Profile - Bourse€¦ · Profile 1,196.0 million euros of revenue 67.8 ... The next stage ... the...

Profile

1,196.0million euros of revenue

67.8million euros of operating income

39.2million euros of net profit

Bonduelle, an international family group, is currently the uncontested leaderin vegetables, with a presence in more than 80 countries.

The group’s activities are organized around three core businesses:

> Canned vegetables, account for 48% of revenues, where Bonduelleis n° 1 in continental Europe.

> Chilled vegetables (fresh ready prepared salads and seasoned delicatessensalads), represent 29% of revenues, where Bonduelle is n° 1 in Western Europe.

> Frozen vegetables, dynamic market representing 23% of revenues, whereBonduelle is n° 2 in Western Europe.

With its 5,686 employees, Bonduelle has built its development on innovation,a complete range of brands (national brands and customer brands), internationalexpansion and unique expertise in the processing of vegetables.

The group’s leadership status in this category makes it a genuine key player in the fieldof nutrition.

BONDUELLE - Annual report 2005/2006 1

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BONDUELLE - Annual report 2005/20062

Message from the Managing Director

We pursued our M&A strategy at year end thanks to new visibility

2005/2006 amounts to “nought” if measured

against revenue growth; is a mediocre year, if

analyzed from the viewpoint of the operating profit

obtained;and a great year if we consider net income…

In short, 2005/2006 has been a highly paradoxical

year, which needs explaining, but which is, more

importantly, filled with initiatives that require analysis

to shed light on the future.

GrowthThe stability of consolidated sales at constant exchange rateand group structure (-0.2%) conceals considerable differencesbetween geographical markets. For example, despite anunfavorable €/$ exchange rate for exporters, revenues increasedby 13% outside the Euro zone. This remarkable performancemade up for the downtrend (-2.1%) experienced in the Eurozone where consumer spending lagged behind the rest of theworld, although it started rising at the end of the year.

Outside the Euro zone, East European countries, Balkans andSouth America confirmed their dynamic economies. Admittedly,the poor performance in the EU can be explained by strongpressure on prices to reboost consumption, and by our deliberatewithdrawal from certain sectors that were not profitable(uncooked fresh vegetables in out-of-home catering) or notcompliant with our strategy as pure player in vegetables (saleof the cooked pork meat business of the Rosporden plant).

Moreover, the strategic choices made in the previous years havestarted bearing fruits. Indeed, the fresh vegetable market remainsvery dynamic thanks to the win over of new consumers (+15% ofpenetration in France), and the breakthrough of innovations inpackaging (easy bag and Tetra RecartTM) which have been verywell received by caterers and consumers.

Christophe Bonduelle Pierre Deloffre


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PProfitabilityOperational profitability dipped slightly (€68 M or -2.2%), as itwas affected by large non recurrent restructuring andreorganization expenses (4 million euros).

Indeed, in the agri-food industry, the Wanzleben plant in EasternGermany has been shut down, and its activity successfullyredeployed to the Straelen and Reutlingen sites.

In France, as announced in early 2005, the manufacturing facilitiesof the Flaucourt plant were transferred to Estrées and frozenfoods to Gniewkowo.

Moreover, the vast reorganization operation decided andannounced in the previous year, has been on a rather small scale.

Accordingly, in France, subsidiaries have been operating in anew structure since January, and the grouping of administrativeservices by geographic zone has started, with in France theclosing of the headquarters of the former BPL subsidiary in Vaulx-Vraucourt and the combination at Villeneuve-d’Ascq of severalaccounting and sales administration accounts. The next stageof this plan will concern Germany: provisions have been setaside for the costs of combining the Humburg headquarters(canned and frozen) and Reutlingen (fresh).

We were able to carry out these optimizations thanks to thecomplete upgrade of our information system, which now includesan integrated ERP software. We began overhauling the IT systemin 2000 and expect to finish by the end of 2007, after aninvestment of 25 million euros and the strong mobilization ofteams.

These critical measures resulted in a decline in permanent staff(- 147 at the end of June) carried out in anticipation of futuretrends. Although these measures are expensive in the short term,they will enhance overall efficiency and profitability.

Net income climbed 8% (40 million euros), mainly driven by theimpact of stable financial results and net improvement in taxexpenses.

DevelopmentsTherefore, the group’s financial situation is sound, and the nextfinancial years should allow us to reap the fruits of initiativestaken since the past two years, both in internal growth andprofitability. The restored visibility enabled us to pursue mergersand acquisitions at the end of the year.

Therefore, in Spring, we seized the dual opportunity offered to us:

First of all, the acquisition of the residual activities of Unileverin frozen vegetables in Spain (Salto brand mainly), subcontractedby the group since 2001, allowed us to secure the work load ofthe Benimondo plant while improving our profitability.

More importantly, the gradual acquisition of equity stakes inAliments Carrière, the Canadian leader of canned and frozenvegetables with forecast sales of 230 million euros (of which 30% in the United States) ex-works from our seven plants.Considering the company’s earning capacity, this minority stake(25%) until summer 2007, will generate profits and give us asolid springboard for penetrating the North American market.Indeed, given the rising awareness of the dangers of rampantobesity and the particular virtues of vegetables, combined withthe current virtually inexistent vegetable offers, we believe we cansuccessfully adapt many products developed in Europe to theNorth American market.

Obviously, this move is a critical milestone in the group’sglobalization strategy as it helps us to consolidate our leadership,improve our risk spread and reinforce our long-termdevelopment.

Christophe Bonduelle Pierre DeloffreChairman Deputy Managing and Managing Director Director


Corporate governance

Shareholding structure

3 families

27.5% 43.7%

99.98%

4.5%100%

24.3%

French limited partnership with shares

Pierre et BenoîtBonduelle SAS

Statutory general partner

ChairmanChristophe Bonduelle

Managing PartnerPierre et Benoît Bonduelle SAS

Chairman and Managing Director Christophe Bonduelle

Deputy Managing Director

Pierre Deloffre

Bonduelle SCA

Bonduelle SA

Industrial and commercial subsidiaries

Other families PublicEmployees

+ Treasury shares


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It reviews the financial statements and evaluates the managementof company operations. At the General Meeting, it issues anopinion on the Managing Partner’s proposals to the Meeting,notably concerning the appropriation of earnings.

Its members are elected exclusively from among the limitedpartners. The Supervisory Board reports on the performance ofits mission to the Shareholders’ General Meeting.

In addition, the Chairman of the Supervisory Board presents areport at this Meeting on the conditions for preparing the Board’sworks and internal control procedures set up by the company.

The Supervisory Board has eight members including five non-executive directors elected for three years. Its compositionguarantees the competence, independence and availability of theSupervisory Board in performing its mission and representingthe interests of shareholders.

Statutory Auditors

Statutory Auditors are appointed by the Shareholders’ GeneralMeeting for six years and may be revoked by this body. Theyverify the fair presentation of the financial statements andperform other missions provided for by law.

Committees

Specific committees have been formed to guide the decisions ofthe corporate bodies responsible for controls and oversight.

• The Compensation Committee, consisting exclusively ofmembers outside the company and family, determines thelevels and mechanisms for compensation for members of theBonduelle SA Board and salaried employees of the Bonduellefamily. It also issues recommendations on the compensationpolicy for key managers.

• The Accounts Committee, whose members originate from theSupervisory Board, and more particularly in charge of reviewingthe annual and interim financial statements, analyzing andevaluating internal control and reviewing the annual auditprograms of the Statutory Auditors and internal audit.

This organization is perfectly suited to the demands of corporategovernance in maintaining a long-term strategy by ensuringmanagement stability and accountability under the oversight of anindependent Supervisory Board.

A French limited partnership withshares (société en commandite paractions - SCA) has two categories ofpartners

General partners (associés commandités)The general partner is indefinitely jointly and severally liablewith respect to his own property for the liabilities of thepartnership. He appoints the manager or managers.

Limited partners (associés commanditaires)Limited partners have the same status as shareholders of abusiness corporation (société anonyme): they are liable for thecompany's liabilities solely to the extent of their contribution.

A limited partnership with shares is characterized by separation offunctions

Executive management

The limited partnership with shares is managed by one or moremanaging partners (gérants), who may be individuals or corporateentities selected from amongst the limited partners or third partynon shareholders.

Pierre et Benoît Bonduelle SAS, a simplified form of a joint stockcompany, is the general and managing partner of BonduelleSCA. The company is held by three families, controlling 24.3% ofthe capital of Bonduelle SCA. A Strategic Steering Committeecomprised of nine members is appointed within the companyand is responsible for defining the asset options of the familygeneral partners. Members of this committee are moreoverdirectors of Bonduelle SA.

Control

The Supervisory Board provides permanent oversight of theCompany’s management on behalf of the limited partners orshareholders.


Corporate governance

Supervisory BoardMembers

From bottom to top and left to right

Francis Danjou

Yves Tack

André CrespelChairman

Daniel BracquartVice-Chairman

Jean Guéguen

Olivier Cavrois

Damien Bonduelle

Stanislas Dalle

The CompensationCommitteeMembers

Daniel BracquartFormer Chairman of the Management Board of Bonduelle,Vice-Chairman of the Supervisory Board of Bonduelle SCA,Chairman of the Institut Catholique des Arts et Métiers de Lille

Antoine FillietteCustomer Relations Manager, 3 Suisses International

Maurice LesaffreManaging Director of the Executive Board of Lesaffre Groupe

Dominique WillemVice-Chairman, Managing Partner of Transearch France

Bruno RauwelExecutive Human Resources Director

The Accounts CommitteeMembers

André Crespel

Daniel Bracquart

Yves Tack

Jean Guéguen

BSCA


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The Executive CommitteeMembers

From left to right

Pascal BredelouxManaging Director Bonduelle Food Service

Umberto GalassiniManaging Director Bonduelle Frais International

Michel TorrisManaging Director Bonduelle Surgelé International

Christophe BonduelleChairman and Managing Director

Pierre DeloffreDeputy Managing Director

Jean-Bernard BonduelleHuman Resources Director

Benoît BonduelleManaging Director Bonduelle Development

Patrick NéaumeManaging Director Bonduelle Traiteur

Gilles LessardManaging Director Bonduelle Conserve International

Paul DumontChief Financial Officer

The Board of DirectorsMembers From bottom to top and left to right

Benoît Bonduelle

Gilles Lessard

Félix Bonduelle

Christophe Bonduelle

Marie-Lætitia Lorthiois

Bruno Bonduelle

François Bonduelle

Thomas Derville

Marc Bonduelle

Jean-Bernard Bonduelle

Jérôme Bonduelle

BSA


Message of the Chairman of the Supervisory Board

Dear Shareholders,

During fiscal year 2005/2006, the Supervisory Board continuedthe assignment given to it.

It was duly informed by Management of the changes in businessand was provided with all the documents required to check andaudit the social and consolidated accounts.

At the next Meeting of 7 December 2006, you will be requiredto decide on the renewal of the 4 members of the SupervisoryBoard: Daniel Bracquart, Stanislas Dalle, Jean Guéguen andmyself. You will be asked to appoint a new member to theSupervisory Board, Mrs Isabelle Danjou, to replace Francis Danjouwho for personal reasons, did not ask for the renewal of hismandate. We thank him for his contribution to the Board's workduring his nine years in office.

As in the previous year, you will find in the specific reportpresented to the General Meeting of 7 December 2006, theminutes of the works of the Board and the Accounts Committeeduring the year.

The ChairmanAndré Crespel


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Bonduelle and its shareholders

The Bonduelle ShareShare information

Trading market Euronext Paris France

Market segment Eurolist Compartiment B

ISIN Code FR 0000063935

Reuters Code BOND.PA

Bloomberg Code BON FP

Outstanding shares 8 000 000

Indexes MID 100 et Next 150

Settlement delivery status SRD

Trading informationShare price (in euros) 2002/2003 2003/2004 2004/2005 2005/2006

High 77.00 80.00 78.05 68.30

Low 51.60 67.80 58.40 55.15

Closing price 69.50 78.00 58.40 67.50

Market capitalisation as at 30 June(millions of euros) 556 624 467 540Monthly trading volume 158,340 201,005 236,080 239,424

Bonduelle share price performance vs French stock indexes SBF 120 (base 100 November 2005)

Bonduelle

SBF 120

80

100

120

140

Nov. 05 Dec. 05 Jan. 06 Feb. 06 March 06 April 06 May 06 June 06 July 06 Aug. 06 Sep. 06 Oct. 06

During fiscal year 2005/2006,the Bonduelle share sharplyincreased in slightly decliningtransaction volumes.


Bonduelle and its shareholders

The Management Board will propose to the Shareholders’General Meeting of 7 December 2006 the payment of a netdividend of 1.25 euro.

This dividend will be paid on 5 January 2007.

Bonduelle’s shareholding structure is characterized by thepresence of family shareholders (52%), which provides thegroup with stability and an ability to pursue long-term strategy.In addition, nearly 3,000 Bonduelle employees hold Bonduelleshares through employee stock ownership plans.

In addition to the family and employee shareholders, thenumber of individual and institutional investors in Bonduellehas grown significantly in recent years, reflecting effortsundertaken to raise the group’s brand recognition.

Breakdown of shareholders as at 30 June 2006

43.7%Public

24.3%General partners

4.5%Personnel and treasury shares

27.5%Other Bonduelle – Dalle family shareholders

2004/2005 2005/2006

4.99

1.25

4.84

1.12

Earnings per shareNet dividend per share

CALENDAR OF FINANCIAL COMMUNICATIONSFOR FISCAL YEAR 2006/2007

03/11/2006 2006/2007 1st quarter revenues

07/12/2006 Annual General Meeting for the yearended 2005/2006

05/01/2007 Dividend payment date

29/01/2007 2006/2007 1st half revenues

29/03/2007 2006/2007 1st half earnings

14/05/2007 2006/2007 3rd quarter revenues

08/08/2007 2006/2007 revenues

09/10/2007 2006/2007 annual earnings

06/12/2007 Annual General Meeting for the yearended 2006/2007


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MeetingsCompany management meets on a regular basis with investorsthrough news briefs and individual presentations. Many investorswere met in fiscal year 2005/2006 in France and other countries(United Kingdom, United States, Germany, Belgium, Switzerland,Netherlands, Italy).

ContactsGroupe BonduelleDirection financièreRue Nicolas Appert – BP 3017359653 Villeneuve-d’Ascq Cedex FranceTel. : +33 (0)3.20.43.60.60Fax : +33 (0)3.20.43.60.00Website : [email protected]

Investor relationsThe Bonduelle Group offers shareholders several sources ofinformation.

The Annual Report, produced in French and English, presentsall the annual financial statements, reviews the highlights of theyear, the group’s strategy and provides a detailed presentationof the activity of each subsidiary. The Bonduelle Group alsopublishes specific information on corporate social responsibilityand the environment.

All these documents are available on request from the groupfinance department and can be consulted and downloaded fromthe “Finance” section of its web site: www.bonduelle.com.

This site also provides real-time information on the company’sshare price and access to group news and recent developments.

Since 1998, a shareholder letter provides a summary of keyfinancial information, recent developments concerning the groupand subsidiaries, in particular, product launches, etc. Thisnewsletter was initially sent to registered and bearer shareholderswith a certain number of shares but the distribution has sincebeen expanded. It is now sent to all shareholders (both bearerand registered) on the basis of the most recent census ofshareholders. These newsletter can also be read at anddownloaded from the “Finance” section of the web site.

The Bonduelle Group also publishes regular financial notices inthe French press.


Key figures

Revenue(millions of euros)

Current operational profit (millions of euros)

Operating profit (millions of euros)

2004/2005 2005/2006

67.869.3

2004/2005 2005/2006

39.238.0

2004/2005 2005/2006

1, 1961,201

2004/2005 2005/2006

0.840.91

Gearing

Net income (millions of euros)

Net profit group share (millions of euros)

2004/2005 2005/2006

70.568.9

2004/2005 2005/2006

40.437.1


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Revenue mix

By technologies2005/2006

29%Chilled

48%Canned 23%

Frozen

By distribution channels2005/2006

80%Retail

2%Industries

18%Catering

3%Industries

By brand2005/2006

62.5%Group proprietarybrands

34.5 %Customer brands

By geographical market2005/2006

42%France

6%Northern Europe

6.5%Other

12%Germany

9%Spain and Portugal

9.5%Eastern Europe

15%Italy

1,196.0million euros of revenue

67.8million euros of operating income

39.2million euros of net profit


Highlights

A year of many initiatives

Spain

Last June, Bonduelleannounced the acquisition ofUnilever‘s frozen business inSpain, already subcontractedby Bonduelle since 2001.This acquisition which willgive the group additionalrevenues of €10 million,while enabling it to consolidate its leadershipin vegetable-based meals in Spain.

EnvironmentBonduelle has incorporated“Natural Resources” into itssustainable developmentpriorities as part of itscommitment to sustainabledevelopment. The group’semployees are thereforestrive to reduce thequantities of water andenergy used duringtransformation processes.

This year, the group sharplyreduced its energyconsumption ratios atconstant tonnage by 4.2%.

CanadaAt the same time as theSpanish acquisition, thegroup confirmed its M&Astrategy by acquiring astake in Aliments Carrière, a Canadian leader incanned and frozenvegetables. The North-American company, whichshares a similar culture withthe group, is relying on this alliance with Bonduelleto gain access to its highvalue-added know-how, for which the offer is muchmore developed in Europeand thereby establishleverage for growth.

GroupThis year, the Groupdeployed the reorganizationmeasures announced lastyear. Dubbed “David andGoliath”, Bonduelle focusedon optimizing its operatingmode and supportinggrowth on buoyant markets.

- Accordingly, the group’sagri-food industry sectorclosed down two plants, in Germany and in Franceand a new Cassegrainfacility was inaugurated on the Estrées (France)industrial site, on 22 July2006. In addition,administrative combinationswere created, bygeographical market.

The new organization ofsubsidiaries, in effect sinceJanuary, was alsoimplemented gradually [seenew organization p 34-35].These measures weresuccessfully implementedthanks to the complete

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InnovationSignificant innovations in2005/2006 included thesuccessful development ofthe Tetra Recart TM range.Bonduelle’s technologicalinnovation continued to growas it expanded sales toBelgium, the Netherlands,Luxembourg, Germany,Portugal, France and Italy.

For this purpose, the newproduction line of theRenescure (France) industrialsite helped to optimize sales.In Portugal, innovationsderived from this newtechnology have been votedproducts of the year 2006.

In the catering market, the advantages of easy bagalso allowed the group to pursue its development.The new sachet isconvenient, small and theperfect response to theexpectations of the foodservice market.

overhaul of the informationsystem, which began in2000 and will be completedin 2007.

- The company alsocontinued its investmentsoutside the Euro zone toleverage growth, withrevenues in this marketclimbing 13%.

DistinctionsUnder the HighPatronage ofChristianPoncelet,Chairman of theFrench Senate,the “Grand Prix

de l’Entreprise Patrimoniale”trophy was awarded toBonduelle. The familybusiness award given byLaurence Parisot, Chairmanof the Medef, France'semployers’ union, wasintroduced in 2001 by theASMEP, French Associationof medium-sized familybusinesses. The aim is topromote and enhance theimage, values andimportance of French familyowned businesses.

TheBoursoscansurvey,pertainingto 96websites of listed

companies chose theBonduelle corporatewebsitewww.bonduelle.com, as thethird in the “small andmidcaps” category.

The criteria used to awardthis trophy included easybrowsing, as well asinformation quality andupdates.

After the “Journéespratiques de nutrition”, theLouis Bonduelle Foundationwas given the Nutridorprize to reward its excellentnutritional communication.This price crowned thenumerous operationscarried out by theFoundation to promotegood eating habits.

THREE GENERATIONS MEET AT THE TOP

Christophe Bonduelle, Félix Bonduelleand Céline Bonduelle



Group businesses

A vast choice of exciting businesses, from agronomy

to sales through production and marketing…

Bonduelle employees use their talents to leverage

the specific business lines which constitute the group’s

strength.

FranceThomas PichonSales development manager

The job of sales development manager involves several levelsas it requires focusing on relations with supermarkets, genuinehubs between product marketing, key accounts and the salesforce with whom I work ever day.

1. Develop a category approach for the delicatessen business:knowledge of the department, purchasing segments andattitudes to develop the category and the brand.

2. Recommend optimal assortments for purchasing pools withthe assistance of marketing, and later with the sale teams, toensure the presence of our products on store shelves andoptimize their location to boost their performance.

My role is to harness in-house talents in order to submitpersonalized proposals to supermarkets (assortments,merchandising, promotional offers...), in line with their strategicambitions and the expectations of their customers – and ours.My job is exciting and complex as it requires goodcommunication, coordination, analytical and argumentativeskills, in addition to being a mix of marketing and sales, officeand field work.

The skills of men and women to leveragethe company’s growth


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SpainÉmilie PujolMarketing manager

Marketing for out-of-home catering is not the same as massretail marketing. The communication is not addressed to“ordinary” consumers, but to cookery and catering experts,who expect best products, and more importantly, best service.

To meet the needs of chefs, we must be attentive to all newproducts, culinary trends or kitchen appliances and developour products accordingly.

Once these products have been developed, then we need todevelop the necessary training for their use to become a dailyreflex in kitchens.

That is what I particularly like about my job: being at the cuspof innovation and creativity, and tailoring our marketing pitchto genuine field needs.

This job requires solid marketing skills and curiosity for theunique world of cooking, since many of our contacts areprofessionals trained in the culinary arts, we must be capableof understanding their problems.

RussiaVassily LebedShift mechanic, Krasnodar factory

I work at the Krasnodar plant, where I’m responsible for servicingmanufacturing process machines. My job is to ensure theoptimum operation of the production chain. Therefore, I makesure that the teams working along the process chain haveequipment in good working condition. This maintenance is alsoessential to preserve the intrinsic characteristics of vegetables; anda well-serviced production chain leads to quality products.

Apart from the accuracy and the precision required for the properperformance of my duties, this job also requires creativity, and theability to solve problems. I’m constantly improving myprofessional skills thanks to this creativity.

FranceDidier BoubertString beans supply manager

Being in charge of string beans supply, means being theinterface between farmers and processing plants. My dutiesrange from selecting the best species, planning the schedule ofseed planting and harvesting, while taking unpredictableclimatic conditions into account, and liaising with plain chiefs.My job is exciting because it requires reactivity and interpersonalskills, and is never boring. Thanks to my knowledge of farmregions and my ability to take decisions to match every dayevents, I can manage harvests with a view to striking a happybalance between the interest of farmers and supplies to ourfactories.


Strategy1.


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or several years now, Bonduelle has

pursued a “pure player” strategy and

become the global leader in its

category, developing vegetables in all forms

and through every technology (canned,frozen, fresh ready-prepared, delicatessen).

This policy enables it to focus on the three

strategic priorities defined by the shareholder.

First, long-term development, then

independence underlying capitalistic

independence to ensure the company’s

smooth long-term development, and

independence towards its markets to

preserve its ability to make autonomous

decisions. Lastly, the personal development

of employees to prove the company’s deep

commitment to its most important capital,People.

f

20 BONDUELLE - Annual report 2005/2006

Strategy and Policies

Guided by objectives of sustainable growth, independence and the personal

development of its employees set by the family shareholders, the group

implements a strategy focused on specialization in one business, vegetables,in all technologies and everywhere in the world.

To leverage this unrivaled position, the Managing Director and his Executive

Committee oversee ten corporate policies, implemented by the 5,686 permanent

Bonduelle employees.

Bonduelle, the pure-playerof vegetables

StrategyVegetables are eaten everywhere on the planet. The hugevegetable market and sustained growth is driven by consumeranxiety concerning healthy eating in regions with high purchasingpower, or more simply access to constant quality products inless economically developed regions.

Nevertheless, different continents have different eating habitsand different ways of eating vegetables. For example, NorthAmericans are huge consumers of frozen products, the Dutchof fresh packaged vegetables and the French canned or preparedvegetables. Thanks to its expertise, Bonduelle is capable ofproposing on each market, the product adapted to specificneeds. Similarly, Bonduelle makes its products easy to use at allmeal times, at home, in canteens and restaurants and even atimprovised meal times such as filling stations. This offer existseither under Bonduelle proprietary brands of Bonduelle,Cassegrain or Frudesa, or under those of its customers, alwaysfor the purpose of making vegetables accessible to all.

Specialist in vegetable multi-technology,Bonduelle sells its products tailored to eachmarket and to each country.

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For this reason, despite unfavorable consumer spending andforeign exchange trends, the group continued to increaseinvestments in marketing, industrial assets, and research anddevelopment.

Accordingly, despite sluggish business in Western Europe, thegroup continued to invest in its brands and on its productiontools and set up integrated management while ensuring 8%growth in net profitability.

Policies1. Long-term focus Every decision taken by the group, be it an investment plan, brandpolicy and innovation, strong agri-industrial involvement or evenpermanent and necessary reorganizations implemented, is aimedat boosting the group’s competitiveness in the future, instead ofensuring profitability in the short term.

2. Growth After a period of strong development, Bonduelle devoted the lasttwo financial years to consolidating its new acquisitions andreorganizing the company. The group is now ready to relaunchboth organic growth and growth through acquisitions. Theacquisition of Salto in Spain and investment in Aliments Carrièrein North America prove this commitment.

3. Food safety With the occurrence of food crises of unprecedented proportionsand problems associated with obesity becoming an increasinglyimportant public health issue, vegetables represent a reassuringproduct for consumers and must be beyond reproach. That iswhy Bonduelle invests each year in improving the quality of itsproducts and tracking raw materials through compliance with asupply charter signed by its agricultural partners and vegetableproducers. Bonduelle also invests in certification programs for allits production sites.

4. Environmental responsibility Vegetables are a gift of nature; their nutritional as well asorganoleptic virtues are universally recognized. We should thereforepreserve this capital at all costs by protecting our environment andits natural resources. The sustainable development strategyimplemented in the group and measured by standardizedperformance indicators on all production sites guarantees thegroup’s environmental responsibility. Already a member of theGlobal Compact, Bonduelle joined this year, the FARRE program (Forum de l’Agriculture Raisonnée Respectueuse del’Environnement).

5. ProfitabilityAchieving long-term development and short-term profitabilitywithout sacrificing the goal of independence is no small feat.

THE SUPPLY CHARTERThe charter encourages farmers working for the group toimplement environmentally-friendly farming practices.


The synergies between Bonduelle entities, fromthe Research and Development department toMarketing, contribute to the development ofpromising innovations.

6. Brand policies A leader in its category, Bonduelle proposes to its retail customersa global approach to the market, by offering them national brandsthat guarantee the value added and the choice sought byconsumers, or the supply of their own brands.

Our brands are backed by significant advertising and promotionalprograms, and notably advertising campaigns tailored to ourdifferent markets in line with the group’s “think global, act local”approach.

The Louis Bonduelle Foundation, the primary corporatecommunication tool, received the highly coveted “Nutridor” awardfor its excellent nutritional communication at the Dietecomtradeshow organized by the Paris medical faculty.

7. InnovationInnovation helps to provide consumers with practical news ways ofusing vegetables and as such is of critical importance in managingthe brand and range portfolio. Bonduelle’s R&D departments, inclose collaboration with the marketing teams, introduced newconcepts such as vegetable cakes in the catered foods departmentsand thereby expanded the high-growth potential of thedelicatessen segment. Frozen vegetables expanded its productrange with the addition of cooked vegetable meals, and in Spainnew vegetable mixes by the Frudesa brand (Salteado con habasde soja). Finally, the fresh ready prepared vegetables segmentalso launched “Mignardises” in France and in Italy. Cannedvegetables also continued to grow with Tetra RecartTM in Europe,primarily with new prepared meaks recipes.

8. Agri-food industry assets One of the group’s specific features is probably its agri-foodindustry expertise. To guarantee its supply of highly delicateproducts, in terms of quantity and quality, and optimizeproduction costs, Bonduelle has developed an unrivalledindustrial infrastructure that stretches from Portugal to theCaucuses and is responsible for more than 90% of its sales.

9. InternationalBonduelle has been implementing an international developmentstrategy for several years now with a view to consolidating itsindependence by spreading commercial risks across a largercustomer base. For the year under review, the contribution ofinternational operations accounted for 58% of total revenue(IFRS), with the aim of achieving a medium term goal of fairdistribution between France, the euro and the non-Euro zone.

Strategy and Policies


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Focus

The shared values of Bonduelle Group The group is committed to achieving objectives ofsustainable development, independence, and the personaldevelopment of its employees. These key human valueswhich constitute the foundation of the group’s corporateculture have been shaped by the group’s history andconstitute its current identity.

Concern for people

Mutual respect, attentiveness and enhancedcommunication between employees. Guaranteedindividual safety.

Confidence

Ability to delegate, contribute to team spirit whileacknowledging the right to try.

Fairness

Guarantee objectiveness, exemplarity and profit sharingfor all.

Integrity

Respecting one's commitments, acting honestlyand transparently.

Simplicity

Promoting common sense, friendliness in day to day tasks,and sincere interpersonal relations.

Excellence

Making performance and quality top priorities.

Openness

Availability, tolerance and promotion of creativity.

10. Personal development of employees The group considers its employees as highly precious assets,because they represent the group’s primary capital and no strategy,no matter how relevant, can be successful without their support.With this in mind, a certain number of measures were taken duringthe year. They included a seminar in Brussels for the group’s top200 executives, and the creation of a group corporate committee,and development of the programs of the Pierre and BenoîtBonduelle Institute (a corporate university).

Indeed, the decisive strength provided by the support of thecompany’s employees will enable Bonduelle to pursue profitableexpansion in world markets, through the implementation of theseten key values to leverage a simple and clear strategy based onshared values.


ObesityIn the western world and in a number of developing countries aswell, obesity has become an alarming problem affecting moreand more people. Obesity is a pathology that can seriouslyimpact the health situation of populations making themvulnerable to serious diseases such as diabetes, hypertension,cardiovascular diseases, etc.

Vegetables are of the essence; they must be eaten on a regularbasis and in sufficient quantity to ensure a balanced diet. Accessto vegetables means availability all year round, optimalorganoleptic characteristics and affordable prices.

This is what the Bonduelle Group strives to achieve by proposingprocessed vegetables to consumers: these vegetables have astable nutritional value, are harvested at optimal maturity andrapidly processed after harvesting. Available throughout theyear, at a constant price, our products are key elements of abalanced diet, which helps consumers to efficiently fight againstrising obesity.

Nutrition

Prevalence of obesity in France

1997 8.2%

2000 9.6%

2003 11.3%

Raising awareness at the Renescure plant (France)

Well done to all the members of the Nutrition Department team:you found a successful way of ensuring that everyone atheadquarters speaks about cardiovascular diseases!

Thanks to the excellent growth drivers which motivated us,simple and accessible material, personalized diagnostics whereeach one is involved and quiz which mobilized all of us... BMI,cholesterol level and tension value are no longer secrets toanyone. This goes to prove that if a “serious” subject is handledin an accessible and friendly way, it will get everyone’s attention.

Emmanuelle CousyMarketing Group Manager, Bonduelle Conserve International

As nutrition is central to Bonduelle’s corporate strategy, the group has a two-

pronged strategy comprising external initiatives aimed at optimizing the nutritional

quality of products, and internal initiatives to raise the awareness of employees.

A strategic priority

Source: ObEpi 2003


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Training programsAt the same time, we pursued the training initiatives for thegroup’s employees. For example, all Marketing France employeesattended a one-day seminar entirely devoted to nutrition, andfocused on the specific needs of this business. Top managementor the operational teams of the food service also benefited fromspecial sharing times around the theme of nutrition.

Together with the Pierre et Benoît Bonduelle Institute, the group’sinternal university, new arrivals to the group are offered a nutritiontraining session during the group discovery seminar. We use thissession to make the new employee aware of the criticalimportance of nutrition for our company and to deploy thegroup’s objectives in each business line.

In addition, we intend to set up a module for all group executives,as well as specific modules for targeted populations whosebusiness is closely linked to nutrition.

The nutritional charterLastly, Bonduelle Group has decided to create a nutritionalcharter to guide its development and its communication packs.This huge project began in 2005 and is expected to becompleted and implemented by the end of 2006.

Health in the workplaceThe Bonduelle Group plans to enlist the active participation ofits employees in the major health challenge posed by nutrition.Accordingly, in 2006, the group scheduled several awareness-raising events for staff.

At headquarters, together with the Fondation Cœur et Artères(Heart and Arteries Foundation) we organized an awarenessweek for cardiovascular diseases. The five days focused onconferences, practical workshops, screenings and healthy menusin the company’s canteen. It was the opportunity for highlyinteresting dialogue between the group’s nutritionists, doctors,nurses and associates.

At the Renescure factory (France), fives days were also devotedto educating employees about food-related health problems.The program mainly focused on mid-shift breaks and snack time.Balanced sandwiches were distributed, and employees wereinvited to talk to nutritionists and nurses as documents weredistributed. A workshop was organized each noon in the staffcanteen for day staff: in addition to the discussions and thedistributed material, we used the different activities organizedevery day to deal with numerous subjects: sports and weightmanagement, doctors, calculating Body Mass Index, sensoryworkshop on fruits and many more.

From food brands, magazines, the government, down tosupermarket chains, nutrition has become the favourite world for everyone.

Bonduelle must legitimately take advantage of this boom. Hence the importance of ensuring that all marketing teams of subsidiaries, who wish to use "nutrition" as a selling point for their consumers, meet to collectively participate in trainingprograms on the topic. These programs will provide them with a common nutrition culture and consistent message.

Obviously, nutrition is a complex issue which needs to bepresented in simple terms. Consumers need to trust themselves,and not perceive food as the enemy but most importantly, as a source of pleasure.

Bonduelle intends to launch products and a new communicationwhich will reflect this new development in the brand’s position.

Martine VariérasFrance Marketing Director, Bonduelle Frais International


The Louis Bonduelle Foundation

“We work through our Foundation to improve the eating habits of everyone and the health status of

each one”.

Christophe Bonduelle, Chairman of the Board of Directors of the Foundation

Promote change eating habits

The group’s commitment

In the current negative public health context, where the increasein pathologies linked to poor nutrition have become a source ofconcern, Bonduelle has clearly shown its staunch commitment tonutrition by creating the Louis Bonduelle Enterprise Foundation.

In addition to an internal nutritional policy on employee training,the improvement of technological processes and products,Bonduelle chose to create a complementary entity that wouldserve as another communication vector towards its consumers.

This is an independent organization with a European dimension. Its long-term goals include initiatives to convince consumers to change their eating habits.

One of the most worrying problems of unhealthy eating is the lowquantity of vegetables and fruits in the diet, especially as it isproven that insufficient quantities of fruits and vegetables in a dietis detrimental to health. For example, in France, public authoritiesclaim that 20%* of cancers could be prevented by the appropriateconsumption of fruits and vegetables.

* PNNS: Food, Nutrition and Cancer.

Pillars of the Foundation

The Louis Bonduelle Foundation was founded in this particularcontext and to reach its objective, it has anchored its initiativeson three pillars:

1. Inform and educate by providing everyone with comprehensiveinformation on vegetables.

2. Support research. The Louis Bonduelle Foundation is co-founder of the Heart and Arteries Foundation, recognized asa useful public organization.

3. Implement field initiatives. Through these operations, theFoundation provides concrete solutions, applicable to everyday life, to make it easy for consumers to start eating theirveggies!


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Membership of the Board of Directors

Christophe BonduelleChairman of the Foundation,CEO of Bonduelle Group

Jean-Charles FruchartDoctor in human biology,Chairman of the InternationalCompany of Atherosclerosis

Béatrice de ReynalNutritionist

Christophe ChâteauDirector of communication and corporate marketing ofBonduelle Group

Jean-Bernard BonduelleHuman Resources Director ofBonduelle Group

Salvatore FabozziInnovation manager ofBonduelle SurgeléInternational

A Major Operation of the Foundation

Veggie Day aims to celebrate vegetables every Tuesday throughoriginal recipes (brownies with red beans) and variouscommunication materials. The concept is supported by severalpartners, in out-of-home catering and in the retail industry. After“Wednesday, kids’ day”, the Foundation intends to introduce anew concept, rooted in our culture, every Tuesday. This initiativeboldly participates in the collective effort to change consumereating habits and get people to start eating their veggies again.

See you on www.lejourdulegume.fr

Recognition by healthcare professionals

Lastly, after nearly two years in existence, the Louis BonduelleFoundation is now officially recognized within the community ofhealth care professionals. This year, the Louis Bonduelle Foundationreceived the 2006 Nutridor Prize for the best nutritionalcommunication, prize awarded by an audience of doctors,nutritionists, dieticians, and industrialists working to promotehealth in the context of the”Journées pratiques de nutrition”(Dietecom congress).

The prize rewards all the work accomplished throughout the year,and particularly research on eating habits which resulted in thepublication of a monograph on the subject. The document isavailable on the Foundation’s website.

Kit developed for restaurant managers to help them organize their restaurant around the vegetable theme.

Posters Index card recipes Easel

“After the Dietecom congress, healthcare professionals elected theLouis Bonduelle Foundation as the best in nutritionalcommunication.

Our various initiatives have appealed to healthcare professionalsand we are honoured that Dietecom was able to participate in thistestimony.

The Foundation’s commitment and active communication proveresponsibility and dynamism which deserves to berewarded.”

Dr Patrick SerogClinical nutritionistScience manager of Dietecom

Latest news about the Foundation is available on the Foundation’s websiteFrance : www.fondation-louisbonduelle.org / Italy : www.fondazionelbonduelle.org

“Veggie Day”


Activities2.


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onduelle sells vegetables in all

forms and technologies (canned,frozen, fresh ready prepared,

delicatessen), through businesses located

throughout the world, from the United

States to Asia Minor. To provide the best

solutions to market trends and to consumer

requirements, the company has divided

up its activities into six subsidiaries

specialized by product and by channel.

B

30 BONDUELLE - Annual report 2005/2006

The vegetable market

The market of prepared vegetables is a high growth market that provides two-

fold benefits to consumers: guarantee of the balanced food required to stay

healthy, and the desired convenience in meal preparation.

Prepared vegetables: products to match consumer expectations

A growing businessVegetables are an expanding market. Driven by concerns aboutincreasing pathologies linked to poor eating habits (obesity, cancer,cardiovascular diseases), nutrition experts are committed to fightingeating disorders and the low consumption of fruits and vegetables.Public authorities come first, with the introduction of extensivecommunication campaigns to educate the public about theimportance of a balanced diet, with plenty of vegetables. A perfectexample is the introduction of “five a day” networks promotingmessages on the need and importance of eating enough fruitsand vegetables. Then healthcare professionals devoted to improvingthe health of their patients. Moreover, scientific studies show the keyrole played by the adequate consumption of vegetables and fruitson maintaining good health.

Lastly, agri-food industry companies which, by adopting responsibleattitudes, have introduced educational programs on the importanceof balanced diets, and at the same time, work towards optimisingthe quality of their products.

Thanks to the collective awareness by the foregoing differentplayers, who promote the benefits of vegetables, the vegetablemarket is well positioned with unique opportunities for companiesin the sector.

1999 2005

6.1

Change in the vegetable market since 19991

(in billions of euros)

Western Europe Central and Eastern Europe North America

3.8

61.2

90.2

48.9

76.0

0

20

40

60

80

100

These figures translate the current dynamism of thevegetable market, in Western, Central and Eastern Europe,and in North America.

1 Food For Thought.


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Market compositionThis market can be divided into four large categories:• “raw fresh” vegetable, meaning the harvested and non-processed

vegetable.

Then prepared vegetables, which include:• canned vegetables,• frozen vegetables,• the new chilled vegetable sector, made up of so-called fresh

ready prepared salads and seasoned delicatessen salads.

These sectors include the market of prepared vegetables, which isthe most buoyant as it meets a dual expectation of consumers.

Currently, consumers want impeccable quality products withsignificant nutritional benefits. The vegetables are processed a fewhours after harvesting to ensure that they maintain all their preciousnutriments required for the proper functioning of our organism:vitamins, fibres, minerals, antioxidants…

Furthermore, recent changes in our lifestyles have deeplytransformed our eating habits. Changes in women’s professionallives, longer commuting times, the relatively larger time devoted toleisure are all factors which taken time away from preparing andcooking meals. Already prepared, transformed vegetables help tomeet these new constraints.

Therefore, while keeping their nutritional qualities, canned, frozenor bagged vegetables provide the simplicity of preparation desiredby consumers.

Prepared vegetables: a segmented marketat the service of consumers

Chilled vegetables

Frozen vegetables

Canned vegetables


Growth by geographicareas

Western Europe

In Western Europe, the authorities are strongly concerned by theconsequences of poor eating habits and therefore have launchedcampaigns to promote the eating of fruits and vegetables; and isleveraged by the very dynamic “chilled vegetable” sector.

Central and Eastern Europe

Already affected by the low consumption of vegetables, Centraland Eastern Europe represent a strong potential for preparedvegetables which currently make up 14% of the market in value.These countries are going through rapid changes which bringtheir everyday lifestyles closer to that of Western Europe,thereby increasing their need for products that require shortercooking time.

North America

In North America, where the people are facing serious public healthproblems linked to poor eating habits, the 300 million inhabitants2

represent a huge potential. Currently, prepared vegetables,especially canned ones, are relatively very basic (simple mixtures ofvegetables), the potential of more sophisticated preparations is astrong leverage for growth.

250

200

150

100

50

Raw vegetablesChilled vegetables

Chan

ge

2000 2001 2002 2003 2004 2005

Dynamism of prepared chilled vegetables (in value) in Western Europe1

(base 100: year 2000)

Chilled vegetables are perfectlysuitable for new lifestyles, such as eating on the go


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Consumption of vegetables by inhabitant in 20051

(kg/year)

Vegetables are a growing market, leveraged by the collectiveawareness of their key role in good health. The involvement ofpublic authorities and the launch of nutrition networks prove theimportance attached to this sector.

In addition to these concerns, prepared vegetables are also aperfect answer to new demands introduced by snacking, attractionfor homemade food, etc.

1 Food For Thought.

2 US Census Bureau, Eurostat, INSEE.

3 Western Europe, 2006 Food For Thought.

American market in 20051

Segmentation by markets At the same time as geographical analysis, the vegetable market ischaracterised by two distribution channels, which meet differentconstraints.

First retail, which represents the major part of vegetable sales andwhich refers to the distribution channel to consumers. With valuegrowth between 2.5% and 10% from Europe to the Americas, theretail channel represents huge sales volumes that go up to nearly13 million tonnes a year for the United States and is carried bypenetration rates that reach more than 95% in certain technologies.

Then, the Food service segment, which includes all sales toprofessional caterers (restaurants, group canteens, snacks…).Processed vegetables are a significant part of this market andrepresent more 45%3 of the market which is steadily rising. Thespecific food service constraints, such as preserving quality overtime, easy preparation, and tight budget constraints contribute tomake prepared vegetables, products that are perfectly adaptedto the segment’s demands.

Vegetable categories Value(billions of euros)

Market shares (%)

Raw fresh vegetables 42 47

Canned vegetables 20.4 23

Frozen vegetables 23.7 26

Chilled vegetables 4 4

Total 90.1 100

Western Europe

75%Raw fresh vegetables

5%Chilled vegetables12%

Frozen

8%Canned

Breakdown of the vegetable market by geographic areas1

Central and Eastern Europe

86%Raw fresh vegetables

1%Chilled vegetables

4%Frozen

9%Canned

Rawvegetables Canned Frozen Chilled

vegetables

France 45.53 14.90 9.42 1.30

Germany 75.62 11.27 5.43 1.01

Italy 82.03 2.26 7.13 1.23

Spain 61.42 7.73 7.51 0.93

Hungary 81.13 13.71 6.73 0.08

Poland 65.21 1.41 0.81 0.06

Romania 107.37 4.55 0.47 -

United States 80.56 47.60 33.17 1.68

Canada 69.75 4.20 6.18 1.21


The group’s organisation

The group’s management

European Union perimeter

Prod

ucti

onsi

tes

Bonduelle Food Service

Bonduelle Frais

International

GermanyStraelen

Reutlingen

FranceGenas

Saint-Mihiel

ItalyBattipaglia

San Paolo d’ArgonCosta di Mezzate

FranceRosporden

Saint-Benoîst-sur-Vanne

FranceBordères

Estrées conserve Labenne

Renescure Russy-Bémont

Saint-SeverVaulx-Vraucourt

HungaryBékéscsabaNagykörös

FranceFlaucourtRosières

BelgiumKortemark

Bonduelle Conserve

International

Bonduelle Traiteur

Log

isti

cPl

atfo

rms


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Non-European Unionperimeter

SpainBenimodo

Milagro

PortugalSantarem

FranceEstrées surgelé

PolandGniewkowo

RussiaKrasnodar

Finance

Human resources

Communication and Corporate Marketing

Information systems

Integrated management program

Research and development

Purchases

Bonduelle Surgelé

InternationalServices GroupBonduelle

Development


The new subsidiary Bonduelle Conserve International was created from thecombination of the activities of the Bonduelle Group by technologies. Createdat year-end 2005, it comprises Bonduelle Private Label (BPL légumes), specialistsin customer brand canned vegetables and the canned activity of BonduelleGrand Public (BGP).

The subsidiary manufactures and sells tinned vegetables in the European Union.It also supplies appertised products for the subsidiaries of Bonduelle Food Serviceand Bonduelle Development.

Bonduelle Conserve International operates on a high growth market, leveragedby numerous innovations. Strong and dynamic leader, Bonduelle ConserveInternational is the largest European organization in the category of appertisedvegetables.

Bonduelle Conserve International

Canned vegetables, a dynamicmarketAppertisation provides numerous packaging solutions: jars, carton,Tetra RecartTM, easy bag, tray, etc.… It is a promising technologywhich offers consumers economic, practical, tasty products with aconstant and controlled quality, which they know well and in whichthey trust. In the European Union, new appertised products rapidlyfind a market niche and products positioned in the top range arein huge demand. In this context, there is increasing progress inmarketing innovations which fuels product lines. These are alldrivers for regular growth, accompanied by increase in value.

To maintain its leadership on an attractive market, BonduelleConserve International focuses primarily on excellent commandof its business line: 2,300 employees are driven by the culture ofcontinuous improvement and customer satisfaction. They start

Appertisation is more than mere canning, it provides numerous packaging solutions:jars, cartons, Tetra RecartTM, flexible sachets…

Gilles LessardManaging Director BonduelleConserve International


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applying their expertise right from the agricultural stage: 50,000hectares are exclusively grown for the subsidiary. With 600,000tonnes of vegetables grown every year, the 9 production sites workwith 10 packaging and warehousing centres which dispatch theequivalent of 28,000 trucks a year. The 2005/2006 season wassatisfactory for all the industrial activity of Bonduelle ConserveInternational. The Hungarian and French production sites enjoyedmild climatic conditions, with the exception of high temperaturesin France late June and early July. The season ended with significantproductivity gains and processed products compliant with qualitativeand quantitative demands. Once again, all the certification auditsfor this year were passed with flying colours: ISO 9001 version2000, European Food Safety Inspection Service (EFSIS) andInternational Food Standard (IFS).

The subsidiary has powerful production and logistical strengthsand is an efficient leader in the management and marketing ofown brands, just as Bonduelle or Cassegrain, and in client brands.With a solid experience in Europe, Bonduelle Conserve Internationaloperates in the 25 countries of the Union through commercialcompanies. It occupies the position of number 1 or number 2 ineach country. Its overall revenues reached 436 million euros for2005/2006, and the geographical breakdown is as follows:

France 46%

Germany 18%

Benelux 8%

Italy 8%

Spain and Portugal 8%

Eastern Europe (Poland, Hungary, Czech Republic) 10%

United Kingdom 2%


Sustained investments from the factory to product development To remain a strong leader, Bonduelle Conserve International mustbe a dynamic leader. Over the 2005/2006 period, 20 million euroshave been dedicated to the industrial investment program:reinforcement of environmental protection and employee safety,technical innovations, research for competitiveness, constantimprovement of manufactured product quality and creation of anew workshop entirely dedicated to Cassegrain products. In 2006,this event coincides with the brand’s 150th anniversary. Cassegrainselects and grows the best vegetables and is currently the upmarketreference for French consumers.

Bonduelle Conserve International’s employees have setthemselves the challenge of developing tomorrow’s flagshipproducts to boost the market. The major drivers for achievingthis include first, the performance of tools and the efficiency oforganizations and second commercial and marketing activity.Accordingly, 40 million euros were devoted in 2005/2006 todeveloping sales and marketing. The most recent innovationsbest illustrate the efforts undertaken. First of all, there was asimultaneous launch in several countries: the individual cupswhich has transformed corn into a snack. Ready-to-eat corn, withcutlery and a packet of sauce, is a simple and rapid nutritionalsolution that provides fibres, magnesium and vitamins to thebody. In France, the Cassegrain tradition has expanded tointegrate a new range: the “légumes du soleil” or sunshinerange. Lastly, recent innovations in Italy have radically changedthe visual codes of the canned department. New packagingdeveloped for Tetra RecartTM cartons propose a fun and cheerfulapproach to eating for consumers. A differentiation strategywhich proves the boldness and creativity of Bonduelle ConserveInternational’s employees.

Innovations best illustrate the efforts undertaken:individual format cups have firmly placed corn in thesnacking universe, packaging with revolutionaryvisuals for Tetra RecartTM cartons, first-of-a-kind“légumes du soleil” range by Cassegrain.

Bonduelle Conserve International


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The challenges of tomorrowThe challenges to meet to confirm the dominant position ofBonduelle Conserve International concern cost control and the capacity to earn market shares in volume and in value. We have the men, experience, tools, means, will and dynamismto achieve it.


The year 2005/2006 which has just ended was characterized by the strong

development of the Bonduelle brand in Europe and by the important

optimization of food service sales in Germany as well as in France. These changes

led to 2% overall increase in earnings compared to the previous year.

Bonduelle Frais International

In 2005/2006, Bonduelle Frais International continued to developthe Bonduelle brand throughout Europe, with a growth rate onthe continent of 23% broken down between France (18%), Italy(22%), and Germany (31%). Thanks to the first televisionadvertisements in France and Germany, and the newcommunication style in Italy, the Bonduelle brand obtained thehighest market share in its history with nearly 20% in Italy, 16.5% inFrance and 20% in Germany, in a continuous growing market whichhas been the focus of producers and retailers throughout Europefor a long time.

The continuous and significant launch of new products confirm theincreasingly key role which the Bonduelle brand plays in the marketof national brands. In addition, Bonduelle has commitments on“customer brands”, thanks to constant attention to the demandsof retailers and their store policy.

The new organisation structure helped to exploit as best as possibleall the European synergies from the early agricultural stage toindustrial transformation. This implementation of means wasfacilitated by the introduction of uniform production methods andallowing factories to diversify their raw materials supply sites. As the subsidiary seeks to achieve optimum food quality and safety,it carefully selects its agricultural partners, monitors productioncontinuously and pays particular attention to the fight againstforeign bodies, by means of sophisticated electronic devicesinstalled in the production plants.

Umberto GalassiniManaging Director BonduelleFrais International


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In Germany, earnings improved thanks to the restructuring ofReutlingen and the closing of the Wanzleben factory. This allowedprocess optimization, bringing productivity to the same level asthat of other plants of the subsidiary. The reduction of non profitablesales and the development of the Bonduelle brand significantlyimproved the country’s profitability.

In France, thanks to the growth achieved by Bonduelle FraisInternational, the Bonduelle brand and customer brands, thesubsidiary succeeded in imposing itself as a benchmark in theworld of Fresh vegetables, for consumers and distributors. Thepackaging renewal last year enhanced brand visibility, reinforcedby the new references which have been highly popular withconsumers.

Italy also continued its development, based on comfortableleadership in the market of fresh ready prepared vegetables. A significant portion of this growth stems from the centre and thesouth of the country, which justifies the expansion of the Battipagliaplant, with the aim of sharply increasing its production capacity, inresponse to a southern market with sustained growth.

The already high sales in the Benelux, the installation of the brandin Greece and the continual interest shown by other countries forits offer, makes Bonduelle Frais International a benchmark on theEuropean market.

FocusIn France, together with other group subsidiaries,Bonduelle Frais International participated in the “Cuisinez !” show in Paris. The show was an opportunityfor the subsidiary to recall that eating vegetables is asource of pleasure and that the products developed by the company fully respond to the current consumerexpectations.


Anxious to work together with other subsidiaries in the group, inadvertising for example, Bonduelle Frais International harnessessynergies from the centralization of certain resources. It is in thisdirection that the subsidiary has reinforced its Research &Development structure to actively participate in industrial andproduct development projects, which are fundamental prioritiesfor brand growth and image.

Furthermore, and in this context, the subsidiary has already adoptedin June 2006 in France, the IT system of Bonduelle Group with theobjective of deploying it in 2007 in Germany as well as in Italy,with a significant involvement of the resources of all activity sectorsand the fundamental help of experts of the group’s IT department.

Bonduelle Frais International has developednumerous innovative products for the market of cold soups and salads, throughout Europe.

Bonduelle Frais International


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Bonduelle Traiteur continues to consolidate its leadership on a market that is

still dynamic and which grew by 13.8% in volume in 2005/2006. Already

the n°1 brand on the cooked salad segment, the subsidiary reinforced its

partnerships in customer brands and launched baked vegetables, a first step

towards the introduction of a vegetable space in the department of fresh

prepared dishes.

Bonduelle Traiteur

New segmentation for heightenedvisibilityTo be closer to the purchasing criteria of consumers, the brandredefined the segmentation of its offer which resulted in a newgraphic identity.

It mainly emphasizes the products packaged with a fork for snackingand those which are eaten at home.

It is also enhanced with new recipes to reinforce its differentiation,which allowed it to offer strong resistance to the increasing powerof customer brands.

The three baked vegetables have a high vegetable content, littlesauce and maintain the texture and taste closest to homemademeals. In individual portion, these products encourage theconsumption of vegetables in all circumstances, as a one-coursemeal or as a side dish.

At the same time, the development of sales of fresh vegetablecakes, launched in 2005, will have contributed to rapidly increasethe size of this new market segment while comforting theBonduelle’s status as an innovator.

Patrick NéaumeManaging Director Bonduelle Traiteur


As the name indicates, the new Bonduelle Surgelé International subsidiary is concentrating all its action on frozen vegetables in the group.

Our mission is two fold: - optimize the industrial tools of frozen vegetables in order to propose products

that are more qualitative and more competitive (retail and catering market),- sell to the retail market, in Europe, our products to our brands (Bonduelle and

Frudesa), but also to the proprietary brands of our customers in all our networks:mass retail as well as the specialized networks (freezer, home service).

Our comments: towards our clients, to provide a global offer (national brandsand customer brands) and thereby optimize the costs, services and advice.

Our ambition: gradually become the benchmark partner in our category.

Bonduelle Surgelé International

The retail market in the European UnionThe frozen vegetable market is very large (+/- 1,500,000 tonnes) andremains a growth market in most European countries (around 2 to5%), and this technology perfectly meets consumer expectations interms of quality and convenience.

However, in value, we observe a stagnation (or regression in certaincountries) due to several phenomena:• Dutreil law in France: aimed at lowering prices for the consumer,• expansion of the offer in customer brands in numerous stores.

Michel TorrisManaging Director BonduelleSurgelé International

Extension steamed vegetables range

To supplement the steamed range, launch of two new families:

• the“vapeur du monde”,

• the “cuisinés vapeur”.

Create more differentiation thanksto new processesTo further improve our offer and continue to play our role as leaderin terms of innovation, Bonduelle Surgelé International has, duringthis year, developed new processes (Zéphir, Mille Feuilles). Theseadvanced technologies will allow us to design new ranges of“concept products”, more tailored to the expectations ofconsumers.

Improve our competitiveness To improve performance, the logistics platform of the Estrées site(France) has been fully automated. It results in gain in terms ofstreamlining of flows and a drop in costs.

Expand our leadership In Spain, in order to consolidate our positions on the Frudesabrand, we acquired Salto from Unilever. This acquisition gave usleadership over all vegetable and rice based products and mixes.

Although for all employees of the new Bonduelle SurgeléInternational subsidiary, 2005/2006 was marked by numerouschanges (internal/external), this year primarily allowed us to defineand build the new foundations for our future development, byintegrating the complementarity of our brands and those of ourcustomers.

This gave us confidence in our ambition: “Become the benchmarkpartner of our category”


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HighlightsThe market structure, these last months, has been considerablytransformed and numerous stakeholders and brands have changedgroups; recent examples:• Findus Spain: from Cap Vest to Ardo • Igloo Surgelé: from Unilever to Permira • Salto Spain: from Unilever to Bonduelle • Findus Europe: from EQT to Cap Vest

There is a current trend towards consolidation on a highlyfragmented market.

Our achievementsIn a highly erratic and complex context (internal set up of the neworganization in technological subsidiaries, strong rise in customerbrands and radical change among the main shareholders), oursales for our brands have increased for most of our customers.

Our sales in customer brands also grew at a sustained rate innumerous stores, on the same level as the market trend. This growthwas achieved in all distribution channels: mass retail as well as thespecialized networks (home service & freezer centre).

The four principal goals of BSI during this financial year included: • consolidate the brand, our current leader ranges,

• create at brand level, the new generations of “concept products”in order to expand the differentiation,

• sharpen our competitiveness and our services,

• expand our brand leadership in certain geographic zones.

Consolidate the leading brandranges Mixed fried rangeImprovement of all recipes, new segmentation adapted to theconsumer’s expectations, modernization of the packaging for moreproduct line visibility.

Mixed fried range Steamed vegetable range


Consumer behaviour continues to influence new developments in catering.

The required equation between quality/price and pleasure/health is increasingly

directed towards nutrition and convenience, and vegetables occupy a place

of choice in societal trends.

In 2005/2006, Bonduelle Food Service conquered new consumer worlds,automatic distribution, airline and railway catering with specific offers responding

to the demands of professionals and their clients.

Bonduelle Food Service

Tailored offers As consumers increasingly eat on the run and easily change fromone formula to another, they expect catering professionals to offerthem food solutions that match their purchasing power and lifeconstraints.

Our offers retain their quality while integrating new products.

• New packed salads (delicatessen),

• Lunch Box, “multi-brand offer”,

• Mono portion microwavable vegetables,

• Mono bowl portions of 4th range salads.

Pascal BredelouxManaging Director BonduelleFood Service

Distributed in service stations, this product basedon a “co-branding” strategy translates the relevanceof the marketing choices of Bonduelle Food Service.

The “minute” range of already cookedvegetables has the advantage of beingextremely easy to use for restaurant operators and significantly shortens preparation time.


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Service to professionalsRestaurant operators and retailers expect answers adapted to their problems from the vegetable leader.

Gourmet solutions

Creation of a range of very elaborate and positioned vegetables:fagots de haricots verts, darioles de légumes… in order to proposetop of the range products for banquet, independent catering offers,etc.

Our specialised teams advise professionals on howto adapt to environmental changes

• Easy bag (less waste),

• Better command of flow management, logistical and technologicalgrouping,

• Convenience of packages and less overpacks,

• But also on a European vision of expectations regarding nutritionand health.

In 2005/2006, Bonduelle Food Service, in the new grouporganization, resolutely focused on the mission of service toprofessionals for all European countries, in all “preparedvegetable” category by successfully maintaining organic growthcorresponding to its markets in Europe.

As our clients trust us, we need to continue expanding ourattentiveness and adapting to their expectations.

Bundle of French beans Moulded pastry filled with vegetables

Delicatessen salad


Bonduelle Development and its 200 employees aim to develop sales in canned

and frozen vegetables, under the Bonduelle brand or that of its customers, in

supermarkets or restaurants, everywhere in the world outside the European

Union.

Bonduelle Development

Economic contextIn a currency context that is once again unfavourable, the year2005/2006 ended by 11% growth in our volumes and 28%growth in our revenues.

Our continuous efforts in terms of commercial investments (+16%) and marketing (+36%) did not alter our overall profitability.

SupplyBonduelle Development diversified its sources of supply to meetthe demand of its customers: internal to the subsidiary by itsKrasnodar plant, internal to the group by purchases to otherBonduelle Conserve International and Bonduelle SurgeléInternational subsidiaries, as well as by external sourcing to theMercosur, Africa and Asia.

Situation in the countriesIn Russia, the wave of extreme cold in February and Marchprevented us from organizing any expedition during two months.

Despite this, our volumes rose by 6%. The investment program ofour Krasnodar plant complied with the timing and budgetconstraints. The installation of a continuous sterilizer in particular,allowed us to raise production by 35%.

The former Republics of the CIS (Kazakhstan, Armenia, etc.) grewby 30% and our brand is currently the leader.

Benoît BonduelleManaging Director Bonduelle Development


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In Ukraine, the temporary closing of borders with the EuropeanUnion allowed us to strongly develop our sales from Krasnodar (+50%).

The Balkans took advantage of the new advertising campaigns inRomania and Croatia and grew by 45%.

Taking advantage of a slight improvement in the Brazilian Real andthe Argentinean Peso, Mercosur resumed revenue growth of 28% in spite of the supply problems in Chile.

The only blot on the landscape was Export which suffered fromthe sharp development of Hard Discount stores in the DOM-TOMs,the overseas French departments and territories and a drop inglobal corn prices especially in Thaï corn.

Despite an unfavourable exchange rate, Bonduelle Developmentcontinued its two-digit growth. Our agro-industrial skills, themobilisation of our teams, the development of new zones as wellas new market segments are key factors for our successfuldevelopment.

The quality of Bonduelle red beans, peas andcorn was rewarded at Russia’s 8th agri-foodindustry convention.

In Brazil, a retail magazine prepared a performance score, by category. Bonduelle ranked first in frozen vegetables among its peers.


SERCorporate social and environmentalresponsibility3.


onduelle has been a member of

Global Compact since 2003.

Global Compact is a UN interna-

tional initiative which defines 10 universal

principles in the areas of human rights,labour standards, the environment and

anti-corruption.

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Corporate social and environmental responsibility

Currently integrated as a group priority, sustainable development is deployed

on a large scale and has taken place within the management committees

of each subsidiary, demonstrating the key role occupied by the approach.

This accountability has helped to drive improvements within our four pillars

of progress.

Coordinating the approach

1. PeopleImprovement approaches centred on employees including thereinforcement of skills and improvement of safety for all.

2. Agricultural productionThis year, the group’s efforts are directed at the culturalpractices of farmers working for Bonduelle, in order to makethem more compliant with our supply charter.

The set up of this charter, distributed by our field managers,allows farmers to grow vegetables while complying with theprinciples of integrated crop management. This charter alsopromotes the production of high-quality vegetables.

3. Natural ResourcesConsumer spending has inevitably dropped due to high energyprices. Our challenge was to offset this increase by decreasing theuse of energy in all our production and logistic sites. Objectivereached, since we have reduced our consumption at constanttonnage by 13.6% since 2002/2003. In order to continue ourimprovements in the following years, we envisage processoptimizations and the formalisation of good practices inproduction units.


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4. Quality/NutritionToday, faced with poor eating habits which lead to the deve-lopment of pathologies such as obesity and cardiovasculardiseases, Bonduelle has decided to act and set up actions inthe field of nutrition. Accordingly, we have defined two majordevelopment fronts this year:

• the Louis Bonduelle Foundation continued its field work,especially with children, in order to promote the eating ofvegetables,

• internally, works were carried out by quality departments tolimit allergen risks, thereby going beyond the mandatorylabelling requirements.

Deployment

2002/2003• Definition of four priority areas• Set up of indicators

2003/2004• Construction of reference bases as well as evaluation tools• Implementation of action plans

2004/2005• Increasing the approach • Launching internal audits

2005/2006• Integrating the approach in the processes Management ISO

The results obtained for each of the priority fronts chosen fouryears make us more determined to continue the approach. Morethan ever, we are committed to pursuing the involvement of allemployees in the sustainable development approach, in order toensure the permanence of improvements in the selected areasof progress.

Jean-Bernard Bonduelle

Human Resources Director, in charge of sustainabledevelopment

Coordination of sustainable development by processes according to ISO 9001/2000

Steering Committee

PilotingJean-Bernard BonduelleHuman Resources Director of Bonduelle Group

Human ResourcesÉric Henry - Françoise SimoësNatural ResourcesAlain Maureaux - Cécile LovichiAgricultural productionEmmanuel Chaveron - Alain GautierQuality/NutritionMarc Grenier - Laurence DepezayReportingJacques Liné - Fabienne VinaïCommunicationChristophe Château - Matthieu Pillet-Will

FocusOur sustainable development approach and CO2emissions reduction programs have been rewarded bythe Carbon Disclosure Project, a survey conducted withthe support of AXA and ADEME.

Industrial committee and CNP

(coordination process)

CODIR Subsidiary (management

process)

Correctiveaction

process

Reporting of indicators

(monitoringprocess)

Division sites + Marketing country

+ Quality (development

process)

Coordinator: subsidiary quality

IC: agronomy, people & safety, quality, CNP: nutrition(country marketing)They set objectives, decide on action plans and means to implement, monitor action plans (monthly or bimonthly)

Control the development of action plans. Measure the indicators and report the values to the IC or the CNP (monthly or bimonthly)

Management’s commitment via the subsidiary quality policy. Validation of objectives, means and action plans. Quarterly review of indicators

Readjustment of actionplans and/or meansto implement (IC and CNP)

To be set up, 1 relevant indicator by theme to be monitored monthly or bimonthly. Reporting to the IC and CNP

Planningimprovement

process

Planning of action plansand means that havebeen decidedInternal

auditprocess

Factory internal audit and subsidiary of each DD process. Calibration of indicators


A new organisation:

2005/2006, year of organizational change, required heightened vigilance

managing teams on the field and in adapting skills, by reinforcement of

managerial trainings.

People

Our commitment in the areaof safety and health

Continue our action

This year, we have continued our policy and our investments forthe safety and health of our employees.

Accordingly, the accident frequency rate* was monitored withestimated objectives:

• achieve an average rate for the company under 20,

• not have a deviance greater than + 10 per factory, in order toreduce differences between the production sites.

Today, the initiatives carried out since this objective was drafted,allowed certain sites to get better, obvious result of theapproaches and awareness raising carried out on the field. We should continue our efforts in this area to optimize our goodpractices in the area of safety and health to meet our objectivewhich is part of our progress priorities.

Work on the nutrition-health program

1. Leverage nutrition-health operations in all sites.

2. Start operations to analyse diseases linked to Muscle SkeletonDisorders (MSD) in the Bonduelle Frais International andBonduelle Traiteur sites.

With the Louis Bonduelle Foundation, we have launchedoperations code-named “nutrition-health” with a clear goal:educate employees on the importance of food on our health.

* The accident frequency rate is a Human Resource data obtained usingprocedures for compiling a company's human resource report. It is calculatedas follows: Rate = [Number of accidents with sick leave X 106] / [Number of hours worked].


Accident frequency rate

2002/2003 39.72

2003/2004 35.5

2004/2005 29.14

2005/2006 30.39

Some figures

219 answer forms to the “Questions pour un Champignon” quiz

70 registrations for cholesterol screenings

340 sandwiches distributed

Example of the set up of a“nutrition-health” operation

The week of 5 vegetables -Renescure Factory (France)Last February, early March, the business canteen and thefactory were buzzing with activities. A five-day nutritionevent was proposed to shift workers.

This campaign followed the “health at work” programwhich started in 2004 on collective behaviours. The basisof the information focused on the topic “How to prepare abalanced snack depending on the working station”.

Numerous events were organised that week. They were allhighly appreciated:

• Information films

• Tasting tests

• Initiation to the stepper

• How to calculate your BMI (body mass index)

• Nutrition quiz named for the occasion: “Questions pourun Champignon”*

Each employee was provided with flyers:

• “Discover vegetables with the Louis BonduelleFoundation ”

• “Physical activity”: the benefits of an active life

• “Fruits and vegetables: 5 a day” : nutritional benefits

• “The 5 veggies week… or a little bit of change, everyday ” with recipes for balanced sandwiches and meals

Nutritionists from the Louis Bonduelle Foundation, thedietician from the business canteen, the nurse from theRenescure factory, who were present during the five daysgave presentations and answered questions fromemployees.

The employees declared that they had discovered newtastes and that they looked forward to other initiatives onthe same topic.

Reported by Jérôme Lefebvre, Director of the Renescure plant


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We used conferences – debates accessible to all to transmit clearmessages. Beyond theoretical principles, each participant managedto realize the importance of daily gestures, such as the quantitiesof salt added to meals. More than “pious speeches”, simplegestures gained full meaning: how can we eat 5 fruits andvegetables a day? Why walk 30 minutes a day?…

Mobility and skill: Our projectIn order to promote mobility to stabilise our workforce, we intendto encourage professional versatility and training with the Pierreand Benoît Bonduelle Institute (in-house university).

For managerial staff, we intend to:

• double the number of internal mobility,

• double the number of expatriates in two years.

The training of the group's men and women is a challenge whichmust help to ensure functional, geographic and sectorial mobility.

Progress priorities• Reduce workplace accidents

• Boost skills through training

• Promote mobility

• Set up nutrition-health initiatives

Awareness week for cardiovascular diseases, headquarters of Villeneuve-d’Ascq, France

use with my importingcustomers who are located inregions where obesity anddiabetes are highlydeveloped.

Hélène BonnetExport zone manager,

Villeneuve-d’Ascq, France

I found it interesting, even if Ididn't attend all theconferences.

I attended workshops, readthe minutes of conferences.

From a personal viewpoint,this was a kind of wake-upcall for me... But I wasreassured with a blood test!

On a professional level, thisgave me new arguments to

* pun on popular French TV quiz show “Questions pour un Champion”, hereinstead of champion, we have “champignon” (mushroom in French).


Training men and women

Transition year

The reorganization of the group into technological subsidiariesforced employees to adjust to their new functions. These changesin functions were tracked and supported by the company’s HumanResource department.

New developments in the training of employees

The observed drop in expenses linked to training is, inter alia, theresult of two phenomena:

1. reorganization of the company which forced subsidiaries topostpone trainings to the following year,

2. cost optimization, fruit of the work of the internal university, thePierre et Benoît Bonduelle Institute.

Guidelines

The priorities of the internal training institute included:

1. reinforcing the skills of the group’s men and women thanksto the operational management training program,

2. improving performance by programs to raise awareness tothe financial approach and the basic economy,

3. set up new expertise modules in the area of bagging.

These priorities were expressed in 5 training programs:

Percentage oftraining

1.ManagementManagement, progress and safetyapproaches

34%

2.Business expertise and techniqueCrimping, appertisation, baggingtechniques

18%

3.CultureReception, understanding of foreignlanguages

16%

4.Customer relationsMarketing, trading, food quality and safety

18%

5.PerformanceFinance, management tool andinformation system

14%

2004/2005 2005/2006

Trained employees 10,395 8,446

% of the payroll 2.26 1.78

Adapting to new developments in the organisation

During this period, three sites were relocated or phased out.The employees of those sites were reassigned to similar jobson other group sites. Accordingly, targeted training programswere organized.

Social Indicators

Mobility of supervisory staff

Indicators : group consolidation structure

At 30/06/05 At 30/06/06

EntriesDepartures

4860

4681

Internal mobility 115 86

2004/2005 2005/2006

Number of permanent employeesas of 30 JuneMenWomenNumber of OEC, FTCin equivalent full time

5,8333,3932,440

7,144

5,6863,3462,340

7,047

Seniority0-3 years3-9 years> 9 years

8981,8663,069

8151,7913,080

Hiring in number of contractsOpen-end contractsFixed-term contracts

308808

269768

Seasonal workers 5,926 5,312

Turnover retirement includedExecutivesEmployees, technicians, and supervisorsWorkers

7.92%

12.19%5.93%

7.31%

11.84%10.03%

Sites 2004/2005 2005/2006

Employees affected by closings 150 234

Employees retrained internally 62 79

% of internal mobility 41.33% 33.76%


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Training: The bagging technique

final content.

This training concerns theentire weighing/baggingprocess as well as thedetector, marker and labeller;it helps to process thepackage and importanthygiene, quality and safetypoints. The training isprovided on site, alternatingtheory in the classroom andpracticals on the field.

Depending on theparticipating employees, it is quite possible to “pickand mix” different modules of the training.

Hélène BoudryR&D group packaging

engineer, Villeneuve-d’Ascq,France

In an attempt to controlknowledge and know-how, weorganized training on one ofthe group’s multi-technologyactivities: weighing/bagging.

The aim is to capitalize onalready existing skills, developthem and ensure theirpermanence.

This training was preparedfirst for the frozen business,then with the subsequent aimof expanding it to the freshready prepared and cannedsegments.

This educational tool willsupplement the operationalmodules present on the fieldand explain in more detaileach of the production linesof the industrial site. It involves highly interestingteam work which was carriedout with the experts of eachfactory, experts who helpedus to select and prepare the

Example of the basic economicsmoduleThis module addresses the concerns of employees and the group’s strategy; it provides concise information oneconomics. It is therefore focused on the questions below:what are the costs involved in creating my own smallcompany? How can I be profitable? What are the keyfactors for success?

Gaining insight into corporate economics allowsemployees to understand the mechanisms of profitabilityand the different economic components of the cost priceof manufacturing a product.

To date, already more than 120 employees from the Genasand Saint-Mihiel (France) plant have participated in thiseducational and dialogue day where they have theopportunity to exchange ideas with their hierarchy and atrainer from the IBP, our internal university.


Achieving the sustainable production of quality vegetables entails changing

our crop practices. Bonduelle has adopted this process by setting up constructive

partnerships, educating the agricultural world and applying new production

techniques.

Agricultural production

We attained our educationalobjective: 100% of producers havesigned the supply charter

We encourage approaches that promote agricultural practicesbased on a sustainable development policy. Our relationshipwith farmers are designed to last that is why in our relationshipwith producer organizations, we ask them to sign the Bonduellesupplier chart. This ensure that agricultural practices complyperfectly with the specifications of each vegetable, specific toits intended technological processing (canned, frozen, chilled)in the context of environmentally friendly practices. This year,we reached 100% of our objectives by distributing the Bonduellesupply charter to Hungarian farmers.

Sustainable developmentinitiatives followed by fieldmanagersAt the same time, a training program based on an educational kit,was organized last year for field managers. This has facilitatedtheir current assistance to farmers.



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Appropriation of sustainable development by producers – Concrete examples.

In PACA (France)

Mr Ughetto’s farm producesfrisée lettuce for BonduelleFrais International. As Mr Ughetto is committed tocomplying with Bonduelle’squality specifications, heclosely supervises theleaching risks of nitrogenfertilizers into the aquifer; he uses organic enrichments,slow-release fertilizer andintermediate nitrate-trappingcrops.

C. Rouy Agronomist at the Genas

plant, France

In the South-west of France

Sweet corn producers fromthe Bordères plant decidedto find a recycling channel forthe green wastes from cornfarming. They found amanufacturer who takesadvantage of the qualities ofthese wastes and recyclesthem to produce cattle feed. In this way, stoned sweetcorn cobs are transformedinto co-products.

S. Mallard Agronomic manager of the

Bordères plant, France

In Catalunya (Spain)

“Mr Ernest’s farm” is a farmthat supplies vegetables to the Bonduelle FraisInternational factories. After signing a qualitystandard, this farm has nowinitiated an ISO 14001certification approach;environmental considerationsare now a pre-requisite togrowing quality vegetables.

E. LuriAgronomic manager of the

Milagro plant, Spain

In Picardy (France)

Mr Eugène Puche’s farmwhich produces spinach, peasand string beans for theEstrées Mons factory hasreceived the “AgricultureRaisonnée” (integrated cropmanagement) and Quali’Terrelabels. Mr Puche wishes tomaintain its operating capitaland transmit to his son apreserved agronomic andenvironmental heritage.Accordingly, he hasdeveloped techniques thatallow his land to bemonitored before anyintervention and thesystematic registration of alloperations undertaken. Lastly, as a pilot farm forFARRE - Forum del’Agriculture RaisonnéeRespectueuse del’Environnement(environmentally-friendlyintegrated crop managementforum), the farm regularlyreceives visitors and thepress and educates themabout its integrated cropmanagement policies.

G. Laigle Spinach Product Manager of

the Estrées plant, France

Progress priorities• 100% of the supply chart signatories in all countries

• Training for field managers

• Optimization of agronomic practices

• Adapting farming techniques to specifictechnological specificities

Explanation of integrated fertilisation

2004/2005 2005/2006Farmers who have signedthe supply charter

97% 100%

Agronomic services83 field

managers76 field

managersIndicators : group structure excluding Russia and Wanzleben


2. Less loss on farms: optimization of vegetableacceptance conditions: examples of growing babycarrots for the frozen food market

When farming practices are adapted to match the specificrequirements of preservation technologies, it optimizes thetransformation of the harvested vegetables into finished products.

On the coastal region of Pas-de-Calais (France) where the gravel-free deep sands and the know-how of its producers areparticularly suitable for growing baby carrots, we have developeda crop technique adapted to the manufacturing qualities offrozen baby carrots.

Carrots grown for the frozen vegetable market, must be long,straight, deep orange, tasty without any green neck.

To obtain such characteristics, the carrots are planted on deep“beds", which are developed before sowing begins. This allowsthe baby carrots to grow by stretching straight down whilepreserving their slender calibre. The length of the plant cyclecoupled with topping on the farm helps to obtain the desiredcolour and taste and eliminate visual faults in the neck.

When such an impeccable, fault-free product is obtained from thefarm, it guarantees better freezing returns downstream usingJIT supply methods.

Promote changes in agriculturalpractices to gain better productsand enhance consumersatisfaction

1. Management of parasitic risks

Observation techniques minimize protection interventions aswell as environmental impacts. To evaluate the emergence ofrisks likely to impact production, we encourage theimplementation of prevention, evaluation and anomaly trackingtools.

In the North of France, we are part of the surveillance network ofthe Plant protection service. A network of corresponding farmers,trained to identify crop parasites, follow the progress ofcontamination by using the observation indicators or specifictraps.

Accordingly, crop protection is integrated and triggered basedon scientifically defined intervention thresholds. If contaminationthresholds are reached, a notice of alert is sent to all farmers toset off the plant protection mechanism. In practical terms, in2005/2006 on the supply zone of the Bonduelle plants in theNorth of France, a network monitored 100 traps enabling theevaluation of all parasites and helped to inform farmers.

Indicators

In 2005/2006, 20% increase in the number of traps.


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3. Improving irrigation techniques

This year we increased the use of the Pivot ramp and the drippingsystem by 15%. These two water-saving techniques guaranteeregular and uniform water supply to the crops.

A tested and controlled varietypotential Our primary concern is to provide consumers with tasty vegetableswith optimal nutritional qualities. We encourage research on varietiesto select species resistant to disease, with high crop potential andresearch to improve the harvesting process and adaptation toindustrial processing.

A vegetable that is well adapted to its environment requires the useof less plant protection products. Our agronomy departments testcollections of varieties, in each vegetable, in each geographic zoneand pick the most suitable ones. In concrete terms, Bonduelleselects the varieties that are resistant to blight from the evolutionof the spinach range. This choice allows us to eliminate the needto use disease protection products on the plant.

For string beans, the Renescure factory (France) has selected sevenvarieties that provide a gustative and nutritive difference on thefrozen vegetables market.

We distribute all vegetable seeds to farmers. To ensure the successof crops, a control plan evaluates the germinating quality, resilience,calibre and purity of seeds.

Irrigation techniques(in percentage of the total irrigatedsurface)

2004/2005 2005/2006

Pivot ramp 41% 54%

Drip 1% 2%

Optimising farming practices

• Optimization of fertilisation:as hydro soluble fertiliser isdistributed by the networkstraight to the roots thereis no need to spray thefertilizer and as a resultfertiliser use is minimised.

• Reduction of exposure todiseases: as the systemavoids the watering ofleaves, the vegetable is lessexposed to the risk ofdeveloping diseases.

Introduced in 2004 and giventhe satisfactory results, theGniewkowo factory (Poland)now uses the water-savingtechnique to irrigate all itscourgettes and celeries.

Krzysztof Kopacz Agronomist, celery

product chief, Gniewkowo factory, Poland

For the past two years, at theBonduelle factory in Poland,Gniewkowo, we havesystematically used dripirrigation to grow celery andcourgette. This irrigationtechnique entails distributingthe water directly on theroots, through a network ofperforated pipes.

The choice of such a tool,combined with othertechnologies, optimizes thewater and fertilizer used onthe crop. The tool hasnumerous advantages:

• Significant water savings:watering the roots directlyreduces water loss throughevaporation. This choicehas helped to reduce thequantity of water used by40%. In addition, as thewater content of the soil ismeasured by tensiometers,irrigation is set off onlywhen necessary.

• Energy savings: the systemjust requires the use of anenergy-thrifty low pressurepump to work.

FocusGood crop practices have allowed us to cut down thewater consumption of certain crops by 40%at the Gniewkowo factory (Poland).

Indicators: group structure excluding Russia and Wanzleben


For the group, Natural Resources represent a critical economic and social

challenge for its development.

Our subsidiaries have set themselves working priorities or performance targets

in production and in logistics.

Natural Resources

Strengthen the network for sharinggood practicesTo develop good practices, in particular in terms of energy andwater, and pool knowledge, the group increasingly relies on itsinternal exchange networks:

• In the subsidiaries, the steering committees examine eachmonth water and energy consumption ratios in order to controlthe process permanently.

• Every year, six Technical Days (canning, frozen, fresh readyprepared, delicatessen, group synthesis and sustainabledevelopment) partly focus on natural resources managementand sustainable development. In 2006, we extended thisprogram to include two additional Days created to meet the group’s specific needs in energy and engineering.

• We continued internal audits. They help to identify majorprogress fronts as well as good practices and are accompaniedby the monitoring of actions to asses the progress made. Sincespring 2005, 11 sites have been accordingly audited in thefield of natural resources.

• In 2005/2006, the environment network handled 5 exchangesaround specific themes: harvest assessment, sustainabledevelopment, and water treatment, study of chemical products,discharges and trace elements.

Labenne factory, France



In 2005/2006, thanks to the commitment of all factories, theratio of consumptions was reduced by 4.2% in relation to2004/2005 which helped to reduce our energy consumption bynearly 2,800 toe*.

Since 2005, Bonduelle fully joined the current global debateabout global warning and the European policy for the allocationof CO2 emission quotas.

In 2005, Bonduelle has generally complied with its emissioncommitment thanks to actions undertaken regarding theimprovement of energy performances since 2001: modificationsof process, fuel oil/gas conversions and restructurings ofproduction tools.

These actions represent approximately 5 million euros ofinvestment over the 2001/2005 period and in concrete terms infive factories, by a 25% reduction of the ratio of emissions ofCO2 tonnes by tonne of products manufactured between 2001and 2005.

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Controlling energy use requires thegeneral mobilisation of the group’splants Between 2004/2005 and 2005/2006, the group realised the 10%surge in the price of its energy fuels.

In anticipation of this inflation, Bonduelle defined many energysaving strategies to deal with the issue from different angles:

• continuing the meter installation program in workshops;

• circulating operational behaviour targets and instructions inthe workshops;

• expert analysis of low performing installations;

• inter site visits to share views on respective practices andreactivate the training of operators;

• continue production streamlining programs for the saturationand maximal regularity of lines in operation;

• actions towards energy suppliers to adjust the supply contractsand performance clauses on boilers installed outside;

• technical studies for optimising energy consumption: recoverenergy from hot or cold water, treatment of boiler water byreverse osmosis, adjustment of boiler capacities, developmentof processes to reduce the consumption of hot and chilledwater, and steam at source, regulation of cold rooms and airtreatments.

• research and development of innovating processes for thenutritional quality and value of the product in association withoptimized water and energy consumption.

Progress priorities• Strengthen the network for sharing good practices

• Control and reduce water and energy use

• Improve water treatment equipment

• Continue the industrial waste and plant mattermanagement policy

Reducing the energyconsumption

by 4.2% in 1 year (at constant tonnage)

* Tonne of oil equivalent


In the same concern for preserving the resource, the BFI subsidiary(Bonduelle Frais International) has initiated the investments requiredfor redeveloping all the production lines of its seven factories.The R&D teams are looking for new processes, right from theresearch and development phases, to optimize as best as possiblewater consumptions in relation to the cleaning and safety ofproducts.

Purification

Purifying process water is always a priority for the group. With thisin mind, Bonduelle built in 2006 a physics/chemistry station onCosta di Mezzate (Italy) to meet Italian waste standards regardingsurface active material and a biological plant in Milagro (Spain).

We continued the approach involving the tracking of common keyperformance indicators at the level of factories. This monitoringallows existing installations to pursue their optimization efforts toreduce electric consumptions (regulations, equipmentreplacements), consumables (flocculants, liquid oxygen), sludgeprotection (consultations and laboratory tests), non complianceswith discharges, pollutions at source (screening of suspendedsubstances).

Bonduelle makes good watermanagement part of its currentconcern for natural resourceprotection

Consumption

Since 2003/2004, the group’s used water ratios have fallen bymore than 10% at constant tonnage. In 2005/2006, we saved750,000 m3 of water in relation to 2004/2005 and our ratio fell by5.4%.

This change is the result of a strong commitment of plants aroundmultiple initiatives:

• metering in workshops and monitoring of ratios;

• reducing consumptions at source thanks to anti-waste initiativesand redevelopments of process (educating personnel, supplyof flow control devices, simplification of networks, organisationof teams and installations of cleaning, counter currentcirculations, readjustment of cleaning and purificationfrequencies, modification of steering criteria).


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Rethinking the use of watertreatment productsIn 2005/2006, a study was conducted in France to find out moreabout the practices associated with the consumption of treatmentproducts for our water (boilers, coolers). The approach will beextended to the entire group, by including the suppliers ofchemical products. This must allow us to streamline use andreduce the number of references.

At the same time as the chemical path, there are ongoing studiesto evaluate the performance of alternative treatments such asUV or pasteurization.

Setting up the Energy approach at Bonduelle

while estimating theeconomic challenges.Currently, thanks to thevalidation of our assumptionsby tests on process and thedefinition of action programssince 2005/2006, wesucceeded in becomingperfectly operational on the2006/2007 harvest season.We impatiently await thenext year’s assessment togeneralize the good practicesto all installations and studymore innovative leads.

Alain Maureaux Research and

Development Director

Since 2002/2003, the group’senergy consumption ratioshave fallen by 13.6% atconstant tonnage. The newobjective is to juggle theenergy price hike by reducingour consumptions. Facedwith this ambitious goal, wemust first measure andidentify the potential gains ofour installations. For that, wehave compared the real andtheoretical energyconsumption of processesand modelled theiroperation. The naturalresource audit and oursustainable developmentreport then allowed us toidentify good practices. Thenall we needed to do was toconvince the technicaldepartments of subsidiaries

Raising personnel awareness to plastic sorting initiatives (PET)

of plastic material residuethat is easy to handle.Environmental, economic and social improvement, this sorting fits perfectly intoour sustainable developmentapproach.

Javier Romero Director of the Benimodo

plant, Spain

Since September 2005, wehave started separating PETfrom the rest of plastic wastethat we produce. Thispractice allows us to recovereach month, 5 tonnes of PETthat can be reclaimed.To encourage sorting andmake employees aware of their efforts, part of theachieved economic gain is reinvested in containers

For the past 2 years, waterconsumption has been reduced

by10% in 2 years atconstant tonnage


Indicators

Energy

Teq CO2 emissions for installations subject to PNAQ 1

2005/2006 consumption

Electricity 283 GWh

Natural gas 448 GWh

Fuel (low sulphur content fuel oil) 9 tonnes

Propane 660 tonnes

Domestic fuel oil 437 tonnes

Water

Production of sludge from wastewatertreatment plant

53,932 m3/year

4,693 T dry matter/year

2005/2006 consumption

12,973,486 m3 used

18.72 m3/TFP

Energy consumption ratios (kWh/TFP)

2002/2003 1,157

2003/2004 1,136

2004/2005 1,090

2005/2006 1,058

Water consumption ratios (m3/TFP)

2002/2003 20.28

2003/2004 20.57

2004/2005 19.79

2005/2006 18.72

2005 Emission 2004 Emission Allocation for

the 2005/2007period

59,000 67,724 89,508

Managing industrial wastes andsub-products: between costoptimization and search for futuresolutionsThis year, the figures indicate a 6% drop in the quantities of non-hazardous industrial wastes. Furthermore, thanks to the effortsundertaken by factories regarding raising awareness on theground, search for new channels and changes in internalorganizations, the tonnages of land-filled industrial wastes hasdropped by 23%.

The tonnage of vegetable matter is closely linked to theproduction activity. In 2005/2006, there were 223,628 grosstonnes of vegetable matter, representing a 7% drop comparedto 2004/2005. This change can be partly explained by theinstallation of compacting units.

The treatment channels remain mostly agricultural. Our Researchand Development department is currently conducting forwardstudies on the potentials of alternative reclaiming solutions.

Packaging

NIW (Non-hazardous Industrial Waste)

26,874 tonnes a year, i.e., 38.78 kg per ton of manufacturedproducts.

Enhancement: 34.8% in technical landfills, 6.6% for energyreclaim, 58.6% in recycling.

SIW (Special Industrial Waste)

151 tonnes, i.e., 0.22 kg per ton of manufactured products.

Plant matter

223,628 tonnes, i.e., 323 kg per ton of manufacturedproducts.

Enhancement: 4% in agricultural spraying, 52% in animal feed,38% in subcontracting, 6% other.

Expenses incurred

Water: €2,407,557Air/Energy: €2,769,442

Waste, plant matter, sludge from wastewater treatment plant:€343,189



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Tonnes/year

% global(weight)

Group 96,982

Glass jars 9%

Metal boxes 57%

Plastic films and composites 7%

Cartons and composites 24%

Plastic trays 2.5%

Capsules 0.5%

market is an approach whichalso corresponds to thegroup’s economic,environmental and societyrequirements. For example,we have achieved savings onsteel consumption by makingcans thinner. In 2005/2006,this approach was extendedto all other packages (trays,cartons, labels, plastic films,covers).

Patrick Socha Packaging developmentmanager, Research and

Development department

First of all, our policy is touse a large variety ofpackaging materials to meetthe requirements of allvegetables and groupproduct ranges.The choice of these materialsis directed by environmentalconcerns corresponding tothe nature of the existingwaste management channels.Accordingly, materials areexcluded due to the residuesgenerated at incineration.Similarly, we prefer to useplastics that arebiodegradable under naturalcomposting conditions. Wealso provide continuous andactive watch for innovationslaunched on the market.Reducing the quantities ofpackages issued on the

Choice of packaging


This year, we completely integrated the steering of the group quality policy

within our subsidiaries. After gaining total command over our food safety and

product processes, we are currently focusing on nutrition deployment.

Quality/Nutrition

QualityThe general and industrial Departments of our subsidiaries haveconfirmed their leadership in implementing group qualityobjectives, to ensure greater efficiency and transversal cohesionof the quality approach on our production sites.

In this perspective, we have reinforced ISO 9000-basedmanagement processes at the level of each subsidiary in orderto better control all sustainable development approaches andmore particularly those linked to quality in a more homogenousmanner in order to reach the common objectives fixed by group.

Due to a larger sharing of the organisation’s own needs, customerand consumer expectations in subsidiary departments, prioritiesare targeted to rapidly deploy essential factors that meet theirexpectations.

Traceability tools at the service of food safety

Traceability is a key requirement of the food safety process.We continued to deploy our new integrated IT tool this year onmany sites and the benefits were instant. For example, dataon manufactured products and the raw materials used havebeen secured through data scanning, and tracing time hasbeen shortened to less than 4 hours on 83% of our sites. Thisharmonisation has strongly boosted the trust expected by ourclients in our traceability system and fully meets regulatoryrequirements.



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Controlling allergen risk

The Bonduelle Group pays great attention to the rising problemsof food allergens to meet the expectations of consumers andclients concerned by this subject. Accordingly, beyond strictregulatory requirements on the mandatory labelling of allergenspresent in our products, a more advanced allergen risk controlapproach has been deployed in our sites leading to the set upof an allergen charter in the quality policies of our subsidiaries.To illustrate our commitment to allergen risk control in our foodsafety process, last year, seven of our sites were certified by theInternational Food Standard (IFS), which brings to more than80% the rate of our sites certified in at least one of the qualitymanagement standards defined under ISO 9001, IFS or BRC(Food Technical Standard, developed by the British RetailConsortium).

Management by processes in the BonduelleFrais International subsidiary

Process improvement groupsare conducted to avoidvertical managementmalfunctions, control ourinterfaces, guided byadvanced indicators, analysethe risks inherent in eachprocess.

In factories, “managing saladsand vegetable raw materialsbetter”, “managingpackaging better“, led to arevision of our organisations,simplifying administrativetasks, redefining indicators toimprove our activity control.

Catherine Contat Grand-Perrin Quality Manager

Bonduelle Frais - France

Bonduelle Frais France hasinitiated Managementthrough transversal process tobetter deploy the policies andobjectives of the subsidiary.

Our ambition is based on fourpillars:

• Our customers, with for ourretail customers, developingservice and category, for ourconsumer customers, thefreshness perceived as wellas new differentiatedproducts carrying our brand.

• Our internal processes withmanagement by processes,operational excellence.

• Our People, withparticipative managementby goal, thereby making allemployees accountable.

• Our economic performancenamely respecting thecompany’s financialobjectives.

Progress priorities• Formalisation and deployment of a quality policy

throughout the group

• Consolidation of the network for exchanginginformation and monitoring developments

• Increased focus on customer needs and satisfaction

• Implementation of a nutritional policy

Group quality policyObjectives Commitments

Remaining attentive to and satisfyingconsumer needs and expectations

• Ensuring that all commercial, marketing, consumer relations, customer account,logistics and qualitydepartments focus on attentiveness to our user customers, distributors and consumers.

• Providing products with consistent quality to match consumer expectations.• Guarantee the absence of genetically modified organisms in our products.• Implement measures to improve the nutritional quality of our products and provide information

to consumers.

Ensure food safety and consumer health

• Guarantee the microbiological, physical and chemical safety of products.• Implement hazard analysis and critical control point (HACCP) procedures and verify

their effectiveness.• Implement measures to guarantee the absence of foreign bodies.• Effectively manage the cold chain from manufacture to delivery.• Effectively ensure the traceability of all our products from sowing to the first delivery point.

Pursue a continuousimprovement strategy

• Introduce accountability, rally and ensure involvement of all personnel associated with quality.• Set up a network to exchange information and monitor developments between group subsidiaries.• Adapt our information systems to match consumer expectations and report

these expectations to production sites.

Setting up the HACCP approach

of a non-allergenic ingredient)or microbiological(microbiological contaminationof the product). Trainingmaterials were created for thepurpose. We have receivedpositive feedback from thesetrainings: they have allowedpersonnel to betterunderstand the preventivemeasures set up to limit oreliminate the hazards and wehave much more relevantfeedback from the fieldpersonnel.

Mathilde HauwQuality manager,

Estrées-Mons factory,France

In Estrées, for several monthsnow, the HACCP method hasbeen deployed on the ground,in other words on manufacturing and packaginglines. This method existedpreviously and was known andapplied by the supervisoryteam in particular. Throughestablished rituals on our site,namely weekly “thememeetings”, the employees ofthis zone have been trained bythe quality service in thedifferent types of dangers thatmay appear at each stage ofthe process: physical hazard(foreign body, for example),chemical (residues fromcleaning products, forexample), allergen (crossedcontamination by an allergen


A clear continuous improvement strategy

To better respond to the concerns of our clients and consumers,numerous improvement actions based on “Food Progress”*concepts (66 projects set up) and “TPM” (Total ProductivityManagement) have been set up to consolidate our confidencelevel in the quality control of our products. For example, cleaningmethods in the most exposed production areas were reviewed,microbiological inspections were intensified for more sensitiveproducts with the assistance of experts from the CTCPA (centretechnique de la conservation des produits agricoles), from theInstitut Pasteur, or other professional organisations.

In addition, as the Bonduelle Group works on first processingproducts, subject to natural whims ad caprices, our activity isnaturally exposed to the accidental presence of butterflies andcaterpillars during harvesting. This exposure is further heightenedby the group’s choice of integrated crop management whichpromotes the development of animal life. Therefore to control thisphenomenon, Bonduelle Group, thanks to its continuous investmentpolicy, currently works with electronic or optical control machineryon its production lines, thereby ensuring the good qualitativecontrol of our products.

* Food Progress is a permanent progress approach shared and applied by allpersonnel. It entails allowing personnel to use their expertise to rapidly andsimply solve problems that they encounter every day ranging from peoplesafety to products’ quality or even productivity.

Computer-based traceability

and we have become moreautonomous in our work.Lastly, thanks to access toJDE on production lines andin offices, information hasbecome more accessible, aswe can have simultaneousaccess from severalcomputers.

Dominique BaudelotTeam leader,

Estrées-Mons factory,France

JDE, our new IT managementsystem, arrived in ourworkshop in the form of alaser tool for “scanning” theinformation on the productboxes that we use. It madeour work easier and morereliable because we nolonger need to recopyinformation by hand into a registration book. In addition, observedanomalies can now be easilycorrected as it is easy totrace the references of all theboxes that have beenprocessed by the line and thetime at which they wereused. We save a lot of time


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Nutrition

The Louis Bonduelle Foundation

This year, the Foundation gave its first Louis Bonduelle ResearchPrize to Carla Estaquio for a thesis on compiling a score toestablish the link between eating fruits and vegetables andchronic pathologies.

The Louis Bonduelle Foundation also continued its field actions!

• January 2006: launch of the “Veggie Day” in supermarkets,and through a website providing practical information andamazing recipes on vegetables. Celebrate vegetables everyTuesday, make it the honoured, and original component ofyour meal. www.lejourdulegume.fr

• March 2006: continuing the “Amici per la Tavola” program inNaples. After the success of this action in Milan in 2005, theFoundation restaged it and reached 1,500 children andcompared eating habits between north and south Italy.

• April 2006 : Légumes 2000, the website for young adults,which adopts an offbeat 70s tone to present a vast array ofeasy-to-make practical recipes, encouraging students to eatvegetables everyday. Major culinary innovation: recipes canbe downloaded on mp3 drives! More than 7,500 recipesdownloaded in the first month, and the champion was: theGandhi-style vegetable crumble. www.legumes2000.fr

• May/June 2006 : the “Robins des Potagers” program where300 children aged between 8 to 11 years, after a visit to avegetable garden where they picked vegetables, were allowedto cook their harvest themselves in a cooking workshop ledby Julie Andrieu: vegetable salad and pasta, muffins withzucchini, exciting ideas to get children to eat their veggies.For these children, the most common works associated withvegetables is health (88%), vitamins and garden. More thanhalf of the children reproduced the recipes at home and thosewho declared they liked vegetables jumped from 39% to 52%a few weeks after the operation! (LH2 data)


• Assessing and controlling processes: we continue to implementthe current processes as well as the new processes underdevelopment, which allow us to take the nutritional qualities ofBonduelle products derived from production lines as keycriterion. For example, we have prepared a correlation betweenthe nutritional qualities and the organoleptic qualities of stringbeans, which allows us to direct production using simple andoptimal measures.

• Ensuring improvement in product quality: this year, a largescale project was devoted to the presence of salt in ourproducts. After a detailed inventory, we initiated a reformulationprocess. This year, efforts were particularly focused on theproducts of the delicatessen range. Since then, the newBonduelle products are developed according to defined andcontrolled salt criteria.

Research and development in nutrition

• Ensuring the advancement of knowledge: we have set upcollaboration with the Institut Pasteur in Lille, in order to takeexhaustive advantage in scientific literature, of publicationsallowing us to advance in the nutritional knowledge ofvegetables. The use of this study allows us to focus ourresearch, to propose to the consumer the best vegetables onthe nutritional level.

• Developing crop growing methods: we organise test programson plots of land, in order to find the best natural crop practicesthat allow vegetables to retain their natural good taste whileenhancing their optimal nutritional values.

Estrées factory, June 2006


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Indicators

Consumer services1 consumer service has been set up in each country


Workforce devoted to quality

383 people (in full time equivalent) of whom:

7% in the quality departments of subsidiaries and at thepurchase Division

31% in the quality departments of factories

42% involved in quality controls on production lines

20% involved in controls at acceptance

Certified sites

16 sites are ISO 9001 certified

14 sites are BRC and/or IFS certified

6 produce certified “organic” products

Improving products

consumers and hopefullyattract new ones.Accordingly, the different testsundertaken have enabled usto cut down the salt content inour recipes by 40%.

Elisabeth CorrignanQuality Manager,

Bonduelle Traiteur

Taboule recipes, one of themajor segments of thedelicatessen salad market onwhich Bonduelle is a leaders,have been subject tosignificant analysis andforward-looking studies; theobjective is to significantlyreduce the current saltcontent, while preserving theintrinsic organoleptic qualitiesof each of our products toalways satisfy our faithful

Testimony of the Institut Pasteur of Lille

products which is a genuinechallenge in the field ofnutrition but also insustainable development: awhole program, with apromising future.

Dr Jean-Michel LecerfHead of the Nutrition

Department, Institut Pasteur of Lille

Nutrition is more than health:it is pleasure and it is life. Thisis a conviction that we sharewith the Bonduelle Group, andit's natural for us to worktogether.Our mission is to accompanymanufacturers of the foodindustry in developing“healthy” products. WithBonduelle, we are trying toknow how to nutritionallyenhance vegetable co-


Consolidated financialstatements

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Consolidated balance sheet

Assets(in thousands of euros) As at 30/06/05* As at 30/06/06

Extraordinary assets 410,877 430,509Other intangible assets 30,799 34,243Goodwill 75,553 75,312Property, plant and equipment 278,765 291,551Equity method stock 73 73Other extraordinary investment 7,782 17,236Deferred tax 15,392 10,496Other extraordinary assets 2,513 1,598Ordinary assets 671,618 678,331Inventories and work in progress 296,322 279,526Customers and other receivables 307,327 330,491Tax receivables 658 10,091Other ordinary assets 4,752 4,561Other ordinary financial assets 4,140 9,290Cash and cash equivalents 58,419 44,372

TOTAL ASSETS 1,082,495 1,108,840

Liabilities(in thousands of euros) As at 30/06/05* As at 30/06/06

Shareholders’ equity, group share 289,442 312,324Share capital 56,000 56,000Premiums linked to capital 22,545 22,545Consolidated reserves 210,897 233,779Minority interests 14,095 20,750Shareholders’ equity 303,537 333,074Extraordinary liabilities 309,614 293,572Financial payables 280,940 269,959Staff commitments 4,271 4,617Other extraordinary provision 7,031 7,632Deferred tax 4,655 1,931Other extraordinary liabilities 12,717 9,433Ordinary liabilities 469,344 482,194Ordinary financial payables 61,967 66,131Ordinary provision 6,282 3,921Suppliers and other creditors 397,821 408,265Tax payables 2,055 2,355Other ordinary liabilities 1,219 1,522

TOTAL LIABILITIES 1,082,495 1,108,840

* Following the impact of IAS 32-39.

Consolidated income statement

As at 30/06/05* As at 30/06/06(in thousands of euros) 12 months 12 months

Sales 1,200,880 1,196,046Purchases and external charges (838,099) (835,550)Staff charges (241,958) (241,391)Amortisations (53,023) (48,954)Other operating products 41,338 33,202Other operating charges (40,185) (32,731)Income on transfer of consolidated shareholdings (73)Ordinary operating income 68,953 70,549Non-recurring items 370 (2,792)Operating income 69,323 67,757Financial products 11,469 46,813Financial expenses (21,513) (56,439)Financial income (10,044) (9,626)Income of equity method companies 11Income before tax 59,290 58,131Tax on income (22,224) (17,770)Net income 37,066 40,361Group share 38,046 39,228Minority share (980) 1,133

BASIC EARNINGS PER SHARE 4.84 4.99

FULLY DILUTED EARNINGS PER SHARE 4.84 4.99

* Excluding Regulation IAS 32-39.



Consolidated cash flow statement

(in thousands of euros) As at 30/06/05 As at 30/06/06

Net income 37,066 40,361Income, equity method companies (11) 0Amortisations and value losses 49,360 47,274Other resources (jobs) not affecting cash 846 (561)Tax paid (22,287) (14,214)Tax charges (products) 22,224 17,770Interest accrued 725 431Gross self-financing margin 87,923 91,062Need difference in working capital (53,540) (4,617)Cash flow relating to operating activities 34,383 86,445Purchase of consolidated companies, cash deducted (2,666) 0Transfer of consolidated companies, no deduction of cash transferred 0 0Industrial investment (57,322) (62,471)Financial investment (18) (15,567)Transfer of fixed assets and financial assets 6,856 113Net difference on borrowing and other capital assets 498 (1)Cash flow relating to investment activities (52,652) (77,926)Capital increases (2,776) 2Net transfer (purchase) of own shares (1,895) (1,664)Loan issues 101,742 40,398Borrowing repayments (11,480) (36,989)Net difference on bank accommodation and other financial assets (44,167) (13,121)Dividends paid to group shareholders and minorities (15,059) (9,387)Cash flow relating to finance 26,365 (20,760)Incidence of differences in exchange rates (482) (333)Cash difference 7,614 (12,574)Cash at beginning of year 49,268 56,882Cash at year-end 56,882 44,308

CASH DIFFERENCE 7,614 (12,574)

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