Bell Food Group announces final terms of the planned capital increase with subscription rights as well as results for the first quarter 2018

25.05.2018, Ad hoc release pursuant to Art. 53 LR, Switzerland

Bell Food Group AG («Bell Food Group» or the «Company») today announces the final terms of the planned capital increase with subscription rights to refinance the acquisition of Hügli Holding Aktiengesellschaft («Hügli»), to continue the previously announced strategic investment program in Swiss production facilities, and to make further growth investments in the convenience segment. The expected gross proceeds from the capital increase amount to approximately CHF 612.6million.

On 10 April 2018, the General Meeting of Bell Food Group approved the proposal of the Board of Directors to increase the Company's existing share capital of CHF 2'000'000 divided into 4'000'000 registered shares with a nominal value of CHF 0.50 each by means of a rights offering to the existing shareholders through the issuance of up to 4,000,000 new registered shares with a nominal value of CHF 0.50 each. In the context of the capital increase, 2,285,712 new registered shares of these 4‘000‘000 registered shares will be offered to existing shareholders of Bell Food Group at an offer price of 268.00  per share. Existing shareholders will be allotted one subscription right for every registered share held on 28 May 2018 (after close of trading) to subscribe for new shares to be issued in the capital increase. 7 rights will grant the holder thereof the right to purchase 4 new shares at the offer price of CHF 268.00 each.

The offering and listing prospectus (Offering Memorandum) will be published today. The exercise period for the subscription rights will start on 29 May 2018 and end 6 June 2018 12:00pm noon (CEST). The subscription rights will be tradeable on SIX Swiss Exchange («SIX») from 29 May 2018 to 4 June 2018. The first trading day of the new registered shares is expected to be 8 June 2018.

Coop Group in Basel, which owns 66.3% of Bell Food Group, has committed to exercise its subscription rights in full, and to subscribe for the corresponding number of new shares of Bell Food Group.

Expected timetable of the capital increase with subscription rights

Results for first quarter 2018

In the context of the planned capital increase with subscription rights, Bell Food Group publishes the results for the first quarter 2018.

The period from 1 January 2018 to 31 March 2018 was mainly influenced by the Acquisition of Hügli, which was consolidated as of 1 January 2018. Net revenue increased by CHF 171.6 million, or 20.9%, from CHF 822.1 million in the first quarter of 2017 to CHF 993.7 million in the first quarter of 2018. Adjusted for currency effects, the growth amounted to CHF 150 million, or 18.4%. CHF 105 million of the increase in net revenue after adjustment for currency effects is attributable to the integration of Hügli. CHF 45 million (+5.6%) can be attributed to the growth of the existing organizational units, all of which contributed to this positive development.

Due to Hügli’s higher gross profit margin, our Group-wide margin increased by 1.3%. However, Hügli’s operational model is more personnel-intensive. After deduction of personnel costs, the margin increase is reduced: adjusted for currency effects and after deduction of such personnel costs, the contribution margin increased by CHF 34 million or 0.6%.

Our transport costs increased in light of our volume growth. We continued to intensively carry out maintenance work, as our production facilities are subject to increasingly strict quality requirements and certain of our Swiss plants are of an advanced age. The remaining operating costs were within budget.

EBITDA increased by CHF 11.4 million, or 22.7%, from CHF 50.2 million in the first quarter of 2017 to CHF 61.6 million in the first quarter of 2018.

Hügli’s net assets were completely integrated in our balance sheet at 31 March 2018, which led to an increase in the balance sheet total of CHF 541.5 million, or 25.9%, from CHF 2,093.0 million as at 31 December 2017 to CHF 2,634.5 million as at 31 March 2018. The Acquisition of Hügli was the reason for the increase in minority interests from CHF 0.2 million as at 31 December 2017 to CHF 81.9 million as at 31 March 2018. Moreover, the payment of the second tranche of the purchase price for completing the acquisition of Hilcona and the issuance of bonds in the amount of CHF 350 million had a major influence on the balance sheet. Consequently, our net financial liabilities increased by CHF 452.2 million, or 70.9%, from CHF 637.4 million as at 31 December 2017 to CHF 1,089.6 million as at 31 March 2018, and our equity ratio decreased from 37.5% to 32.9%. We continue to maintain our strategic goal of an equity ratio of more than 40%.

Following the repayment of the CHF 175 million bond due May 2018 and the gross proceeds from the Offering of approximately CHF 612.6 million, we are approaching our targeted equity ratio. Furthermore, we expect to acquire the remaining minority shares in Hügli during the course of 2018 which, once completed, will be reflected in our equity. We are targeting a net debt to EBITDA ratio of 2.5x.

Segment information

Market intensity and the associated pressure on margins continued to increase in Switzerland. Bell Switzerland’s sales increased by 2% in the first quarter of 2018. Sales in the retail channel were stable. Growth was primarily realized in the wholesale and food processing channels, where lower margins apply. The Easter business was lower than expected as a result of adverse weather conditions; however, the barbecue season started well.

Bell Germany’s sales increased as a result of targeted activities. This was offset by price reductions caused by lower raw material prices, which reduced Bell Germany’s net revenue.

Volume growth continued within Bell International. The French, Polish and Hungarian Bell entities recorded positive growth in the first quarter of 2018. Competitive pressure on Hubers, our poultry specialist, intensified. Sales volumes developed steadily, but increased quality requirements led to higher maintenance and personnel costs.

Within our convenience segment, consisting of Hilcona/Eisberg and Hügli, we recorded a substantial increase in sales compared to the first quarter of 2017 as a result of the Acquisition of Hügli. The integration of Hügli is proceeding as expected: we identified areas of synergy potential and initiated concrete first steps. Hilcona/ Eisberg is developing according to our expectations.

Acquisitions

In April 2018, we acquired Service Gastronomie Molard in Geneva, Switzerland by way of an asset deal. We thereby expanded our position as a supplier of restaurants and hotels.

On 25 April 2018, we announced that Eisberg, a subsidiary of Bell Food Group, acquired full ownership of Sylvain & CO SA, a family business with its registered office in Essert-sous-Champvent in the canton of Vaud, Switzerland, which is a leading provider of ultra-fresh convenience products in Switzerland. With 180 employees, Sylvain & CO SA is specialized in the production of fresh and ready-to-eat salads, vegetables and fruit and in 2017 generated revenues of approximately CHF 40 million.

Outlook

Raw material prices for pork are developing in accordance with our expectations. Due to the Acquisition of Hügli, we will generate one quarter of our total sales in the high-margin convenience sector going forward. The integration of Hügli is proceeding as planned.

Key Figures (PDF)

Furthermore, settlement of the public tender offer of Bell Food Group for all remaining publicly traded bearer shares of Hugli will take place today. All publications of Bell Food Group in connection with the public tender offer are available on its website www.bellfoodgroup.com/publictenderoffer

About Bell Food Group
The Bell Food Group is one of the leading meat processors and convenience specialists in Europe. Its range of products includes meat, poultry, charcuterie, seafood, convenience products and salads. With the brands Bell, Hilcona and Eisberg, the Group meets a diversity of customer needs. Its customers include the retail trade as well as the food service sector and the food processing industry. More than 10,000 employees generated revenues of CHF 3.6 billion in 2017. The Bell Food Group is listed on the Swiss stock exchange. 

This document is not an offer to sell or a solicitation of offers to purchase or subscribe for shares. This document is not a prospectus within the meaning of Article 652a of the Swiss Code of Obligations, nor is it a listing prospectus as defined in the listing rules of the SIX Swiss Exchange AG or a prospectus under any other applicable laws. Copies of this document may not be sent to jurisdictions, or distributed in or sent from jurisdictions, in which this is barred or prohibited by law. The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any jurisdiction in which such offer or solicitation would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. A decision to invest in securities of Bell Food Group AG ("Bell Food Group") should be based exclusively on the issue and listing prospectus published by Bell Food Group AG for such purpose. Copies of such issue and listing prospectus (and any prospectus supplements) are available free of charge from Bell Food Group, Media Relations, Email: media@bellfoodgroup.com / telephone +41 58 326 30 30.

This document is not for publication or distribution in the United States of America, Canada, Australia or Japan and it does not constitute an offer or invitation to subscribe for or purchase any securities in such countries or in any other jurisdiction. In particular, the document and the information contained herein should not be distributed or otherwise transmitted into the United States of America or to U.S. persons (as defined in the U.S. Securities Act of 1933, as amended (the "Securities Act")) or to publications with a general circulation in the United States. This document does not constitute an offer or invitation to subscribe for or to purchase any securities in the United States of America. The securities referred to herein have not been and will not be registered under the Securities Act, or the laws of any state, and may not be offered or sold in the United States of America absent registration under or an exemption from registration under Securities Act. There will be no public offering of the securities in the United States of America.

The information contained herein does not constitute an offer of securities to the public in the United Kingdom. No prospectus offering securities to the public will be published in the United Kingdom. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Any offer of securities to the public that may be deemed to be made pursuant to this communication in any member state of the European Economic Area (each an "EEA Member State") that has implemented Directive 2003/71/EC (together with the 2010 PD Amending Directive 2010/73/EU, including any applicable implementing measures in any Member State, the "Prospectus Directive") is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive.

This publication may contain specific forward-looking statements, e.g. statements including terms like "believe", "assume", "expect", "forecast", "project", "may", "could", "might", "will" or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of Bell Food Group and those explicitly or implicitly presumed in these statements. Bell Food Group cautions readers that a number of factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements made by Bell Food Group or on Bell Food Group's behalf.  These factors include, but are not limited to: (1) the ability to successfully consummate the acquisition of Hügli Holding Aktiengesellschaft and realize expected synergies, and (2) other risks and uncertainties inherent in the business of Bell Food Group and Hügli Holding Aktiengesellschaft. Against the background of these uncertainties, readers should not rely on forward-looking statements. Bell Food Group assumes no responsibility to update forward-looking statements or to adapt them to future events or developments. 

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Davide Elia

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Fabian Vetsch

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