Preliminary Statement of Results 2019

RNS Number : 2755D

Kerry Group PLC

18 February 2020

 

18 February 2020

Preliminary Statement of Results

for the year ended 31 December 2019

Kerry Group, the global taste & nutrition and consumer foods group, reports business performance for the year ended 31 December 2019.

 HIGHLIGHTS

·    Group revenue of €7.2 billion reflecting 9.6% reported growth

-    Taste & Nutrition 4.0% volume growth

-    Consumer Foods 2.2% volume reduction (0.9% growth excluding contract exit)

·    Group trading profit of €903m reflecting 12.1% reported growth

·    Group trading margin +30bps to 12.5%

-    Taste & Nutrition trading margin of 15.3%

-    Consumer Foods trading margin of 7.6%

·    Adjusted EPS up 8.3% on a constant currency basis to 393.7 cent (11.4% reported growth)

·    Basic EPS of 320.4 cent (2018: 305.9 cent)

·    Final dividend per share of 55.1 cent (total 2019 dividend up 12% to 78.6 cent)

·    Free Cash Flow of €515m (2018: €447m)

Edmond Scanlon - Chief Executive Officer

"We are pleased with the business performance and the strategic development of the Group in 2019. Taste & Nutrition delivered good volume growth, particularly against the backdrop of softer market volumes in some developed markets. We also enhanced our trading profit margin and achieved growth in adjusted earnings per share of 8.3% in constant currency.

Significant progress was made right across our strategic growth priorities of taste, nutrition, foodservice and developing markets. We successfully integrated a number of strategic acquisitions, expanded our strategic footprint in high growth developing markets, while further enhancing our industry-leading global integrated solutions portfolio."

Contact Information

Media
Catherine Keogh	VP Corporate Affairs & Communications	[phone]	[e-mail]
Investor Relations
Marguerite Larkin	Chief Financial Officer	[phone]	[e-mail]
William Lynch	Head of Investor Relations	[phone]	[e-mail]
Website
www.kerrygroup.com

PRELIMINARY STATEMENT OF RESULTS

For the year ended 31 December 2019

Group Performance

Strong growth was achieved in the year, driven by good volume growth in Taste & Nutrition and the contribution from strategic acquisitions. Group reported revenue increased by 9.6% to €7.2 billion, reflecting volume growth of 2.8%, flat overall pricing, favourable translation currency impact of 2.1% and contribution from business acquisitions of 4.7%. Taste & Nutrition achieved good volume growth in the Americas, a solid performance in Europe and continued strong growth in APMEA. Consumer Foods delivered a solid underlying performance versus the market, offset by the impact of the ready meals contract exit previously announced.

Group trading profit increased by 12.1% (+9.5% in constant currency), reflecting good growth and the contribution from business acquisitions. Group trading margin increased by 30bps, reflecting portfolio enhancement, operating leverage, efficiencies and acquisitions, partially offset by Brexit risk management costs, investments for growth and net investment on the KerryExcel programme.

Constant currency adjusted earnings per share increased by 8.3% to 393.7 cent (2018 currency adjusted: 363.5 cent). Basic earnings per share increased by 4.7% to 320.4 cent (2018: 305.9 cent). The Board recommends a final dividend of 55.1 cent per share, an increase of 12.0% on the final 2018 dividend. Together with the interim dividend of 23.5 cent per share, this brings the total dividend for the year to 78.6 cent, an increase of 12% on 2018.

Kerry's industry-leading research and development expenditure increased to €291m (2018: €275m) due to additional investment in Taste & Nutrition. Net capital expenditure amounted to €315m (2018: €286m) as the Group continued to invest in its strategic priorities for growth, particularly across taste, nutrition and developing markets. The Group achieved free cash flow of €515m reflecting cash conversion of 74% in the year (2018: €447m / 72%).

The Marketplace

The food and beverage industry continues to evolve at pace, with a heightened focus on sustainability as consumers are demanding more, which is challenging traditional business models right along the end-to-end supply chain.

Consumers want great taste, including authentic, natural and local taste experiences. They want enhanced nutrition for better health and overall wellbeing, and they expect more convenient and affordable options to match today's on-the-go and digital lifestyles. Consumers are demanding that these experiences are produced and delivered without compromise, in ways that are good for people and the planet. Products are increasingly required to reflect consumers' values on sustainability and provide additional fulfilment by creating positive outcomes beyond the consumption occasion. Our Purpose to Inspire Food and Nourish Life helps define the key role Kerry plays in addressing these needs. As our customers continue to meet these rapidly changing consumer demands and increase speed to market, Kerry is best positioned as the co-creation partner of choice with our unique business model, broad taste and nutrition technology portfolio, and industry-leading integrated solutions capability.

Taste & Nutrition

Kerry is the global leader in the development of taste and nutrition solutions for the food, beverage and pharmaceutical markets. Our broad technology foundation, customer-centric business model, and industry-leading integrated solutions capability make Kerry the co-creation partner of choice.

	2019	Growth
Revenue	€6,018m	4.0%¹
Trading margin	15.3%	+20bps
		¹ volume growth

·    Volume growth driven by Beverage and Food End Use Markets (EUMs) - led by Meat and Snacks

·    Pricing of +0.1% - reflecting broadly neutral raw material costs in the period

·    Trading margin +20bps - key drivers were enhanced product mix, operating leverage and efficiencies, partially offset by investments for growth and Brexit risk management costs

Reported revenue increased by 12.5%, reflecting volume growth of 4.0%, pricing of 0.1%, favourable translation currency impact of 2.6% and contribution from business acquisitions of 5.8%. This performance included the recent acquisitions of Fleischmann's (FVC), Southeastern Mills (SEM) and Ariake U.S.A. Inc. Trading profit grew by 14.1% to €918.5m, reflecting a 20bps improvement in trading margin to 15.3%.

Developing markets delivered strong volume growth of 10.0%, with APMEA developing markets being the main driver. Key drivers of growth were localisation, regulatory changes, food safety, convenience and home delivery, which drove increased new product development. Foodservice performed well, with volume growth of 5.5% despite some softness in the North American market.

Kerry's nutrition and wellbeing technology portfolio had a strong performance, as Kerry further evolved its position as the industry-leading nutrition and wellness partner across Beverage and Food EUMs, particularly in Meat and Snacks. Demand for great tasting products with improved nutritional attributes continued to accelerate across the globe. Our unique taste and nutrition positioning, food science expertise and deep understanding of the intersection of taste and nutrition were key drivers of increased innovation across a wide range of applications. This led to good sales growth in solutions incorporating Kerry's fermented ingredients, broad speciality protein portfolio, probiotics, TasteSense™, botanicals and natural extracts.

Americas Region

·    2.7% volume growth

·    Solid performance in North America led by Food EUMs of Meat and Snacks

·    LATAM performed well

Reported revenue in the region increased by 16.5% to €3,198m, reflecting 2.7% volume growth, 0.2% increase in net pricing, favourable translation currency impact of 4.4% and contribution from business acquisitions of 9.2%. North America delivered good volume growth against a backdrop of softer market volume growth rates.

Within the Food EUMs, Kerry's Meat sub-EUM delivered strong growth, with plant-based offerings in particular delivering an excellent performance, as customers continue to seek innovative solutions to meet the consumer demand for cleaner label and next generation offerings. This performance was complemented by the acquisition of the coatings and seasonings business of Southeastern Mills (SEM) which performed very well. The Snacks sub-EUM delivered good growth, as Kerry's integrated solutions capability was key to a number of successful customer launches addressing consumer demands for new world taste and healthier snacking experiences. The Cereal & Sweet sub-EUM remained challenged and the Meals sub-EUM was impacted by churn within the category. The Dairy sub-EUM benefitted from the ongoing evolution of the ice cream category towards healthy indulgence and added wellness benefits.

While Beverage EUMs were impacted by subdued market volume growth in Foodservice, there were a number of plant-based beverage launches and innovations utilising Ganeden® probiotics, contributing to a good finish to the year.

LATAM performed well with good growth in Brazil and Mexico, and a solid performance in Central America. The Beverage EUM delivered strong growth across the region, with particularly good growth in the ice cream category in Brazil and the Snacks sub-EUM in Mexico.

The global Pharma EUMs had a good performance, led by strong growth in excipients in North America.

Good progress was made on the integration of Fleischmann's (FVC) business and Ariake U.S.A. Inc. and both performed well. These were complemented by the acquisitions of Isoage Technologies, Biosecur Lab and Diana Food (Georgia, USA), further enhancing Kerry's leading authentic taste and clean label technology portfolio, which the Group plans to leverage in meeting the increasing demand across a broader range of applications.

Europe Region

·    2.0% volume growth

·    Good performance in Beverage and Food EUMs of Meat and Snacks

·    Foodservice performed well across the region

Reported revenue in the region increased by 2.4% to €1,456m, reflecting 2.0% volume growth, 0.1% increase in net pricing, favourable translation currency impact of 0.1% and contribution from business acquisitions of 0.2%. This represented a good overall performance versus the marketplace, with Kerry's performance in the Foodservice channel contributing strongly to growth in the region.

Kerry's Beverage EUMs achieved strong broad-based growth across a number of sub-categories from low/non-alcoholic beverage, tea and coffee to plant-based offerings. There was a strong performance within Foodservice, as customers enhanced their beverage offerings across their menus, with a number of 'better for you' and seasonal product launches incorporating Kerry's botanicals, natural extracts and sugar reduction technologies.

Within the Food EUMs, Kerry's Meat sub-EUM performed very well, with its industry-leading portfolio deployed to create solutions which met a variety of customer and consumer needs. Strong growth and very good business development were achieved in plant-based meat alternatives, supported by the launch of the Radicle™ portfolio. The Snacks sub-EUM performed well, with a number of new authentic world taste launches and healthy snack products incorporating Kerry's Ganeden® probiotics. The Confectionery sub-EUM achieved good growth through a number of local novel taste LTOs across the region. The Dairy sub-EUM was impacted by softer demand in the ice cream category during the period. International dairy markets were relatively stable in the period, reflecting less volatility in global supply/demand dynamics.

Russia and Eastern Europe delivered good growth, as we continue to develop our presence and offering across the region. The Group also completed the acquisition of Pevesa Biotech - a specialist plant protein isolates and hydrolysates business based in Spain and serving key nutrition applications.

APMEA Region

·    10.3% volume growth

·    Strong growth right across all Food and Beverage EUMs

·    Good progress in strategic expansion and business development

Reported revenue in the region increased by 16.2% to €1,285m, reflecting 10.3% volume growth, 0.1% increase in net pricing, 0.1% favourable transaction currency impact, 0.6% favourable translation currency impact and contribution from business acquisitions of 5.1%. Key to the strong growth in the region was the further deployment of Kerry's business model with customers across existing and new markets. This approach was key in supporting our customers as they meet evolving local consumer demands.

Within Food EUMs, Kerry's Meat sub-EUM delivered excellent growth with both global and regional customers, particularly in China and South East Asia, with a range of innovations meeting key consumer preferences for premium local authentic taste and a superior home delivery experience. The Snacks sub-EUM delivered strong growth, particularly with savoury taste innovations that meet local consumer preferences.

Kerry's Beverage EUMs delivered strong growth underpinned by a number of successful launches in refreshing beverages with enhanced wellness and functional benefits. The branded DaVinci range enjoyed strong growth across the year.

We continued to make good progress in expanding our capacity and deploying our technology capabilities in the region. Our strategic expansion in China progressed well, as we upgraded the recently acquired SIAS facility to serve our customers in the Greater Beijing region, and continued the expansion programme at our Nantong facility. In June, the Group opened a new facility in Tumkur, India, which will serve our rapidly expanding South West Asia market. Further to the acquisition of AATCO at the end of 2018, the Group invested in expanding its capabilities in the Middle East region.

Consumer Foods

Kerry Foods is an industry-leading manufacturer of chilled food products primarily to the Irish and UK markets.

	2019	Growth
Revenue	€1,307m	-2.2% (+0.9%)¹
Trading margin	7.6%	+10bps
	¹ volume growth (excluding contract exit)

·    Overall volume performance impacted by ready meals contract exit

·    Pricing of -0.5% reflective of lower input costs and market pricing

·    Trading margin - strong efficiencies partially offset by pricing and Brexit risk management costs

Reported revenue decreased by 2.4% to €1,307m, reflecting a 2.2% reduction in volumes, a 0.5% decrease in net pricing, and a favourable translation currency impact of 0.3%. Excluding the impact of the previously reported ready meals contract exit, Kerry delivered a robust performance in the context of a subdued UK marketplace, where lower consumer confidence impacted overall market volumes. The divisional trading margin increased by 10bps to 7.6%. Trading profit decreased by 1.2% to €98.9m in the year. The realignment programme was completed during the year and delivered to plan.

The Richmond chilled sausage range delivered a solid performance, led by growth in chicken sausages and the new plant-based sausage which was launched at the end of September, along with a range of meat-free products under the Naked Glory brand. The Denny brand in Ireland performed well. A number of business wins supported our overall performance within spreads.

Chilled meals continued to be impacted by reduced promotional activity, while frozen meals had a good performance across the range. As previously announced, production was ceased in the ready meals facility in Burton in September and the site was sold prior to the year end.

The Cheestrings range had strong growth supported by a number of innovations. Fridge Raiders also extended its snacking range to reach a broader consumer market.

Financial Review

		Reported % change	2019 €'m	2018 €'m
Revenue		9.6%	7,241.3	6,607.6
Trading profit		12.1%	902.7	805.6
Trading margin			12.5%	12.2%
Computer software amortisation			(26.5)	(25.0)
Finance costs (net)			(81.6)	(67.0)
Adjusted earnings before taxation			794.6	713.6
Income taxes (excluding non-trading items)			(98.6)	(89.2)
Adjusted earnings after taxation		11.5%	696.0	624.4
Brand related intangible asset amortisation			(37.8)	(28.8)
Non-trading items (net of related tax)			(91.7)	(55.1)
Profit after taxation			566.5	540.5
			EPS Cent	EPS Cent
Basic EPS		4.7%	320.4	305.9
Brand related intangible asset amortisation			21.4	16.3
Non-trading items (net of related tax)			51.9	31.2
Adjusted* EPS		11.4%	393.7	353.4
Impact of retranslating prior year adjusted earnings per share at current year average exchange rates			-	10.1
Adjusted* EPS in constant currency		8.3%	393.7	363.5

* Before brand related intangible asset amortisation and non-trading items (net of related tax).

Revenue

Group reported revenue increased by 9.6% to €7.2 billion (2018: €6.6 billion), reflecting volume growth of 2.8%, flat overall pricing impact, favourable translation currency impact of 2.1% and contribution from business acquisitions of 4.7%.

2018: Group reported revenue +3.1%, volume growth +3.5%, pricing (0.5%), transaction currency (0.1%), translation currency (3.4%) and contribution from business acquisitions of +3.6%.

Taste & Nutrition reported revenue increased by 12.5% to €6.0 billion (2018: €5.4 billion), reflecting volume growth of 4.0%, pricing increase of 0.1% related to raw material movements, translation currency impact of 2.6% and contribution from business acquisitions of 5.8%.

2018: Taste & Nutrition reported revenue +3.7%, volume growth +4.1%, pricing (0.5%), transaction currency (0.1%), translation currency (4.0%), acquisitions +4.2%.

Consumer Foods reported revenue decreased by 2.4% to €1.31 billion (2018: €1.34 billion), reflecting volume decline of 2.2%, pricing decrease of 0.5% related to raw material pricing pass-through and market pricing, and positive translation currency impact of 0.3%. The volume decrease reflects the exit of a ready meals contract during the year - excluding the impact of this contract exit, volume would have increased by 0.9%.

2018: Consumer Foods reported revenue +0.6%, volume growth +1.1%, pricing (0.4%), transaction currency (0.3%), translation currency (0.6%), acquisitions of +0.8%.

Trading Profit & Margin

Group trading profit increased by 12.1% to €902.7m (2018: €805.6m). Group trading margin increased by 30bps to 12.5% driven by portfolio enhancement, operating leverage, efficiencies and the impact of acquisitions, partially offset by investments for growth, Brexit risk management costs and increased Kerryconnect investment due to the commencement of the rollout across our sites in North America.

Trading margin in Taste & Nutrition increased by 20bps to 15.3% (2018: 15.1%), driven by portfolio enhancement, operating leverage and efficiencies, partially offset by investments for growth, the impact of acquisitions and Brexit risk management costs.

Trading margin in Consumer Foods increased by 10bps to 7.6% (2018: 7.5%), driven by efficiencies from the Realignment Programme which delivered to plan, partially offset by a decrease in operating leverage as a result of the contract exit, Brexit risk management costs and net price in a challenging market.

The trading profit reflects an EBITDA of €1.1 billion (2018: €0.9 billion) and an EBITDA margin of 15.1% (2018: 14.2%).

Finance Costs (net)

Finance costs (net) for the year increased by €14.6m to €81.6m (2018: €67.0m) primarily due to acquisition activity and the impact of IFRS 16 'Leases'. The Group's average interest rate for the year was 3.7% (2018: 3.8%).

Impact of IFRS 16 'Leases'

In January 2019, the Group adopted the new accounting standard IFRS 16 'Leases', which resulted in a €3.4m reduction in operating expenses and an increase of €4.6m in finance costs on transition.

Taxation

The tax charge for the year before non-trading items was €98.6m (2018: €89.2m) representing an effective tax rate of 13.0% (2018: 13.0%) and is reflective of the geographical mix of earnings.

Acquisitions

During the year, the Group completed eleven acquisitions at a total consideration of €561.7m. These investments were aligned to the Group's strategic priorities for growth, bringing additional taste and nutritional technologies, expanding its presence in developing markets and adding to its foodservice offering.

Non-Trading Items

During the year, the Group incurred a non-trading item charge of €91.7m (2018: €55.1m) net of tax. The charge in the year related to costs associated with the integration of recent acquisitions, a material transaction process in our sector that we participated in, and the Consumer Foods Realignment Programme. The prior year non-trading charge related primarily to costs associated with the integration of acquisitions and the completion of the Brexit Currency Mitigation Programme.

Adjusted EPS in Constant Currency

Adjusted EPS in constant currency increased by 8.3% in the year (2018: +8.6%). This was achieved through volume growth ahead of our markets, good margin progression, together with the contribution from the acquired businesses.

Basic EPS

Basic EPS increased by 4.7% to 320.4 cent (2018: 305.9 cent). Basic EPS is calculated after accounting for brand related intangible asset amortisation of 21.4 cent (2018: 16.3 cent) and a non-trading item charge of 51.9 cent net of related tax (2018: 31.2 cent).

Return on Average Capital Employed

The Group achieved ROACE of 11.8% (2018: 12.0%) reflective of strategic acquisitions completed and investments made in the year.

Exchange Rates

Group results are impacted by year-on-year fluctuations in exchange rates versus the euro. The average rates below are the principal rates used for the translation of results. The closing rates below are used to translate assets and liabilities at year end.

	Average Rates		Closing Rates
	2019	2018	2019	2018
Australian Dollar	1.61	1.58	1.60	1.62
Brazilian Real	4.44	4.34	4.53	4.44
British Pound Sterling	0.88	0.89	0.85	0.90
Chinese Yuan Renminbi	7.73	7.82	7.82	7.85
Malaysian Ringgit	4.65	4.77	4.60	4.74
Mexican Peso	21.59	22.72	21.19	22.50
Russian Ruble	72.28	74.05	69.34	79.46
South African Rand	16.20	15.89	15.77	16.47
US Dollar	1.12	1.18	1.12	1.14

 

Balance Sheet

A summary balance sheet as at 31 December is provided below:

	2019 €'m	2018 €'m
Property, plant & equipment	2,062.9	1,767.0
Intangible assets	4,589.7	4,095.6
Other non-current assets	179.5	189.7
Current assets	2,672.2	2,271.4
Total assets	9,504.3	8,323.7
Current liabilities	2,014.0	1,650.8
Non-current liabilities	2,928.1	2,638.5
Total liabilities	4,942.1	4,289.3
Net assets	4,562.2	4,034.4
Shareholders' equity	4,562.2	4,034.4

 

Property, Plant & Equipment

Property, plant and equipment increased by €295.9m to €2,062.9m (2018: €1,767.0m) primarily due to capital expenditure in the year and the impact of the change in the lease accounting policy, partially offset by the annual depreciation charge. Net capital expenditure in the year amounted to €315.3m (2018: €285.5m). The level of capital investment supports the Group's growth initiatives and included upgrading the recently acquired SIAS facility in the Greater Beijing region, continuing the expansion programme at the Nantong facility in China and opening a new facility in Tumkur, India to serve the rapidly expanding South West Asia market and expanding the Group's capabilities in the Middle East region.

Intangible Assets

Intangible assets increased by €494.1m to €4,589.7m (2018: €4,095.6m) due to additions of €437.7m relating to the eleven acquisitions completed during the year, the increased investment in Kerryconnect related software and positive foreign exchange movements, partially offset by the annual amortisation charge.

Current Assets

Current assets increased by €400.8m to €2,672.2m (2018: €2,271.4m), primarily due to an increase in cash on hand at 31 December 2019 and trade receivables, other receivables and inventories from the businesses acquired during the year.

Retirement Benefits

At the balance sheet date, the total net deficit for all defined benefit schemes (after deferred tax) was €8.6m (2018: €44.0m). The decrease in the net deficit is primarily driven by a strong return on assets and a reduction in the deficit from the liability management programme offsetting unfavourable movements in discount rates. The net deficit expressed as a percentage of market capitalisation at 31 December 2019 was 0.04% (2018: 0.3%).

Free Cash Flow

Free cash flow is an important indicator of the strength and quality of the business and of the availability of funds to the Group for reinvestment or for return to the shareholder. In 2019, the Group achieved free cash flow of €514.6m (2018: €446.5m).

Free Cash Flow	2019 €'m	2018 €'m
Trading profit	902.7	805.6
Depreciation (net)	191.4	134.1
Movement in average working capital	(89.5)	(57.1)
Pension contributions paid less pension expense	(26.7)	(40.0)
Cash flow from operations	977.9	842.6
Finance costs paid (net)	(80.8)	(64.5)
Income taxes paid	(67.2)	(46.1)
Purchase of non-current assets	(315.3)	(285.5)
Free cash flow	514.6	446.5
Cash conversion¹	74%	72%

¹ Cash conversion is free cash flow expressed as a percentage of adjusted earnings after tax.

Net Debt

Net debt at the end of the year was €1,862.8m (2018: €1,623.5m) reflecting acquisitions completed and dividends paid, partially offset by cash flow generated.

Financing

In June 2019, the Group renewed its €1.1 billion revolving credit facility, extending the maturity date to June 2024. The facility contains two 1-year extension options, exercisable on the 1^st and 2^nd anniversaries of the facility and which, if exercised, would extend the maturity date of the facility to June 2026. In line with the Group's commitment to environmental and social matters, the revolving credit facility carries a price adjustment mechanism, which is linked to the Group meeting or exceeding certain carbon, water and waste efficiency metrics. This facility is not subject to a financial covenant.

In September 2019, the Group issued 10 year €750m euro bond notes. The bonds are listed on Euronext Dublin and are rated by S&P and Moody's.

Key Financial Covenants

The Group's balance sheet is in a strong position with a Net debt to EBITDA* ratio of 1.8 times. At this ratio the Group has significant liquidity headroom to support future growth plans. A small element of the Group's finance facilities is subject to financial covenants. Group Treasury monitors compliance with all financial covenants and at 31 December the key covenants were as follows:

	Covenant	2019 Times	2018 Times
Net debt: EBITDA*	Maximum 3.5	1.8	1.7
EBITDA: Net interest	Minimum 4.75	13.2	14.7
* Calculated on a pro-forma basis.

Share Price and Market Capitalisation

The Company's shares traded in the range €86.50 to €117.90 during the year. The share price at 31 December 2019 was €111.10 (2018: €86.50) giving a market capitalisation of €19.6 billion (2018: €15.2 billion). Total Shareholder Return for 2019 was 29.3% (2018: (6.8%)).

Annual Report and Annual General Meeting

The Group's Annual Report will be published at the end of March and the Annual General Meeting will be held in Tralee on 30 April 2020.

Future Prospects

Our markets and the end-to-end supply chain are experiencing unprecedented disruption, as consumers are demanding more than ever before, and traditional business models are being challenged as a result. What consumers want from food and beverage offerings is changing at pace. They want great tasting products that nourish their bodies, enhance their lives and are sustainable for the planet. New entrants and challenger brands have added significant fragmentation to the marketplace. Key for customers to win in this fast-moving environment is the ability to bring more products to market and to do so quicker. This changing marketplace is creating a significant opportunity for enterprises that can deliver on these new requirements. Kerry's unique business model, broad taste and nutrition technology portfolio, and industry-leading integrated solutions capability positions it as the co-creation partner of choice for the food, beverage and pharma industries.

Taste & Nutrition has strong growth prospects, as we continue to further deploy our industry-leading business model in supporting our customers. Consumer Foods continues to selectively focus on growth opportunities.

The Group will continue to invest for growth aligned to the changing market landscape and pursue M&A opportunities aligned to our strategic growth priorities.

Over the past number of weeks, we have been working with our team in China to manage the ongoing developments relating to the coronavirus. Our first priority remains the safety of our people and their families. Our team in China are taking all appropriate protective measures in our facilities and we are working with the Chinese authorities, our customers and other stakeholders to manage through the situation. We have included in our full year guidance the estimated first quarter impact on our China business.

The Group has a strong innovation pipeline and remains confident in its ability to continue to outperform its markets. We have reflected our estimate of the impact in the first quarter from the developments in China and expect to achieve adjusted earnings per share growth in 2020 of 5% to 9% on a constant currency basis.

Disclaimer: Forward Looking Statements

This Announcement contains forward looking statements which reflect management expectations based on currently available data. However actual results may differ materially from those expressed or implied by these forward looking statements. These forward looking statements speak only as of the date they were made and the Company undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise.

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

Consolidated Income Statement
for the financial year ended 31 December 2019
		Before	Non-		Before	Non-
	Non-Trading		Trading	Non-Trading		Trading
		Items	Items	Total	Items	Items	Total
		2019	2019	2019	2018	2018	2018
	Notes	€'m	€'m	€'m	€'m	€'m	€'m
Continuing operations
Revenue	2	7,241.3	-	7,241.3	6,607.6	-	6,607.6
		_______	_______	_______	_______	_______	_______
Trading profit	2	902.7	-	902.7	805.6	-	805.6
Intangible asset amortisation		(64.3)	-	(64.3)	(53.8)	-	(53.8)
Non-trading items	3	-	(110.9)	(110.9)	-	(66.9)	(66.9)
		_______	_______	_______	_______	_______	_______
Operating profit		838.4	(110.9)	727.5	751.8	(66.9)	684.9
Finance income		0.3	-	0.3	0.5	-	0.5
Finance costs		(81.9)	-	(81.9)	(67.5)	-	(67.5)
		_______	_______	_______	_______	_______	_______
Profit before taxation		756.8	(110.9)	645.9	684.8	(66.9)	617.9
Income taxes		(98.6)	19.2	(79.4)	(89.2)	11.8	(77.4)
		_______	_______	_______	_______	_______	_______
Profit after taxation attributable to owners of the parent		658.2	(91.7)	566.5	595.6	(55.1)	540.5
		_______	_______	_______	_______	_______	_______
Earnings per A ordinary share				Cent			Cent
- basic	4			320.4			305.9
- diluted	4			319.9			305.7
				_______			_______

Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2019
					2019	2018
					€'m	€'m
Profit after taxation attributable to owners of the parent					566.5	540.5
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges					7.2	2.2
Cash flow hedges - reclassified to profit or loss from equity					0.1	(2.5)
Net change in cost of hedging					0.6	(2.0)
Deferred tax effect of fair value movements on cash flow hedges					(1.4)	(0.2)
Exchange difference on translation of foreign operations					67.0	(0.9)
Fair value movement on revaluation of financial assets held at					(1.0)	(1.9)
fair value through other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation					14.0	34.5
Deferred tax effect of re-measurement on retirement benefits obligation					(2.0)	(6.3)
					_______	_______
Net income recognised directly in total other comprehensive income					84.5	22.9
					_______	_______
Total comprehensive income					651.0	563.4
					_______	_______

Consolidated Balance Sheet					31 December	31 December
as at 31 December 2019					2019	2018
					€'m	€'m
Non-current assets
Property, plant and equipment					2,062.9	1,767.0
Intangible assets					4,589.7	4,095.6
Financial asset investments					41.7	35.3
Investment in associates and joint ventures					16.2	15.6
Other non-current financial instruments					82.7	101.7
Deferred tax assets					38.9	37.1
					_______	_______
					6,832.1	6,052.3
					_______	_______
Current assets
Inventories					993.3	877.8
Trade and other receivables					1,066.3	967.8
Cash at bank and in hand					554.9	413.8
Other current financial instruments					57.7	10.0
Assets classified as held for sale					-	2.0
					_______	_______
					2,672.2	2,271.4
					_______	_______
Total assets					9,504.3	8,323.7
					_______	_______
Current liabilities
Trade and other payables					1,643.0	1,482.1
Borrowings and overdrafts					190.8	13.8
Other current financial instruments					12.1	11.0
Tax liabilities					140.7	122.4
Provisions					25.2	20.3
Deferred income					2.2	1.2
					_______	_______
					2,014.0	1,650.8
					_______	_______
Non-current liabilities
Borrowings					2,355.3	2,119.7
Other non-current financial instruments					-	5.6
Retirement benefits obligation					11.9	53.2
Other non-current liabilities					167.9	82.6
Deferred tax liabilities					338.9	324.1
Provisions					33.2	32.1
Deferred income					20.9	21.2
					_______	_______
					2,928.1	2,638.5
					_______	_______
Total liabilities					4,942.1	4,289.3
					_______	_______
Net assets					4,562.2	4,034.4
					_______	_______
Issued capital and reserves attributable to owners of the parent
Share capital					22.1	22.0
Share premium					398.7	398.7
Other reserves					(119.0)	(207.3)
Retained earnings					4,260.4	3,821.0
					_______	_______
Shareholders' equity					4,562.2	4,034.4
					_______	_______

Consolidated Statement of Changes in Equity for the financial year ended 31 December 2019
				Note		Share Capital €'m	Share Premium €'m	Other Reserves €'m		Retained Earnings €'m	Total €'m
Group:
At 1 January 2018						22.0	398.7	(214.4)		3,366.9	3,573.2
Profit after tax attributable to owners of the parent					-		-	-	540.5		540.5
Other comprehensive (expense)/income						-	-	(5.1)		28.0	22.9
						___	_______	_______		_______	______
Total comprehensive (expense)/income						-	-	(5.1)		568.5	563.4
Dividends paid				5		-	-	-		(114.4)	(114.4)
Share-based payment expense						-	-	12.2		-	12.2
						___	_______	_______		_______	______
At 31 December 2018						22.0	398.7	(207.3)		3,821.0	4,034.4
Adjustment on initial application of IFRS 16 'Leases'						-	-	-		(9.4)	(9.4)
						___	_______	_______		_______	______
Adjusted balances at 1 January 2019						22.0	398.7	(207.3)		3,811.6	4,025.0
Profit after tax attributable to owners of the parent					-		-	-	566.5		566.5
Other comprehensive income						-	-	73.9		10.6	84.5
						___	_______	_______		_______	______
Total comprehensive income						-	-	73.9		577.1	651.0
Shares issued during the financial year						0.1	-	-		-	0.1
Dividends paid				5		-	-	-		(128.3)	(128.3)
Share-based payment expense						-	-	14.4		-	14.4
						___	_______	_______		_______	______
At 31 December 2019						22.1	398.7	(119.0)		4,260.4	4,562.2
						___	_______	_______		_______	______

Other Reserves comprise the following:
								Share-
				Capital		Other		Based				Cost of
			FVOCI	Redemption		Undenominated		Payment		Translation	Hedging	Hedging
			Reserve	Reserve		Capital		Reserve		Reserve	Reserve	Reserve	Total
			€'m	€'m		€'m		€'m		€'m	€'m	€'m	€'m
At 1 January 2018			3.5	1.7		0.3		51.1		(255.8)	(15.2)	-	(214.4)
Other comprehensive expense			(1.9)	-		-		-		(0.9)	(0.3)	(2.0)	(5.1)
Share-based payment expense			-	-		-		12.2		-	-	-	12.2
			_______	_______		_______		_______		_______	_______	_______	______
At 31 December 2018			1.6	1.7		0.3		63.3		(256.7)	(15.5)	(2.0)	(207.3)
Other comprehensive (expense)/income			(1.0)	-		-		-		67.0	7.3	0.6	73.9
Share-based payment expense			-	-		-		14.4		-	-	-	14.4
			_______	_______		_______		_______		_______	_______	_______	______
At 31 December 2019			0.6	1.7		0.3		77.7		(189.7)	(8.2)	(1.4)	(119.0)
			_______	_______		_______		_______		_______	_______	_______	______

Consolidated Statement of Cash Flows
for the financial year ended 31 December 2019											2019		2018
									Notes			€'m	€'m
Operating activities
Trading profit												902.7	805.6
Adjustments for:
Depreciation (net)												191.4	134.1
Change in working capital												(63.9)	(78.8)
Pension contributions paid less pension expense											(26.7)		(40.0)
Payments on non-trading items											(89.1)		(59.8)
Exchange translation adjustment												(2.5)	0.5
												_______	______
Cash generated from operations												911.9	761.6
Income taxes paid												(67.2)	(46.1)
Finance income received												0.5	0.5
Finance costs paid												(81.3)	(65.0)
												_______	______
Net cash from operating activities												763.9	651.0
												_______	______
Investing activities
Purchase of assets (net)												(315.6)	(296.1)
Proceeds from the sale of assets												32.8	10.6
Capital grants received												3.0	-
Purchase of businesses (net of cash acquired)									6		(562.7)		(476.8)
Payments relating to previous acquisitions											(5.3)		(11.9)
Purchase of share in associates and joint ventures												-	(14.5)
Income received from associates and joint ventures												-	-
												_______	______
Net cash used in investing activities												(847.8)	(788.7)
												_______	______
Financing activities
Dividends paid									5			(128.3)	(114.4)
Payment of lease liabilities												(35.5)	-
Issue of share capital												0.1	-
Repayment of borrowings												(564.4)	(2.5)
Increase in borrowings												950.0	352.7
												_______	______
Net cash movement due to financing activities											221.9		235.8
												_______	______
Net increase in cash and cash equivalents											138.0		98.1
Cash and cash equivalents at beginning of the financial year											403.9		305.6
Exchange translation adjustment on cash and cash equivalents											7.8		0.2
												_______	______
Cash and cash equivalents at end of the financial year											549.7		403.9
												_______	______
Reconciliation of Net Cash Flow to Movement in Net Debt
Net increase in cash and cash equivalents											138.0		98.1
Cash flow from debt financing												(385.6)	(350.2)
												_______	______
Changes in net debt resulting from cash flows											(247.6)		(252.1)
Fair value movement on interest rate swaps (net of adjustment to borrowings)											12.5		(2.6)
Exchange translation adjustment on net debt												(4.2)	(27.1)
												_______	______
Movement in net debt in the financial year												(239.3)	(281.8)
Net debt at beginning of the financial year												(1,623.5)	(1,341.7)
												_______	______
Net debt at end of the financial year												(1,862.8)	(1,623.5)
												_______	______

Notes to the Financial Statements

for the financial year ended 31 December 2019

1. Accounting policies

The financial information included within this statement has been extracted from the audited financial statements of Kerry Group plc for the financial year ended 31 December 2019. The auditors' report was unqualified. The financial information set out in this document does not constitute full statutory financial statements for the financial years ended 31 December 2019 or 2018 but is derived from same. The consolidated financial statements of Kerry Group plc have been prepared in accordance with International Financial Reporting Standards ('IFRS'), International Financial Reporting Interpretations Committee ('IFRIC') interpretations and those parts of the Companies Act 2014 applicable to companies reporting under IFRS. The financial statements comprise of the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the notes to the financial statements. The Group's financial statements have also been prepared in accordance with IFRS adopted by the European Union ('EU') which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'). The Group's financial statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the EU differs in certain respects from IFRS issued by the IASB. References to IFRS hereafter refer to IFRS adopted by the EU.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) and financial asset investments which are held at fair value. Assets classified as held for sale are stated at the lower of carrying value and fair value less costs to sell. The investments in associates and joint ventures are accounted for using the equity method.

The Group's accounting policies will be included in the 2019 Annual Report & Accounts, which will be published at the end of March, and are consistent with those described in the 2018 Annual Report & Accounts, except for changes in respect of IFRS 16 'Leases' outlined below.

Leasing

At the commencement date of the lease, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which consists of the initial measurement of the lease liability, any initial direct costs incurred by the Group in setting up/entering into the lease, an estimate of any costs to dismantle and remove the asset at the end of the lease and any payments made in advance of the lease commencement date (net of any incentive received).

The Group depreciates right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life or the end of the lease term. The carrying amounts of right-of-use assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised when the carrying value of an asset exceeds its recoverable amount.

The Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the applicable incremental borrowing rate. Lease payments included in the measurement of the lease liability comprises of fixed or variable payments (based on an index or rate), amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to the initial measurement, the liability will be reduced for payments made and increased for the interest applied and it is remeasured to reflect any reassessment or contract modifications. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or in the Consolidated Income Statement if the right-of-use asset is already reduced to zero.

The Group has elected to record short-term leases of less than 12 months and leases of low-value assets as defined in IFRS 16 as an operating expense in the Consolidated Income Statement on a straight-line basis over the lease term.

The Group has also elected not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component further increasing the lease liability.

The Group adopted IFRS 16 'Leases' using the modified retrospective approach. Accordingly, the comparative information has not been restated and continues to be accounted for in accordance with the Group's previous accounting policy under IAS 17 'Leases'.

Leasing policy applicable before 1 January 2019 (Operating leases)

Annual rentals payable under operating leases are charged to the Consolidated Income Statement on a straight-line basis over the period of the lease.

Critical accounting estimates and judgements - Leasing

The significant judgements made by management in applying the Group's accounting policies and the key source of estimation uncertainty were the same as those described in the 2018 Annual Report, except for the new judgements and estimation uncertainty described below related to lessee accounting, as this is the first year of adoption of IFRS 16.

In determining the incremental borrowing rate for lease contracts/liabilities the Group, where possible, has utilised external benchmarked information and takes into consideration credit rating, applicable margin for lease by currency, interest rate for the lease term and applies a currency premium where applicable. The Group has applied judgement in determining the lease term of contracts that include renewal options. If the Group is reasonably certain of exercising such options this will impact the lease term and accordingly the amount of lease liabilities and right-of-use assets recognised. The Group reassesses these estimates and judgements if a significant event or a significant change in circumstances occurs.

New standards and interpretations

Certain new and revised accounting standards and new International Financial Reporting Interpretations Committee ('IFRIC') interpretations have been issued. The Group intends to adopt the relevant new and revised standards when they become effective and the Group's assessment of the impact of these standards and interpretations is set out below:

The following Standards and Interpretations are effective for the Group in 2019 but do not have a material effect on the results or financial position of the Group:			Effective Date
-	IFRS 16	Leases	1 January 2019
		IFRS 16, published in January 2016, replaces the existing standard IAS 17 'Leases'. IFRS 16 eliminates the classification of leases as either operating leases or finance leases for lessees. It introduces a single lessee accounting model, which requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months with certain exceptions and to recognise depreciation of lease assets separately from interest on lease liabilities in the income statement.
		The Group has adopted IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application of €12.1m and a deferred tax asset of €2.7m was recognised in retained earnings at 1 January 2019. Accordingly, the comparative information presented for 2018 has not been restated - i.e. it is presented, as previously reported, under IAS 17 and related interpretations. Right-of-use assets for property leases were measured on transition as if the new rules had always been applied, but discounted at the incremental borrowing rate at 1 January 2019. All other right-of-use assets were measured at the amount of the lease liability on adoption.
		As at 31 December 2018, the Group had non-cancellable operating lease commitments of €83.1m and finance lease commitments of €nil. Of these commitments, approximately €1.0m relate to short-term leases and €0.1m are low-value leases which will be recognised on a straight-line basis as an expense in the Consolidated Income Statement. The Group has recognised right-of-use assets of €95.2m and lease liabilities of €107.3m on 1 January 2019, the transition date. The weighted average incremental borrowing rate applied to lease liabilities at the date of initial application was 6.7%. The Group has also elected not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component further increasing the lease liability at 1 January 2019. The Group has excluded initial direct costs incurred in entering into the leases recognised on transition on 1 January 2019, these costs are included for leases entered into since this date.
-	IAS 19 (Amendments)	Employee Benefits - Plan Amendment, Curtailment or Settlement	1 January 2019
-	IFRIC 23	Uncertainty over Income Tax Treatments	1 January 2019
		IFRIC 23 'Uncertainty over Income Tax Treatments' was issued in June 2017 and clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments.
		The Group had previously accounted for uncertain tax positions in line with IFRIC 23 and therefore, there is no impact to the Group in 2019 in respect of IFRIC 23.
		The Group considers each uncertain tax treatment separately or together with one or more uncertain tax treatments based on which approach better predicts the resolution of the uncertainty. If the Group concludes that it is not probable that a taxation authority will accept an uncertain tax treatment, the Group reflects the effect of the uncertainty in determining the related taxable profit, tax bases, unused tax losses, unused tax credits or tax rate. The Group reflects the effect of uncertainty for each uncertain tax treatment using an expected value approach or a most likely approach depending on which method the Group expects to better predict the resolution of the uncertainty. The unit of account for recognition purposes is the income tax/deferred tax assets or liabilities and the Group does not provide separately for uncertain tax positions.

The following Standards and Interpretations are not yet effective for the Group and are not expected to have a material effect on the results or financial position of the Group:			Effective Date
-	IFRS 3 (Amendments)	Business Combinations	1 January 2020
-	IFRS 9, IAS 39 & IFRS 7 (Amendments)	Interest Rate Benchmark Reform	1 January 2020
-	IAS 1 (Amendments)	Presentation of Financial Statements	1 January 2020
-	IAS 8 (Amendments)	Accounting Policies, Changes in Accounting Estimates and Errors	1 January 2020
-	The Conceptual Framework	Revised Conceptual Framework for Financial Reporting	1 January 2020
-	IFRS 17	Insurance Contracts	1 January 2021
		IFRS 17 published in May 2017 will be effective for reporting periods beginning on or after 1 January 2021. The Group is currently assessing the potential impact of the standard on future periods however it is not expected that it will have a material impact.

2. Analysis of results

The Group has determined it has two reportable segments: Taste & Nutrition and Consumer Foods. The Taste & Nutrition segment is the global leader in the development of taste and nutrition solutions for the food, beverage and pharmaceutical markets across Ireland, Europe, Americas and APMEA. Our broad technology foundation, customer-centric business model, and industry-leading integrated solutions capability make Kerry the co-creation partner of choice. The Consumer Foods segment is an industry-leading manufacturer of chilled food products primarily in Ireland and in the UK.

	Taste & Nutrition 2019				Consumer Foods 2019	Group Eliminations and Unallocated 2019	Total 2019		Taste & Nutrition 2018	Consumer Foods 2018	Group Eliminations and Unallocated 2018	Total 2018
	€'m				€'m	€'m	€'m		€'m	€'m	€'m	€'m
External revenue			5,939.1		1,302.2	-	7,241.3		5,272.4	1,335.2	-	6,607.6
Inter-segment revenue			78.5		4.4	(82.9)	-		78.2	3.8	(82.0)	-
	_______				_______	_______	_______		_______	_______	_______	_______
Revenue	6,017.6				1,306.6	(82.9)	7,241.3		5,350.6	1,339.0	(82.0)	6,607.6
	_______				_______	_______	_______		_______	_______	_______	_______
Trading profit				918.5	98.9	(114.7)	902.7		805.3	100.1	(99.8)	805.6
	_______				_______	_______			_______	_______	_______
Intangible asset amortisation							(64.3)					(53.8)
Non-trading items							(110.9)					(66.9)
							_______					_______
Operating profit							727.5					684.9
Finance income							0.3					0.5
Finance costs							(81.9)					(67.5)
							_______					_______
Profit before taxation							645.9					617.9
Income taxes							(79.4)					(77.4)
							_______					_______
Profit after taxation attributable to owners of the parent								566.5				540.5
							_______					_______
Segment assets and liabilities
Segment assets			6,268.5		925.7	2,310.1	9,504.3		5,492.1	938.1	1,893.5	8,323.7
Segment liabilities			(1,565.7)		(311.8)	(3,064.6)	(4,942.1)		(1,201.1)	(348.2)	(2,740.0)	(4,289.3)
		_______			_______	_______	_______		_______	_______	_______	_______
Net assets			4,702.8		613.9	(754.5)	4,562.2		4,291.0	589.9	(846.5)	4,034.4
		_______			_______	_______	_______		_______	_______	_______	_______
Other segmental information
Property, plant and equipment additions				247.2	32.7	0.7	280.6		259.1	23.6	1.0	283.7
Depreciation (net)				164.6	22.7	4.1	191.4		115.0	18.5	0.6	134.1
Intangible asset additions				1.3	2.0	51.9	55.2		0.3	2.1	28.0	30.4
Intangible asset amortisation				23.0	6.8	34.5	64.3		17.1	6.6	30.1	53.8
		_______			_______	_______	_______		_______	_______	_______	_______

Revenue analysis

Disaggregation of revenue from external customers is analysed by End Use Market (EUM), which is the primary market in which Kerry's products are consumed, and primary geographic market. An EUM is defined as the market in which the end consumer or customer of Kerry's product operates. The economic factors within the EUMs of Food, Beverage and Pharma and within the primary geographic markets which affect the nature, amount, timing and uncertainty of revenue and cash flows are similar.

Analysis by EUM
		Taste & Nutrition 2019	Consumer Foods 2019	Total 2019		Taste & Nutrition 2018	Consumer Foods 2018	Total 2018
		€'m	€'m	€'m		€'m	€'m	€'m
Food		4,161.5	1,302.2	5,463.7		3,617.6	1,335.2	4,952.8
Beverage		1,507.6	-	1,507.6		1,390.8	-	1,390.8
Pharma		270.0	-	270.0		264.0	-	264.0
		_______	_______	_______		_______	_______	_______
External revenue		5,939.1	1,302.2	7,241.3		5,272.4	1,335.2	6,607.6
		_______	_______	_______		_______	_______	_______

Analysis by primary geographic market

Disaggregation of revenue from external customers is analysed by geographical split:
		Taste & Nutrition 2019	Consumer Foods 2019	Total 2019		Taste & Nutrition 2018	Consumer Foods 2018	Total 2018
		€'m	€'m	€'m		€'m	€'m	€'m
Republic of Ireland		184.9	252.5	437.4		186.1	270.8	456.9
Rest of Europe		1,271.5	1,049.7	2,321.2		1,235.7	1,064.4	2,300.1
Americas		3,197.8	-	3,197.8		2,745.3	-	2,745.3
APMEA*		1,284.9	-	1,284.9		1,105.3	-	1,105.3
		_______	_______	_______		_______	_______	_______
External revenue		5,939.1	1,302.2	7,241.3		5,272.4	1,335.2	6,607.6
		_______	_______	_______		_______	_______	_______

*Asia Pacific, Middle East and Africa

Information about geographical areas
	Europe 2019	Americas 2019	APMEA* 2019	Total 2019	Europe 2018	Americas 2018	APMEA* 2018	Total 2018
	€'m	€'m	€'m	€'m	€'m	€'m	€'m	€'m
Segment assets by location	4,858.4	3,502.3	1,143.6	9,504.3	4,173.7	3,160.3	989.7	8,323.7
Property, plant and equipment additions	87.9	114.7	78.0	280.6	87.9	142.1	53.7	283.7
Intangible asset additions	54.3	0.9	-	55.2	30.1	0.3	-	30.4
	_______	_______	_______	_______	_______	_______	_______	_______

*Asia Pacific, Middle East and Africa

Kerry Group plc is domiciled in the Republic of Ireland and the revenues from external customers in the Republic of Ireland were €437.4m (2018: €456.9m).

Revenues from external customers include €1,527.9m (2018: €1,560.8m) in the UK and €2,597.5m (2018: €2,189.5m) in the USA.

There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8 'Operating Segments'. The accounting policies of the reportable segments are the same as the Group's accounting policies as outlined in the Statement of Accounting Policies. Under IFRS 15 'Revenue from Contracts with Customers' revenue is primarily recognised at a point in time. Revenue recorded over time during the year was not material to the Group.

3. Non-trading items
		Gross	Tax	Net	Net
		2019	2019	2019	2018
	Notes	€'m	€'m	€'m	€'m
Taste & Nutrition acquisition related costs:
-     acquisition integration and restructuring costs	(i)	(63.1)	14.9	(48.2)	(34.1)
-     other transaction costs	(i)	(17.6)	-	(17.6)	-
		_______	_______	_______	_______
		(80.7)	14.9	(65.8)	(34.1)
Consumer Foods Realignment Programme	(ii)	(26.7)	4.5	(22.2)	(15.1)
Loss on disposal of businesses and assets	(iii)	(3.5)	(0.2)	(3.7)	(5.9)
		_______	_______	_______	_______
2019 Non-trading items		(110.9)	19.2	(91.7)	(55.1)
		_______	_______	_______	_______
2018 Non-trading items		(66.9)	11.8	(55.1)
		_______	_______	_______	_______

(i) Taste & Nutrition acquisition related costs
During the year, acquisition integration and restructuring costs of €63.1m (2018: €44.2m) primarily related to costs of integrating recent acquisitions into the Group's operations and transaction expenses incurred in completing current year acquisitions. These costs reflect the closure of factories, relocation of resources and the restructuring of operations in order to integrate the acquired businesses into the existing Kerry operating model. A tax credit of €14.9m (2018: €10.1m) arose due to tax deductions available on acquisition integration and restructuring costs. Other transaction costs of €17.6m related to a material transaction process that the Group participated in. These costs primarily related to external costs associated with deal preparation, integration planning and due diligence. The associated tax credit is €nil (2018: €nil).
(ii) Consumer Foods Realignment Programme
During 2019, the Consumer Foods business completed a programme to simplify its business model in terms of footprint and resources in response to the challenging marketplace. The charge relating to this in 2019 is €26.7m, which reflects redundancies, relocation of resources and the streamlining of operations. The associated tax credit is €4.5m (2018: €nil). In 2018, Consumer Foods completed its Brexit Mitigation Programme whereby certain sourcing and production activities were relocated and other activities restructured as a consequence of Brexit in order to reduce the Group's sterling transaction exposure. The net charge relating to this in 2019 is €nil (2018: €15.1m) and the associated tax credit is €nil (2018: €2.2m).
(iii) Loss on disposal of businesses and assets
During the year, the Group disposed of property, plant and equipment primarily in the UK, US and Australia for a consideration of €32.8m resulting in a loss of €3.5m for the year ended 31 December 2019. In 2018, the Group disposed of property, plant and equipment primarily in Italy, Malaysia and the US for a consideration of €10.6m resulting in a loss of €1.0m. Also in 2018 the Group disposed of investments in associates for a combined consideration of €1.1m resulting in a loss of €4.4m.
A tax charge of €0.2m (2018: €0.5m) arose on the disposal of assets and businesses.
There were no impairments of assets held for sale recorded in the financial year.

4. Earnings per A ordinary share
		EPS	2019	EPS	2018
		cent	€'m	cent	€'m
Basic earnings per share
Profit after taxation attributable to owners of the parent		320.4	566.5	305.9	540.5
Diluted earnings per share
Profit after taxation attributable to owners of the parent		319.9	566.5	305.7	540.5
		_______	_______	_______	_______

	2019	2018
	m's	m's
Number of Shares
Basic weighted average number of shares	176.8	176.7
Impact of share options outstanding	0.3	0.1
	_______	_______
Diluted weighted average number of shares	177.1	176.8
	_______	_______
Actual number of shares in issue as at 31 December	176.5	176.3
	_______	_______

5. Dividends

	2019	2018
	€'m	€'m
Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2018 dividend of 49.20 cent per A ordinary share paid 10 May 2019 (Final 2017 dividend of 43.90 cent per A ordinary share paid 18 May 2018)	86.7	77.4
Interim 2019 dividend of 23.50 cent per A ordinary share paid 15 November 2019 (Interim 2018 dividend of 21.00 cent per A ordinary share paid 16 November 2018)	41.6	37.0
	_______	_______
	128.3	114.4
	_______	_______

Since the financial year end the Board has proposed a final 2019 dividend of 55.10 cent per A ordinary share which amounts to €97.3m. The payment date for the final dividend will be 15 May 2020 to shareholders registered on the record date as at 17 April 2020. The consolidated financial statements do not reflect this dividend.

6. Business combinations

During 2019, the Group completed a total of eleven acquisitions, all of which are 100% owned by the Group unless otherwise stated.

		Total
		2019
		€'m
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment		115.1
Brand related intangibles		237.0
Current assets
Cash at bank and in hand		2.9
Inventories		17.1
Trade and other receivables		11.2
Current liabilities
Trade and other payables		(14.8)
Non-current liabilities
Deferred tax liabilities		(7.2)
Other non-current liabilities		(0.3)
		________
Total identifiable assets		361.0
Goodwill		200.7
		________
Total consideration		561.7
		________
Satisfied by:
Cash		546.9
Deferred payment		14.8
		________
		561.7
		________
Net cash outflow on acquisition:
		Total
		2019
		€'m
Cash		546.9
Less: cash and cash equivalents acquired		(2.9)
Prepayments in relation to 2020 acquisitions		18.7
		________
		562.7
		________

The acquisition method has been used to account for businesses acquired in the Group's financial statements. Given that the valuation of the fair value of assets and liabilities recently acquired is still in progress, some of the above values are determined provisionally. The valuation of the fair value of assets and liabilities will be completed within the measurement period. For the acquisitions completed in 2018, there have been no material revisions of the provisional fair value adjustments since the initial values were established. The Group performs quantitative and qualitative assessments of each acquisition in order to determine whether it is material for the purposes of separate disclosure under IFRS 3 'Business Combinations'. None of the acquisitions completed during the period were considered material to warrant separate disclosure.

The goodwill is attributable to the expected profitability, revenue growth, future market development and assembled workforce of the acquired businesses and the synergies expected to arise within the Group after the acquisition. €194.4m of goodwill recognised is expected to be deductible for income tax purposes.

Transaction expenses related to these acquisitions of €7.1m were charged in the Group's Consolidated Income Statement during the financial year. The fair value of the financial assets includes trade and other receivables with a fair value of €11.2m and a gross contractual value of €11.2m.

From the date of acquisition, the acquired businesses have contributed €140.9m of revenue and €10.6m of profit after taxation attributable to owners of the parent to the Group. If the acquisition dates had been on the first day of the financial year, the acquired businesses would have contributed €202.9m of revenue and €14.0m of profit after taxation attributable to owners of the parent to the Group.

The following acquisitions were completed by the Group during 2019:

Acquisition	Acquired	Principal activity
Southeastern Mills	January	Southeastern Mills, located in the USA, is a leading food manufacturer specialising in coating and seasoning systems.
Ariake U.S.A., Inc.	March	Ariake is a manufacturer of natural clean label savoury solutions, based in the USA.
Muskvale Flavours & Fragrances	March	Muskvale Flavours & Fragrances, based in Australia, creates and sells flavours and fragrances.
ComeIn Food Systems	August	ComeIn Food Systems, located in Mexico, produce seasonings and functional ingredients.
Saporiti Whipping Agents	August	Saporiti Whipping Agents, based in Brazil, specialises in whipping agents technology.
Isoage Technologies	August	Isoage Technologies is a USA based supplier of fermentation technology and functional ingredients to the food, dairy and pet industries.
Ensyn Technologies	August	Ensyn Technologies are experts in Rapid Thermal Processing technology which forms the base for many smoke products, based in Canada.
Pevesa Biotech S.A.U.	September	Pevesa, based in Spain, is a specialist plant protein isolates and hydrolysates business, serving key nutrition applications.
Biosecur Lab	September	Biosecur is a supplier of natural antimicrobials made from citrus extracts, based in Canada.
Serve Food Solutions	September	Serve Food Solutions, based in the USA, provides solutions to manufacturers and foodservice companies.
Diana Food (Georgia, USA)	November	Diana Food, based in Georgia, USA, is a savoury taste manufacturer of natural clean label technologies.

7. Events after the balance sheet date

Since the financial year end, the Group has proposed a final dividend of 55.10 cent per A ordinary share (note 5).

There have been no other significant events, outside the ordinary course of business, affecting the Group since 31 December 2019.

8. General information

The statutory financial statements of Kerry Group plc for the financial year ended 31 December 2019 were approved by the Board of Directors and authorised for issue on 17 February 2020 and will be filed with the Registrar of Companies following the annual general meeting. The statutory financial statements of Kerry Group plc for the financial year ended 31 December 2018, to which an unqualified audit opinion was received, were annexed to the annual return and filed with the Registrar of Companies.

SUPPLEMENTARY INFORMATION

FINANCIAL DEFINITIONS

1.   Revenue

Volume growth

This represents the sales growth year-on-year, excluding pass-through pricing on raw material costs, currency impacts, acquisitions (net of disposals) and rationalisation volumes.

Volume growth is an important metric as it is seen as the key driver of top-line business improvement. This is used as the key revenue metric, as Kerry operates a pass-through pricing model with its customers to cater for raw material price fluctuations. Pricing therefore impacts like-for-like revenue growth positively or negatively depending on whether raw material prices move up or down. A full reconciliation to reported revenue growth is detailed in the revenue reconciliation below.

Revenue Reconciliation

2019	Volume growth	Price	Transaction currency	Acquisitions/ Disposals	Translation currency	Reported revenue growth
Taste & Nutrition	4.0%	0.1%	-	5.8%	2.6%	12.5%
Consumer Foods	(2.2%)	(0.5%)	-	-	0.3%	(2.4%)
	________	________	________	________	________	________
Group	2.8%	-	-	4.7%	2.1%	9.6%
2018
Taste & Nutrition	4.1%	(0.5%)	(0.1%)	4.2%	(4.0%)	3.7%
Consumer Foods	1.1%	(0.4%)	(0.3%)	0.8%	(0.6%)	0.6%
	________	________	________	________	________	________
Group	3.5%	(0.5%)	(0.1%)	3.6%	(3.4%)	3.1%
	________	________	________	________	________	________

2.   EBITDA

EBITDA represents profit before finance income and costs, income taxes, depreciation (net of capital grant amortisation), intangible asset amortisation and non-trading items.

	2019	2018
	€'m	€'m
Profit after taxation attributable to owners of the parent	566.5	540.5
Finance income	(0.3)	(0.5)
Finance costs	81.9	67.5
Income taxes	79.4	77.4
Non-trading items	110.9	66.9
Intangible asset amortisation	64.3	53.8
Depreciation (net of capital grant amortisation)	191.4	134.1
	_______	_______
EBITDA	1,094.1	939.7
	_______	_______
The calculation of EBITDA in 2019 reflects the impact of the adoption of IFRS 16, prior year comparatives were not restated.

3.   Trading Profit

Trading profit refers to the operating profit generated by the businesses before intangible asset amortisation and gains or losses generated from non-trading items. Trading profit represents operating profit before specific items that are not reflective of underlying trading performance and therefore hinder comparison of the trading performance of the Group's businesses, either year-on-year or with other businesses.

	2019	2018
	€'m	€'m
Operating profit	727.5	684.9
Intangible asset amortisation	64.3	53.8
Non-trading items	110.9	66.9
	_______	_______
Trading profit	902.7	805.6
	_______	_______

4.   Trading Margin

Trading margin represents trading profit, expressed as a percentage of revenue.

	2019	2018
	€'m	€'m
Trading profit	902.7	805.6
Revenue	7,241.3	6,607.6
	_______	_______
Trading margin	12.5%	12.2%
	_______	_______

5.   Operating Profit

Operating profit is profit before income taxes, finance income and finance costs.

	2019	2018
	€'m	€'m
Profit before tax	645.9	617.9
Finance income	(0.3)	(0.5)
Finance costs	81.9	67.5
	_______	_______
Operating profit	727.5	684.9
	_______	_______

6.   Adjusted Earnings Per Share and Growth in Adjusted Earnings Per Share on a Constant Currency Basis

The growth in adjusted earnings per share on a constant currency basis is provided as it is considered more reflective of the Group's underlying trading performance. Adjusted earnings is profit after taxation attributable to owners of the parent before brand related intangible asset amortisation and non-trading items (net of related tax). These items are excluded in order to assist in the understanding of underlying earnings. A full reconciliation of adjusted earnings per share to basic earnings is provided below. Constant currency eliminates the translational effect that arises from changes in foreign currency year-on-year. The growth in adjusted earnings per share on a constant currency basis is calculated by comparing current year adjusted earnings per share to the prior year adjusted earnings per share retranslated at current year average exchange rates.

	2019	2018
	EPS	EPS
	cent	cent
Basic earnings per share	320.4	305.9
Brand related intangible asset amortisation	21.4	16.3
Non-trading items (net of related tax)	51.9	31.2
	_______	_______
Adjusted earnings per share	393.7	353.4
Impact of retranslating prior year adjusted earnings per share at current year average exchange rates	-	10.1
	_______	_______
Adjusted earnings per share on a constant currency basis	393.7	363.5
	_______	_______
Growth in adjusted earnings per share on a constant currency basis	8.3%	8.6%
	_______	_______

7.   Free Cash Flow

Free cash flow is trading profit plus depreciation, movement in average working capital, capital expenditure, payment of lease liabilities, pensions costs less pension expense, finance costs paid (net) and income taxes paid.

Free cash flow is seen as an important indicator of the strength and quality of the business and of the availability to the Group of funds for reinvestment or for return to shareholders. Movement in average working capital is used when calculating free cash flow as management believes this provides a more accurate measure of the increase or decrease in working capital needed to support the business over the course of the year rather than at two distinct points in time and more accurately reflects fluctuations caused by seasonality and other timing factors. Average working capital is the sum of each month's working capital over 12 months. Below is a reconciliation of free cash flow to the nearest IFRS measure, which is 'Net cash from operating activities'.

	2019	2018
	€'m	€'m
Net cash from operating activities	763.9	651.0
Difference between movement in monthly average working capital and movement in the financial year end working capital	(25.6)	21.7
Expenditure on acquisition integration and restructuring costs	89.1	59.8
Purchase of assets	(315.6)	(296.1)
Payment of lease liabilities	(35.5)	-
Proceeds from the sale of property, plant and equipment	32.8	10.6
Capital grants received	3.0	-
Exchange translation adjustments	2.5	(0.5)
	_______	_______
Free cash flow	514.6	446.5
	_______	_______

8.   Cash Conversion

Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings after tax.

	2019	2018
	€'m	€'m
Free cash flow	514.6	446.5
Profit after taxation attributable to owners of the parent	566.5	540.5
Brand related intangible asset amortisation	37.8	28.8
Non-trading items (net of related tax)	91.7	55.1
	_______	_______
Adjusted earnings after tax	696.0	624.4
	_______	_______
Cash Conversion	74%	72%
	_______	_______

9.   Financial Covenants

The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated in accordance with lenders' facility agreements using an adjusted EBITDA, adjusted finance costs (net of finance income) and an adjusted net debt value to adjust for the impact of non-trading items, acquisitions net of disposals, deferred payments in relation to acquisitions and lease liabilities. These ratios are calculated in accordance with lenders' facility agreements and these agreements specifically require these adjustments in the calculation.

	Covenant	2019 Times	2018 Times
Net debt: EBITDA	Maximum 3.5	1.8	1.7
EBITDA: Net interest	Minimum 4.75	13.2	14.7

10.  Average Capital Employed

Average capital employed is calculated by taking an average of the shareholders' equity and net debt over the last three reported balance sheets plus an additional €527.8m relating to goodwill written off to reserves pre conversion to IFRS.

			2019	H1 2019	2018	H1 2018	2017
			€'m	€'m	€'m	€'m	€'m
Shareholders' equity			4,562.2	4,186.5	4,034.4	3,773.6	3,573.2
Goodwill amortised (pre conversion to IFRS)			527.8	527.8	527.8	527.8	527.8
			_______	_______	_______	_______	_______
Adjusted equity			5,090.0	4,714.3	4,562.2	4,301.4	4,101.0
Net debt			1,862.8	1,918.2	1,623.5	1,403.3	1,341.7
			_______	_______	_______	_______	_______
Total			6,952.8	6,632.5	6,185.7	5,704.7	5,442.7
			_______	_______	_______	_______	_______
Average capital employed			6,590.3		5,777.7
			_______		_______

11.  Return on Average Capital Employed (ROACE)

This measure is defined as profit after taxation attributable to owners of the parent before non-trading items (net of related tax), brand related intangible asset amortisation and finance income and costs expressed as a percentage of average capital employed.

	2019	2018
	€'m	€'m
Profit after taxation attributable to owners of the parent	566.5	540.5
Non-trading items (net of related tax)	91.7	55.1
Brand related intangible asset amortisation	37.8	28.8
Net finance costs	81.6	67.0
	_______	_______
Adjusted profit	777.6	691.4
	_______	_______
Average capital employed	6,590.3	5,777.7
	_______	_______
Return on average capital employed	11.8%	12.0%
	_______	_______

12.  Total Shareholder Return

Total shareholder return represents the change in the capital value of Kerry Group plc shares plus dividends in the financial year.

	2019	2018
Share price (1 January)	€86.50	€93.50
Interim dividend (cent)	23.5	21.0
Dividend paid (cent)	49.2	43.9
Share price (31 December)	€111.10	€86.50
	_______	_______
Total shareholder return	29.3%	(6.8%)
	_______	_______

13.  Market Capitalisation

Market capitalisation is calculated as the share price times the number of shares issued.

	2019	2018
Share price (31 December)	€111.10	€86.50
Shares in issue ('000)	176,514.9	176,298.4
	_______	_______
Market capitalisation (€'m)	19,610.8	15,249.8
	_______	_______

14.  Enterprise Value

Enterprise value is calculated as per external market sources. It is market capitalisation plus reported borrowings less total cash and cash equivalents.

15.  Net Debt

Net debt comprises borrowings and overdrafts, interest rate derivative financial instruments and cash at bank and in hand.

 

END

 

 

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