Final Results

Glanbia PLC 03 March 2004 Glanbia plc Preliminary Announcement of Results Year Ended 3 January 2004 Glanbia plc, the international dairy, consumer foods and nutritional products company, announces its preliminary results for the year ended 3 January 2004. Highlights: • Solid performance delivered • Operating profit * before exceptional items up 1.4% despite 11.9% reduction in Group turnover • Operating margin before exceptional items up to 4.5% from 3.9% • Profit before tax and exceptional items up by 7.4% (13% in constant currencies) • Exceptional costs of €90.47m relate primarily to the finalisation of UK restructuring, and also includes €6.95m to accelerate restructuring arising from the Mid Term Review of CAP • Adjusted earnings per share ** up 10.4% to 19.26 cent • Year-end Net Debt / EBITDA *** 1.17, interest cover up to 5.93 times • Strategic investments underway in US, Nigeria, Mexico and Ireland • Glanbia well positioned for further growth in international nutrition and consumer products * Including share of operating profit of joint ventures & associates ** Before exceptional items and amortisation of goodwill *** Earnings before interest, tax, depreciation, amortisation of goodwill and exceptional items Strategic Highlights: • Construction commenced on $190m cheese and whey products production facility in New Mexico, USA, which post completion will position Glanbia as the number one producer of American style cheddar cheese in the US • Joint venture signed with Conaprole, Uruguay, to market and sell dairy ingredients into Central and South American markets • Joint venture signed with PZ Cussons plc to build US$20m facility in Nigeria to supply evaporated milk and milk powder to the local market • Finalisation of UK restructuring programme - - Sale of Glanbia Fresh Meats (UK) Limited; closure of UK fresh meat facilities - formation of a joint venture with Milk Link Limited to serve the UK hard cheese market • Commenced development of Group Innovation Centre in Kilkenny, Ireland, to advance strategy of scientific innovation in nutritional foods and ingredients • Continuation of innovative pipeline of new nutritional products Commenting on the results, Group Managing Director, John Moloney said, 'Glanbia had a solid performance in 2003, achieving strong operating margin growth, improved profitability and positive cash flow. We have now completed our UK restructuring which finalises a three-year programme of business reorganisation. This narrowing of focus enables the advancement of our growth strategy. Significant progress was made in advancing this strategy with investment initiatives in the US, Nigeria, Mexico and Ireland. Glanbia now has three focussed platforms for future growth in cheese, nutritional ingredients and consumer foods with a nutritional emphasis. We are confident that this strategy will provide a strong platform for earnings growth into the future.' Financial Highlights Y/E 3 January Y/E 4 January Change 2004 2003 Euro Euro Group Turnover 2,041.07m 2,316.74m -11.9% Operating Profit* before 92.79m 91.54m +1.4% exceptional items Operating Margin before 4.5% 3.9% exceptional items Profit before Tax / 77.14m 71.81m +7.4% exceptional items Exceptional Change 90.47m 79.92m Adjusted EPS** 19.26c 17.44c +10.4% FRS 3 EPS (12.01)c (10.06)c Dividend 5.00c 4.76c +5.0% Net year end borrowings 153.80m 176.31m -12.8% Year end Net Debt / EBITDA*** 1.17 1.22 ____________________________________________________________________ * Including share of operating profit of joint ventures & associates ** Before exceptional items and amortisation of goodwill *** Earnings before interest, tax, depreciation, amortisation of goodwill and exceptional items For further information, contact: Glanbia plc: Geraldine Kearney, Group Director of Communications, Glanbia plc Tel: +353 (0)56-7772200 (office) or +353 (0)87-2319430 (mobile) UK Enquiries: John Olsen / Tom Leatherbarrow, Hogarth Partnership Tel: 0207 3579477 Results (i) Profit and Loss Account Glanbia's 2003 underlying results reflect a solid performance in a challenging year, with increased operational efficiency, volume growth in key sectors and improved margins. The reported results, after exceptional charges, reflect the completion of restructuring in the UK through the sale of Glanbia Fresh Meats (UK) Limited and the creation of the joint venture with Milk Link Limited to service the UK cheese market. Group turnover in 2003 was down 11.9% to €2,041.07m (2002: €2,316.74m) reflecting the impact of the restructuring of operations in the UK in 2002 and 2003. Operating profit before exceptional costs (including share of operating profit of joint ventures & associates) increased by 1.4% to €92.79m (2002: €91.54m) and profit before tax and exceptional items increased by 7.4% to €77.14m (2002: €71.81m). The Group continues to focus attention on improving operational efficiencies and driving value added products, which resulted in an improvement in operating margins to 4.5% (2002: 3.9%). A net exceptional charge of €90.47m (2002: €79.92m) arises in the period from a number of one off items. Of this, €16.45m has been charged against operating profit, €9.50m of which relates to redundancy costs arising from the fire at the Roosky pigmeat plant in 2002 and €6.95m relates to the costs of accelerating efficiencies and cost effectiveness across all Irish businesses arising from the impact of the EU Commission's Mid Term Review of the Common Agricultural Policy. A further €85.61m of exceptional costs relate to the finalisation of the restructuring of operations in the UK as part of the continuing refocusing of operations around group strategy. Of this exceptional charge, €49.15m arises from the sale of 75% of Glanbia Foods (announced in February 2004), €31.04m arises from the sale of Glanbia Fresh Meats (UK) Limited and closure of related meat processing facilities (announced in July 2003) and €5.42m arises due to the recognition of increased pension obligations to former employees of the UK Dairies business which was disposed of in a prior period. The Group incurred an additional exceptional loss of €1.56m on the disposal of a pig farm during the year. These exceptional costs were offset by an exceptional gain of €11.60m from an insurance settlement, representing the surplus realised over the net book value of the asset destroyed in the Roosky fire. Of the net exceptional charge of €90.47m, €41.69m relates to the writeback through the profit and loss account of goodwill previously written off against reserves, €33.88m relates to a loss on the disposal of assets and €14.90m relates to other costs. After net exceptional items, the Group realised a loss before tax of €14.89m (2002: (€8.11m)). Adjusted earnings per share increased by 10.4% to 19.26c (2002: 17.44c). The FRS 3 loss per share was 12.01c (2002: (10.06c)). (ii) Financing Glanbia's financial position has been further strengthened during the year, as the Group benefited from improved operating performance and good cash flows. Net bank borrowings declined by 12.8% to €153.80m (2002: €176.31m). Capital expenditure increased in the period to €41.74m (2002: €35.02m). Depreciation reduced in the period to €38.13m (2002: €53.07m), a reduction of €5.77m arose as a result of a review of the remaining useful lives of all plant and equipment owned by the Group as required by FRS 15 (Tangible Fixed Assets), and the remaining reduction in depreciation reflects the sale / cessation of operations in 2002 and 2003. The ratio of year-end net borrowings to EBITDA (Earnings before interest, tax, depreciation, amortisation of goodwill and exceptional items) is now 1.17 (2002: 1.22). The interest charge for the year (including share of joint ventures & associates) declined by 20.7% to €15.65m (2002: €19.73m) reflecting lower overall borrowings and continued strong emphasis by the Group on working capital utilisation. Interest cover increased significantly to 5.9 times compared to 4.6 times in 2002. Non-equity minority interest, which relates to Preferred Securities and Preference Shares, amounted to €11.00m (2002: €12.62m), impacted by the weaker dollar. Equity shareholders' funds decreased marginally by 1% to €179.44m (2002: €181.30m), due to the impact of the finalisation of the restructuring of UK operations in 2003. (iii) Dividend A final dividend of 2.94c per share is proposed (2002: 2.80c), giving a total dividend for the year of 5.00c per share (2002: 4.76c), an increase of 5%. Subject to shareholder approval the final dividend will be paid on 24 May 2004 to shareholders on the Register as at 23 April 2004, the record date. Irish dividend withholding tax will be deducted at the standard rate where applicable. REVIEW OF OPERATIONS: CONSUMER FOODS The Group's Consumer Foods businesses encompass the manufacture and marketing of value added fast moving consumer goods in Ireland, the UK and Continental Europe. In Ireland this includes the market leading dairy and chilled convenience food business as well as the processing and sale of Irish pork. In the UK it encompasses the production of high quality own label cheese products and the Leprino Joint Venture producing mozzarella for the European pizza sector. Overview: In 2003 Consumer Foods accounted for 44.11% of the Group's turnover and 48.25% of the Group's operating profit. Overall a challenging operating environment resulted in a reduction in operating profit to €44.77m (2002: €47.59m), but encouragingly, operating margins improved to 5.0% (2002: 4.0%). Turnover declined to €900.41m (2002: €1,175.11m) due to the impact of the exit from the UK consumer meats and foodservice distribution activities in 2002 and the exit from the UK fresh meats business in 2003. Consumer Foods benefited from enhanced operational efficiencies in key businesses, new product extensions, nutritional product introductions and the finalisation of the reorganisation of the UK activities. Very competitive block mozzarella markets and currency weakness adversely impacted the Glanbia Cheese business. The new UK joint venture with Milk Link, announced in February 2004, is a response to ongoing margin pressure in the highly competitive UK market and allows Glanbia to retain a stake in a more integrated business which will compete more effectively in this market, while realising cash for investment in high growth areas. Ireland: Glanbia is Ireland's leading supplier of branded and value-added liquid milk products and the market-leading supplier of fresh dairy products, cheeses, soups and spreads principally under the Yoplait, Avonmore and Kilmeaden brands. The Group also processes fresh pork for the retail and foodservice trade, selling in Ireland, Europe, the US and Asia. For over two decades the Glanbia brands have been household names and research indicates they are synonymous with quality, convenience and health. This depth of experience, combined with a constant focus on innovation and marketing is the driver that positions this business as the market leader and the consumer's choice. In anticipating and responding to consumer needs we have expanded the range of products through the introduction of a convenience 'grab and go' portfolio led by Avonmore 'SuperMilk on the Go' and the milk-based nutritional and functional beverage, 'Milk Plus'. The business is focused on the development and supply of functional foods including the award-winning 'Yoplait Everybody' probiotic yogurt drink. Ongoing nutritional product innovations are core to this business. Irish pork operations had a reasonable performance in 2003. The Group has expanded processing capacity at its facility in Roscrea and is in the process of expanding capacity at its facility in Edenderry to replace the capacity lost in the fire in Roosky in 2002. Against the background of a competitive liquid milk sector and a challenging retail environment, the Irish consumer foods business overall had a good performance in 2003 with volume growth and expansion into new value-added segments. UK The Group's UK Consumer Foods businesses for the period include Glanbia Foods, Glanbia Cheese and the UK fresh meats operations (up to the date of sale - 5 July 2003). Glanbia Foods Limited is Britain's second largest producer of cheddar, Stilton and British territorial cheeses. Glanbia Cheese, the pizza cheese joint venture with Leprino Foods, is Europe's leading producer of mozzarella for the pizza sector, serving quick service restaurants and chilled and frozen pizza manufacturers Glanbia Foods performed satisfactorily in 2003. Despite a highly competitive market we achieved steady sales volumes and enhanced operating efficiencies. The result for Glanbia Cheese was below expectations primarily due to the competitive nature of the block mozzarella market driven largely by a European response to the Mid Term Review of the Common Agricultural Policy. Overall the business benefited from volume growth. The Northern Ireland facility has yet to fully realise the benefits of technology investments and capacity expansion completed in October 2003. Significant progress was made during the year in terms of re-organising the Groups UK operations. In July 2003 the Group announced its decision to withdraw from its UK fresh pork operations and in February 2004 the Group announced its decision to enter into a joint venture with Milk Link to service the UK hard cheese sector. FOOD INGREDIENTS AND NUTRITIONALS Food Ingredients comprises the US and Irish dairy ingredients operations, as well as the Group's expanding nutritional business. At facilities in Ireland and the US, Glanbia processes and markets a range of milk, cheese and whey protein ingredients for sale on international markets. It is also involved in a number of strategic joint ventures. Glanbia has a strong presence in international dairy ingredients markets, is the largest producer of barrel cheese in the USA, is the second largest producer of whey protein isolate worldwide and is the largest milk processor in Ireland. In the nutritional sector Glanbia is a leading producer of high value-added whey-based nutritional ingredients for domestic, US, Asian and European markets. Overview: Overall, the division accounts for 44.40% of the Group's turnover and 36.39% of the Group's operating profit. Food Ingredients and Nutritionals performed well during 2003, with operating profit up by 12.4% on 2003, and operating margins increasing to 3.7%. However results were impacted by the weakness of the US dollar against the Euro and weak US cheese markets in the first half of 2003. Divisional operating profit increased to €33.77m (2002: €30.05m). The operating margin was 3.7% (2002: 3.3%). Turnover was down marginally to €906.21m compared to €910.08m in 2002. Ingredients USA The Group is the largest producer of US barrel cheese, the second largest producer of whey protein concentrate and the third largest producer of lactose in the US. It is one of the top producers of American type cheddar cheese, supplying the food service, food processing and retail sectors. The business had a satisfactory performance in 2003, delivering solid volume growth in a year when cheese markets were weak, particularly in the first half. The joint venture in New Mexico which was announced in 2003 will, on completion, make Glanbia the number one producer of American type cheddar cheese in the US. Ingredients Ireland In Ireland, Glanbia Ingredients is the country's largest dairy processor, utilising over 30% of the national manufacturing milk pool. Modern large-scale facilities in three strategic locations produce a wide portfolio of cheese, protein, butterfat-based and formulated products and cream base for Baileys Irish liqueurs. Glanbia exports over 95% of output to European, North and South American, African and Asian markets. This business had a satisfactory performance during 2003. Nutritionals Glanbia's international nutritional ingredients activities are now being brought to market via a separate, focused business unit. Good progress was made in developing nutritional ingredients in 2003 and the business performed in line with expectations. In 2003 the business commissioned new protein hydrolysis capacity in the US and continued its pipeline of new product development with the introduction of two novel ingredient solutions that extend the shelf life and improve the texture of nutritional bars: BarFlex(TM) and BarPro(TM) both of which are partially hydrolyzed milk protein isolate, along with Prolibra(TM)-a weight loss solution. In 2002 the business introduced Salibra, a bioactive whey fraction to support intestinal health and wellness. Sales of Salibra are growing and the product is being introduced into the sports nutrition sector in the US as a muscle development and sports performance product. These product introductions contributed to strong sales growth in the year. The business also added to its research capability in Ireland and the US in the areas of applications and clinical nutrition. AGRI BUSINESS The Agribusiness Division is the key linkage between Glanbia and its farmer suppliers in Ireland and is engaged primarily in farm input sales, feed milling, milk assembly and grain trading. The division also has interests in fertiliser production, veterinary wholesaling, malting and port services. Overall the division had a good performance in 2003. Market share gains were made in feed and fertiliser sales in 2003. During the year the Division continued its cost reduction programme and achieved enhanced operating efficiencies across all elements of the business. In 2003 the division accounted for 11.49% of the Group's turnover and 15.36% of the Group's operating profit. Turnover increased to €234.45m (2002: €231.55m), operating profit improved to €14.25m (2002: €13.89m). The operating margin was 6.0%. STRATEGIC DEVELOPMENTS During 2003 significant progress was made in developing our strategic focus on the high growth areas of consumer products, dairy ingredients and in particular the nutritional market. This was achieved both through wholly owned investments and a number of strategic joint ventures, which offer a relatively low risk entry into significant growth markets. Specifically: • The Group commenced construction of the $190m cheese and whey products production facility in New Mexico, USA. This new plant will be 50% owned by Glanbia with the balance jointly owned by Dairy Farmers of America Inc. and Select Milk Producers Inc. It will position the Group as the number one producer of American type cheddar cheese in the USA and simultaneously build our global position as a supplier of advanced technology whey proteins to the nutritional sector. Commissioning of the new facility is planned for Autumn 2005. • The Group entered into a strategic joint venture with Conaprole of Uruguay in respect of the sales and marketing into Central and South American markets of dairy ingredients manufactured by Glanbia in Ireland and the US and by Conaprole in Uruguay. This venture is now operational and sales performance is encouraging. • The Group announced a 50/50 joint venture with PZ Cussons plc to build a new US$20 million facility in Nigeria to supply evaporated milk and milk powder to the local Nigerian market. The factory will be capable of handling 35,000 tonnes of milk products per annum and will be commissioned in early 2005. Glanbia will have full responsibility for operations while PZ Cussons plc will be responsible for the marketing and distribution of the product stream through its existing Nigerian subsidiary. • The Group announced the development of a Group Innovation Centre, to be completed by Autumn 2004. There is growing consumer awareness of the link between health and diet and Glanbia as a food Group is committed to achieving the highest standards of best practice in relation to science based innovation. Group strategy is focused on developing products with a health based functional foods and nutritional emphasis in both ingredient and consumer form. This new world-class research and product development facility, to be based in Ireland, is core to this strategy. • On 23 February 2004, the Group announced the sale of a 75% interest in its UK hard cheese business, Glanbia Foods Limited (through the sale of 100% of Glanbia Foods limited and the simultaneous creation of a new joint venture with Milk Link Ltd which will be 25% owned by the Group) for a net consideration of €118.7m. • The Group is actively pursuing a number of potential acquisition opportunities in the nutritional ingredients sector. OUTLOOK Glanbia is now focussed on cheese, nutritional ingredients and consumer foods, having completed its strategic reorganisation. In determining the potential outcome for 2004 the Board has taken into consideration the phasing of new investment projects, the transition to a new EU dairy regime and a weakened dollar. Taking these factors into account, the Board expects to make further progress in the current year. Furthermore, the Board is confident that the developments commenced in 2003, together with planned initiatives in 2004, will deliver satisfactory earnings growth in 2005 and beyond. ANNUAL REPORT AND ANNUAL GENERAL MEETING The 2003 Annual Report for the Group will be published in April. The Annual General Meeting will take place in the Newpark Hotel, Kilkenny on 18 May 2004. Ends 3 March 2004 Glanbia plc Consolidated Profit and Loss Account for the Year ended 3 January 2004 Pre- Pre- exceptional Exceptional Total exceptional Exceptional Total 2003 2003 2003 2002 2002 2002 Notes Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Turnover 2,109,760 - 2,109,760 2,386,437 - 2,386,437 Less (68,687) - (68,687) (69,699) - (69,699) share of turnover of joint venture ------------- ------------- -------------- -------------- -------------- -------------- Group 1 2,041,073 - 2,041,073 2,316,738 - 2,316,738 turnover Cost of (1,773,537) - (1,773,537) (2,010,118) - (2,010,118) sales ------------- ------------- -------------- -------------- -------------- -------------- Gross 267,536 - 267,536 306,620 - 306,620 profit Distribution (94,697) - (94,697) (127,339) - (127,339) costs Administra 2 (80,970) (16,451) (97,421) (90,693) - (90,693) tive expenses ------------- ------------- -------------- -------------- -------------- -------------- Group 91,869 (16,451) 75,418 88,588 - 88,588 operating profit Share of 916 - 916 2,947 - 2,947 operating profit of joint ventures and associates ------------- ------------- -------------- -------------- -------------- -------------- Operating 1 92,785 (16,451) 76,334 91,535 - 91,535 profit including joint ventures and associates Loss on 3 - (28,190) (28,190) - (25,610) (25,610) sale of operations Provision 4 - (49,146) (49,146) - - - for loss on sale of operations Profit on 5 - 11,594 11,594 - 13,754 13,754 sale of fixed assets Loss on 6 - (9,827) (9,827) - (68,064) (68,064) termination of operations Group (15,023) - (15,023) (19,206) - (19,206) interest Share of (627) - (627) (521) - (521) interest of joint ventures and associates ------------- ------------- -------------- -------------- -------------- -------------- Profit / 77,135 (92,020) (14,885) 71,808 (79,920) (8,112) (loss) before taxation Taxation (10,272) 1,546 (8,726) (7,939) - (7,939) ------------- ------------- -------------- -------------- -------------- -------------- Profit / 66,863 (90,474) (23,611) 63,869 (79,920) (16,051) (loss) after taxation ------------- ------------- -------------- -------------- Equity (251) (677) minority interest Non-equity (11,005) (12,619) minority interest -------------- -------------- Loss for (34,867) (29,347) the year Dividends 7 (14,515) (13,833) -------------- -------------- Loss (49,382) (43,180) absorbed for the year ========= ========== Earnings 8 (12.01) c (10.06) c per share Adjusted 8 19.26 c 17.44 c earnings per share The financial statements were approved by the Board of Directors on 2 March 2004 and signed on its behalf by TP Corcoran, JJ Moloney and GJ Meagher, Directors. Glanbia plc Consolidated Balance Sheet as at 3 January 2004 2003 2002 Eur'000 Eur'000 Assets employed Fixed assets Tangible assets 363,641 416,826 Goodwill 2,466 4,420 Financial assets Investments in joint ventures: Share of gross assets 40,542 30,527 Share of gross liabilities (27,598) (17,426) --------------------- --------------------- 12,944 13,101 Investments in associates 9,607 9,101 Other investments 15,903 14,252 --------------------- --------------------- 38,454 36,454 --------------------- --------------------- 404,561 457,700 --------------------- --------------------- Current assets Stocks 202,736 180,022 Debtors 210,402 226,838 Cash and bank balances 59,775 90,953 --------------------- --------------------- 472,913 497,813 Creditors - Amounts falling due within one year 348,751 317,442 --------------------- --------------------- Net current assets 124,162 180,371 --------------------- --------------------- Total assets less current liabilities 528,723 638,071 --------------------- --------------------- Less: Non-current liabilities Creditors - Amounts falling due after more than one year 183,682 275,407 Provision for liabilities and charges Deferred taxation 27,559 23,723 Capital grants 16,611 18,505 --------------------- --------------------- 300,871 320,436 ============ ============ Capital and reserves Called up equity share capital 17,551 17,551 Share premium account 80,005 80,005 Merger reserve 113,148 113,148 Revenue reserves (34,088) (32,232) Capital reserves 2,825 2,825 --------------------- --------------------- Equity shareholders' funds 179,441 181,297 Equity minority interests 5,671 6,983 Non-equity minority interests 115,759 132,156 --------------------- --------------------- 300,871 320,436 ============ ============ The financial statements were approved by the Board of Directors on 2 March 2004 and signed on its behalf by TP Corcoran, JJ Moloney and GJ Meagher, Directors. Glanbia plc Summary Cash Flow Statement for the Year ended 3 January 2004 2003 2003 2002 2002 Eur'000 Eur'000 Eur'000 Eur'000 Group operating profit 91,869 88,588 Reorganisation and merger costs (338) (775) Profit on disposal of fixed assets (415) (885) Depreciation 38,125 53,072 Grants amortised (1,443) (1,670) Working capital increase (33,588) (12,085) Goodwill amortisation 297 313 -------------- -------------- Net cash inflow from operating activities 94,507 126,558 Returns on investments and servicing of finance Interest paid (16,548) (20,236) Dividends paid to minority interest (11,758) (28,306) (11,813) (32,049) -------------- -------------- Taxation (9,816) (4,990) Capital expenditure and financial investment Purchase of fixed assets (net of grants received) (41,736) (35,007) Disposal of fixed assets 2,629 6,377 (Purchase) / disposal of investments (2,410) (41,517) 10,705 (17,925) -------------- -------------- Acquisitions and disposals Purchase of subsidiary undertakings - (677) Disposal of subsidiary undertakings 795 1,184 Termination of operation (1,851) (8,648) Minority interest redeemed (100) - Fire insurance proceeds (net of redundancy and other 7,332 6,176 - (8,141) costs) -------------- -------------- Equity dividends paid (14,080) (13,533) -------------- -------------- Change in net debt resulting from cash flows 6,964 49,920 Currency translation impact 15,547 16,431 -------------- -------------- Decrease in net borrowings 22,511 66,351 ======== ======== Glanbia plc Notes to the Financial Statements 3 January 2004 1. Segmental analysis 2003 2002 Eur'000 Eur'000 Analysis by class of business Turnover Consumer Foods 900,411 1,175,114 Food Ingredients 906,210 910,075 Agribusiness 234,452 231,549 ------------------ ------------------ 2,041,073 2,316,738 ========== ========== Operating profit (including share of profits of joint venture and associates) Consumer Foods 44,773 47,590 Food Ingredients 33,765 30,051 Agribusiness 14,247 13,894 ------------------ ------------------ 92,785 91,535 ========== ========== Analysis by geographical segments Turnover by market destination Ireland 793,753 837,533 UK / rest of Europe 653,747 885,703 USA / other 593,573 593,502 ------------------ ------------------ 2,041,073 2,316,738 ========== ========== 2. Exceptional items 2003 2002 Eur'000 Eur'000 (9,505) - (a) Redundancy cost arising from fire at Roosky plant (b) Restructuring cost associated with EU Commission Mid Term Review of the Common Agricultural Policy (6,946) - ------------------ ------------------ (16,451) - ========== ========== 3 Loss on sale of operation The loss arises primarily from the sale by the Group of its UK fresh meats operation at West Bromwich in July 2003. The Group also disposed of a pig farm during the period, and recognised an additional loss representing increased pension obligations to former employees of the UK Dairies operation which was disposed of in a prior period. Fresh UK Pig Meats Dairies Farm Total Eur'000 Eur'000 Eur'000 Eur'000 Loss on disposal of asset (10,852) (5,417) (651) (16,920) Goodwill write back to profit (10,262) - (909) (11,171) and loss account on sale Goodwill written off on sale (99) - - (99) ---------------- ---------------- ---------------- ---------------- (21,213) (5,417) (1,560) (28,190) ========= ========= ========= ========= The loss on sale in 2002 arose mainly from the Group's sale of its UK Foodservice distribution business in August 2002. The Group also sold two farms during 2002. Notes to the Financial Statements continued 3 January 2004 4 Provision for loss on sale of operation The provision arises from the sale by the Group of a 75% interest in its UK hard cheese business (Glanbia Foods Ltd), which was announced on 23 February 2004. 2003 2002 Eur'000 Eur'000 Loss on disposal of asset after period end (18,629) - Write back of goodwill on asset disposed after period end (30,517) - ---------------- ---------------- (49,146) - ========= ========= 5. Profit on sale of fixed assets The profit arises from the excess of insurance proceeds received over the net book value of assets destroyed by fire at the pigmeat processing plant in Roosky, Ireland on 8th May 2002. 2003 2002 Eur'000 Eur'000 On disposal of investments - 13,396 Profit on disposal of tangible assets 11,594 358 ---------------- ---------------- 11,594 13,754 ========= ========= The directors have taken the decision not to reinstate the processing plant at Roosky but rather to restore the lost capacity at the two remaining pig processing plants, with the result that a redundancy cost of €9,505k has been incurred during the period (see note 2a). 6. Loss on termination of operations The loss arises from the decision to close the Group's UK fresh meat operations at Drongan and Gainsborough, and an adjustment relating to the loss arising from the closure of the Groups UK Consumer Meats operation in June 2002. 2003 2002 Eur'000 Eur'000 Loss arising on termination of operations (8,578) (30,370) Goodwill write back to profit and loss account on termination - (37,694) Goodwill written off on termination (1,249) - ---------------- ---------------- (9,827) (68,064) ========= ========= 7. Dividends 2003 2002 Interim dividend paid per share (cent) 2.06 1.96 Final dividend proposed per share (cent) 2.94 2.80 ---------------- ---------------- 5.00 4.76 ========= ========= Total dividend (Eur'000) 14,515 13,833 ========= ========= Notes to the Financial Statements continued 3 January 2004 8. Earnings per share 2003 2002 Eur'000 Eur'000 Profit after taxation and minority interest (34,867) (29,347) ========= ========= Weighted average number of ordinary shares in issue (million) 290.303 291.703 ========= ========= Earnings per share (cent) (12.01) (10.06) ========= ========= Adjustments: Goodwill amortisation 0.10 0.11 Exceptional items 5.13 - Loss on sale of operations 9.71 8.78 Provision for loss on sale of operations 16.93 - Profit on sale of fixed assets (3.99) (4.72) Loss on termination of operations 3.39 23.33 ---------------- ---------------- Adjusted Earnings per Share 19.26 17.44 ========= ========= 9. Group Borrowings 2003 2002 Eur'000 Eur'000 Borrowings due with one year 43,221 1,117 Borrowings due after one year 170,351 266,144 Less: Cash and bank balances (59,775) (90,953) ---------------- ---------------- Net borrowings 153,797 176,308 ========= ========= 10. Accounting policies These accounts have been prepared using the same accounting policies as detailed in the 2002 annual financial statements. 11. Basis of preparation and reporting currency The financial information set out in this document does not constitute full statutory accounts for the years ended 3 January 2004 (referred to as 2003 accounts) or 4 January 2003 (referred to as 2002 accounts) but is derived from same. The 2003 and 2002 accounts have been audited and received unqualified audit reports. The 2003 financial statements were approved by the Board of Directors on 2 March 2004. The financial statements are prepared under the historical cost convention and are presented in Euro. This information is provided by RNS The company news service from the London Stock Exchange
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