IFRS CONVERSION MEMO PINGUIN GROUP FIRST APPLICATION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS

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1 IFRS CONVERSION MEMO PINGUIN GROUP FIRST APPLICATION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS

2 FIRST APPLICATION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS a) Introduction Since 1 January 2005 the consolidated annual accounts of the Pinguin Group are prepared in accordance with the standards and interpretation approved by the IASB (International Accounting Standards Board) approved in the European Union. The IFRS opening balance sheet as at 1 July 2004 (transition date to IFRS) was prepared in accordance with IFRS 1 First application of International Financial Reporting Standards. b) Principles for drawing up the consolidated annual accounts IFRS 1 requires the retroactive application of every IFRS applicable on the reporting date of the first IFRS consolidated annual accounts. Some exceptions to this principle are allowed, of which Pinguin used the following: - Real value or reassessed value as presumed cost price. This exception was used for a limited number of elements of the tangible fixed assets (land and buildings). - IAS 32 and IAS 39 are not used by Pinguin for the period preceding the first IFRS consolidated annual accounts. The reconciliation is presented as follows as at : - equity for application of IAS 32/39: EUR 23,730,000 - impact on the own equity of the MTM futures contracts: EUR 285,494 - deferred tax debts: EUR 97,757 - equity as at after application of IAS 32/39: EUR 23,543,000 If the hedging of an expected future transaction leads to the withdrawal of a nonfinancial asset or a non-financial liability, or if an expected future transaction concerning a non-financial asset or non-financial liability becomes a permanent commitment for which the administrative processing of real hedging transactions is applied, the entity will act as follows: - The entity transfers the corresponding profits or losses included in the equity to the profit and loss account in the same period or periods when the acquired assets or the liabilities taken on affect the profit or loss. However, if an entity expects a (part of a) loss that is directly included in the equity not to be realisable in one or more future periods, it needs to transfer the amount that is expected not to be realisable to the profit and loss account. - The entity transfers the corresponding profits and losses included in its equity to include them in the first cost price or other balance sheet value of the asset or liability.

3 c) Impact of the transfer from the Belgian GAAP to IFRS All the adjustments are a result of changes in the principles for financial reporting and not a result of correction of mistakes which, in application of the former GAAP (Belgian GAAP), were made in previous annual accounts. The transition from Belgian GAAP to IFRS results in a decrease of the consolidated equity (including minority interests) from EUR 19.1 million to EUR 17 million. This decrease of EUR 2.1 million is explained in the reference table below. All adjustments in this table are projected after the effect of deferred taxes. Equity impact on IFRS restatement OBS (in thousands of EUR) Equity (exclusive of minority interests) according to Belgian GAAP published as at ,112 - Re-classification "third-party interest" BE GAAP 1,264 - Tangible fixed assets + goodwill 6,984 - capital subsidies -1,522 - Stocks -2,938 - Seasonal corrections -3,841 - Deferred taxes -1,874 - Others -176 Equity according to IFRS 17,009 as at TOTAL IMPACT ON EQUITY : -2,103 (1) Tangible fixed assets These are subject to the principles of the period of use of the most important components (IAS 16). The compliance with these principles causes the major increase of the net balance sheet value of the tangible fixed assets according to the IFRS standards. Tangible fixed assets are also subject to the principles in relation to the special depreciations (IAS 36). In accordance with IFRS 1 the possibility to determine the cost price on the basis of the market value was used for land and buildings. The market value (real value in going concern) of all land and buildings was estimated by Troostwijk-Roux, independent experts. The application of the aforementioned principles resulted in a positive impact of EUR 17.1 million on Land and Buildings of the Pinguin Group, the major ones being: - Pinguin Westrozebeke: EUR 11.7 million

4 - Pinguin Langemark: EUR 4.4 million - Pinguin Salads: EUR -170,000 - Pinguin Convenience: EUR -16,000 - Pinguin Aquitaine: EUR 1.2 million For machines and installations the Board of Directors opted to use the net balance sheet value according to "Belgian GAAP" for the Belgian divisions. For the French division the going concern value of machines and installations was used. This valuation led to a decreased value of EUR 1.9 million. In addition the reclassification of a major part of the fixed assets (land and buildings (Pinguin Aquitaine)) from operational lease under Belgian GAAP to financial lease according to the IFRS principles, led to an increase of the tangible fixed assets by EUR 2.1 million. The machines and installations of the British subsidiaries were valued in the opening balance sheet to a net booking value in accordance with UK GAAP. However, an impairment of EUR 2.5 million was applied. (2) Capital subsidies The capital subsidies are deducted from the tangible fixed assets it refers to and not from the equity in accordance with IFRS. (3) Stocks The impact on the stocks valuation is a consequence of the lower depreciation charges which are in turn a consequence of the application of duration of use of all major tangible fixed assets on the basis of the taxation report. (4) Seasonal correction In accordance with Belgian GAAP on 30 June, a major amount of costs (depreciations, personnel costs and general costs) were transferred to the second half of the calendar year. The vegetable season only starts at the end of May and the peak is for more than 75% in the second half of the calendar year. In accordance with the IFRS principles, this seasonal correction is no longer applied. Posting this seasonal correction back has an impact on the equity of EUR 3.8 million. (5) Third-party interests Contrary to the Belgian GAAP third-party interests are posted under equity according to IFRS. This third-party interest refers to the participating interest of Lurberri and Primco in the French subsidiary for 28% and 20% respectively. (6) Deferred taxes In accordance with IAS 12 deferred tax claims and liabilities are calculated on the basis of temporary difference between the fiscal and statutory balance sheet value of the assets. Deferred tax claims are only included if the future fiscal profit will probably be available to settle these temporary differences. On an annual basis an evaluation

5 process takes place of the outstanding debts on the basis of the future business plans. Due to the weak results and uncertain forecast it was decided not to project the deferred tax claims for now. Compensating these claims against liabilities has an impact of EUR 1.9 million on the equity. The application of IAS 12 results in a total deferred tax debt of EUR 3.8 million as a result of posting the surplus value to the tangible fixed assets. (7) Others The other adjustments following the restatement of the assets and liabilities of the Pinguin Group according to the IFS standards resulted in a negative impact of EUR 176,000 and relate, among others, to: - Car leases - Goodwill Pinguin Salads - Formation expenses - Revenue recognition Equity impact on IFRS restatement OBS (in thousands of EUR) Equity (exclusive of minority interests) according to Belgian GAAP published as at ,434 - Re-classification "third-party interest" BE GAAP 1,096 - Tangible fixed assets + goodwill 8,367 - capital subsidies -1,406 - Stocks -4,501 - Seasonal corrections 0 - Deferred taxes -1,307 - Others -750 Equity (including minority interests) according to IFRS 33,933 as at TOTAL IMPACT ON EQUITY : 1,499

6 Equity impact on IFRS restatement OBS (in thousands of EUR) Equity (exclusive of minority interests) according to Belgian GAAP published as at ,715 - Re-classification "third-party interest" BE GAAP 1,190 - Tangible fixed assets + goodwill 9,591 - capital subsidies -1,384 - Stocks -3,143 - Seasonal corrections -3,718 - Deferred taxes -1,860 - Others -661 Equity (including minority interests) according to IFRS 23,730 as at TOTAL IMPACT ON EQUITY : 15

7 PINGUIN GROUP (in 000 euro) BELGIAN 31/12/2005 GAAP IFRS IMPACT IFRS VASTE ACTIVA Immateriële activa Consolidatieverschillen Materiële vaste activa Terreinen en gebouwen Installaties, machines en uitrusting Leasing en soortgelijke rechten Meubilair en rollend materieel Overige materiële vaste activa Activa in aanbouw en vooruitbetalingen Financiële vaste activa Andere financiële activa Vorderingen en borgtochten VLOTTENDE ACTIVA Voorraden en bestellingen in uitvoering Grond- en hulpstoffen Gereed product Vorderingen op ten hoogste één jaar Handelsvorderingen Overige vorderingen Geldbeleggingen en liquide middelen Overlopende rekeningen TOTAAL ACTIVA PINGUIN GROUP (in 000 euro) BELGIAN 31/12/2005 GAAP IFRS IMPACT EIGEN VERMOGEN Kapitaal Uitgiftepremies (formation expenses) Reserves Omrekeningsverschillen Kapitaalsubsidies Minderheidsbelangen VOORZIENINGEN EN LATENTE BELASTINGEN Pensioenen en soortgelijke verplichtingen Voorzieningen Uitgestelde belastingen en belastingslatenties IFRS SCHULDEN Verplichtingen op meer dan één jaar Intrestdragende financiële verplichtingen Financiële leasing Kredietinstellingen Overige schulden Verplichtingen op ten hoogste één jaar Rentedragende financiële verplichtingen Handelsverplichtingen Verplichtingen mbt belastingen, bezoldigingen Belastingen Bezoldigingen en sociale lasten Overige verplichtingen Overlopende rekeningen TOTAAL PASSIVA

8 Pinguin Groep - 31/12/2004 Profit and loss account (in thousands of EUR) PROFIT AND LOSS ACCOUNT BE GAAP BE GAAP BE GAAP IFRS - impact IFRS Dec Jun Jul. - Dec Jul. - Dec (12 mnd) (6 mnd) (6 mnd) (6 mnd) Operating income Turnover Changes in stock (net) Other operating income Operating costs Purchases services and several goods Personnel costs Write-downs depreciations provisions Other operating costs OPERATING RESULT (EBIT) FINANCIAL RESULT EXCEPTIONAL RESULT RESULT BEFORE TAXES Tax latencies Taxes RESULT AFTER TAXES Third-party share Group share Pinguin Groep - 31/12/2005 Resultatenrekening (in duizenden EUR) RESULTATENREKENING BE GAAP IFRS - impact IFRS Jul. - Dec Jul. - Dec (6 mnd) (6 mnd) Bedrijfsopbrengsten Omzet Voorraadwijzigingen (netto) Andere bedrijfsopbrengsten Bedrijfskosten Aankopen Diensten en diverse goederen Personeelskosten Afschrijvingen/ waardeverminderingen/ provisies Andere bedrijfskosten BEDRIJFSRESULTAAT (EBIT) FINANCIEEL RESULTAAT UITZONDERLIJK RESULTAAT RESULTAAT VOOR BELASTINGEN Belastinglatenties Belastingen RESULTAAT NA BELASTINGEN Aandeel Derden Aandeel Groep