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Christophe Barnouin – CEO Wessanen: Good morning everyone, thanks for joining us this

morning. I would like to give you an update together with one of next year about our full year

results.

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13th February 2018

FY and Q4 2017 Results Analyst Meeting 1

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On page 2 of this presentation you see is that it is a year in which we have grown totally like

10%, improved the profit by 30%, reduced the net debt to less than 1-time EBITDA, and

maintained quite decent return on capital employed.

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If we go into the detail a bit on page 3, we see that 10% growth we see that with own brands

is 85% of what we do at 100% of what we care for. That is growth of 7.7%.

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We have moved the EBITE this year versus last year by roughly 130 basis points. This is

fundamentally out of a good execution of our strategy both on growth as well as on

operations. I am going to give you an update on that now.

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The improved growth and profit are coming from the good progress on our priorities for 2017

because we have put and continue to put a nice focus on our own brand and the core

categories – that is what we care for – and we have continuously reduced either distribution

brands or private label. So, we some distribution brands in the portfolio but the one we did

not like, or we would believe we could do better ourselves, we do ourselves.

We had a very big program in term of upgrading our operation. You will remember that one

year ago we had a restructuring plan to conduct and execute in Germany. That has been

very well managed, the business had been well restructured and we have now the factories

that are the right size and the team has re-launched as well as the brands in drugstores and

supermarkets in Germany. We have extended our facility to facilitate the insourcing. We did

that in Germany, in the UK, and in Italy and we continue to move in term of key operation

processes like sales and operations planning.

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Part of the strategy is to really continue to build a green, very efficient and quite attractive

company. We are measuring that in a couple of ways. We are progressing on our agenda to

become more organic; So, organic food is 78% of what we do. We have been certified earlier

this year for first operating company on the B Corp, which is a very high standard in

sustainability certification. We joined the UN Global Compact. And what I am going to talk

slightly more about in a few minutes, is that we have committed more on our purpose and

sharpened our purpose for the next years to come.

What kept us busy as well in 2017 was the good integration of our last acquisition. I will

spend a few words on that.

How do we structure growth? We structure growth by focusing on the key core categories for

us. I give you an example in page 6 on Dairy Alternative. There, the consumer will have seen

it or may not have seen it everywhere in Europe. that we have expanded our ranges in in

Spain, in the Benelux, and in Germany. I will give you some results of those launches in a

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few moments. We have continuously developed new mix and ingredients, So, we are really

better in product expertise.

We have expanded the Dairy Alternative factory in Italy, which is a very good factory. And for

those who have been there, a few years ago, if you walk into the factory it is a different one

today, because we expanded and that has allowed insourcing of volumes that were out at

the beginning at a decent margin, which explains partly why our profit is going into the high

direction. Now as a result of it, we build stronger brands in France. In Dairy Alternative we

have Bjorg at number 1. Bonneterre our number 1 in what we call HFS, which is the organic

shops. Isola Bio, an Italian brand, is now number 3 in France on organic shops as well. In

Italy we have the number 1 brand with Isola Bio and we are launching Bjorg in the

supermarkets.

In the Netherlands Isola Bio is now the number 3. We have launched it twelve months ago

and Zonnatura has expanded into Dairy Alternative with exactly the right recipes of Isola Bio

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and has captured even now the leadership in organic Dairy Alternative in the supermarkets.

We are quite happy with that. And we launched as well in Germany with Allos and now Allos

is the number 2 brand there. That is one example when we are talking about driving growth

through category focus to the benefit of the brand.

It is the same story on tea. We are busy rolling out Clipper as well as continuously improving

our product expertise. I will give you an example. You may want to have a nice tea bag, but

you would prefer it without bleach, So, in organic and fair trade we have increased the

capacity and we are increasing the capacity as we speak of our factory in the UK and that is

allowing the in-sourcing of Alter Eco tea, Bjorg tea, of Piramide tea, and of Bonneterre tea.

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That helps us to reinforce the brand strengths all over Europe. In the UK we have a strong

historic position, in France we are now the number 2 with Clipper in organic tea, in the

Netherlands we are the number 1 and the number 2 brand in organic, and Piramide is the

number 1 brand in The Netherlands in the organic sector. We have a very, very fast start in

Germany, in the drugstore and supermarket area, with Clipper.

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At the end of the day we continue to roll out our brands on top of category management and

Clipper now is 60% of the sale out of the U.K., Isola Bio 70% out of Italy, and Whole Earth

has been launched in the Netherlands, mostly on peanut butter and is now 20% of the sales,

which are done out of the UK. So, that gives you some examples of how we structure growth

for today and for tomorrow.

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A few years ago and a few months ago we spent some money a few years ago on

acquisitions. We have been very busy with the integration of our portfolio. With Piramide, the

portfolio has been simplified. Growth has been achieved within the organic channel, and we

have changed the design. We have insourced that product into the Clipper factory.

We have a new packaging for Destination. We want to in-source that for the - we have the

new packaging, we have in-sourcing, we want to in-source more coffee into the factory and

we are preparing the international roll out in the related countries.

We acquired Mrs Crimble’s a year and half ago. We completely changed the marketing mix

that has been a driver for good growth turnaround in Q4.

And in Biogran, we basically have done a very simple thing. There are two brands called El

Granero for the organic shops and Ecocesta for supermarkets. We have given them the best

products on different categories that we are driving [no sound]. That is how we integrate the

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Now if we move into the operation part. As you may have noticed we have spent some time

in term of in-sourcing equipment and value improvement and factory extension. We have

spent a lot of time in restructuring well and fast our German factory [sound fading] That was

very good. We are working on – but we are not there yet – sales and operation planning,

because the more integrated we are, the better synergies and profit improvement we will

have [ sound fading]

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We have made good progress on our green agenda, which is very important for us. We have

a certified B Corp and we plan to have more companies certified B corp in the future because

it is very high standard in terms of sustainability, but that will help us to get […] and stay

ahead of the game.

We joined now the UN Global Compact since last year and we have promoted some organic

start-ups as well. There are a lot of ideas that are coming through start-ups, and we are on a

little programme for them to incentivise them to have more organic initiative.

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We are sharpening our purpose, because we believe strongly that a sharp purpose drives to

a better performance at the end of the day. We really believe that if we are in this business, it

is to provide food and to connect people with nature. There are four long-term commitments

behind that that will help us in everything we do. We provide food that is as intended by

nature, So, more organic, more vegetarian, being slightly better in terms of resource-

sufficiency, So, carbon neutral, carbon compensation and less waste organic, for nature but

as well as for our own economy saving on waste. We continue to be very diverse and very

agile. That is one of the fundamental values this year. The agility is that we capture business

opportunities but also the way we are mobile, how we use our own people and how diverse

we [sound fading]. Again, a strong integration in our eco-system is good for the purpose, it is

good for the performance. In our world, we need to really know where our key raw materials

come from, So, we want to trace and to have full sustainable suppliers are now key for

organic raw materials, and we continue on the fair trade.

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That is an important thing internally and I am a strong believer that […] gives a clear direction

and in the end will facilitate performance.

Now I will hand over to Ronald with the financial part.

Ronald Merckx – CFO Wessanen: Thank you, just a few slides as usual and a bit more

colour on the numbers.

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If you look at the fourth quarter in isolation, you can see there is a little bit of a contribution

there still in terms of M&A from the acquisition we did in December 2016 of Biogran. Then

6% autonomous growth on our own brands and good high single digit growth in a number of

brands and also a slightly weak performance in one or two other brands.

In previous quarters we have also seen the effect of both decline in private label and the loss

of sole agency brands, which particularly was the Dr. Schär brand in France that we have

talked about in previous quarters. That is the total picture and currency in the quarter did not

have much of an effect anymore. The pound has been fairly stable.

If we then take it to the full year, you know there's significant impact there from M&A relating

to all the acquisitions we did in 2017.

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Good growth of 7.7% on our own brands and again about 20% dilution from private label.

The sole agency was there basically from 1st January 2017 post the contract in the beginning

of the year. The private label losses are many related to the fact that we said goodbye to a

number of private label contractors as a result of the restructuring in Germany and there

were some contracts that we said goodbye to in Italy. But that happened more towards the

back end of the first half.

For the full year, due to the weakness of the year of the pound early on in the year, that

effect is a little bit different. But overall, 10% growth reported for the full year, and the

breakdown as just discussed.

If you then look at the EBITE-margin development, you can see 130 basis points

improvement here. If you split that between autonomous and M&A it is about 50-50, So, 60 –

65 basis accretion from the M&A that we have done in 2016 within effect in 2017.

And then the other is along all the lines of the P&L: you see here an increase in gross

margins as you can see from the P&L. We also see in warehousing and transportation. We

are getting some operating leverage. For instance, in Germany, we went from 2 to 1

distribution centres and that drives a little bit of benefit.

And also in SG&A you can see some benefits. Broadly A&P was in line with the prior year as

a percentage of sales.

So, a good and credible performance in terms of EBITE going forward.

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Let me give a little bit of extra colour on some of the financials. One of the first lines is the

exceptional item that we booked in Q4. That relates to our distribution centre for HFS in

France, in Rungis near Paris, a place where we have been active for a number of decades,

but due to the growth we now need to leave that facility and move to somewhere else. We

have taken a provision for that. It will make the business more efficient going forward.

As for net financing cost, we had more debt due in 2017 than we had in 2016.

Those costs have gone up a little bit. On the other hand, we had lower translation effects on

forex contracts So, that has offset that a little bit.

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And then the third element in Q4 is that we have seen some positive changes in the one-offs

in tax. There are a couple of items there. First of all, you will have all read that in France the

tax rate is going down at some point in the near future – 2022 – but what that has done is

that we have a number of deferred tax liabilities in France related to acquisitions that we

have done and as a result of the reduction in the tax rate the liabilities are reduced. That has

a positive effect on the tax line.

In Italy, we have been able to use a notional tax credit on the equity that we invested there

after the acquisition of Abafoods which we this year or 2017 now been able to value and that

has had a positive impact.

We have also had some tax carry-forward losses in France, particularly relating to the

acquisitions of Alter Eco [no sound]. The same goes for the Netherlands, partially offset by

the fact that in Germany we still have some unrecognised income tax losses that we have

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not valued as yet. That basically drove the total tax from 30% underlying to 23% reported for

the full year.

Taking the last slide, we have seen a very positive development in terms of our net debt. So,

a strong operating cash flow. Working capital was flattish despite that overall growth in the

business.

Provisions of EUR 12 million outflow is related to two things. There is about EUR 7 million to

EUR 8 million there in cash […] in long-term incentive plans that we paid out […] and also

cash outflows relating to the tax income.

The restructuring provision we took last year in Germany. EUR 14.7 million interest in tax;

the interest is a little bit over EUR 1 million, So, most of that is [sound fading].

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CapEx, we really invested in our tea factory in Beaminster So, about just over half of that

CapEx actually was in that base. Then we paid a dividend and then finally we sold all our

Treasury shares that we were holding to be able to settle the equity-shared LTIP. Basically,

what we have done for the whole company is that we have changed all the cash-settled LTIP

to equity-settled plans. As a result, we had a cash inflow from selling these shares.

Going forward, we also reduced the of some of these LTIPs, accounting from cash-settled to

equity-settled, So, going forward that will take out some of the volatility. Also, in terms of

cash outflow it will be a little bit more pleasant for us.

That leads to a net debt of leverage ratio of just under 1 time, which is [no sound].

Over to you Christophe for the last part.

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Christophe Barnouin – CEO Wessanen: We plan to grow, we plan to grow with our own

brand first we plan to further valuation of the private label, partly because we disconnected

some private label in the course of the year. So, we had the effect of that.

We believe that we can continue to generate an improvement of the EBITE percentage, as

we have done over the past years. We are going to have a net financial cost of around EUR

1.5 million to EUR 2 million tax rate […] 40%. We spent a bit of money on capital expenditure

but not very different than what we have done in the past, So, in the range of EUR 11 million

to EUR 13 million and there will be a […] component of around EUR 10 million. But the

priorities for next year to deliver this objective is really fundamentally the same story; we do

have the business within that work and we are trying to get more leverage out of that.

So, the focus is on core categories to help with the complexity of the business, focus on our

own brand, continuously reducing the private label business by working hard on factory

extensions, process improvement in the operations where we are not super happy about

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where we are today, execute our plan on our 2025 commitment on […] and roll our B Corp,

because it is quite a good stimulation for everyone.

On M&A we continue actively to look for anyone who would like to join us.

So that is it. Let’s open for any questions.

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QUESTIONS AND ANSWERS

[sound fading]

Fernand De Boer – Degroof Petercam

I have a couple of questions. If you look at the working capital […] and the second thing quite

a big outflow for provisions So, cash generation [….].

And then another question. You stated that the market quote has been at the high end of the

5% to 7%. I then look at the organic growth rate for the full year of 7.7%, taking into account

all that you do […] guidance you gave last year […] we expect […] are you then be happy

with the organic growth rate of 7.7% […]?

Ronald Merckx – CFO Wessanen: Yes, on the first two: on working capital 7% we will

continue to work on projects particularly when it comes to sales […] planning where we have

a project running but in the long run that will help to drive down stocks whilst maintaining

customer service level. But when you look at creditors and debtors I do not think […] also

with creditors particularly relating to […] and fair-trade element. Fair trade cannot really […]

fair anymore.

We also try with a number of suppliers to develop longer-term relationships […] through

resources rather than trying to squeeze the working capital. I am quite pleased with that goal.

In terms of provisions, as I have said, a significant outflow of that EUR 12 million was related

to LTIP and because we have now changed it from a cash to equity-settled the overall cost

will […]. The other point is we had the cash outflow from the restructuring in June. We have

announced that we are going to HFS warehouse in France. So, I expect to see some cash

outflow there in 2018, but as was in the announcement of that EUR 3.6 million, EUR 1.1

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million was in impairment of a building so, that's not a cash outflow. So, yes, you are looking

at EUR 2.5 million to EUR 3 million max on cash outflow for that restructuring.

Christophe Barnouin – CEO Wessanen: On your question on growth. So, the

fundamentals have no changed. We plan to grow 5%-7% of our own brands broadly in line

with the market. Markets fluctuate, and we see a deceleration of the organic shops all over

Europe, but we see a good acceleration in the organic grocery business all over Europe. It

has […] in both sides, so what we lose on one side we […]. We have plan to grow 5% to 7%

of our own brand whether it will be 7%, 5%, 6%, I have no clue. But we plan, and we allocate

the resources to fundamentally gain share in certain areas, mitigate some waste in others

and at the end of the day we have plan to grow 5% to […]. I understand the question

because the 5% is different than 7% and 8% is different than 6% in terms of models but I do

not know. So, I know the plan we have put in place and in the long run we commit on 5% to

7% sometimes it is more is like in profit we are committed to 30 to 50 basis points year-on-

year and this is what you have seen over the past four years. Sometimes it is more,

sometimes it is less but for us this is the plan So, growth should be in the range that we have

always […] 5% to 7%.

Ronald Merckx – CFO Wessanen: Maybe just one small addition there is. I have seen in

some of your notes this morning as well, that the ‘anniversary effect’ of particularly the

private label decline in 2017. That is why I said what we should not forget is the fact that sole

agency, the big contract in France we lost in January, in that respect is basically and

therefore our expectation is that if everything stays as it is in terms of the contracts there will

not be a significant effect there.

On the private label however, because we lost those contracts during 2017, as I said in my

introduction that closer towards the end of the first half you will therefore – particularly in the

first half 2018 – everything else being still an anniversary effect of decline in those private

label […] and Italy. We are broadly happy with where that is as it relates to our own brands. I

have taken into account the effect that private label and the effect for the full year.

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Fernand De Boer – Degroof Petercam: But to come to that, the lost Dr. Schär in France

also gave you a good opportunity to drive your own sales that was part of the […].

Christophe Barnouin – CEO Wessanen: Yes, we continue to under the […] We have

launched that quite successfully So, we have lost Dr. Schär which is a gluten-free proposal

which was sub-party bound and instead we have launched Bjorg and all the organic gluten-

free, which is trading the market. That works well, so we are quite happy and we will continue

to do that.

John David Roeg – NIBC:

I have four questions, firstly on Carrefour. Is that your prime customer in France? In view of

Carrefour's new strategy whereby they have said that they want to grow – and this is

worldwide – organic food sales from EUR 1.3 billion to EUR 5 billion in a couple of years,

how do you think to benefit from that new strategy?

Secondly on the Q4 numbers it is mentioned in the press release that marketing expenses

were lower. What was the impact of that on underlying EBITE improvement?

And then there was also a comment that they were partly lower because of lower share-

based payment expenses. So, that is probably retailers not reaching certain volume targets

and as such you do not have to pay these margins or bonuses to these retailers. Is this

structural or what has happened here?

I forgot my last question So, perhaps I come back to that later.

Christophe Barnouin – CEO Wessanen: We are very happy that Carrefour understands

that if they want to grow, why do not they push something that is good for the planet and

good for their growth and profit? Carrefour is our first customer with Leclerc and after that we

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have been for the past three years in very good cooperation with them and we continue to do

so.

So, we have a kind of collaboration in which we have engaged with them, showing them the

importance of the organic versus conventional food, the importance of Bjorg, Alter Eco,

Clipper and the private label and we are on good terms with them. So, we have developed a

plan together to grow. So, we are quite busy despite that they have announced that they are

going to push that even further because that could mean at the end of the day a larger share

of organic food.

So on Q4, I understand the question but again, it is quite difficult for us to manage A&P by

quarter and because we have a yearly plan. Ronald, to my memory Q4 was the strongest in

terms of spend of A&P of the year and we are preparing projects on Natura, on Bjorg and

Clipper. in the natural, we are preparing project on Bjorg.

I do not know the answer to your other question, because […] structural impact in what we

do.

Ronald Merckx – CFO Wessanen: The comment actually relates to our long-term

incentives share plan. In Q4 we had about 40-50 basis points effect of the fact that the cost

relating to the still cash-settled LTIP plans is much lower than it was in Q4 last year. It is one

of the reasons why we have also gone to equity steps because if you look at the full year, the

impact of LTIP has actually been zero, because the cost in 2017 have been the same as in

2016 but by quarter it has been quite volatile because of different moves and relative to

share prices quarter-on-quarter and year-on-year.

John David Roeg – NIBC: So, some feeling about the impact year-on-year the difference in

marketing spending – sorry for the misunderstandings, which is share based I thought the

market shares.

Ronald Merckx – CFO Wessanen: If you look at the total margin in Q4 there is about 240

basis points […] like for like basis. We know that has been the impact of the lower share-__________________________________________________________________

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based payments and the rest of it is split between as in terms of gross margins as a

percentage, although Christophe already said, in absolute terms was actually the highest.

[…]

John David Roeg – NIBC: Thank you. I remember my last question. It is the comment in the

press release on the slowdown in the health food store channel; is this taking place in

countries like France and Germany? Is it a material slowdown or is it just going from 7% to

5% or so?

Christophe Barnouin – CEO Wessanen: There is a shift all over Europe - the more organic

as it collides and penetration the more people will shop in their main store. So, we are

moving from a digital structure or pattern that we have identified for a long time. There is less

growth in Europe in organic food in specialised trade, but we are compensated by the

acceleration in the growth division. And […] touched a year and a half ago in Germany; in

France it has maintained a very high growth rate last year in organic shops for the year and

less so in the last quarters. But again, a good growth in total.

Karel Zoete - Kepler Cheuvreux

I have a couple of questions. The first is with regards to the tax rate. If you look at where you

generate profits and the nominal tax rate, what are you expecting in terms of meeting your

tax guidance? 30% seems a bit […]

My second question is on the equity-settled compensation plans. Do you expect to buy back

those shares issued? Is there time to afford dilution?

The last question is on the French market and the changes to the region environment there

with the fixed mark-up in due time. Your category is not extremely promotional but what is

your expectation here with regard to your […]?__________________________________________________________________

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Ronald Merckx – CFO Wessanen: If I can answer the first question, on the tax rate. You

know that France is on 60% turnover of our business. The rate as it is, is still 34%. They will

come down to 25.8 in 2020, so gradually we will see that tax rate going down. That is

absolutely right.

We are quite comfortable with the 30% because that is if we take out all these one-offs that

we have seen this year that is the underlying rate and that will gradually come down towards

[…].

In terms of LTIP, the dilution effect of issuing shares to settle the equity-settled LTIP is

minimal. It is less than 0.1%. It is a nice plan, but it is not like we will own 10% of the

company in the next few years.

Christophe Barnouin – CEO Wessanen: And on your last question on the fixed market; So,

there has been over the past five year a price war between retailers in France, which is

value-distracting for them but not only for them. What they do not make at margin they come

back and say that this is the bill because they have lowered your price, and will you please

pay it for them. Specifically for the small companies that do not have strong brands it is quite

difficult to [register]. The idea was to impose a fixed mark-up of 10%.

There is no bill; there is no project or flow, there is no law that has been applied. I am telling

you because we are in the middle of the negotiation which the French retailers, as we speak,

and we are close to a final agreement at the end of Feb. This is not a part of this year’s

negotiation at all; it is a project and I can tell you that they do not have that in mind, but it is

usually a question of why are we in business with them, what is their margin they need to

take more margin out of us we do get in return? That is the normal conversation that we are

used to.

Karel Zoete - Kepler Cheuvreux: You can no longer say we do not do these ‘buy one get

one free’?

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Christophe Barnouin – CEO Wessanen: No because our category is not heavily […] the

category in food goes above 30% of what we call promotional pressure, so volume sold over

this. By the way above 20 over or above 25 the incremental impact is nil. But it is not our

case, So, we are less than 10% [sharing] our category […] promotion to for Bjorg for instance

but […]

Robert-Jan Vos - ABN AMRO

I have a couple of questions. For the year, your EBITE margin was 130 basis points higher

and Ronald, you said that around 50% is M&A related and that the other half is supported by

the LTIP and also A&P, which is lower as a percentage of sales. Concerning your guidance

for 2018 is it fair to assume that your margin improvement for the year will be less than these

65 basis points, like half of the 130?

Then on HFS. You mentioned that in several countries you see a slow-down. Is it possible to

name the countries where that is particularly the case, and can you remind me what currently

your sales exposure is to this channel, to HFS, versus the supermarket channel?

The gross margin increased 40 basis points in the year; is that also roughly 50-50 M&A and

other? Can you confirm that or correct? Speaking of M&A, 2017 is one of the first years since

many that you have not done any M&A; what can you say about the pipeline and your

ambitions for that going forward?

Ronald Merckx – CFO Wessanen: You talked about 160 basis points but the total is 60-65

basis points M&A. There was no impact on the LTIP for the full year; there was a bit of an

impact in the fourth quarter. So, underlying the autonomous improvement, the gross margin

was the largest part of it, a slightly lower SG&P and A&P is basically […]

The split of the gross margin between M&A and autonomous is, I think, mostly […]

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Christophe Barnouin – CEO Wessanen: On HFS, roughly, the exposure we have is one

third of the total sales in the organic specialised trade and one third is in the supermarkets.

That is why I am not super stressed […] the slow-down in the organic shops. Where we were

taken by surprise in Germany two years ago, where most of our business was in organic

shops, we moved quickly into getting some good base out of the supermarket and drugstore

channel. Again, it is growing 5% to 10% in France, the organic shops. It is still slightly

growing in Spain, it is declining in Italy and flattish in Germany. But this channel is not going

to disappear. It is not that I need to decline because the channel does not give me growth.

Take for example Germany. We have managed to significantly move on Allos because we

launched new products and new categories. It is our job to gain some market share at the

end of the day. But we still have to do that.

Regarding the M&A by […] our priority was to integrate the previous. We believe that this

takes time because integration is not simply consolidating numbers but distracting value year

after year. We are showing the progress of what we do. Yes, there is a pipeline in M&A. We

were in a couple of due diligence exclusivity this year that we dropped, because the quality of

the asset to be planned did not actually exactly what people have told us, or what people

wanted to do with it. So, we absolutely want to resist to the pressure of making deals for the

sake of making deals.

Henk Veerman – Kempen & Co

My first question is a follow up on the tax rates. In Q4 there was a tax gain and we saw the

same one year ago in Q4. And Ronald, we certainly had a discussion also on the amount of

unrecognised tax losses you still have. So, my question is how much is there still? And do

you expect for the current growth rate and profitability further recognition of those?

Ronald Merckx – CFO Wessanen: No, it is all detailed in the previous annual accounts as

well. We are still sitting in The Netherlands on significant unrecognised tax losses. Now we

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can only value those to the extent that we generate enough profit in The Netherlands. And

we are doing that as much as we can. That is why you have seen that in value to start the

value some tax losses but not to the extent that we can use up that whole EUR 100 million,

but business is not static. Things may happen, and we will try and use those up as we can.

Henk Veerman – Kempen & Co: My follow-up question relates to the A&P costs and what

we should think of 2018 in terms of percentage of sales? Would it be a bit similar or do you

still believe in a step-up in terms of […]?

Related to your comments on M&A: it looks like that the market remains quite competitive

and that prices remain quite high. What if in 2018 that scenario remains? Would you also

consider maybe a more aggressive sort of A&P strategy to push your growth beyond the

market growth, also to make sure you have a favourable position in some of the early growth

markets?

Christophe Barnouin – CEO Wessanen: First, our plans are always done without M&A. So,

we never factor our M&A in anything we do. Fundamentally, we need to do more of what we

have. That is the fundamental mindset. So, that the plan has to be paid with what we have

without betting on the future or closing a deal. So, that is a fundamental. There is no trade-off

between internal money, internal investment. That is just M&A. That is why the plan is not

dependent on an internal factor like M&A. And then the multiple of the target maybe high or

low, but it does not say that the value we can create by purchasing the business. […] Yes,

and we grow, we do not […]. Again, I have seen that the history of does not mean we can

have that.

Reginald Watson – ING

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To come back to the top line again, not HFS this time but grocery: you have mentioned the

acceleration in grocery several times. Is it actually accelerating or is it staying at a high level?

The press release talks about grocery channel continuing to […]

Related to that, when we look at your sales and aggregate, you are still outperforming the

wider market as a whole, but I perceive that outperformance has come down slightly this

year versus previous years. How do you feel about that going forward?

Christophe Barnouin – CEO Wessanen: It is a good question Grocery has performed more

or less the same as previous years, as a percentage. Of course, they may have been years,

we capture the move from one channel to their benefit. But in that sense, it is not a

maximisation in percentage but as a share for that, that will be […]

Reginald Watson – ING: And the typical out-performance of [...] versus the wider market?

Christophe Barnouin – CEO Wessanen: The strategy differs by country. What we have

observed is fundamentally that we incentivise our team on market share gain. […] We are

very good if you want you can read of it in France. […] So, surely Bjorg's gain.

Reginald Watson – ING: When you look at the trends in market share gain, how do you see

that?

Christophe Barnouin – CEO Wessanen: Year-on-year it is stability plus. Again we are very

well developed. So, if we grow with the market […]

Reginald Watson – ING: Okay. I mean it is certainly one of the defining characteristics of

Wessanen. You highlighted earlier in your presentation pack that you can take grand

portfolios and move around Europe, you can take production portfolios around Europe and

that is for out-performance versus the wider market.

Christophe Barnouin – CEO Wessanen: Yes, it helped us a lot in the fundamentals which

are that we are in the business making a better product. As the market gets bigger, we need

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to make better products at an affordable price and that is what we do by our best for taking

product market. […]

Question

I have a remaining question on your sales, let's say the distribution and price label brands.

Ronald you explained that it will be less than the roughly 20% decline then in 2017 but it will

not decelerate extremely because of the reasons you mentioned. But in general. if a

customer for distribution knocks on your door, what do you say then? Or in other words, have

you not gained any new contracts in 2017 or do you still do that business if there is an

opportunity?

Christophe Barnouin – CEO Wessanen: So, again roughly 85% of what we do is our own

brand. So, regarding the last 15%, is 5 and 10: 5 is private label, and 10 is roughly sole

agencies. Sole agencies need to fit in the portfolio. Sometimes they do, and they are

partners and we have good cooperation unless we have a better idea like we had with Dr.

Shar. In the private label we think we do not actively seek volume contracts. When

somebody knocks at the door, we look at the margin and we look at the situation of that […]

coverage of a fixed cost into dedicated factory and say yes or no. Fundamentally, we prefer

to do our own brand. We never do capital expenditure related to a third-party contract. But

again, we are not the enemy of our own interest. In some areas we do, but no one has an

incentive on that on the contract.

Ronald Merckx – CFO Wessanen: So, we do not actively go out and hunt. We by and large

develop our own.

Question: And in 2017 have you obtained any new contracts in that?

Ronald Merckx – CFO Wessanen: No, because strategically [...].

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I have a question about Belgium. How will that move forward?

The second question is about [out-]sourcing. […] brands?

Christophe Barnouin – CEO Wessanen: Belgium is a very disputed territory between

France and the Netherlands. That could be the definition of the country. That is more or less

the case in our own brands. First, the presence is very limited and that is one of the

frustration. We can do more, and we are doing more on that side. We are using the merger

of […] backdoor. So, our Flemish customers have more ‘culture’ -- meaning ‘are closer’ – to

the Dutch and the trading facilities and the customer base as well, for Zonnatura. To make it

very simple we have three big retailers, Colruyt, Delhaize and Carrefour. We do business

with Carrefour on Bjorg, but we are looking for Zonnatura as well. Progressively, we are

growing over there. But we never […] So, it is not high on our agenda, but it is a nice

opportunity. What we do today is on a marginal basis. Again, if I build a strong team in

Belgium because I want to be in Belgium, I lose money for the next three years. For the

moment, we see customers. We do have three account managers based in Belgium now and

we do that. We are present in the organic channel as well both in the north and the south, but

we are quite pleased that you noticed our presence. I hope you are not the only one.

Ronald Merckx – CFO Wessanen: Yes, on the in-sourcing your question it is now about

45% of our own brand and in-source by 5% third-party. The key thing that we have done is in

Italy and that is we tested to allow that to happen […] big project going on there and in fact

we will have to acquire if more […] machines to support the long-term growth that we see.

What we now also do after the restructuring we have done in Germany is that we have

started to in-source some of our in-house.

Fernand De Boer – Degroof Petercam: Can you say anything about […]

Christophe Barnouin – CEO Wessanen: So, the base is growing well and is growing very

fast close to each other. But that is the first fundamental. We have managed some good

growth on the organic shops, which was and then we are expanding as fast as we can. For

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Ecocesta the market is growing quite fast and it is just starting. So, with that we needed to

take bigger orders and higher stakes in Dairy Alternatives and get them on the Spanish

team. We are also preparing the launch of Clipper in Spain. There was a distribution contract

with an agent until the end of last year and if we do good business with […] there is more to

come.

Ronald Merckx – CFO Wessanen: Operator, can you please check whether there are any

questions from the conference call?

Anna Patrice – Berenberg

I have a couple of follow-up questions as the line was not always very good. First on the

margin. On the gross margin there is very little expansion besides double-digit decline in

private label contract parties. So, what should be the underlying gross margin expansion

going forward?

Another question is on EBITE margin expansion of 130 basis points. Before you were talking

about roughly 100 basis points So, 50-50 you state underlying and some M&A So, where

does the surprise comes from and what should we expect as a sustainable EBITE margin

expansion going forward? So, should it be 50 basis points, or should it be a bit more, should

it be 70 basis points or 100 basis points?

What I did not understand is where the organic EBITE margin expansion comes from. You

say that the marketing expense has gone flat year-over-year so, there is a decline in

percentage of sales. Should we expect it the same in 2018 or should we expect some

increase in […] expense can also increase as a percentage of sales?

I was surprised to see that Opex were flattish year-over-year while you have an […]

personnel and the gross margin [...] end margin I would expect for example. So, should we __________________________________________________________________

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also expect going forward flattish Opex given that you leverage on stable SG&A, on stable

marketing expenses?

And then last but not least, can you explain the one-off in France? I am not sure that you

talked about the optimisation due to HFS plant with Q3 update, So, when will you decide to

do it, what was the catalyst and what exactly did you do? And should we expect some further

one-offs in 2018?

Christophe Barnouin – CEO Wessanen: Can you repeat the last one on the organic

channel in France? We did not …

Anna Patrice – Berenberg: So, there was one-off expense because of the […] you said

right in HFS?

Christophe Barnouin – CEO Wessanen: Yes.

Anna Patrice – Berenberg: And so, what was exactly this? Should we still expect something

in 2018 and what has triggered this decision, because I am not sure I remember it from the

Q3 update that there will some reorganization?

Christophe Barnouin – CEO Wessanen: I understand. So, let me explain what we are

doing in France. In France, we have a distribution centre that delivers to stores or to the main

retail chain for the Bonneterre business. That is very simple. We have grown over the past

year and our warehouse is becoming too small. So, we need to change warehouse. We will

relocate people. It is close to Paris. We will move some back-office people and bring them

back to Lyon on the back-office side and we will move the warehouse. Under the labour law

in France, that triggers a restructuring project to find simply a larger warehouse but if it is

further than 15 kilometres you are obliged to propose a redundancy to people. They are not

obliged to follow you.

So that is the fundamental project is we are growing on Bonneterre, the warehouse is too

small, we need another one, which will be in another location and we take that move in terms

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of merging teams in Lyon instead of Paris. That explains what you have seen that whole

provision of which EUR 1 million is a non-cash item. So, that is the idea and whether there

should be more in 2018, no: we will use that provision to execute the project.

Ronald Merckx – CFO Wessanen: I mean in France when you do this sort of stuff you have

to go through all kinds of legal hoops and negotiations with trade unions, workers councils

and what have you. At the announcement or the trading update of Q3 we were not in a

position to go public with it.

Maybe it was due to the quality of the sound here, but a lot of your questions were a little bit

difficult to understand but I will try and answer some of them.

In terms of gross margin you said you would have expected to see more because of the

lower effect or mix effect of a sole agency and private label. On sole agency actually the

gross margins are relatively okay, with private label you are right, but we should not forget is

that there is a whole other mix of things that plays into the total gross margin. In particular,

the fact that we have seen a softening of our gross margins due to the effect of the weaker

pound. We have increased prices later on in the year to protect gross profit but in terms of

margins there has been some dilution there. Those are the key things that play into that.

In terms of sort of going forward you had a question about the organic improvement in

EBITE. We have guided 30 to 50 basis points year-on-year improvement and we are still

comfortable with that.

Then you had a question about Opex whether that should stay relatively flat going forward.

What we should not forget that in those Opex numbers in our P&L on various lines there are

the exceptional items include […] restructuring that we talked about earlier on. But part of

that 30 to 50 basis points improvement in margin will come from operating leverage and that

will also be there for the SG&A line, so, for the Opex line but that will play an element.

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Anna Patrice – Berenberg: And these margins of 100 basis point in 2017, it seems that it

came above the initial guidance of roughly 100 basis points. So, what was the positive

surprise what went better versus initial expectations?

Ronald Merckx – CFO Wessanen: As I said, half of that it is from M&A and the other one as

we have seen as I said earlier both in gross margin improvement we have seen SG&A

improvements and warehousing and transportation. In the early discussion – and that is also

related to the 30 to 50 basis points improvement going forward – it is on all the P&L lines that

you see 10, 20 basis points improvement as you grow because you do get efficiencies in

your warehousing and transportation. Christophe in answer to the question from Karel or

Henk has already said that in terms of A&P you do get some operating leverage as well and

that is what we seen in 2017 as well. That is maybe the level of precision that can swing 10

or 20 basis points one year or the other, but 30 to 50 basis points is what we see longer

term. If you add back 60 to the top end of that range, you are almost at sort of the level of

improvement that you have seen in 2017.

Anna Patrice – Berenberg: Okay. And the marketing spends in 2018 would you expect

similar levels as in 2017 in absolute terms or there will be an increase as a percentage of

sales in 2018?

Ronald Merckx – CFO Wessanen: It will be similar. That is what Christophe already said,

yes.

Anna Patrice – Berenberg: It is similarly in absolute terms

Ronald Merckx – CFO Wessanen: Yes, no, percentage terms, I mean as we grow

percentage it will be little bit higher in terms of absolute numbers but in percentage terms it

would be broadly in line.

Anna Patrice – Berenberg: Okay, and then my last question. Christophe was talking about

the organic growth of own brands, slightly above […] market and private labels then certified

in France […] best part of brands will still decline but that's to the same extent as in 2017, __________________________________________________________________

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right? You said that from the second half of 2018 there should be some easy comparison

basis. So, we should not see significant declines. Does that mean that on the reported top

line growth we should see roughly 5% to 7% top line growth, so high growth at own brands

and [...] slightly by third-party and private labels? Would that be correct?

Ronald Merckx – CFO Wessanen: That is absolutely correct. We will see a slightly bigger

effect of that in the first half of 2018 because most of those private label contracts were still

there in the first half of 2017. So, your conclusion is correct.

Anna Patrice – Berenberg: Thank you very much.

Christophe Barnouin – CEO Wessanen: As there are no further questions, thank you for

having attended this conference. We hope to see you soon!

___

End of call

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