Interim Results

KERRY GROUP PLC 31 August 1999 Interim Report Half Year Ended 30 June, 1999 FINANCIAL HIGHLIGHTS * Turnover increased by 16.1% to IR£903.2m (EUR1,146.8m). * Operating profit before goodwill amortisation and exceptional items increased by 22.6% to IR£69.7m (EUR88.6m). * Profit before taxation and exceptional items increased by 22.8% to IR£46.8m (EUR59.4m). * Exceptional restructuring costs of IR£8.3m (EUR10.5m). * Earnings per share before goodwill amortisation and exceptional items increased by 20.5% to IR23.5p (EUR29.9c). * Dividend per share increased by 19.0% to IR2.0p (EUR2.54c). The unaudited results and Balance Sheet of the Group as at 30 June, 1999, together with comparative figures for the previous year and the audited results to 31 December, 1998, are set out on pages 5 - 16 of this release. A copy of the Interim Report will be circulated to shareholders and is available for inspection at the registered office of the company. For further information please contact: Frank Hayes, Director of Corporate Affairs, Kerry Group plc Prince's Street, Tralee, Co. Kerry Telephone: +353-66-7182304 Fax: +353-66-7182972 KERRY GROUP PLC. Chairman's Statement for the half year ended 30 June 1999 Results The Board of Kerry is pleased to report an excellent performance for the six months to 30 June 1999, maintaining the Group's strong record and forward momentum in sales and earnings growth. Operating profits increased by 22.6% to IR£69.7m (EUR88.6m). Group turnover at IR£903.2m (EUR1,146.8m) reflects an increase of 16.1% on the same period of 1998. The improved operating profit margin of 7.7%, compared to the previous years level of 7.3%, results from synergies derived through the Group's food ingredients technologies and expanded market base, plus the benefits of on-going investment in our consumer foods brands. Profit before taxation and exceptional items increased by 22.8% to IR£46.8m (EUR59.4m). As announced at year end the Group has undertaken an integration and rationalisation programme with specific reference to businesses acquired during 1998. Of the IR£25m (EUR31.7m) expenditure approved by the Board for this programme, IR£8.3m (EUR10.5m) was incurred during the period under review. Earnings per share before goodwill amortisation and exceptional items increased by 20.5% to IR23.5p (EUR29.9c). After goodwill amortisation and exceptional items earnings per share decreased by 8.8% to IR16.6p (EUR21.1c). Operational Review The 16.1% increase in total Group sales in the period reflects continuing strong internal volume growth in all of Kerry's geographical markets. While the Group's 1998 acquisitions, principally the food ingredients businesses of Dalgety in Europe and Burns Philp in Australia and New Zealand, performed very satisfactorily, their impact on total turnover in the period relative to the first six months of 1998 was reduced due to the disposal of Baker's Aid in the US and two meat processing plants at Chard, UK and Dublin, Ireland. In Ireland the Group's operations continued to out perform the market, with the further development of the Listowel confectionery and speciality ingredients business and good growth in Kerry's branded consumer foods sectors. Turnover increased by 4.9% to IR£218.9m (EUR277.9m) while operating profits increased by 11.1% to IR£12.9m (EUR16.4m). The major developments in Kerry's European ingredients operations in 1998 contributed to a very satisfactory performance in the Group's Rest of Europe and Middle Eastern markets, with turnover increased by 18.3% to IR£397.7m (EUR505.0m) and operating profits increased by 36.8% to IR£27.9m (EUR35.5m). This reflects a full six months contribution from the acquired Dalgety ingredients businesses, as against a three month contribution in same period of 1998, and the benefits accruing from the combined coatings, flavours and seasonings businesses. In the UK retail market the results achieved were also boosted considerably by further growth in the Richmond, Walls' and Mattessons brand shares. In Kerry's American markets significant growth was again recorded with sales advanced by 6% to IR£240.1m (EUR304.9m), notwithstanding the disposal of Baker's Aid in the US. Operating profits increased by 12.4% to IR£27.5m (EUR34.9m). Strong volume growth was again achieved in all sectors of the US market, in particular through major national accounts and through food processors supplying foodservice chains. Good progress was also recorded by Kerry Mexico and the Group also continued to build its presence in Mercosur markets. The addition of the Mauri and Pinnacle ingredients operations of Burns Philp in June 1998 in Australia and New Zealand and SDF Food's in Malaysia has led to an increase in turnover originating in Asia Pacific markets from IR£6.5m (EUR8.2m) in the first half of 1998 to IR£46.5m (EUR59.0m) in the period under review. Operating profits from operations in the Asia Pacific region increased from IR£0.4m (EUR0.6m) to IR£1.4m (EUR1.8m) with good progress recorded in processor and foodservice applications for coatings, marinades, flavours and seasonings. Development As announced at year end the Board approved an integration and rationalisation plan at a cost of IR£25m (EUR31.7m) for businesses connected with the 1998 acquisitions. The focus of this programme to date has related principally to the Dalgety ingredients operations and the harmonisation of manufacturing and technical facilities in the UK and mainland Europe. This European programme is well advanced at a cost of IR£8.3m (EUR10.5m) and has already yielded significant efficiencies with a positive impact on earnings. Production of seasonings, flavourings and coatings has transferred from Fareham (UK) to Portbury (UK) and to Germany. Processing previously carried out at Aylesbury (UK) has transferred to the Standon, Bicester and Birstwith sites in the UK. Similarly all fruit processing from the Bingham plant has moved to the Tenbury Wells centre in the UK, whilst all coatings production in France is now concentrated in Blendecques with the closure of the Kerganet site. The capital programme to establish a major European Development Centre for coatings, seasonings, functional ingredients and flavours in Bristol (UK) is near completion. The acquisition of Tukania Proca GmbH, based in Rodgau, Germany further consolidates the Group's position as a leading ingredients supplier to the European snack sector, complementing Kerry's UK based facilities in Portbury. The Group recently commissioned a state of the art processing and technical facility at Tres Coracoes in Brazil with an investment to date of US$20m. This facility to service the growing food manufacturing and foodservice sectors in Brazil, Argentina and Chile will be further expanded over the next year to incorporate coatings and flavourings processing and development facilities at an additional cost of US$20 million. Financial The higher first half interest charge at IR£17.9m (EUR22.8m) reflects the finance costs of 1998 acquisitions and an increase in working capital requirements. Net debt at the end of the period, incorporating an adverse translation adjustment of IR£35.7m (EUR45.3m) on foreign currency borrowings, stood at IR£478.3m (EUR607.4m) compared to the year end level of IR£445.6m (EUR565.7m). Before currency adjustment, this represents a reduction of IR£84.1m (EUR106.8m) in Group borrowings compared to the year earlier position. Allowing a tax credit of IR£1.4m (EUR1.8m) on exceptional restructuring costs, the Group taxation charge increased from IR£7.2m (EUR9.1m) in the first half of 1998 to IR£9.9m (EUR12.6m). The calculation of earnings per share is based on the basic weighted average number of shares in issue during the period of 172.047m. Dividend The Board has declared an interim dividend of IR2.0p (EUR2.54c) per share net, an increase of 19.0% on the 1998 interim dividend. The interim dividend will be paid on 29 November 1999 to shareholders on the record date 5 November 1999. A Dividend Withholding Tax has been introduced in Ireland, replacing Advanced Corporation Tax abolished with effect from 6 April 1999. Dividend Withholding Tax at a rate of 24% will apply to all dividends made by a resident company on or after 6 April 1999. The Revenue Commissioners have introduced transitional measures relating to dividends paid between 6 April 1999 and 5 April 2000, which will apply to the company's interim dividend payable in November. Shareholders will shortly be circulated with details of the rules applicable to Dividend Withholding Tax. Year 2000 The Group has continued to make satisfactory progress in addressing Y2K compliance issues and is on target in completing all necessary systems modifications to ensure that no interruptions will occur in supply chain operations. Costs associated with the programme in 1999 are expected to be in line with the IR£1.4m (EUR1.8m) projection, highlighted in the Group's 1998 Annual Report. Current Trading and Outlook The Group expects a very satisfactory outcome for the year, continuing the Company's record of earnings growth and business development. The integration and restructuring programme associated with the 1998 acquisitions is progressing very satisfactorily and will be substantially completed by year end. We continue to explore complementary acquisition opportunities. Michael Hanrahan Chairman 31 August 1999 CONSOLIDATED PROFIT AND LOSS ACCOUNT (IR£) for the half year ended 30th June, 1999 Half year ended 30th June, 1999 Unaudited Half year Year ------------------------------- ended ended Pre 30th June, 31st Dec., Exceptional Exceptional 1998 1998 Items Items Total Unaudited Audited IR£'000 IR£'000 IR£'000 IR£'000 IR£'000 Turnover Continuing operations 903,192 - 903,192 777,904 1,732,642 ======= ======= ======= ======= ========= Operating profit - continuing operations Before goodwill amortisation and exceptional items 69,748 - 69,748 56,912 136,547 Goodwill amortisation 5,016 - 5,016 2,232 7,539 Exceptional restructuring costs (Note 5) - 8,280 8,280 - - ------ ------- ------ ------ ------- Operating profit 64,732 (8,280) 56,452 54,680 129,008 Profit on sale of businesses - - - - 88 Interest payable and similar charges 17,933 - 17,933 16,579 35,239 ------ ------- ------ ------ ------ Profit before taxation 46,799 (8,280) 38,519 38,101 93,857 Taxation 11,346 (1,425) 9,921 7,200 19,201 ------ ------- ------ ------ ------ Profit after taxation and attributable to ordinary shareholders 35,453 (6,855) 28,598 30,901 74,656 ====== ======= Dividends 3,441 3,131 9,152 ------ ------ ------ Retained profit for the period 25,157 27,770 65,504 ====== ====== ====== Earnings per ordinary share (pence) - basic before goodwill amortisation and exceptional items 23.5 19.5 48.1 - basic after goodwill amortisation and exceptional items 16.6 18.2 43.7 - fully diluted after goodwill amortisation and exceptional items 16.5 18.1 43.4 CONSOLIDATED BALANCE SHEET (IR£) as at 30th June, 1999 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited IR£'000 IR£'000 IR£'000 Fixed assets Tangible fixed assets 450,860 416,533 437,778 Intangible assets 193,954 214,431 190,080 ------- ------- ------- 644,814 630,964 627,858 Current assets Stocks 219,686 204,874 193,148 Debtors 288,708 261,216 218,200 Cash at bank 4,677 2,316 10,029 ------- ------- ------- 513,071 468,406 421,377 Creditors: Amounts falling due within one year (450,894) (414,969) (351,849) --------- --------- --------- Net current assets 62,177 53,437 69,528 --------- --------- --------- Total assets less current liabilities 706,991 684,401 697,386 Creditors: Amounts falling due after more than one year (452,121) (480,233) (460,375) Provisions for liabilities and charges (5,233) (5,011) (5,203) --------- --------- --------- 249,637 199,157 231,808 ========= ========= ========= Capital and reserves Called up share capital 17,205 17,204 17,205 Share premium account 150,184 150,184 150,184 Revaluation reserve (Note 4) - 8,454 7,498 Profit and loss account 64,576 5,044 38,549 ------- ------- ------- 231,965 180,886 213,436 Deferred income 17,672 18,271 18,372 ------- ------- ------- 249,637 199,157 231,808 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT (IR£) for the half year ended 30th June, 1999 Half year Half year Year ended ended ended 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited IR£'000 IR£'000 IR£'000 Operating profit before goodwill amortisation 69,748 56,912 136,547 Depreciation (net) 22,790 19,668 39,343 Change in working capital (23,206) (7,989) 36,056 Exchange translation adjustment (793) (603) (1,554) -------- ------- ------- Net cash flow from operating activities 68,539 67,988 210,392 Returns on investments and servicing of finance (17,933) (16,579) (35,239) Taxation (7,028) (7,554) (20,926) Capital expenditure Purchase of tangible fixed assets (22,284) (16,170) (54,016) Proceeds on the sale of fixed assets 469 423 1,368 Development grants received 62 97 1,346 Acquisitions and disposals Purchase of subsidiary undertakings (4,141) (329,428) (349,469) Proceeds on the sale of businesses - - 8,731 Deferred creditors paid (3,371) - (39) Exceptional restructuring costs (5,405) - - Issue of share capital - 65,599 65,600 Equity dividends paid (6,022) (5,058) (7,947) ------- --------- --------- Cash inflow / (outflow) before use of liquid resources and financing 2,886 (240,682) (180,199) Financing Increase / (decrease) in debt due within one year 19,347 78,206 (13,777) (Decrease) / increase in debt due after one year (27,585) 160,708 199,921 -------- ------- -------- (Decrease) / increase in cash in the period (5,352) (1,768) 5,945 ======== ======= ======== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (IR£) for the half year ended 30th June,1999 Half year Half year Year ended ended ended 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited IR£'000 IR£'000 IR£'000 (Decrease) / increase in cash in the period (5,352) (1,768) 5,945 Cash flow from debt financing 8,238 (238,914) (186,144) ------- --------- --------- Change in net debt resulting from cash flows 2,886 (240,682) (180,199) Exchange translation adjustment (35,666) (4,932) 15,760 -------- --------- --------- Movement in net debt in the period (32,780) (245,614) (164,439) Net debt at beginning of period (445,551) (281,112) (281,112) --------- --------- --------- Net debt at end of period (478,331) (526,726) (445,551) ========= ========= ========= KERRY GROUP PLC. NOTES TO THE INTERIM REPORT (IR£) for the half year ended 30th June, 1999 1. Segmental Analysis Half year ended Half year ended Year ended 30th June, 1999 30th June, 1998 31st Dec., 1998 Unaudited Unaudited Audited Turnover Operating Turnover Operating Turnover Operating profit profit profit IR£'000 IR£'000 IR£'000 IR£'000 IR£'000 IR£'000 By geographical market of origin: Ireland 218,862 12,905 208,606 11,618 462,281 25,448 Rest of Europe 397,723 27,939 336,280 20,428 760,690 56,748 Americas 240,143 27,456 226,539 24,432 456,584 52,562 Asia Pacific 46,464 1,448 6,479 434 53,087 1,789 ------- ------ ------- ------ --------- ------ 903,192 69,748 777,904 56,912 1,732,642 136,547 ======= ======= ========= Goodwill amortisation (5,016) (2,232) (7,539) Exceptional restructuring costs (8,280) - - ------- ------- ------- 56,452 54,680 129,008 ======= ======= ======= Turnover by destination: Ireland 147,252 137,662 290,335 Rest of Europe 448,730 388,046 867,505 Americas 249,639 232,975 501,103 Asia Pacific 57,571 19,221 73,699 ------- ------- --------- 903,192 777,904 1,732,642 ======= ======= ========= KERRY GROUP PLC. NOTES TO THE INTERIM REPORT (IR£) for the half year ended 30th June, 1999 2. Earnings Per Share EPS Pence EPS Pence EPS Pence June 1999 June 1998 Dec. 1998 Profit after taxation before goodwill amortisation and exceptional restructuring costs 23.5 19.5 48.1 Goodwill amortisation 2.9 1.3 4.4 Exceptional restructuring costs 4.0 - - ---- ---- ---- Profit after taxation 16.6 18.2 43.7 Share option dilution 0.1 0.1 0.3 ---- ---- ---- 16.5 18.1 43.4 ==== ==== ==== The basic weighted average number of shares in issue for the period was 172,047,213 (June 1998 : 169,555,960). The diluted weighted average number of ordinary shares in issue for the period was 173,132,371 (June 1998 : 170,638,349). The dilution arises in respect of executive share options outstanding. 3. Accounting Policies These accounts have been prepared using the same policies as detailed in the annual financial statements except that the Group has implemented two new financial reporting standards, Financial Reporting Standard 12 'Provisions, Contingent Liabilities and Contingent Assets' and Financial Reporting Standard 15 'Tangible Fixed Assets'. FRS12 does not have any significant impact on the classification or measurement of the Group's assets or liabilities. The effect of adopting FRS15 is outlined in Note 4. 4. Revaluation Reserve The carrying value of previously revalued assets has been restored to historical cost. The revaluation reserve has been written off against tangible fixed assets under the transitional arrangements of Financial Reporting Standard 15 'Tangible Fixed Assets'. Prior year comparatives have not been restated in this report as the effect is not material. KERRY GROUP PLC. NOTES TO THE INTERIM REPORT (IR£) for the half year ended 30th June, 1999 5. Exceptional Restructuring Costs The exceptional costs relate to the major restructuring programme the Group has undertaken consequent to the significant acquisitions in 1998. The costs arise from the rationalisation and closure of manufacturing facilities together with the restructuring of administration and management functions along new more focused market lines. The exceptional costs can be analysed as follows: IR£'000 Redundancies and contract compensation 2,822 Plant closure / relocation expenses 1,767 Plant and other assets written off 2,697 Standardisation of information systems 817 Other 177 ----- 8,280 ===== 6. These accounts are not full accounts and except where indicated are unaudited. Full accounts to 31st December, 1998, which received an unqualified audit report, have been filed with the Registrar of Companies. KERRY GROUP PLC. CONSOLIDATED PROFIT AND LOSS ACCOUNT (Euro) for the half year ended 30th June, 1999 Half year ended 30th June, 1999 Unaudited Half year Year --------------------------------- ended ended Pre 30th June, 31st Dec., Exceptional Exceptional 1998 1998 Items Items Total Unaudited Audited EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Turnover Continuing operations 1,146,817 - 1,146,817 987,734 2,200,001 ========= ======= ========= ======= ========= Operating profit - continuing operations Before goodwill amortisation and exceptional items 88,562 - 88,562 72,263 173,379 Goodwill amortisation 6,369 - 6,369 2,834 9,573 Exceptional restructuring costs (Note 5) - 10,513 10,513 - - ------ -------- ------ ------ ------- Operating profit 82,193 (10,513) 71,680 69,429 163,806 Profit on sale of businesses - - - - 112 Interest payable and similar charges 22,770 - 22,770 21,051 44,744 ------ -------- ------ ------ ------- Profit before taxation 59,423 (10,513) 48,910 48,378 119,174 Taxation 14,407 (1,809) 12,598 9,142 24,380 ------ -------- ------ ------ ------- Profit after taxation and attributable to ordinary shareholders 45,016 (8,704) 36,312 39,236 94,794 ====== ======== Dividends 4,369 3,976 11,620 ------ ------ ------ Retained profit for the period 31,943 35,260 83,174 ====== ====== ====== Earnings per ordinary share (cents) - basic before goodwill amortisation and exceptional items 29.9 24.8 61.1 - basic after goodwill amortisation and exceptional items 21.1 23.1 55.5 - fully diluted after goodwill amortisation and exceptional items 21.0 23.0 55.1 KERRY GROUP PLC. CONSOLIDATED BALANCE SHEET (Euro) as at 30th June, 1999 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited EUR'000 EUR'000 EUR'000 Fixed assets Tangible fixed assets 572,473 528,888 555,863 Intangible assets 246,271 272,271 241,352 ------- ------- ------- 818,744 801,159 797,215 Current assets Stocks 278,944 260,136 245,247 Debtors 366,584 331,676 277,057 Cash at bank 5,939 2,941 12,734 ------- ------- ------- 651,467 594,753 535,038 Creditors: Amounts falling due within one year (572,516) (526,901) (446,756) --------- --------- --------- Net current assets 78,951 67,852 88,282 --------- --------- --------- Total assets less current liabilities 897,695 869,011 885,497 Creditors: Amounts falling due after more than one year (574,075) (609,770) (584,555) Provisions for liabilities and charges (6,645) (6,363) (6,606) --------- --------- --------- 316,975 252,878 294,336 ========= ========= ========= Capital and reserves Called up share capital 21,846 21,846 21,846 Share premium account 190,694 190,694 190,694 Revaluation reserve (Note 4) - 10,734 9,520 Profit and loss account 81,996 6,405 48,948 ------- ------- ------- 294,536 229,679 271,008 Deferred income 22,439 23,199 23,328 ------- ------- ------- 316,975 252,878 294,336 ======= ======= ======= KERRY GROUP PLC. CONSOLIDATED CASH FLOW STATEMENT (Euro) for the half year ended 30th June, 1999 Half year Half year Year ended ended ended 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited EUR'000 EUR'000 EUR'000 Operating profit before goodwill amortisation 88,562 72,263 173,379 Depreciation (net) 28,937 24,973 49,955 Change in working capital (29,466) (10,144) 45,782 Exchange translation adjustment (1,007) (766) (1,973) -------- -------- ------- Net cash flow from operating activities 87,026 86,326 267,143 Returns on investments and servicing of finance (22,770) (21,051) (44,744) Taxation (8,924) (9,592) (26,571) Capital expenditure Purchase of tangible fixed assets (28,295) (20,532) (68,586) Proceeds on the sale of fixed assets 596 537 1,737 Development grants received 79 123 1,709 Acquisitions and disposals Purchase of subsidiary undertakings (5,258) (418,287) (443,734) Proceeds on the sale of businesses - - 11,086 Deferred creditors paid (4,280) - (49) Exceptional restructuring costs (6,863) - - Issue of share capital - 83,294 83,295 Equity dividends paid (7,646) (6,422) (10,091) ------- --------- --------- Cash inflow / (outflow) before use of liquid resources and financing 3,665 (305,604) (228,805) Financing Increase / (decrease) in debt due within one year 24,565 99,301 (17,493) (Decrease) / increase in debt due after one year (35,025) 204,057 253,846 -------- ------- -------- (Decrease) / increase in cash in the period (6,795) (2,246) 7,548 ======== ======= ======== KERRY GROUP PLC. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Euro) for the half year ended 30th June,1999 Half year Half year Year ended ended ended 30th June, 30th June, 31st Dec., 1999 1998 1998 Unaudited Unaudited Audited EUR'000 EUR'000 EUR'000 (Decrease) / increase in cash in the period (6,795) (2,246) 7,548 Cash flow from debt financing 10,460 (303,358) (236,353) ------- --------- --------- Change in net debt resulting from cash flows 3,665 (305,604) (228,805) Exchange translation adjustment (45,286) (6,262) 20,010 -------- --------- --------- Movement in net debt in the period (41,621) (311,866) (208,795) Net debt at beginning of period (565,735) (356,940) (356,940) --------- --------- --------- Net debt at end of period (607,356) (668,806) (565,735) ========= ========= ========= NOTES TO THE INTERIM REPORT (Euro) for the half year ended 30th June, 1999 1. Segmental Analysis Half year ended Half year ended Year ended 30th June, 1999 30th June, 1998 31st Dec., 1998 Unaudited Unaudited Audited Turnover Operating Turnover Operating Turnover Operating profit profit profit EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 By geographical market of origin: Ireland 277,897 16,386 264,874 14,752 586,975 32,312 Rest of Europe 505,004 35,475 426,988 25,938 965,877 72,055 Americas 304,919 34,862 287,645 31,022 579,742 66,740 Asia Pacific 58,997 1,839 8,227 551 67,407 2,272 --------- ------ ------- ------ --------- ------- 1,146,817 88,562 987,734 72,263 2,200,001 173,379 ========= ======= ========= Goodwill amortisation (6,369) (2,834) (9,573) Exceptional restructuring costs (10,513) - - -------- ------- ------- 71,680 69,429 163,806 ======== ======= ======= Turnover by destination: Ireland 186,971 174,794 368,649 Rest of Europe 569,770 492,717 1,101,504 Americas 316,976 295,818 636,270 Asia Pacific 73,100 24,405 93,578 --------- ------- --------- 1,146,817 987,734 2,200,001 ========= ======= ========= 2. Earnings Per Share EPS Cents EPS Cents EPS Cents June 1999 June 1998 Dec. 1998 Profit after taxation before goodwill amortisation and exceptional restructuring costs 29.9 24.8 61.1 Goodwill amortisation 3.7 1.7 5.6 Exceptional restructuring costs 5.1 - - ---- ---- ---- Profit after taxation 21.1 23.1 55.5 Share option dilution 0.1 0.1 0.4 ---- ---- ---- 21.0 23.0 55.1 ==== ==== ==== The basic weighted average number of shares in issue for the period was 172,047,213 (June 1998 : 169,555,960). The diluted weighted average number of ordinary shares in issue for the period was 173,132,371 (June 1998 : 170,638,349). The dilution arises in respect of executive share options outstanding. 3.Accounting Policies These accounts have been prepared using the same policies as detailed in the annual financial statements except that the Group has implemented two new financial reporting standards, Financial Reporting Standard 12 'Provisions, Contingent Liabilities and Contingent Assets' and Financial Reporting Standard 15 'Tangible Fixed Assets'. FRS12 does not have any significant impact on the classification or measurement of the Group's assets or liabilities. The effect of adopting FRS15 is outlined in Note 4. 4. Revaluation Reserve The carrying value of previously revalued assets has been restored to historical cost. The revaluation reserve has been written off against tangible fixed assets under the transitional arrangements of Financial Reporting Standard 15 'Tangible Fixed Assets'. Prior year comparatives have not been restated in this report as the effect is not material. 5. Exceptional Restructuring Costs The exceptional costs relate to the major restructuring programme the Group has undertaken consequent to the significant acquisitions in 1998. The costs arise from the rationalisation and closure of manufacturing facilities together with the restructuring of administration and management functions along new more focused market lines. The exceptional costs can be analysed as follows: EUR'000 Redundancies and contract compensation 3,583 Plant closure / relocation expenses 2,244 Plant and other assets written off 3,425 Standardisation of information systems 1,037 Other 224 ------ 10,513 ====== 6. These accounts are not full accounts and except where indicated are unaudited. Full accounts to 31st December, 1998, which received an unqualified audit report, have been filed with the Registrar of Companies.

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