Gamma Holding continues positive trend

•  Turnover: € 371 million (first half of 2009: € 322 million)
•  EBITDA¹ excluding restructuring expenses surges to € 48.5 million (first half of 2009: € 25.6 million)
•  EBITA² excluding restructuring expenses and impairment shows a sharp increase to € 33.7 million (first half of 2009: € 11.0 million)
•  Restructuring expenses: € 6.6 million (first half of 2009: € 9.3 million)
•  Net group result: € 1.4 million (first half of 2009: € -53.3 million)

‛The positive trends that tentatively emerged at the end of last year have clearly been prolonged in the first half of 2010. Our lower cost basis and the recovery of the majority of the markets in which we operate have led to a further improvement in income. Barring unforeseen circumstances, we expect the positive trend to continue in the second half of 2010.'

Jan Albers, CEO

Half-year report of the Executive Board

Turnover rose in the first six months of 2010 by 15% to € 371 million (first half of 2009: € 322 million). This includes a positive effect of € 5.7 million arising from currency movements.

EBITDA¹ of the group excluding restructuring expenses increased by 89% from € 25.6 million in the first half of 2009 to € 48.5 million in the first six months of 2010. Currency movements had a positive effect of € 0.9 million.

EBITA² excluding restructuring expenses and impairment tripled to € 33.7 million (first half of 2009: € 11.0 million).

The restructuring expenses, which related mainly to Clear Edge Filtration, totalled € 6.6 million (first half of 2009: € 9.3 million). There was no impairment of property, plant and equipment and intangible assets in the reporting period (first half of 2009: € 22.1 million).

Financial income and expense came to € -17.8 million (first half of 2009: € -17.3 million). Income tax totalled € -6.9 million (first half of 2009: € -1.8 million). The effective tax rate in the first six months of the year was 83% (first half of 2009: -5% on a loss before income tax). This high effective tax rate is mainly due to tax losses that cannot be offset, principally in Europe, in combination with a relatively low result before taxation.

The net group result improved in the first six months to € 1.4 million (first half of 2009: € -53.3 million).

Developments per business unit

The turnover of Ammeraal Beltech (including PTFE) increased by 14% to € 135.0 million (first half of 2009: € 118.7 million). EBITDA¹ excluding restructuring expenses came to € 13.6 million (first half of 2009: € 5.2 million). The business unit benefited from a recovery in the United States and Asia, while the European market also picked up slightly. There was a consequent increase in sales of, in particular, modular belts, timing belts and lightweight rubber belts. Ammeraal Beltech developed, specifically for the food industry, Soliflex PRO, a new series of durable, hygienic, homogeneous, solid belts which, thanks to a unique combination of materials and drive lugs on the underside of the belting, is extremely easy to clean and is hence cost-saving. In addition, the AmWrap, belting that is especially suitable for coil wrapping of hot aluminium sheeting, was brought onto the market.

At Clear Edge Filtration turnover increased by 19% to € 54.4 million (first half of 2009: € 45.5 million). EBITDA¹ excluding restructuring expenses totalled € 6.8 million (first half of 2009: € 0.3 million). Demand for filtration products rose in Asia Pacific and America. The extra focus on Original Equipment Manufacturers (OEMs) and targeted end users, as well as the benefit of lower operating expenses, contributed to the positive result. In order to become stronger, more cost-competitive and more market-focused than the competition, it was decided to close the Swedish facility and to transfer the manufacturing activities to the central weaving plant in Germany. In that context, the activities of the R&D centre in the UK have also been transferred to the German site. The closure of the Swedish facility will lead to the loss of approximately 80 jobs. This consolidation process is expected to be completed by early 2011.

The turnover of Dimension-Polyant increased by 24% to € 21.6 million (first half of 2009: € 17.4 million). EBITDA¹ excluding restructuring expenses rose to € 3.0 million (first half of 2009: € 2.0 million). The facility in Sri Lanka, which was opened last year, performed well. Demand for high-quality sailcloth showed an increase, while the OEM market, the cruising and the wind surfing segment also picked up. In the first half year of 2010 the business unit launched successful innovations. Dimension-Polyant developed, for example, a ground-breaking sailcloth which consists of 80% recycled fabric.

The business unit also launched a lighter and lower stretch type of high quality surfing sailcloth.

The turnover at Bekaert Textiles increased by 25% to € 75.9 million (first half of 2009: € 60.7 million). EBITDA¹ excluding restructuring expenses improved from € 6.0 million in the first six months of 2009 to € 13.8 million in the first half of 2010. The business unit has clearly benefited from the radical cost-saving measures that have been taken in recent years. Upward trends, mainly in North and South America, and successful new products helped drive the recovery. The business unit increased production capacity in the United States and launched, among other products, 'Second Life', a new collection of mattress tickings made of yarns of recycled polyester. 'Becool' was also brought onto the market, a new moisture-absorbent, fast-drying and temperature-regulating mattress ticking.

The turnover of Vlisco Group rose by 6% from € 79.9 million in the first six months of 2009 to € 84.4 million in the first half of 2010, partly thanks to higher volumes at Vlisco and Uniwax. EBITDA¹ excluding restructuring expenses totalled € 12.9 million (first half of 2009: € 12.6 million). The business unit successfully opened a flagship store for its top brand Vlisco in the Congolese capital Kinshasa and brought onto the market both a complete line of handbags and two new collections of fabrics. Vlisco also made a contribution to the world exhibition in Shanghai, which is still running until 31 October. Additional promotional activities were also carried out for Uniwax, including a special campaign to mark the fiftieth anniversary of Cote d'Ivoire. GTP introduced a new three-colour fabric called Nustyle, thus taking a first step in its repositioning to four sub-brands based on consumer use. As part of its strategy of becoming a pan-Africa fashion retailer, Woodin opened its tenth store in Ghana at the Golden Tulip hotel in Accra.

Financial information

The balance of interest-bearing liabilities at the end of the first half of 2010 was € 282.1 million (year-end 2009: € 259.5 million). This higher figure is principally due to a negative currency effect and increased working capital. The net interest-bearing liabilities/EBITDA¹ ratio improved from 4.2 at year-end 2009 to 3.3 and thus remained well below the bank covenant of 4.7.

Purchase of property, plant and equipment in the first half of the year totalled € 16.0 million (first half of 2009: € 8.5 million) and were mainly within Bekaert Textiles. On the other hand, divestments totalled € 8.6 million (first half of 2009: € 0.5 million) and related mainly to the sale of real estate. In Belgium the sale of a large part of the former industrial site in Waregem was completed. This property was encumbered with a mortgage to cover a tax claim from the past. This mortgage has been replaced with a bank guarantee of € 7.6 million, for which cash equivalents serve as security. The net purchase of property, plant and equipment came to € 7.4 million (first half of 2009: € 8.0 million).

Trade working capital rose in the first six months from € 180.0 million at year-end 2009 to € 208.3 million in 2010. Trade working capital as a percentage of turnover came to 28.0% (first half of 2009: 30.7%). Currency movements caused trade working capital to increase by € 15.5 million in the first half of the year. The organic increase in trade working capital was € 12.8 million.

Total equity stood at € 81.4 million (year-end 2009: € 73.9 million). On the reporting date, total equity as a percentage of the balance sheet total was 13.5% (year-end 2009: 13.8%).

Strengthening of the financial position

Gamma Holding has been approached in the recent period by various parties who have shown interest in acquiring the activities of Vlisco Group. In order to strengthen the Company's financial position, the possibilities of such a transaction are at present being investigated with one party.

Risk management

Gamma Holding attaches great importance to risk control. To increase risk awareness within the group, to gain a better understanding of the existing risks and to control identified risks more effectively, the Company has a structured system for risk management. This system, as well as the risk profile and the main risks, have been described in the 2009 annual report. The nature and possible scale of these risks are also applicable to the second half of 2010. The following should be noted in this connection:

•  A downturn in the economy may lead to lower volumes.
•  An upturn in the economy may lead to rising prices for energy and raw materials and hence to increasing pressure on margins.
•  The Company's improved foundations should have a positive effect on new financing conditions.

Gamma Holding continually monitors the identified risks and will continually follow developments where new risks can arise and identified risks can change in the second half of 2010.

Other developments

Reappointment as member of the Supervisory Board

On 29 April 2010, the General Meeting of Shareholders of Gamma Holding N.V. re-appointed Mr J. Zuidam (61) as a member of the Supervisory Board. Mr Zuidam has already been a member of the Supervisory Board of Gamma Holding for eight years. The re-appointment is for a period of four years, extended to the first General Meeting of Shareholders after that period.

Acquisition of shares by Gilde

On 17 June 2010 Gilde Buy Out Partners ('Gilde') acquired 1,456,859 shares of Gamma Holding, which corresponds to an interest of approximately 19%, at a price of € 18.65 per share. The investment company purchased these shares from three large investors: ASR, Delta Lloyd and Allianz. The Executive Board of Gamma Holding was not involved in this transaction. On 18 June 2010 Gilde announced that it had increased its interest to 23.57%.

Outlook

Gamma Holding will continue to closely monitor market conditions and make changes to the organisation as necessary. In that respect, restructuring expenses of approximately € 4 million are expected to be incurred in the remainder of 2010. Barring unforeseen circumstances, the positive trend is expected to continue in the second half of 2010. However, increased pressure on margins due to rising energy and raw material prices should be taken into account.

Gamma Holding will publish its trading update on the third quarter before the opening of the stock exchange on Friday 29 October 2010.

Statement by the Executive Board

The Executive Board hereby declares that, to the best of its knowledge:

•  the consolidated interim financial statements, which have been prepared in accordance with IAS 34, Interim Financial Reporting, give a true and fair view of Gamma Holding's assets and liabilities, its financial position and the results for Gamma Holding and the consolidated companies; and
•  the half-year report of the Executive Board includes a fair review of the information required pursuant to section 5:25d, subsections 8 and 9 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).

Helmond, 30 July 2010

Executive Board of Gamma Holding N.V.

Jan Albers, CEO

Leendert van Reeuwijk, CFO

Appendix

Consolidated interim financial statements for first half-year 2010

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¹ Group result before income tax, interest, depreciation/amortisation and impairment of property, plant and equipment and intangible assets.

² Group result before income tax, interest and amortisation/impairment of goodwill and acquired intangible assets.