Final Results
C&C Group Plc
10 May 2005
10 May, 2005
C&C GROUP PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR YEAR ENDED 28 FEBRUARY 2005
Dublin, London, 10 May, 2005: C&C Group plc ('C&C' or the 'Group'), the leading
manufacturer, marketer and distributor of branded beverages and snacks in
Ireland, today announced results for the year ended 28 February 2005.
Financial Highlights
• Turnover growth of 4.2%(i) to €750.4 million.
• Operating Profit growth of 3.5%(i) to €115.1 million.
• Adjusted EPS of 26.4 cent; basic EPS of 15 cent.
• Final dividend of 7.5 cent per share; total dividend of 13 cent per
share.
• Free cash flow of €88 million (66% of EBITDA).
• Net debt reduced by €40 million to €441 million.
Operating Highlights
• The Group's principal brand, Bulmers, increased its share of Irish LAD
(ii) market.
• Volume of the Group's international cider brand, Magners, increased by
61%.
• Tullamore Dew depletions increased by 6%.
• Marketing investment of €46 million, increased by 19%.
(i) Comparisons are for continuing operations and are based on figures
excluding exceptional items and amortisation and are on a constant currency
basis.
(ii) Long Alcohol Drinks (Beer, Cider, RTD's).
Performance Highlights
Maurice Pratt, C&C Group Chief Executive Officer commented "C&C is pleased to
report progress in line with expectations. Our first annual results as a public,
listed company represent a significant milestone in our history. We are equally
pleased to report top and bottom line growth in a trading environment
characterised by a number of adverse factors. This, we believe, represents a
worthy performance and demonstrates the resilience of our business."
Investors and analysts Irish Media International Media
Mark Kenny or Jonathan Neilan Paddy Hughes or Mark Cahalane Edward Orlebar
K Capital Source Drury Communications Finsbury Group
Tel: +353-1- 631 5500 Tel: +353 1 260 5000 Tel: +44 20 7251 3801
Email :c&cgroup@kcapitalsource.com Email: phughes@drurycom.com Email: edward.orlebar@finsbury.com
Or: mcahalane@drurycom.com
Full year results for year ended 28 February 2005
C&C is reporting operating profit of €115.1 million an increase of 3.5%(i) on
the previous year The outcome represents an adjusted Earnings Per Share of
26.4 cent for the year ended 28 February 2005. C&C generated free cash flow of
€88 million in the period.
C&C's strategy is to sustain growth, primarily through brand management
expertise while maintaining strong margins and a high return on capital
employed. This in turn supports strong cash generation capability and a
progressive dividend policy. The Group's overall performance in 2004/05 reflects
both the resilience of C&C's business and its defensive characteristics.
Dividends
The proposed final dividend of 7.5 cent per share will be paid on 11 July 2005
to ordinary shareholders registered at the close of business on 20 May 2005. The
Group's full year dividend will therefore amount to 13 cent per share. A scrip
dividend alternative will be available subject to shareholder approval.
Outlook - Investing for Sustainable Growth
The Group's objective is to continue to deliver growth through its brand
management skills and leading market positions in growth categories.
The favourable prevailing economic conditions in Ireland are expected to
continue. The anticipated acceleration in consumer spending growth should
provide C&C with a positive operating backdrop for its fiscal 2005/06 full year.
The Irish on-trade market is likely to see a continuation of the 2004 rate of
decline until the smoking ban impact on prior year comparatives is eliminated in
mid 2005 - thereafter, a significantly slower pace of decline is expected.
Strategically, the Group's primary focus is to invest for sustainable growth
opportunities presented by Bulmers in Ireland and Magners in the UK. C&C's
objective is to increase Bulmers' existing share of the Irish LAD market and to
build upon Magners' initial success by investing in its roll out in the UK. The
greater London area has been selected for roll out in 2005/06 and the level of
marketing investment is such that operating profit for the Alcohol division is
unlikely to show significant growth in the 2005/06 fiscal year.
The Group also plans to enhance growth in International Spirits & Liqueurs by
further increased investment in Tullamore Dew. The impact of the US Dollar
depreciation on the operating profit of this division is expected to amount to
€2 million in 2005/06 compared to 2004/05.
Within the Soft Drinks & Snacks division, which has yet to see benefit from the
economic upturn in Ireland, C&C is increasing its marketing focus on growth
areas, and in particular is launching a new product in the energy segment of the
soft drinks market in the 2005/06 fiscal year. C&C will also implement measures
to improve productivity in 2005/06.
Fiscal year 2005/06 has started satisfactorily with Cider brands showing good
performance in all markets. The London roll out of Magners, which commenced in
March 2005, is proceeding to plan.
Acquisition of Allied Domecq
The recent announcement of a recommended offer by Pernod Ricard S.A. for Allied
Domecq plc may, if successfully completed, have an impact on C&C.
Allied Domecq distributes approximately 75% of C&C's International Spirits &
Liqueurs volume. We are confident that we can secure alternative distributors
if necessary. However a change could have a short-term disruptive impact.
C&C's Distribution business in Ireland (which is part of the Alcohol division)
includes distribution of Allied Domecq brands. Agreements for the distribution
of these brands expire on 31 January 2006 and it is possible that some or all of
these may not be renewed.
OPERATIONS REVIEW
Summary
On a comparable basis (i) turnover and operating profit increased by 4.2% and
3.5% respectively. Turnover growth was restricted by reduced sales volume to the
on-trade, following the introduction of the smoking ban in March 2004, and by
the relatively poor summer weather.
Operating profit growth, of 3.5%, principally reflects growth in the Alcohol
division arising from the success of the Bulmers and Magners brands. Operating
profit margin declined slightly (by 0.1 point) and principally reflects a 19%
increase in marketing investment behind company brands. Operating margins were
broadly maintained in the Alcohol and the International Spirits & Liqueurs
divisions but declined in the Soft Drinks & Snacks division.
Summary consolidated profit statement (ii)
Year ended Year ended Year ended
28 February 2005 29 February 2004 29 February 2004
Reported Restated (I) (ii)
Turnover €m 750.4 775.0 720.2
Growth % (3.2) 4.2
Operating Profit €m 115.1 128.3 111.2
Growth (10.3) 3.5
Operating Profit Margin % 15.3 16.6 15.4
Finance Charges €m (21.6) (50.4)
Taxation €m (8.6) (11.5)
Earnings €m 84.9 66.4
Growth % 27.9
2005 fiscal turnover and operating profit, on a reported basis, declined by 3.2%
and 10.3% respectively. These declines reflect the disposal of C&C's Italian
subsidiary Barbero 1891 SpA in December 2003 and the impact of currency
depreciation, principally the US Dollar, on the results of our International
Spirits & Liqueurs division.
Earnings increased by 27.9% in the year. This increase reflects a decline in
interest charges arising from a reduction in debt as a result of the disposal of
Barbero 1891 SpA and the reduced cost of debt following the refinancing in May
2004.
(i) Comparisons are for continuing operations on a constant currency basis.
(ii) Figures exclude exceptional items and goodwill amortisation
DIVISIONAL REVIEW - ALCOHOL
Year ended Year ended Year ended Growth
28 February 2005 29 February 2004 29 February 2004 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Turnover 443.2 410.9 412.9 7.3
- Cider Brands 212.6 193.5 193.7 9.8
- Distribution 230.6 217.4 219.2 5.2
Operating Profit 72.4 66.7 66.8 8.4
Operating Margin % 16.3 16.2 16.2
Turnover for the Alcohol division increased by 7.3% in the year. This comprises
a 9.8% increase for Cider brands (principally Bulmers and Magners) and a 5.2%
increase for Distribution. The ban on smoking in licensed premises in the
Republic of Ireland came into effect on 29 March 2004 and had a significant
impact on the LAD(i) market in the fiscal year. C&C believes that the ban was a
major contributor to the 7%(ii) decline in the on-trade LAD market and 11%(ii)
growth in the off-trade LAD market in the 12 months to 28 February 2005. The
overall LAD market declined by 1% (iii) in the period.
The operating margin for the Alcohol division increased by 0.1 point to 16.3% as
a result of the improved mix of strong growth in Cider partially offset by a
decline in Distribution margins.
Sales volume of the division's principal brand Bulmers matched last year and
continued to increase its share of the overall LAD market. According to Nielsen,
Bulmers' share in the on-trade LAD market increased from 9.0% to 9.6% in the
period while its share of the off-trade LAD market increased from 6.2% to 6.6%.
In the year, C&C's international cider brand Magners, significantly increased
its distribution in Great Britain, where the on-trade LAD market is eight times
the size of Ireland. Sales volume for the brand increased by 61%. In Northern
Ireland, Magners' share of the on-trade LAD market increased from 4.0% to 5.4%
(ii) in the year to the end of February 2005. During the year Magners'
distribution in Scotland was extended beyond the mainly Glasgow region where it
was test marketed in 2003. By 28 February 2005, Magners had achieved 59%(ii)
turnover weighted distribution in the on-trade in Scotland.
Turnover for Distribution increased by 5.2 % in the period comprising a 1.2%
increase in turnover for Wine & Spirits and a 9.9% increase in turnover for
Agency brands/Wholesaling.
The spirit market declined by 3.4%(ii) in the Republic of Ireland in the year to
28 February 2005. This decline reflects the impact of the smoking ban and
continued weakness in the spirit market following the excise duty increase of
December 2002. C&C's volume of spirits, liqueurs and fortified wines declined by
3% in the year.
The wine market in the Republic of Ireland grew by 9%(iii) in the year to 28
February 2005. Growth was concentrated in the off-trade and in New World wines
and there was an evident shift towards lower priced wines in the period. C&C's
wine volume increased by 3% in the period. In response to changes in the wine
market C&C is streamlining its operations to focus its sales and marketing
organisation and to extend its portfolio to include more value products.
The addition of the agency for the Coors Brewers brands in Northern Ireland
accounts for the growth in Agency brands/Wholesaling.
(i) Long Alcohol Drinks (Beer, Cider and RTD's)
(ii) Nielsen. All market share statistics refer to volume.
(iii) Revenue Commissioners
DIVISIONAL REVIEW - INTERNATIONAL SPIRITS & LIQUEURS
Year ended Year ended Year ended Growth
28 February 2005 29 February 2004 (i) 29 February 2004 Year-on-Year
€m €m (constant (constant
currency) currency
€m %
Turnover 68.5 72.8 65.4 4.7
Operating Profit 17.6 23.8 16.9 4.1
Operating Margin % 25.7 32.7 25.8
Turnover for the International Spirits & Liqueurs division on a constant
currency basis increased by 4.7% in the year, reflecting shipments volume growth
of 7%.
The operating margin for the division on a constant currency basis, at 25.7%
virtually matched last year. This was achieved despite an increase in marketing
investment of 19% to support the re-launch of Carolans and the further growth of
Tullamore Dew.
C&C's premium Irish whiskey brand Tullamore Dew performed particularly well with
17% growth in shipments in the year. Depletions(ii) growth in the period was 6%.
C&C increased its marketing investment in Tullamore Dew in the year by 15%. This
reflects the Group's commitment to build international growth brands by focusing
investment in brands and markets with attractive growth opportunities.
C&C's Irish cream liqueur brand, Carolans, was successfully re-launched during
the year. Shipment growth for Carolans was 4% in the year. Depletions (ii)
however are forecast to have declined by 4% in the year. This decline reflects
increased price competition in the low margin UK market and a disappointing
outturn in the brand's principal market, the USA, where in the Christmas quarter
the overall cream liqueur market was flat.
Frangelico, the group's hazelnut liqueur brand had a solid performance
increasing its sales volume by 4%.
During the year C&C completed a €3 million bottling plant investment and as part
of this upgrade, C&C repatriated the bottling of Tullamore Dew from Irish
Distillers and completed the repackaging of Carolans. These changes improved the
Division's margins.
(i) Continuing Operations
(ii) Defined as sales by distributors to customers
DIVISIONAL REVIEW - SOFT DRINKS & SNACKS
Year ended Year ended Year ended Growth
28 February 2005 29 February 2004 29 February 2004 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Turnover 238.7 240.9 241.9 (1.3)
Operating Profit 25.1 27.4 27.5 (8.7)
Operating Margin % 10.5 11.4 11.4
Turnover for the Soft Drinks and Snacks Division declined by 1.3% in the year.
This performance comprised a 1.7% decline in Soft Drinks' turnover and unchanged
Snacks' turnover.
Increased marketing investment in support of Club, Club Energise and Ballygowan
in Soft Drinks and Tayto and Tayto Honest in Snacks contributed to a 0.9 point
drop in the division's operating profit margin.
Margins in Soft Drinks were adversely affected by the impact of the estimated
12% (ii) volume decline in the on-trade soft drinks market. This performance
reflects the impact of the smoking ban on the on-trade and the decline in soft
drinks mixer usage corresponding to a decline in spirit sales.
Production of a portion of the Snacks' product range was outsourced in October
2003, and this enhanced operating margins in the Snacks business.
The soft drinks market (i) declined by 2.2% in the year reflecting, in part,
unseasonal summer weather and the secular decline in Carbonated Soft Drinks.
Bottled water, sport and energy drinks and cordials continue to show growth.
C&C's overall soft drinks volume (which includes Northern Ireland) declined by
3.1% in the year. This represented a decline of approximately 0.3 point in
market share in the Republic of Ireland. This decline principally reflects a
decline in the Water sub-category and was concentrated in the grocery multiple
channel.
C&C recorded strong growth for the Club Energise Sport brand (launched in 2003)
and for the MiWadi brand in the cordial category.
The overall savoury snacks market was flat in the year. This comprised growth in
crisps products and a decline in snacks. C&C maintained market share in the key
crisps category but experienced a decline in the snacks category.
During the year C&C launched the Honest range of snacks to meet consumer needs
for healthier offerings. The product has been well received and has achieved a
satisfactory niche position in the crisps and popcorn categories.
(i) Carbonated soft drinks/bottled water for Republic of Ireland per the
Beverage Council of Ireland
(ii) Nielsen
FINANCE REVIEW
Cash Flow
Free cash flow of €88 million for the year represented 66% of EBITDA - ahead of
the Group's medium term target of 60%. This performance reflects the relatively
low net capital expenditure during the year. Re-organisation costs, paid in the
year, principally relate to a logistics integration programme commenced and
provided for in the previous year.
A summary Cash Flow for the year ended 28 February 2005 is set out below:
Year ended Year ended
28 February 2005 29 February 2004
€m €m
Operating Profit (i) 115.1 128.3
Depreciation 18.3 18.7
EBITDA 133.4 147.0
Net Capital Expenditure (5.5) (7.9)
Working Capital (5.1) 6.4
Operating Cash Flow 122.8 145.5
Re-Organisation Costs (4.6) (6.5)
Fire Insurance Proceeds - 16.0
Finance Charges (ii) (22.0) (42.2)
Taxation Payments (8.2) (13.6)
Free Cash Flow (FCF) 88.0 99.2
FCF/EBITDA 66% 67%
(i) Before exceptional items and goodwill amortisation and including
discontinued operations in 2004
(ii) Excluding IPO related finance costs
Net Capital Expenditure
Net capital expenditure for the period of €5.5 million comprised gross capital
expenditure of €17.4 million and asset disposals of €11.9 million. The main
components of the gross spend included a plant upgrade for International Spirits
& Liqueurs' bottling, a warehouse extension in Belfast, expenditure on sales
infrastructure (coolers and dispensers for soft drinks), compliance with legal
requirements on traceability, effluent etc., and a general replacement/upgrade
of plant.
Disposals mainly comprised sales of warehouses in Belfast, Limerick, Cork and
Galway and arose from a logistics integration programme.
Finance Charges
The reduction in finance charges is due to reduced debt arising from the
proceeds of the disposal of C&C's Italian subsidiary Barbero 1891 SpA in
December 2003 and from a refinancing of debt in May 2004.
Interest rates (excluding margin) applying to debt for the May 2004 to February
2005 period averaged 2.1%. Future interest rate exposure is partially hedged at
the following interest rates (excluding margin):
Fiscal year 2006 €300 million hedged at 3.35%
Fiscal year 2007 €250 million hedged at 3.37%
Fiscal year 2008 €150 million hedged at 3.46%
Taxation
The tax charge for the year represents an effective tax rate on profit before
exceptional items of 10.6% less a credit for excess provision in previous
periods of €1.3 million.
Exceptional Costs
The total cost of the Initial Public Offering (IPO) of the Group's shares on the
Dublin and London Stock Exchanges, which took place in May 2004, was borne by
the Group and amounted to €28.8 million (including €9.2 million relating to the
refinancing of existing debt). €15.2 million of the total cost has been
accounted for as share issue costs and has been charged against the share
premium account.
The costs have been accounted for as follows:
Total P&L Net Share P&L
Feb '05 Premium Feb '04
€m €m €m €m
Underwriting & other costs 19.6 3.3 15.2 1.1
Hedge settlement costs 3.8 3.8 - -
Unamortised debt costs written off 5.4 5.4 - -
Total 28.8 12.5 15.2 1.1
Net Debt
Net debt at 28 February 2005 amounted to €441 million. The movement in net debt
between 1 March 2004 and 28 February 2005 is outlined below. At 28 February
2005, EV gearing (net debt/market capitalisation plus net debt) was 31%. Net
interest charge was covered 6.2 times by EBITDA before exceptional items.
€m
Net Debt at 1 March 2004 481.1
Free Cash Flow in Period (88.0)
Exceptional IPO Costs 28.8
Dividends Paid 17.7
Other 1.4
Net Debt at 28 February 2005 441.0
Foreign Exchange
Exchange rate movements in the year adversely affected operating profit by €6.7
million. This is made up of a loss in the International Spirits & Liqueurs
division arising from transaction exposure to the US Dollar and Canadian Dollar
(€6.9 million) and a gain arising from translation exposure to Sterling (€0.2
million).
Pensions
Financial statements up to and including 28 February 2005 are prepared in
accordance with SSAP 24 in relation to pensions. The application of FRS17 would
have the effect of creating an additional charge to profits of €2.1 million in
the year and of bringing the pension fund deficit (net of tax) of €45.6 million
onto the Balance Sheet at 28 February 2005. On conversion to International
Financial Reporting Standards, IAS19 will have an impact in C&C's 2006 fiscal
year similar to FRS17.
Transition to International Financial Reporting Standards
All EU companies listed on an EU Stock Exchange will be required to report their
consolidated accounts in accordance with International Financial Reporting
Standards (IFRS) for accounting periods starting after 1 January 2005. C&C will
therefore report its interim results for 6 months to 31 August 2005 under IFRS.
C&C's preparations for the adoption of IFRS are well advanced. Apart from the
effect on pensions outlined above, we estimate that the principal changes to the
Profit and Loss account will relate to:
1. elimination of the charge (€30 million) for goodwill amortisation in the
P&L Account; and
2. the introduction of an expense for share options granted - estimated at
€1 million for fiscal year 2006.
These changes will have no impact on cash and accordingly will not impact
dividends.
Further guidance will be given during the year as necessary, in particular to
the effect new Standards will have when adopted.
Comparative reporting
Profits for each division in the Operating and Financial Review are shown at
constant exchange rates for transactions in relation to the International
Spirits & Liqueurs division; for translation in relation to the Group Sterling
denominated subsidiaries; and with comparable classifications in relation to
central warehousing and other costs. The reconciliation to reported figures is
outlined below.
Previously Reclassification Restated Discontinued FX FX Year to
Reported Year to Operations Translation Transaction 29 Feb '04
Year to 29 Feb '04 Comparative
29 Feb'04
€m €m €m €m €m €m €m
Turnover
Alcohol 415.7 (4.8) 410.9 - 2.0 - 412.9
International 127.5 (4.3) 123.2 (50.4) - (7.4) 65.4
Soft drinks & 238.5 2.4 240.9 - 1.0 - 241.9
snacks
Total 781.7 (6.7) 775.0 (50.4) 3.0 (7.4) 720.2
Operating Profit
(before goodwill
amortisation)
Alcohol 66.7 - 66.7 - 0.1 - 66.8
International 34.2 - 34.2 (10.4) - (6.9) 16.9
Soft drinks & 27.4 - 27.4 - 0.1 - 27.5
snacks
Total 128.3 - 128.3 (10.4) 0.2 (6.9) 111.2
Special note regarding forward-looking information
Some statements in this Announcement are forward-looking. They represent our
expectations for our business, and involve risks and uncertainties. We have
based these forward-looking statements on our current expectations and
projections about future events. We believe that our expectations and
assumptions with respect to these forward-looking statements are reasonable.
However, because they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond our control, our actual results or
performance may differ materially from those expressed or implied by such
forward-looking statements.
Group Profit and Loss account
Year ended 28 February 2005
Year ended Year ended
28 February 2005 29 February 2004
(as restated)
Before Goodwill Before Goodwill,
goodwill and goodwill, exceptional
exceptional and exceptional items and
items exceptional items and discontinued
items discontinued operations
€m Total operations Total
€m €m €m €m €m
Turnover
- continuing operations 750.4 - 750.4 724.6 - 724.6
- discontinued operations - - - - 50.4 50.4
750.4 - 750.4 724.6 50.4 775.0
Operating costs (635.3) - (635.3) (606.7) (40.0) (646.7)
IPO related transaction costs - (3.3) (3.3) - (1.1) (1.1)
Free shares to be issued to employees - - - - (22.0) (22.0)
Amortisation of goodwill - continuing - (29.8) (29.8) - (29.8) (29.8)
Amortisation of goodwill - discontinued - - - - (0.8) (0.8)
Operating profit
- continuing operations 115.1 (33.1) 82.0 117.9 (52.9) 65.0
- discontinued operations - - - - 9.6 9.6
115.1 (33.1) 82.0 117.9 (43.3) 74.6
Exceptional items
Profit on sale of subsidiary - - - - 116.9 116.9
Reorganisation costs - - - - (10.9) (10.9)
Profit/(loss) on disposal of fixed - 3.2 3.2 - (4.7) (4.7)
assets
Profit on ordinary activities before 115.1 (29.9) 85.2 117.9 58.0 175.9
interest
Net interest payable and similar (21.6) (9.2) (30.8) (50.4) - (50.4)
charges
Profit on ordinary activities before 93.5 (39.1) 54.4 67.5 58.0 125.5
tax
Tax on profit on ordinary activities (8.6) 2.5 (6.1) (7.4) (2.6) (10.0)
Profit attributable to ordinary 84.9 (36.6) 48.3 60.1 55.4 115.5
shareholders
Dividends - paid (17.7) - (17.7) - - -
Dividends - proposed (24.1) - (24.1) - - -
Profit retained for the financial year 43.1 (36.6) 6.5 60.1 55.4 115.5
Basic earnings per ordinary share Cent Cent Cent Cent
- After exceptional items and
goodwill amortisation 15.0c 36.0c
- Before exceptional items and
goodwill amortisation 26.4c 18.7c
Diluted earnings per ordinary share
- After exceptional items and
goodwill amortisation 15.0c 36.0c
- Before exceptional items and
goodwill amortisation 26.4c 18.7c
Other Group Statements
Year ended 28 February 2005
Statement of total recognised gains and losses 2005 2004
€m €m
Profit attributable to ordinary shareholders 48.3 115.5
Currency translation reserve movement (0.5) 0.4
Total recognised gains and losses for the year 47.8 115.9
Movements on profit and loss account
2005 2004
€m €m
At the beginning of year 112.9 (3.0)
Profit retained for the financial year 6.5 115.5
Transfer to capital redemption reserve fund (0.3) -
Currency translation reserve movement (0.5) 0.4
Balance at end of year 118.6 112.9
Reconciliation of movements in shareholders' funds
2005 2004
€m €m
Total recognised gains and losses for the year 47.8 115.9
Transactions with shareholders
Cancellation of convertible shares (0.3) -
New shares issued on IPO 423.0 -
Shares redeemed following IPO (422.7) -
Free shares issued to employees 21.3 -
Share issue costs incurred (15.2) -
Dividends - paid (17.7) -
Dividends - proposed (24.1) -
Net movement 12.1 115.9
Shareholders' funds at beginning of year 138.3 22.4
Shareholders' funds at end of year 150.4 138.3
Group Balance Sheet 2005 2004
As at 28 February 2005 €m €m
Fixed assets
Intangible assets - goodwill 432.0 461.8
Tangible fixed assets 138.5 144.1
570.5 605.9
Current assets
Stocks 55.0 51.7
Debtors 91.1 96.2
Cash at bank and in hand 26.0 78.8
172.1 226.7
Creditors: amounts falling due within one year (141.0) (161.6)
Net current assets 31.1 65.1
Total assets less current liabilities 601.6 671.0
Creditors: amounts falling due after more than one year (447.0) (507.0)
Provisions for liabilities and charges (4.2) (25.7)
Net assets 150.4 138.3
Capital and reserves
Share capital 3.2 0.5
Share premium 3.4 -
Capital redemption reserve fund 0.3 -
Capital reserve and merger reserve 24.9 24.9
Profit and loss account 118.6 112.9
Shareholders' funds - equity 150.4 138.3
Group cash flow statement 2005 2004
Year ended 28 February 2005 €m €m
Net cash inflow from operating activities:
Group operating profit 82.0 74.6
Goodwill amortisation 29.8 30.6
Depreciation of tangible fixed assets 18.3 18.7
Provision movement re IPO costs (1.4) 0.8
Net cash impact of free staff shares (0.5) 22.0
Fire claim costs - 6.3
Exceptional reorganisation costs paid (4.6) (6.5)
Increase in stocks (3.5) (0.7)
Increase in debtors (0.1) (2.6)
(Decrease)/increase in creditors (0.9) 9.6
Exchange difference (0.6) 0.1
118.5 152.9
Returns on investments and servicing of finance:
Interest received 0.7 1.2
Interest paid and similar costs (26.5) (43.4)
(25.8) (42.2)
Taxation paid (8.2) (13.6)
Capital expenditure and financial investment:
Purchase of tangible fixed assets (17.4) (10.1)
Disposal of tangible fixed assets 11.9 2.2
Insurance proceeds received on fixed assets destroyed in fire - 9.7
(5.5) 1.8
Disposals:
Disposal of subsidiary undertakings - 215.9
Net cash disposed - (73.0)
- 142.9
Equity dividends paid (17.7) -
Net cash flow before financing 61.3 241.8
Group cash flow statement (continued)
2005 €2004
€m €m
Financing:
Net issue and redemption of share capital 0.3 -
Expenses paid in respect of shares issued (15.2) -
Bank loans repaid (595.2) (190.3)
New bank loans drawn down 496.0 -
(114.1) (190.3)
(Decrease)/increase in cash in the year (52.8) 51.5
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash (52.8) 51.5
Net repayment of bank loans 99.2 190.3
Reduction in net debt resulting from cashflow 46.4 241.8
Roll-up of deferred interest - (3.8)
Loan issue costs written off in year (6.3) (4.2)
Net movement 40.1 233.8
Net debt at beginning of year (481.1) (714.9)
Net debt at end of year (441.0) (481.1)
Segmental analysis report
Year ended 28 February 2005
(a) Prior year adjustments
As a result of adopting a new accounting policy relating to the treatment of
allowances given to customers in respect of central warehousing and other costs,
the turnover and net operating expenses for the previous financial year have
been amended.
In previous years, the Group accounted for the cost of these allowances as
operating expenses whereas the current policy is to account for them as
discounts and therefore as a reduction to turnover. This change had no impact
on the reported profit in any period or on the financial position (net assets)
of the Group as reported.
The impact of the change on turnover and net operating expenses on continuing
operations in both years is shown below:
2005 2004
Net Turnover Net
operating Operating (as operating Operating
Turnover expenses profit restated) expenses profit
€m €m €m €m €m €m
Under previous policy 757.2 (642.1) 115.1 731.3 (613.4) 117.9
Impact of change (6.8) 6.8 - (6.7) 6.7 -
Restated under revised policy 750.4 (635.3) 115.1 724.6 (606.7) 117.9
(b) The segmental analysis of turnover, operating profits and net assets
is as follows:
2005 2004
Turnover
Class of business analysis Turnover Operating Net (as Operating Net
profits assets restated) profits Assets
€m €m €m €m €m €m
Alcohol 443.2 72.4 94.3 410.9 66.7 95.1
International spirits & liqueurs 68.5 17.6 12.4 72.8 23.8 14.7
Soft drinks & snacks 238.7 25.1 77.1 240.9 27.4 77.6
Total continuing operations 750.4 115.1 183.8 724.6 117.9 187.4
Discontinued operations - - - 50.4 10.4 -
750.4 115.1 183.8 775.0 128.3 187.4
Unallocated goodwill/amortisation - (29.8) 432.0 - (30.6) 461.8
Unallocated IPO preparation costs - (3.3) - - (1.1) (1.1)
Free shares to employees - - - - (22.0) (22.0)
Group net borrowings - - (441.0) - - (481.1)
Unallocated liabilities - - (24.4) - - (6.7)
Total 750.4 82.0 150.4 775.0 74.6 138.3
Segmental analysis report (continued)
Geographical analysis by country of operation
2005 2004
Turnover
Turnover Operating Net assets (as Operating Net assets
profits restated) profits
€m €m €m €m €m €m
Republic of Ireland 613.5 115.2 173.2 609.7 115.9 176.6
Rest of World 136.9 (0.1) 10.6 114.9 2.0 10.8
Unallocated items - (33.1) (33.4) - (53.7) (49.1)
Total continuing operations 750.4 82.0 150.4 724.6 64.2 138.3
Discontinued operations - - - 50.4 10.4 -
Total 750.4 82.0 150.4 775.0 74.6 138.3
Geographical analysis by country of destination
2005 2004
€m €m
Republic of Ireland 530.2 525.4
UK 147.6 126.8
Rest of Europe 27.3 21.4
North America 35.9 37.1
Rest of World 9.4 13.9
Total continuing operations 750.4 724.6
Discontinued operations - 50.4
Total 750.4 775.0
The discontinued amounts relate to an Italian subsidiary Barbero 1891 SpA which
was sold in December 2003.
Notes to the preliminary announcement
1. Basis of preparation
The accounting policies applied to the preparation of the preliminary
announcement are consistent with the accounting policies as set out in the
financial statements for the year ended 29 February 2004, with the exception
that during the current financial year the Group implemented a new policy
whereby allowances given to customers in respect of central warehousing and
other costs, which were previously treated as operating costs, are now netted
against turnover. The turnover and net operating expenses as reported in the
previous financial year have been restated accordingly, as set out in the
segmental analysis report.
2. Exceptional items
2005 2004
€m €m
(a) (Profit) on sale of subsidiary - (116.9)
During the previous year the Group disposed of an Italian subsidiary company, Barbero 1891 SpA.
(b) Reorganisation costs - 10.9
Reorganisation costs provided for in the previous year related to the costs of a fundamental
reorganisation of the Group's Snacks operations and restructuring of operations in certain other
trading subsidiaries.
(c ) (Profit)/loss on disposal of fixed assets (3.2) 4.7
The (profit)/loss on disposals relates to the disposal of surplus property and plant arising from
reorganisations in continuing operations.
(d) Free shares to employees - 22.0
Free shares to the value of €22m (inclusive of associated costs) were issued to Group employees to
coincide with the Initial Public Offering of the Company's shares in May 2004. The cost of the shares
had been provided for in the previous year.
(e) IPO Costs 3.3 1.1
In arriving at Group operating profit for the year, an amount of €3.3m was charged relating to
professional fees and other costs incurred in connection with the Initial Public Offering which took
place in May 2004 (2004: €1.1m).
The tax effect of these exceptional items is a net credit of €2.5m (2004: €1.5m).
3. Earnings per ordinary share
2005 2004
€m €m
Earnings as reported 48.3 115.5
Adjustment for discontinued activities / exceptional items net of tax 6.8 (85.2)
Adjustment for goodwill 29.8 29.8
Earnings adjusted for exceptional items and goodwill 84.9 60.1
Number Number
'000 '000
Number of shares at beginning of year (adjusted) 321,130 321,130
Adjustment for the effect of conversion of options 788 -
Weighted average number of ordinary shares 321,918 321,130
Basic earnings per share
Basic earnings per share - cent 15.0 36.0
Adjusted earnings per share - cent 26.4 18.7
Diluted earnings per share
Basic earnings per share - cent 15.0 36.0
Adjusted earnings per share - cent 26.4 18.7
The opening number of issued ordinary shares have been adjusted to include all
shares issued during the year without any corresponding increase in resources.
In calculating the weighted average number of shares these have been treated as
if they were in issue for the entire current and prior years.
Share options totalling 4.9 million shares were granted on 19 May 2004 under the
terms of the Executive Share Option Scheme. The options were granted at the
initial listing share price of €2.26 per share and are subject to achievement of
certain performance criteria relating to growth in earnings per share.
4.Dividends
2005 2004
€m €m
Paid
Interim dividend of 5.5c per ordinary share 17.7 -
Proposed
Final dividend of 7.5c per ordinary share 24.1 -
Total equity dividends 41.8 -
5. Analysis of net debt
29 February 2004 Cash Non-cash changes 28 February 2005
€m flow €m €m
€m
Cash at bank and in hand (78.8) 52.8 - (26.0)
Bank loans 559.9 (99.2) 6.3 467.0
481.1 (46.4) 6.3 441.0
6. Pensions
At the 28 February 2005 the Group's defined benefit pension schemes had a net
deficit calculated in accordance with FRS 17 Retirement Benefits of €45.6m
(2004: €31.9m). As allowed under the current Irish/UK Generally Accepted
Accounting Standards on which the preliminary announcement has been prepared
this deficit has not been provided for in the Group's balance sheet.
This announcement has been issued through the Companies Announcement Service of
the Irish Stock Exchange.
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