 plus those achieved in 1Q07 meant that the cost of supplies [1] used equalled €70.6 million, some 6.8% less than that of the previous year.

It is worth highlighting a significant productivity improvement at the Viscofan Group. This was helped by restructuring plans implemented in 2006-2007 and the optimisation of employee numbers, resulting in a net reduction of 78 staff in the final workforce figure since December 2006.

In cumulative terms the personnel expenses equalled €65.8 million. This was 9.7% more than in 1H06 due to the €11.8 million reduction in this item in 1Q06, on cancellation of post-retirement benefits at Teepak USA. Excluding non-recurrent effects, the cumulative personnel expenses in June 2007 would have declined by 6.2% against the same period in 2006. In 2Q07, the figure equalled €32.5 million, 8.2% less than that in 2Q06.

In the second quarter of 2007, all the brands within the Viscofan Group brands were unified to Viscofan. This was combined with a corporate-image makeover, including the launch of a new logo with a more direct, innovative, fresh, dynamic and modern image that is in turn contributing to strengthening integration and collaboration between the various Group companies.

With a firm grip on costs and growth in revenues from both casings and canned vegetables, the cumulative EBITDA in the first six months expanded by 20% year-on-year to €51.7million, of which €26.7 million was recorded in 2Q07 (+38.3% vs. 2Q06). On constant exchange rates in consolidation, EBITDA would have advanced by 22.0%.

Excluding non-recurrent results, furthermore, 1H07 EBITDA growth equalled 57.2% year-on-year.

Meanwhile, cumulative depreciation and amortisation increased by 17.0% against last year, to €18.6 million. This increase was due to the depreciation and amortisation of Teepak assets that were revalued at end-2006.

Accordingly, 1H07 EBIT came to €33.1 million, a difference of 21.8% against last year or 95.1% excluding non-recurrent results. The €17.3million 2Q07 EBIT exceeded 2006's figure by 53.1%.

Net debt has remained stable for 2Q07, compare with that obtained in March 2007, to €116.0MM, 3.7% larger than in December 2006. This resulted from the strong increase in shareholder remuneration with both the share premium redemption in 2Q07 and the dividend distributed in January 2007. Compared with June 2006, however, net debt fell by 10.0%.

There was continued control of the Group's financial gearing, which equalled 41.7% in 1H07 vs. 50.5% in 1H06.

Smaller average debt levels against 1H06, together with the US dollar's depreciation as well as the foreign exchange gains, enabled the Company to compensate for increased borrowing costs and obtain a 1H07 Net financial negative result of €3.4million, or 21.7% less than in 2006.

Profit for the period before tax for 1H07 expanded by 30% to €29.7 million. In 2Q07 the figure equalled €16.1 million (+77.1% vs. 2Q06).

Cumulative taxes in 1H07 totalled €7.1 million. This represented a 6.1% decrease against the same period the previous year thanks to the use of tax credits arising mainly in North America, implying a 23.9% tax rate.

Net profit for the period reflected the strength of these results both in 2Q07 and cumulatively in 1H07, which at €13.0 million and €22.6 million respectively exceeded figures posted the previous year by 77.5% and 47.9%. Recurrent profit for the period in 1H07 expanded by 134.1% compared with the same period in 2006.

1H07 results: casings

Data in thousand €

	Jan-Jun'07	Jan-Jun' 06	%Change	Apr-Jun'07	Apr-Jun'06	%Change
Revenues	211,990	207,691	2.1%	107,309	104,757	2.4%
EBITDA	48,493	40,832	18.8%	24,892	17,863	39.3%
Margin EBITDA	22.9%	19.7%	3.2 p.p.	23.2%	17.1%	6.1p.p.
EBIT	31,104	26,028	19.5%	16,252	10,536	54.3%
Net profit	21,662	14,941	45.0%	12,471	7,028	77.4%

Unaudited data

For yet another quarter in 2Q07, Viscofan continued to focus on increasing its share of market value via sales strategies intended to boost average prices in almost all casing families.

Cumulative revenue up to June 2007 of €212.0 million was therefore 2.1% more than that obtained in 1H06, despite the depreciation of certain currencies against the euro and particularly the US dollar. Excluding the effects of exchange rates in consolidation, revenue would have expanded by 5.3% against 1H06.

Turning to 2Q07, revenues totalled €107.3 million, or 2.4% against 2Q06, so accelerating slightly from the 1.7% growth obtained in 1Q07 vs. 1Q06.

It is also worth highlighting the positive results obtained from the continuous search to improve production efficiency, supported by suitable technology transfers, mainly at the Teepak cellulose plants.

These advances, together with cost controls in raw materials for both cellulose and collagen, plus the positive impact of plastic production being transferred to the Czech Republic and Brazil as from July 2006 -with more competitive production costs- allowed a 14.0% reduction in the cost of supplies [2] vs. 1H06, to €44.7 million. This was despite larger metre volumes of casings sold.

On a quarterly basis, costs of supplies in 2Q07 decreased by 6.2% against the 2Q06 figure, to €23.3 million.

Meanwhile, the personnel expenses expanded by 9.8% against 1H06, due to the abovementioned influence of post-retirement benefits at Teepak. Excluding non-recurrent effects, the personnel expenses would have decreased by 7.1%. In 2Q07 the figure was 9.4% less than in 2Q06.

The slight increase in revenues combined with production cost savings at the Group's main plants — particularly the recently acquired Teepak facilities — and smaller plastic production cost in the Czech Republic compared with those in Germany, fed through into strong improvements in casings' EBITDA in 1H07. This totalled €48.5 million and so a 18.8% improvement on 1H06 (20.9% assuming constant exchange rates in consolidation).

Excluding 1H06's €10.2 million non-recurrent results, the casing business's EBITDA would have expanded by 58.5% in 1H07 vs. 1H06.

The healthy quarterly results were reflected in a large 39.3% year-on-year EBITDA expansion vs. 2Q06, to €24.9 million.

Casings thus generated a 22.9% cumulative EBITDA margin in 1H07 (+3.2 p.p. vs. 1H06 and +8.1 p.p. vs. 1H06's recurrent EBITDA margin) and 23.2% in 2Q07 (+6.1 p.p. vs. 2Q06).

Positive 1H07 EBITDA developments were also reflected in EBIT, which totalled €31.1 million, having expanded by 19.5% against 1H06's €26.0 million. Compared with that of 1H06, the recurrent EBIT doubled. This was despite increased depreciation and amortisation for the larger valuations of Teepak assets acquired, as booked in the last quarter of 2006.

On a quarterly basis, EBIT totalled €16.3 million, or 54.3% more than 2Q06's figure.

Net profit for the period from casings equalled €21.7 million, or 45.0% more than in 1H06, (131.6% excluding non-recurrent results), of which €12.5 million was recognised in 2Q07 (+77.4% vs. 2Q06).

1H07 results: Preserved vegetables

Data in thousand €

	Jan-Jun'07	Jan-Jun' 06	%Change	Apr-Jun'07	Apr-Jun'06	%Change
Revenues	42,758	38,639	10.7%	23,158	21,287	8.8%
EBITDA	3,218	2,260	42.4%	1,773	1,415	25.3%
Margin EBITDA	7.5%	5.8%	1.7p.p.	7.7%	6.6%	1.0p.p.
EBIT	1,964	1,124	74.7%	1,067	779	37.0%
Net profit	927	332	179.2%	530	298	77.9%

Unaudited data

The canned vegetables business continues to post double-digit revenue growth (+10.7% in 1H07 vs. 1H06), driven mainly by asparagus and olives. There was driven by the asparagus and the olives, with a solid expansion in both volumes and -in particular- value, thanks to the sale price rises needed to pass on raw material cost increases.

In asparagus, Carretilla maintains clear market leadership and not just in market share of volumes -in which the market contracted by 6.7% while Carretilla's tonnage volume sales were stable- but above all in that of value, with 12.9% growth by Carretilla asparagus against 6.9% for the market.

The second quarter of this year also saw the continuation of an asparagus market trend characterised by scarcity and sharp rises in sale prices, which are being driven up by raw material cost increases. This is already generating a reduction in market sale volumes and margins that is set to worsen in the months ahead. The preserved vegetables business continued to post solid performance in this setting, generating revenue of €23.2 million, or 8.8% based on year-on-year comparisons.

The cumulative EBITDA margin in 1H07 equalled 7.5%, or 1.7 p.p. above that obtained in 1H06. This was thanks to the sharp increase in sales of products with the greatest value added (Carretilla brand white asparagus) and the lower advertising effort than last year linked to the launch of ready meals. Cumulative EBITDA in 1H07 therefore totalled €3.2 million, while in 2Q07 the EBITDA margin equalled 7.7% (+1.0 p.p. vs. 2Q06), with €1.8million EBITDA (+25.3% vs. 2Q06).

Despite the 10.4% increase in depreciation and amortisation, operating profitability strength fed through into 74.7% EBIT growth (37.0% in 2Q07 vs. 2Q06), to €2.0 million. This was also reflected in an expansion of net profit for the period, which at €0.9 million was almost triple the amount booked in 1H06.

Appendix

Balance Sheets ('000 €)

	Jun'06	Dec '06	%Change
Tangible assets	281,025	285,990	-1.7%
Goodwill	0	0	n.s.
Other intangible assets	9,984	11,373	-12.2%
Non-Current Financial Assets	367	1,587	-76.9%
Investment in Associates accounted for using the equity method	0	0	n.s.
Deferred tax assets	9,963	13,696	-27.3%
Othen non-current assets	1,055	0	n.s.
NON CURRENT ASSETS	302,394	312,646	-3.3%
Stocks	132,964	132,968	0.0%
Commercial debts and other receivables	114,846	101,109	13.6%
Other financial current assets	557	152	266.4%
Assets corresponding to tax on current earning	240	0	n.s.
Other current assets	1,180	0	n.s.
Cash and cash equivalents	9,675	12,233	-20.9%
Non current assets held for sale	0	0	n.s.
CURRENT ASSETS	259,462	246,462	5.3%
TOTAL ASSETS= EQUITY AND LIABILITIES	561,856	559,108	0.5%
Share capital	14,388	14,388	0.0%
Other Reserves	45,124	52,686	-14.4%
Retained earnings	229,626	208,354	10.2%
Own shares	-8,499	-3,004	182.9%
Exchange rate differences	-2,609	-4,293	-39.2%
Interim dividend	0	0	n.s.
EQUITY	278,030	268,131	3.7%
Minority interest	0	0	n.s.
NET EQUITY	278,030	268,131	3.7%
	0	0	0.0%
Loans	60,019	61,165	-1.9%
Financial liabilities	5,732	5,501	4.2%
Deferred income tax liabilities	29,448	34,783	-15.3%
Provisions	40,769	41,951	-2.8%
Other non-current liabilities	2,701	3,064	-11.8%
NON CURRENT LIABILITIES	138,669	146,464	-5.3%
Loans	66,197	63,026	5.0%
Trade creditors	66,280	71,682	-7.5%
Other financial liabilities	0	1,342	n.s.
Provisions	9,715	6,676	45.5%
Income tax for current liabilities	2,667	1,787	49.2%
Other current liabilities	298	0	n.s.
Liabilities linked to non-current assets held for sale	0	0	n.s.
CURRENT LIABILITIES	145,157	144,513	0.4%
NET DEBT	115,984	111,806	3.7%

Unaudited data

Average exchange rates

	1H06	1H07	%Change
Euro	1.000	1.000	0.0%
US Dollar	1.229	1.329	8.1%
Canadian Dollar	1.403	1.508	7.5%
Mexican Peso	13.388	14.552	8.7%
Brazilian real	2.695	2.713	0.6%
Czech crown	28.462	28.161	-1.1%
British Pound	0.684	0.675	-1.4%
Polish Zloty	3.890	3.905	0.4%
Serbian Dinar	86.998	79.907	-8.2%

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Disclaimer

This document is a free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.

This document contains additional non-compulsory forward-looking statements on intentions or expectations of the Company as of the date of its publication whose only purpose is to provide further information on perspectives on future performance.

Such forward-looking statements do not constitute any guarantee of future performance and involve risks and uncertainties as well as other important factors that could cause actual developments or results to differ essentially from those expressed in our forward-looking statements.

Analysts and investors in particular as well as any other persons or entities who must take decisions or give advise on investments in the Company should not place undue reliance on those forward-looking statements.

The financial information contained in this document has been prepared under International Financial Reporting Standards (IFRS). This financial information is unaudited and, therefore, subject to potential future modifications.

[1] Cost of supplies = Variation in stocks + Net purchases
[2] See note 1