Interim Results
Kerry Group PLC
31 August 2004
Press Announcement
Tuesday 31 August 2004
Interim Report
Half Year Ended 30 June 2004
Kerry, the global ingredients, flavours, and consumer foods group, reports
interim results for the half year ended 30 June 2004.
Financial Highlights
• Sales increased by 8.5% to €1,955m
• Operating profit* increased by 10.2% to €147m
• Operating margin* up from 7.4% to 7.5%
• Adjusted profit after tax* increased by 10.7% to €94.8m
• Earnings per share* increased by 10.4% to 50.9 cent
• Interim dividend per share up 11.1% to 4.5 cent
• €674m acquisition programme
• Free cash flow €85m
*before goodwill and exceptionals
Commenting on Kerry's performance in the first half of 2004, Chief Executive
Hugh Friel said; 'In a very busy period, the Group again delivered excellent
results throughout its operations, while also building important platforms for
future growth and development. Kerry's consistent strategy and capability to
meet consumer lifestyle, convenience, health and nutritional requirements again
delivered good sales growth and further margin progression. Building on a good
first half performance, the Group is confident of achieving a good outcome for
the full year.'
For further information please contact:
Frank Hayes
Director of Corporate Affairs Tel no +353 66 7182304
Fax no +353 66 7182972
Kerry Web Site: www.kerrygroup.com
Chairman's Statement
For the half year ended 30 June 2004
Results
The Group continued to perform strongly in the first half of 2004, delivering
good results throughout all core businesses. In a very busy period for the
Group, Kerry invested considerable management and financial resources in the
further development of its lifestyle and nutritional foods, flavours and
ingredient ranges, while also extending its technology portfolio into
bio-ingredients and pharma-ingredients growth sectors.
Throughout all Group markets the heightened awareness of balanced dietary
requirements and healthy lifestyles experienced in 2003 continued to drive
consumer demand for more varied, tasteful, convenient, nutritional food and
beverage products in the period under review. Total Group turnover in the
first six months of 2004 grew to €1,955m, reflecting an increase of 8.5% on the
same period of 2003. Acquisitions concluded primarily during the second quarter
contributed €73m to this result. Adjusting for the impact of foreign exchange
translation, acquisitions and divestitures, on a like-for-like basis sales
increased by 3.8% compared with the first half of 2003. Operating profit before
goodwill and exceptional items increased by 10.2% to €147m. Notwithstanding the
busy acquisition programme in the period, the consistency of Group performance
was again exemplified through the increase in the Group operating margin to 7.5%
from 7.4% in the same period of 2003 and 7.1% in the same period of 2002.
Adjusted profit after tax increased by 10.7% to €94.8m. Earnings per share
before goodwill and exceptionals increased by 10.4% to 50.9 cent. Allowing for
goodwill and exceptional items (including exceptional restructuring costs in the
half year of €6.7m) basic FRS3 earnings per share was reported at 33.1 cent
compared to 33.4 cent for the first half of 2003.
Operating Reviews
Ireland and Rest of Europe
Building on the strong sales growth achieved in Ireland in 2002 and in 2003,
sales originating from Irish based operations again grew satisfactorily to a
level of €670m (H1 2003 : €656m). Operating profit increased to €32.2m, from
€31.6m in the first half of 2003.
European operations (excluding Ireland) increased sales by 11.6% to €694m and
increased operating profits by 10.9% to €52.4m.
Development across European markets was again fuelled by demand for more
impactful flavours, new functional health and 'wellness' food and beverages, and
greater convenience. Kerry continued to make good progress across European food
ingredient markets. Growth continued through sauces and culinary systems for
the prepared meals sector. Development through added-value food coatings
applications was maintained with steady progress in the seafood and poultry
sectors and into new foodservice categories.
The German market showed encouraging progress overall but market conditions in
France, particularly for seasonings, proved difficult due to the poor barbecue
season. Development across the overall European snack sector also proved slow
during the period. However, in Eastern Europe, particularly in the E.U.
accession countries, seasonings and coatings continued to record good growth.
In line with increasing demand for functional, high protein and low-carbohydrate
ingredients, Kerry continued to make good progress through its Irish based
speciality dairy ingredients and protein facilities. Fruit preparations also
benefited from such trends, in particular the Kerry Ravifruit range and
functional/health confectionery items from the York (UK) based sweet ingredients
facilities. To maximise technical synergies across Group ingredients
businesses, cross divisional business development teams have been established to
lead development in the functional bar sector and in the sports/lifestyle
nutrition sectors.
In European flavour markets, Mastertaste Italy again significantly outperformed
the market through sweet, savoury and beverage applications. Capitalising on
recent acquisitions and the division's sweet and beverage flavour development
capabilities, Mastertaste Europe successfully established a strong technical
platform for development in such categories in Europe.
In the UK and Irish consumer foods markets, Kerry Foods again recorded
encouraging progress. All Kerry branded categories continued to out-perform
market growth rates. Cheestrings is now the leading brand in its sector of the
UK cheese snacks market. Stage 1 of the major expansion programme at the
Charleville production plant to expand capacity across the Cheestrings range was
completed during the half year at a cost of €5m. The second phase of this €14m
investment programme will commence during the second half of 2004. Charleville
Cheese also continued to build on its brand leadership position in the natural
cheese market in Ireland. Denny again made good progress in the sausage, rasher
and pre-packed cooked meats market in Ireland, leading market development in all
categories. Performance through the new Freshways manufacturing facility in
Dublin proved very satisfactory, fuelling good growth in the pre-packed sandwich
sector and in 'on-the-go' salads. In response to the increasing trend towards
convenient health functional foods and beverages, Dawn Dairies successfully
launched Dawn Omega Milk on the Irish market in March. Available in full-fat
and low-fat variants, Dawn is the first milk brand in the market to offer fresh
milk as a medium to introduce essential Omega-3 fatty acids. Kerry Spring also
recorded encouraging results through the launch of Kerry Spring Still Flavoured
Water, adding to its reputation as the leading supplier of flavoured water on
the Irish market. Despite increased margin pressure due to relative sterling
and dollar exchange rates, Saint Brendan's branded cream liqueur again recorded
good sales growth.
In the Irish and UK poultry markets, escalating costs and competitive pressures
again contributed to difficult trading conditions in the sector. In the
convenience sector, the former Hibernia Foods facilities acquired prior to
year-end were successfully integrated. The expanded ready meals operation
performed ahead of market growth rates. Kerry Foods also recorded encouraging
results in the UK chilled desserts sector from the former Hibernia chilled
patisserie facility in Birmingham.
The strengths of Kerry's marketing and distribution skills were again evidenced
by the strong performance of the Richmond and Wall's brands. Wall's
microwaveable sausage offering made excellent progress.
Americas
The Group's American operations performed strongly in the first half of 2004.
Sales increased by 11.2% to €504m. Allowing for the impact of acquisitions and
the shift in the exchange rate of the US dollar versus Euro, like-for-like sales
growth of 6% in Kerry's core businesses again proved satisfactory. Operating
profits grew by 13% to €55.3m, reflecting like-for-like growth of 9%. Greater
awareness of dietary and health concerns accelerated the pace of new product
introductions - particularly in North American markets. Kerry technologist's
have led development of new formulations for managing carbohydrates in a broad
range of food categories and in enhancing the nutritional value of wellness and
health food and beverages. In the USA and Canada progress in the sweet sector,
responding to such trends, has been very strong. Nutriant also benefited
strongly through customer launches of new products with low-carb positioning
containing soy isolates and soy protein systems. While overall conditions in
the North American speciality ingredients markets remained challenging, again
progress was achieved through nutritional lipids in the functional bar sector
and in low-carb products.
In the food coatings sector, the restructuring of operations initiated in 2003
across Kerry manufacturing plants contributed to an improved business
performance in the sector in the period. Product price increases and greater
business efficiencies helped to offset higher sectoral raw material costs. In
seasonings, good progress continued through the meat industry and regional snack
producers. In the U.S. and Canadian markets, the Group's customised and branded
food and beverage foodservice solutions business will form a new 'Food and
Beverage Creations' division. Embracing Kerry's foodservice beverage brands
(including Da Vinci Gourmet, JetTea, JetCafe and Oregon Chai), its food sector
brands (Golden Dipt, Alferi and Aromont) and foodservice chains' business,
development through this dedicated foodservice solutions division will be driven
by an industry-leading culinary team based at the new Kerry Innovation Centre in
Dallas.
Satisfactory growth and development was achieved throughout all foodservice
applications in the first half of 2004, particularly in the specialty coffee
sector and the Group's recently acquired complementary flavoured beverage
businesses.
In Mexican and Central American ingredients markets satisfactory business
development continued, with further progress through seasonings and nutritional
beverage applications. The foodservice sector in the region also exhibited
encouraging prospects and activity in the speciality coffee sector appears
promising. Kerry also recorded good growth in the Colombian and Venezuelan
markets. Kerry's Brazilian based ingredients businesses recorded good growth in
the artisinal ice-cream sector and through seasonings in the meat industry.
In line with dietary trends and increased demand for high impact flavours and
natural authentic flavours, Kerry's Mastertaste flavour division made excellent
progress in sweet and beverage sectors in American markets. Development in the
nutritional, nutraceutical and healthy beverages categories was driven through
the SunPure and Crystals businesses acquired in 2003. Flavour business
development in the region continued with the completion of three further
acquisitions based in the USA and Mexico. Mastertaste also made an important
first step into the specialist international fragrance market.
Asia Pacific
An excellent business performance was achieved in Asia Pacific markets in the
first half of 2004. Sales increased by 22% to €87.3m and operating profits
increased by 28% to €6.9m. In line with the pace of development in major Asian
economies, Kerry has made good progress in providing ingredient technologies to
match the requirements of global food and beverage manufacturers now
successfully established in Asia's fast growing consumer markets. Development
through Kerry's speciality branded flavoured beverage applications was most
encouraging. In Asia sales growth also increased through nutritional
ingredients cheese systems, seasonings, food coatings and speciality lipids.
Kerry also recorded continued growth in its Australian and New Zealand
businesses. Seasonings benefited from the expansion of the poultry sectors.
Natural sauces were successfully introduced to the Australian prepared meals and
foodservice sectors. The Kerry Pinnacle bakery division in Australia also
recorded further growth through major supermarket chains.
Development
In the first half of 2004, the Group invested considerable resources in
providing for future growth and development in line with evolving consumer
nutritional, health, lifestyle and convenience requirements. The acquisition
programme completed during the period, at a cost of €674m, has extended the
Group's food ingredients platform to bio-ingredients and pharma-ingredients
applications, significantly broadened the Group's flavour development technical
and regional base, and also expanded the Group's interests in the U.S. branded
beverage foodservice and natural foods sectors.
Acquisitions concluded during the period comprised:
(a) Ingredients Businesses
Quest Food Ingredients, a leader in innovation and applications of
bio-ingredients and pharma-ingredients, serving pharmaceutical, culinary, snack,
bakery, dairy, beverage and confectionery markets worldwide. The acquisition
completed on 30 April 2004, establishes a new Kerry Bio-Science division,
operating from nine major manufacturing units located in Utrecht, Netherlands;
Norwich NY, USA; Rochester MN, USA; Zwijndrecht, Netherlands; Esterol, Malaysia;
Brantford, Canada; Cebu, Philippines; Cork, Ireland; and Menstrie, UK.
Technology and innovation is driven from two Centres of Excellence located in
Naarden, Netherlands and Chicago, USA - complemented by satellite development
centres across major markets. The acquired business significantly expands
Kerry's technological base and has well established leading global positions in
bio-ingredients and pharma-ingredients - including protein hydrolysates,
emulsifiers, yeast flavourings, enzymes, hydrocolloids, cultures and
fermentation products.
Cremo Ingredients, based in Glamsbjerg, Denmark, a leading supplier of dairy
ingredients and flavourings to an extensive customer base in the savoury,
convenience and snack food sectors throughout Europe and Asia.
(b) Foodservice Businesses
Oregon Chai, a leading U.S. branded supplier of natural Chai Tea Lattes and Chai
Tea Latte mixes, concentrates and ready-to-drink products. Serving specialist
foodservice beverage chains, grocery, club and natural food store channels
throughout the U.S. and Canada, Oregon Chai is the recognised brand leader in
both natural and organic segments of the speciality Chai tea market.
Extreme Foods, a leader in developing and marketing branded ready-to-use ice
blended flavoured beverages for the U.S. foodservice industry. Serving
independent coffeehouses, national coffeehouse chains and department store
in-house cafes, Extreme Foods produces unique ice-blended fruit smoothies and
coffee frappes marketed under the JetTea and JetCafe brand names respectively.
Available in nine different flavours, JetTea Smoothies are market leading
premium quality, pre-packaged, shelf stable, fat-free, fruit based smoothies.
JetCafe is the world's only super-premium all natural ice-blended coffee frappe.
(c) Flavour Businesses
Manheimer, a leading formulator and supplier of natural flavours for the
beverage, confectionery, meat and soup industries from its state-of-the-art
facilities based in New Jersey, USA. The Manheimer Fragrances division develops
and markets innovative fragrances for application in home environmental,
personal care, household and industrial products.
Flavurence, based in Los Angeles, specialising in natural fruit flavours, a
major flavour supplier to food and beverage producers in the west coast of the
USA.
Laboratorios Krauss, based in Mexico, a supplier of sweet flavours to the food
industry in Mexico, Latin America and the Caribbean.
Fructamine, based in Mozzo, Bergamo in Northern Italy, a leading Italian
producer of naturally extracted flavours, serving European savoury, bakery and
soft drink markets.
Finance
At the end of the half year Group borrowings amounted to €1,334m, compared to
€852m at the end of the first half of 2003, notwithstanding record expenditure
of €668m on acquisitions in the period. Kerry's businesses continue to generate
a strong free cash flow which will ensure a speedy reduction in Group
indebtedness.
The ratio of debt to EBITDA increased to 2.9 times (H1 2003 : 2.3 times), while
debt to EV (Enterprise Value) increased from 26% at the end of the first half of
2003 to 29% at the end of the first half of 2004. Interest charges for the
period were €23.3m compared to €22.3m in the first half of 2003, with EBITDA to
net interest covered 12.0 times (H1 2003 : 8.6 times).
Dividend
The Board has declared an interim dividend of 4.5 cent per share, an increase of
11.1% on the 2003 interim dividend of 4.05 cent per share. The interim dividend
will be paid on 29 November 2004 to shareholders registered on the record date
29 October 2004.
Current Trading and Outlook
The Group has demonstrated a strong capability to respond to evolving consumer
trends through provision of flavour and ingredient technologies, and consumer
food and beverage offerings which meet consumer lifestyle, convenience, health
and nutritional requirements. This consistent strategy and clarity of focus in
the organisation continues to deliver good results. Furthermore through the
Group's recent acquisitions, including global flavour, food ingredients and
bio-science technologies, important platforms have been established for future
profitable growth and market development. In particular through the Kerry
Bio-Science division the Group has established an important science foundation
and significantly enlarged its food technology research capability. As part of
Kerry's global operations - with the opportunity to leverage research results
and technical development through Kerry's complementary businesses - this
science platform will deliver strong commercial applications. In terms of
nutrition and diet, Kerry Bio-Science research has already led to a deeper
understanding of satiety control and new methodologies to regulate insulin and
glucagon excretion. In addition, building on its relationship with major global
pharmaceutical companies, Kerry Bio-Science, through its hydrolysed protein
technologies, has a strong pipeline of development projects in cell tissue
culture, diagnostics and production of 'smart' drugs for targeted therapy.
All core businesses and recently acquired businesses are performing well.
Building on the good first half performance, the Group is confident of achieving
a good outcome for the full year.
Kerry Group plc
Consolidated Profit and Loss Account
for the half year ended 30 June 2004
Half year ended Half year ended Year ended
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
Notes €'000 €'000 €'000
Turnover
Continuing operations 1,882,158 1,802,092 3,693,410
Acquisitions 73,186 - -
_____________ ____________ ____________
1 1,955,344 1,802,092 3,693,410
_____________ ____________ ____________
Operating profit before goodwill amortisation and
exceptional items
Continuing operations 140,605 133,155 308,519
Acquisitions 6,167 - -
_____________ ____________ ____________
146,772 133,155 308,519
Goodwill amortisation 30,335 24,661 48,103
Exceptional restructuring costs 4 6,720 - -
_____________ ____________ ____________
Operating profit 109,717 108,494 260,416
Profit on sale of fixed assets 1,643 1,017 942
Interest payable and similar charges 23,266 22,281 37,356
_____________ ____________ ____________
Profit before taxation 88,094 87,230 224,002
Taxation 26,570 25,297 63,025
_____________ ____________ ____________
Profit after taxation and attributable to ordinary 61,524 61,933 160,977
shareholders
Dividends 8,446 7,520 23,610
_____________ ____________ ____________
Retained profit for the period 53,078 54,413 137,367
_____________ ____________ ____________
Earnings per ordinary share (cent)
- basic before goodwill amortisation and exceptional 2 50.9 46.1 112.1
items
- basic after goodwill amortisation and exceptional items 2 33.1 33.4 86.7
- fully diluted after goodwill amortisation and 2 32.9 33.3 86.4
exceptional items
Kerry Group plc
Consolidated Balance Sheet
as at 30 June 2004
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
€'000 €'000 €'000
Fixed assets
Tangible assets 979,896 843,264 844,701
Intangible assets 1,314,377 821,433 837,301
______________ _____________ _____________
2,294,273 1,664,697 1,682,002
Current assets
Stocks 530,011 427,453 383,899
Debtors 652,434 550,994 482,955
Cash at bank and in hand 50,695 32,013 56,862
______________ _____________ _____________
1,233,140 1,010,460 923,716
Creditors: Amounts falling due within one year (1,060,679) (877,751) (709,872)
______________ _____________ _____________
Net current assets 172,461 132,709 213,844
______________ _____________ _____________
Total assets less current liabilities 2,466,734 1,797,406 1,895,846
Creditors: Amounts falling due after more than one year (1,398,794) (858,223) (899,024)
Provisions for liabilities and charges (53,223) (57,197) (48,333)
______________ _____________ _____________
1,014,717 881,986 948,489
______________ _____________ _____________
Capital and reserves
Called-up equity share capital 23,307 23,211 23,234
Capital conversion reserve fund 340 340 340
Share premium account 370,377 363,574 365,229
Profit and loss account 591,730 465,266 531,149
______________ _____________ _____________
985,754 852,391 919,952
Deferred income 28,963 29,595 28,537
______________ _____________ _____________
1,014,717 881,986 948,489
______________ _____________ _____________
Kerry Group plc
Consolidated Cash Flow Statement
for the half year ended 30 June 2004
Half year ended Half year ended Year ended
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
€'000 €'000 €'000
Operating profit before goodwill amortisation and exceptional 146,772 133,155 308,519
items
Depreciation (net) 46,873 43,174 83,827
Change in working capital (374) (79,160) 9,138
Exchange translation adjustment (309) 84 (1,176)
______________ _____________ _____________
Net cash inflow from operating activities 192,962 97,253 400,308
Return on investments and servicing of finance (21,107) (21,633) (40,774)
Taxation (22,860) (13,549) (40,476)
Capital expenditure
Purchase of fixed assets (50,252) (38,670) (101,632)
Proceeds on the sale of fixed assets 2,275 1,923 7,683
Development grants received 233 236 1,194
Acquisitions and disposals
Purchase of subsidiary undertakings (668,431) (124,896) (207,376)
Proceeds on the sale of businesses - - 1,264
Deferred creditors paid (28,767) (2,027) (5,532)
Exceptional restructuring costs (1,761) (8,892) (16,575)
Consideration adjustment on previous acquisitions (895) (97) (248)
Equity dividends paid (16,041) (14,571) (22,196)
______________ _____________ _____________
Cash outflow before the use of liquid resources and financing (614,644) (124,923) (24,360)
Financing
Issue of share capital 5,221 609 2,287
Increase / (decrease) in debt due within one year 148,856 43,703 (123,860)
Increase in debt due after one year 454,400 66,040 156,211
______________ _____________ _____________
(Decrease) / increase in cash in the period (6,167) (14,571) 10,278
______________ _____________ _____________
Reconciliation of Net Cash Flow to Movement in Net Debt
for the half year ended 30 June 2004
(Decrease) / increase in cash in the period (6,167) (14,571) 10,278
Cash flow from debt financing (603,256) (109,743) (32,351)
______________ _____________ _____________
Change in net debt resulting from cash flows (609,423) (124,314) (22,073)
Exchange translation adjustment on net debt (19,315) 35,910 80,677
______________ _____________ _____________
Movement in net debt in the period (628,738) (88,404) 58,604
Net debt at beginning of period (705,200) (763,804) (763,804)
______________ _____________ _____________
Net debt at end of period (1,333,938) (852,208) (705,200)
______________ _____________ _____________
Kerry Group plc
Statement of Total Recognised Gains and Losses
for the half year ended 30 June 2004
Half year ended Half year ended Year ended
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
€'000 €'000 €'000
Profit attributable to ordinary shareholders 61,524 61,933 160,977
Exchange translation adjustment on foreign currency net 7,503 (7,159) (24,230)
investments
_____________ ____________ ____________
Total recognised gains and losses relating to the period 69,027 54,774 136,747
_____________ ____________ ____________
Reconciliation of Movements in Share Capital and Reserves
for the half year ended 30 June 2004
Capital
Share Capital Conversion Profit & Loss
and Premium Reserve Fund Account Total
€'000 €'000 €'000 €'000
At beginning of period 388,463 340 531,149 919,952
Retained profit - - 53,078 53,078
Share issue 5,221 - - 5,221
Exchange translation adjustment - - 7,503 7,503
___________ ____________ ____________ ____________
At end of period 393,684 340 591,730 985,754
___________ ____________ ____________ ____________
The Profit & Loss Account figures comprise the following:
Intangible Assets Retained Profit & Loss
Written Off Profits Account
€'000 €'000 €'000
At beginning of period (527,802) 1,058,951 531,149
Retained profit (30,335) 83,413 53,078
Exchange translation adjustment - 7,503 7,503
_____________ ____________ ____________
At end of period (558,137) 1,149,867 591,730
_____________ ____________ ____________
The exchange translation adjustment arises on the retranslation of the Group's
opening net investment in its overseas subsidiaries.
Kerry Group plc
Notes to the Interim Report
for the half year ended 30 June 2004
1. Analysis of results by region
Half year ended Half year ended Year ended
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
Operating Operating Operating
Turnover Profit Turnover Profit Turnover Profit
€'000 €'000 €'000 €'000 €'000 €'000
By geographical market of origin:
Ireland 669,992 32,191 655,641 31,640 1,331,879 69,078
Rest of Europe 693,596 52,395 621,373 47,225 1,265,001 111,516
Americas 504,451 55,274 453,499 48,904 939,104 113,441
Asia Pacific 87,305 6,912 71,579 5,386 157,426 14,484
__________ __________ __________ __________ _________ __________
1,955,344 146,772 1,802,092 133,155 3,693,410 308,519
Goodwill amortisation - (30,335) - (24,661) - (48,103)
Exceptional restructuring costs - (6,720) - - - -
__________ __________ __________ __________ __________ __________
1,955,344 109,717 1,802,092 108,494 3,693,410 260,416
__________ __________ __________ __________ __________ __________
Turnover Turnover Turnover
€'000 €'000 €'000
By destination:
Ireland 356,681 351,298 725,879
Rest of Europe 934,178 862,449 1,764,163
Americas 538,246 487,501 984,808
Asia Pacific 126,239 100,844 218,560
__________ __________ __________
1,955,344 1,802,092 3,693,410
__________ __________ __________
Turnover and operating profit as presented above, are stated net of intra Group
transactions.
2. Earnings per share
Half year ended Half year ended Year ended
30 June 2004 30 June 2003 31 Dec. 2003
Unaudited Unaudited Audited
EPS EPS EPS
cent €'000 cent €'000 cent €'000
Adjusted earnings * 50.9 94,766 46.1 85,577 112.1 208,183
Goodwill amortisation 16.3 30,335 13.3 24,661 25.9 48,103
Exceptional items (net of tax) 1.5 2,907 (0.6) (1,017) (0.5) (897)
_______ ________ _______ ________ _______ ________
Profit after taxation, goodwill amortisation 33.1 61,524 33.4 61,933 86.7 160,977
and exceptional items
Share option dilution 0.2 - 0.1 - 0.3 -
_______ ________ _______ ________ _______ ________
32.9 61,524 33.3 61,933 86.4 160,977
_______ ________ _______ ________ _______ ________
The basic weighted average number of ordinary shares in issue for the period was
186,087,228 (half year ended 30 June 2003: 185,631,612; year ended 31 December
2003: 185,707,545). The diluted weighted average number of ordinary shares in
issue for the period was 186,993,765 (half year ended 30 June 2003: 186,224,863;
year ended 31 December 2003: 186,418,117). The dilution arises in respect of
executive share options outstanding.
In addition to the basic and diluted earnings per share, an earnings per share
before goodwill amortisation and exceptional items calculation is also provided,
as it more accurately reflects the Group's underlying trading performance.
* Adjusted earnings is calculated as profit after taxation, before goodwill
amortisation and exceptional items. Adjusted earnings per shares is the
adjusted earnings divided by the weighted average number of ordinary shares.
3. Businesses acquired
The Group completed a number of acquisitions during the period at a total cost
of €674m.
The acquisition of Quest Food Ingredients from the ICI Group was completed at
the end of April 2004. The acquired business has operations in The Netherlands,
USA, Malaysia, Canada, Philippines, Ireland and the UK and also has two Centres
of Excellence driving technology and innovation in The Netherlands and USA.
Quest Food Ingredients has leading global positions in bio-ingredients and
pharma-ingredients and has well established global customer relationships across
the pharmaceutical, culinary, bakery, dairy, brewing and confectionery
industries.
In May 2004, the Group acquired Manheimer. With state-of-the-art research and
development facilities and manufacturing facilities in New Jersey, Manheimer is
a leading formulator and supplier of natural flavours for the beverage,
confectionery, meat and soup industries, while Manheimer Fragrances develops and
markets innovative fragrances for application in home-environmental, personal
care, household and industrial products. The Cremo dairy ingredients and
flavourings business was also acquired in May 2004. Based in Glamsbjerg,
Denmark, the business has state-of-the-art manufacturing and product development
facilities and has established an extensive customer base throughout Europe and
Asia within the savoury convenience and snack food industry.
The acquisitions of Flavurence, Laboratorios Krauss, Fructamine, Oregon Chai and
Extreme Foods were also completed in the period. Flavurence, based in Los
Angeles, is a major flavour supplier to food and beverage producers in the West
coast of the USA and specialises in natural fruit flavours. Laboratorios Krauss
has a strong market presence through sweet flavours particularly in the bakery
sector and is headquartered in Mexico City with flavour development facilities
based in Pachuca, Mexico. Fructamine, based in Bergamo in Northern Italy, is a
leading Italian producer of naturally extracted flavours and has a well
established position across European savoury, bakery and soft drinks markets.
Oregon Chai, a leading US-branded supplier of natural Chai Tea Lattes and Chai
Tea Latte mixes, concentrates and ready-to-drink products based in Oregon and
Extreme Foods, a developer and marketer of blended flavour beverages based in
Nevada, hold leading positions in the fast-growing niches of the US-branded
beverage foodservice sector.
4. Exceptional restructuring costs
The exceptional restructuring costs in the period relate to the rationalisation
of new and existing businesses arising from the integration of Quest Food
Ingredients and other acquisitions made in 2004 and 2003.
5. Accounting policies
These accounts have been prepared using the same accounting policies detailed in
the 2003 annual financial statements.
6. Interim accounts
These accounts are not full accounts and except where indicated are unaudited.
Full accounts to 31 December 2003, which received an unqualified audit report,
have been filed with the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange