Preliminary Statement of Results 2020

RNS Number : 1770P

Kerry Group PLC

16 February 2021

 

Date 16 February 2021

LEI: 635400TLVVBNXLFHWC59

KERRY GROUP

PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

Strong recovery in business performance, with volumes returning to growth in the fourth quarter

Kerry Group, the global taste & nutrition and consumer foods group, reports business performance for the year ended 31 December 2020.

OVERVIEW

>  Group revenue of €7.0bn reflecting a volume reduction of 2.9% (Q4: +2.2%) >  Taste & Nutrition volumes -3.0% (Q4: +0.7%) >  Consumer Foods volumes -2.6% (Q4: +8.8%) >  Pricing +0.3% >  Group trading margin of 11.5% (2019: 12.5%) >  Taste & Nutrition trading margin of 14.2% (2019: 15.3%) >  Consumer Foods trading margin of 7.8% (2019: 7.6%) >  Adjusted EPS reduction of 9.4% on a constant currency basis to 345.4 cent (-12.3% reported) >  Basic EPS of 313.0 cent (2019: 320.4 cent) >  Final dividend per share of 60.6 cent (total 2020 dividend up 10.1% to 86.5 cent) >  Free cash flow of €412m (2019: €515m) >  Strategic review of Dairy business

Edmond Scanlon, Chief Executive Officer

"This has been a truly unique year, with the daily lives of people across the world profoundly impacted by the COVID ‐ 19 pandemic. I am exceptionally proud of the response of our people, and how they have supported our customers and local communities throughout the year, aligned to our Purpose, Inspiring Food, Nourishing Life.

In the year, there were notable distinctions in business performance by channel. Sustained strong growth was achieved in the retail channel, primarily through growth in authentic cooking, plant-based offerings and health and wellness products. Performance in our foodservice channel was most significantly impacted in the second quarter, as the introduction of restrictions affected our customers' operations. The proactive nature of our business model has been a key driver of our strong recovery through the year, as we supported foodservice customers in adapting their operations and menus to cater for increased consumer demand for takeaway, online and delivery.

We made very good progress on a number of strategic fronts. We commenced the strategic development of our Georgia, US facility, which will have world-leading capabilities. We launched our 2030 sustainability strategy - Beyond the Horizon, which details Kerry's sustainability targets and will be central to our growth strategy, as we continue to innovate with our customers and expand our reach of sustainable nutrition solutions. We completed a number of key acquisitions aligned to our strategic growth priorities in the year, and have since announced our intention to acquire Spanish listed Biosearch Life.

While uncertainty from COVID-19 continues to impact our customers, consumers and industry, we will continue to co-create with our customers to meet accelerating consumer demands, and look forward to a year of strong recovery and good growth."

PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

The Marketplace

This year has seen major changes in the daily lives of consumers across the globe, with purchasing and consumption behaviours significantly disrupted, leading to a much more dynamic marketplace. At-home consumption has been elevated, as consumers adapted to changes in daily routines and work practices. The foodservice channel has been significantly impacted due to restrictions on operations and consumer mobility, leading to increased demand for online and delivery. Our foodservice business was most impacted in the second quarter, as many of our customers were closed for extended periods, with performance significantly improving through the year as they adapted their offerings to cater for the changing marketplace.

The COVID-19 pandemic has served to accelerate key trends that were on the rise at the beginning of the year, with increased demand for health and immunity enhancement, plant protein options, and products addressing a diverse range of sustainability criteria. Customers are increasingly focusing on sustainability as an enabler of growth, leading to significant opportunity for Kerry and our differentiated portfolio of sustainable nutrition solutions. As customers adapt to this dynamic operating environment, product portfolios and menu offerings continue to be evaluated, with new product development strategies focused on these rapidly changing consumer demands. These dynamics are leading to significant challenges and opportunities across the industry.

Performance

Group revenue of €7.0 billion reflected a reported decrease of 4.0%, with an overall volume reduction of 2.9% in the year. This performance reflected a strong recovery since April with a return to volume growth of 2.2% in the fourth quarter. Performance in Taste & Nutrition continued to improve through the year and returned to volume growth in the fourth quarter, while performance in Consumer Foods improved with a very strong finish to the year.

The Group reported trading profit of €797.2m (2019: €902.7m) due to the impact of COVID-19. Group trading margin decreased by 100bps to 11.5% as a result of operating deleverage and COVID ‐ related costs partially offset by cost mitigation actions, with significant recovery in business margins across the second half of the year.

Constant currency adjusted earnings per share decreased by 9.4% to 345.4 cent (2019 currency adjusted: 381.4 cent). Basic earnings per share decreased by 2.3% to 313.0 cent (2019: 320.4 cent). The Board recommends a final dividend of 60.6 cent per share, an increase of 10.0% on the final 2019 dividend. Together with the interim dividend of 25.9 cent per share, this brings the total dividend for the year to 86.5 cent, an increase of 10.1% on 2019.

Net capital expenditure amounted to €311m (2019: €315m) and research and development expenditure was €282m (2019: €291m) as the Group continued to invest in its strategic priorities for growth across taste, nutrition, developing markets and foodservice. Group free cash flow of €412m and cash conversion of 67% in the year (2019: €515m / 74%) reflected the impact of COVID-19 and investments to support the ongoing progression of the Kerryconnect programme across our sites in North America.

Sustainability

In October, we launched our new sustainability strategy - Beyond the Horizon. This details Kerry's key sustainability 2030 commitments and targets, while reflecting how innovation and co-creation will continue to be central to Kerry's growth strategy. Our aim is to increase our reach to over two billion people with sustainable nutrition solutions by 2030, which will be achieved by deploying and enhancing Kerry's solutions across the nutrition spectrum. Beyond the Horizon reflects our vision to become our customers' most valued partner, creating a world of sustainable nutrition.

Business Reviews

Taste & Nutrition

Sustained strong growth in retail, with continued good recovery in our foodservice business

	2020	Performance
Revenue	€5,753m	-3.0%1
Trading margin	14.2%	-110bps

¹ volume performance

>  Overall volume reduction of 3.0%, with a return to growth of 0.7% in Q4

>  Retail channel delivered strong growth of 3.8%, led by Beverage and Pharma EUMs, with Food EUM performance driven by Snacks and Meals

>  Foodservice channel volumes declined 19% with continued recovery through H2 (Q3: -15% | Q4: -8%)

>  Trading margin decrease in the year principally driven by operating deleverage and net COVID ‐ related costs, with continued recovery in H2 aligned to the improvement in business volumes

Taste & Nutrition reported revenue was €5.8 billion, reflecting a reported decrease of 4.4%, primarily due to lower volumes and adverse translation currency, partially offset by contribution from business acquisitions. Taste & Nutrition began the year strongly before the global spread of COVID ‐ 19. While performance was most impacted in the second quarter, business volumes recovered well since then and returned to growth in the fourth quarter. We saw a significant change in the nature of innovation through the year, as product ideation, collaboration and co-creation was adapted to cater for virtual engagement through this period. Kerry's nutrition and wellness technology portfolio had a very good performance within the retail channel through customised solutions incorporating our broad protein portfolio, fermented ingredients, probiotics and immunity enhancing technologies.

Business volumes in the foodservice channel declined 19% in the year, with many out ‐ of ‐ home food and beverage outlets closed for an extended period of time. This impact was the primary driver of overall performance in developing markets, where business volumes declined by 1.2%.

In the year, we completed a number of key strategic acquisitions. These included Bio-K Plus International Inc., a leading biotechnology company with a number of probiotics in beverage and supplement applications in Canada, and we acquired Jining Nature Group in China and Tecnispice, S.A. in Guatemala, both of which are local leaders in savoury taste in their respective markets within APMEA and LATAM.

Americas Region

>  Overall volume reduction of 2.5%, with a return to growth of 0.5% in Q4

>  Retail channel delivered strong growth - led by the Beverage EUM and Meals and Snacks within the Food EUM

>  Foodservice performance recovered well across H2

Revenue in the region was €3.1 billion, reflecting a reported decrease of 3.5%, with lower business volumes of 2.5%, positive pricing of 0.1%, an adverse translation currency impact of 3.0% and contribution from business acquisitions of 1.9%.

The retail channel in North America achieved strong growth in the year. This was led by an excellent performance across the Beverage EUM, where Kerry's immunity enhancing technologies, broad protein portfolio and natural extracts were deployed in a number of nutritional, low/no alcohol and plant ‐ based beverage launches. Within the Food EUM, Meals achieved very strong growth through clean label innovations incorporating Kerry's natural stocks and broths, with a number of plant-based launches also supporting growth. Overall Meat performance was impacted in the year by customer product availability on retail shelves, while Snacks performed well through more at-home consumption and increased demand for healthier options.

The foodservice channel in North America was impacted considerably in the second quarter, however performance has seen a significant improvement since then, led by quick service restaurant chains, while dine-in restaurants and independent operators were more challenged. This improvement in performance has been supported by health and wellness innovations and limited time offerings.

In LATAM, the foodservice channel was impacted later in the year, but recovered well through the fourth quarter. Brazil returned to growth led by beverage and ice ‐ cream, while market conditions in Mexico and CACAR remained more challenged.

Pharma achieved very strong growth globally, with cell nutrition performing well and immunity enhancing technologies delivering excellent growth in the year.

Europe Region

>  Overall volume reduction of 5.0%, with business volumes of -0.4% in Q4 reflecting further recovery

>  Retail channel delivered good growth in Beverage EUM and Snacks and Meat within the Food EUM

>  Foodservice continued to recover but was impacted by restrictions late in the year

Revenue in the region was €1.4 billion, reflecting a reported decrease of 5.6%, with lower business volumes of 5.0%, an adverse transaction currency impact of 0.1%, an adverse translation currency impact of 0.9% and contribution from business acquisitions of 0.4%.

This was the most impacted region from COVID-related restrictions in the foodservice channel in the second quarter, but has recovered well since then with customers reopening and operating at varying capacities through the second half of the year. Kerry's improvement in the foodservice channel was supported by a number of launches incorporating the Radicle™ portfolio of plant-based technologies.

The retail channel performed well, with Beverage achieving good growth in nutritional and low/no alcohol beverage categories. Within the Food EUM, Snacks had strong growth through clean label and healthier innovations in savoury applications with a number of large customers. Dairy performance was impacted by product repositioning in the category and supply/demand dynamics in global dairy markets. Meat performed well in the year, driven by strong growth and business development in plant ‐ based alternatives, as ranges continued to expand within the category. Russia and Eastern Europe delivered a very good performance in the year, led by Snacks and Meat within the Food EUM.

APMEA Region

>  Overall volume reduction of 1.9%, with growth of 2.8% in Q4

>  Retail channel performed well with strong growth in H2 within the Food EUM through Snacks and Dairy

>  Foodservice continued strong recovery through Q4

Revenue in the region was €1.2 billion, reflecting a reported decrease of 5.2%, with lower business volumes of 1.9%, an adverse transaction currency impact of 0.2%, an adverse translation currency impact of 3.5% and contribution from business acquisitions of 0.4%.

Overall performance in the region further improved in the fourth quarter, having returned to growth in the previous quarter. This growth was led by China and the Middle East, while there remained variations in performance across the region aligned to local conditions. The foodservice channel continued to recover through the year as restrictions on mobility eased. The retail channel performed well, led by the Food EUM of Snacks, where we saw a lot of innovation in the category across the region. Demand increased for indulgent offerings as consumers spent more time at home, while healthier snacks with nutritional claims also had a strong performance in the year, benefitting from increasing emphasis on ingredient label declarations for children in China. Meals was more challenged, as many consumers opted for more traditional food offerings during the initial period where restrictions were in place. Dairy had strong growth from increased demand with regional leaders for Kerry's clean label solutions, with Meat also performing well, particularly in the Middle East.

The Group continued to make good progress in expanding its capacity and deploying technology capabilities in China and the Middle East, while also moving into the new Technology & Innovation Centre in Shanghai.

Consumer Foods

Good underlying growth with a very strong finish to the year across the portfolio

	2020	Performance
Revenue	€1,279m	-2.6%1
Trading margin	7.8%	+20bps

¹ volume performance

>  Volume performance reflected underlying growth of 2.2%, more than offset by the ready meals contract exit impact

>  Volume growth of 8.8% in Q4 represented strong performances across the portfolio and some stocking benefits

>  Pricing of +1.2% reflective of increases in input costs and market pricing

>  Trading margin +20bps as efficiencies partially offset by COVID ‐ 19 impacts and pricing

The market saw major variations in category performances through the year, as consumers' purchasing and consumption behaviours changed significantly as a result of COVID-19. Shopping habits became more functional and impulse purchases have reduced. At-home snacking increased, as out-of-home occasions have been curtailed by restrictions on movement. Many retailers scaled back category product listings and their freshly prepared over ‐ the ‐ counter operations. Large traditional retailers have benefitted through the year, with increased average basket sizes and reduced promotional activity, while demand for online and delivery has increased dramatically.

Consumer Foods reported revenue was €1.3 billion, reflecting a reported decrease of 2.1%, as lower volumes due to the previously reported ready meals contract exit and an adverse impact from translation currency were partially offset by increased pricing.

The Richmond sausage range achieved very good growth in the year, with strong growth across Kerry's branded meat-free ranges driving further market share gains. The Denny brand performed well, while overall meat sales were impacted by reduced retailer deli counter operations. Spreadable butter and Dairygold performed well due to increased at-home consumption.

Chilled meals were impacted by reduced consumer impulse purchases, while frozen meals benefitted from increased retailer stocking in the fourth quarter. Plant-based meals had strong growth across both chilled and frozen ranges through the year, with a number of successful launches supporting performance.

The snacking range and home delivery meals business achieved very strong growth in the year. This was led by Fridge Raiders, which benefitted from increased at-home snacking consumption. The Strings & Things range, led by Cheestrings also delivered strong growth with a number of innovations, while Oakhouse Foods home delivery meals had exceptionally strong growth in the year.

Financial Review

	% Change	2020 €'m	2019 €'m
Revenue	(4.0%)	6,953.4	7,241.3
Trading profit	(11.7%)	797.2	902.7
Trading margin		11.5%	12.5%
Computer software amortisation		(28.4)	(26.5)
Finance costs (net)		(72.4)	(81.6)
Adjusted earnings before taxation		696.4	794.6
Income taxes (excluding non-trading items)		(85.1)	(98.6)
Adjusted earnings after taxation	(12.2%)	611.3	696.0
Brand related intangible asset amortisation		(41.7)	(37.8)
Non-trading items (net of related tax)		(15.5)	(91.7)
Profit after taxation		554.1	566.5
		EPS cent	EPS cent
Basic EPS	(2.3%)	313.0	320.4
Brand related intangible asset amortisation		23.6	21.4
Non-trading items (net of related tax)		8.8	51.9
Adjusted* EPS	(12.3%)	345.4	393.7
Impact of retranslating prior year adjusted earnings per share at current year average exchange rates		-	(12.3)
Adjusted* EPS in constant currency	(9.4%)	345.4	381.4

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

Revenue

Group revenue was €7.0 billion (2019: €7.2 billion) reflecting a reported decrease of 4.0%. This comprised a volume decrease of 2.9% primarily due to the impact of COVID-19, positive pricing of 0.3%, an adverse transaction currency impact of 0.1%, an adverse translation currency impact of 2.3% and contribution from business acquisitions of 1.0%.

2019: Group reported revenue +9.6%, volume growth +2.8%, pricing flat, translation currency +2.1%, contribution from business acquisitions of +4.7%.

Taste & Nutrition revenue was €5.8 billion (2019: €6.0 billion) reflecting a reported revenue decrease of 4.4%. This comprised a volume decrease of 3.0% due to the impact of COVID-19, positive pricing of 0.1%, an adverse transaction currency impact of 0.1%, an adverse translation currency impact of 2.6% and contribution from business acquisitions of 1.2%.

2019: Taste & Nutrition reported revenue +12.5%, volume growth +4.0%, pricing increase +0.1%, translation currency +2.6%, acquisitions +5.8%.

Consumer Foods revenue was €1.28 billion (2019: €1.31 billion) reflecting a reported revenue decrease of 2.1%. This comprised a volume decrease of 2.6%, positive pricing of 1.2% and an adverse translation currency impact of 0.7%. Excluding the impact of the ready meals contract exit, volume would have increased by 2.2%.

2019: Consumer Foods reported revenue (2.4%), volume reduction (2.2%), pricing (0.5%), translation currency +0.3%.

Trading Profit & Margin

Group trading profit decreased by 11.7% to €797.2m (2019: €902.7m) due to the impact of COVID-19. The Group had a trading margin of 11.5%, a decrease of 100bps, primarily reflecting operating deleverage from lower volumes in Taste & Nutrition and COVID ‐ related costs partially offset by cost mitigation actions.

Taste & Nutrition had a trading margin of 14.2%, a decrease of 110bps reflecting significant operating deleverage and COVID ‐ related costs partially offset by cost mitigation actions.

Consumer Foods had a trading margin of 7.8%, an increase of 20bps, reflecting efficiencies delivered from the 2019 Realignment Programme and cost mitigation actions partially offset by net COVID ‐ related costs and negative net pricing in a challenging market.

The trading profit reflects an EBITDA of €1.0 billion (2019: €1.1 billion) and an EBITDA margin of 14.4% (2019: 15.1%).

Finance Costs (net)

Finance costs (net) for the year decreased by €9.2m to €72.4m (2019: €81.6m) primarily due to lower interest rates. The Group's average interest rate for the year was 3.0% (2019: 3.7%).

Taxation

The tax charge for the year before non-trading items was €85.1m (2019: €98.6m) representing an effective tax rate of 13.0% (2019: 13.0%) and is reflective of the geographical mix of earnings.

Acquisitions

During the year, the Group completed three acquisitions at a total consideration of €280.0m. These acquisitions were aligned to the Group's strategic priorities for growth; enhancing both the Group's taste and nutrition technologies, expanding its presence in developing markets and in the foodservice channel.

Non-Trading Items

During the year, the Group incurred a non-trading item charge of €15.5m (2019: €91.7m) net of tax. The charge in the year primarily related to costs associated with the integration of business acquisitions.

Adjusted EPS in Constant Currency

Adjusted EPS in constant currency decreased by 9.4% to 345.4 cent (2019: +8.3%) due to the impact of COVID ‐ 19 on business performance.

Basic EPS

Basic EPS decreased by 2.3% to 313.0 cent (2019: 320.4 cent). Basic EPS is calculated after accounting for brand related intangible asset amortisation of 23.6 cent (2019: 21.4 cent) and a non-trading item charge of 8.8 cent net of related tax (2019: 51.9 cent).

Return on Average Capital Employed

ROACE in the year was 9.8% (2019: 11.8%) reflecting the impact of COVID ‐ 19 on current year profits.

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.

	AverageRates		Closing Rates
	2020	2019	2020	2019
Australian Dollar	1.66	1.61	1.59	1.60
Brazilian Real	5.75	4.44	6.38	4.53
British Pound Sterling	0.89	0.88	0.90	0.85
Chinese Yuan Renminbi	7.86	7.73	8.03	7.82
Malaysian Ringgit	4.77	4.65	4.92	4.60
Mexican Peso	24.34	21.59	24.46	21.19
Russian Ruble	81.16	72.28	90.68	69.34
South African Rand	18.62	16.20	18.02	15.77
US Dollar	1.13	1.12	1.23	1.12

Balance Sheet

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

	2020 €'m	2019 €'m
Property, plant & equipment	1,990.6	2,062.9
Intangible assets	4,687.1	4,589.7
Other non-current assets	170.6	179.5
Current assets	2,594.8	2,672.2
Total assets	9,443.1	9,504.3
Current liabilities	1,696.3	2,014.0
Non-current liabilities	3,091.3	2,928.1
Total liabilities	4,787.6	4,942.1
Net assets	4,655.5	4,562.2
Shareholders' equity	4,655.5	4,562.2

Property, Plant & Equipment

Property, plant and equipment decreased by €72.3m to €1,990.6m (2019: €2,062.9m) primarily due to the depreciation charge and the impact of foreign exchange translation partially offset by additions made in the period. Net capital expenditure in the year (including computer software) amounted to €310.7m (2019: €315.3m). The level of capital investment supports the Group's growth initiatives and included the strategic development of its Georgia, US facility, creating a world ‐ leading manufacturing facility to meet increasing demand for integrated solutions across a variety of protein applications .

Intangible Assets & Acquisitions

Intangible assets increased by €97.4m to €4,687.1m (2019: €4,589.7m) due to the acquisitions made in the year partially offset by the amortisation charge and the impact of foreign exchange translation.

Current Assets

Current assets decreased by €77.4m to €2,594.8m (2019: €2,672.2m) due to decreased inventory and trade and other receivables.

Retirement Benefits

At the balance sheet date, the total net deficit for all defined benefit schemes (after deferred tax) was €43.6m (2019: €8.6m). The increase in the net deficit was driven primarily by lower discount rates which increased schemes' liabilities. However, this was partially offset by strong returns on schemes' assets. The net deficit expressed as a percentage of market capitalisation at 31 December 2020 was 0.2% (2019: 0.04%).

Free Cash Flow

In 2020, the Group achieved free cash flow of €412.0m (2019: €514.6m).

	2020		2019
Free Cash Flow		€'m	€'m
Trading profit		797.2	902.7
Depreciation (net)		200.7	191.4
Movement in average working capital		(102.5)	(89.5)
Pension contributions paid less pension expense		(23.4)	(26.7)
Cash flow from operations		872.0	977.9
Finance costs paid (net)		(74.6)	(80.8)
Income taxes paid		(74.7)	(67.2)
Purchase of non-current assets		(310.7)	(315.3)
Free cash flow		412.0	514.6
Cash conversion¹		67%	74%

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

Total Net Debt

Total net debt at the end of the year was €1,945.1m (2019: €1,972.2m). Lease liabilities are included in total net debt for 2020 and 2019.

Financing

Undrawn committed facilities at the end of the year were €1,100m (2019: €1,100m) while undrawn standby facilities were €320.0m (2019: €330.0m).

In early 2020, the Group repaid US$208m of maturing private placement notes. During the second quarter of 2020, the Group completed a €200m tap issuance onto its 2025 Senior Notes and exercised the first of the two 'plus one year' extension options on the revolving credit facility to further extend the maturity date of this facility to June 2025.

Of the cash at bank and in hand at year end, €75m was on short term deposit under a Sustainable Deposits programme.

Key Financial Ratios

The Group's balance sheet is in a strong position with a Net debt to EBITDA* ratio of 1.9 times. At this ratio the Group has significant liquidity headroom to support future growth plans. The Group's debt is not subject to financial covenants, other than €163.0m of US$ Private Placements. Group Treasury monitors compliance with all financial covenants and at 31 December the key ratios are as follows:

	Covenant	2020 Times	2019 Times
Net debt: EBITDA*	Maximum 3.5	1.9	1.8
EBITDA: Net interest*	Minimum 4.0	13.8	13.2
* Calculated in accordance with lenders' facility agreements which take account of adjustments as outlined in the financial definitions.

Share Price and Market Capitalisation

The Company's shares traded in the range €91.95 to €125.60 during the year. The share price at 31 December 2020 was €118.50 (2019: €111.10) giving a market capitalisation of €20.9 billion (2019: €19.6 billion). Total Shareholder Return for 2020 was 7.4% (2019: 29.3%).

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 on 29 April 2021.

Strategic Review

The Group is conducting a strategic review of its dairy-related businesses in Ireland and the UK. This business has activities across both Taste & Nutrition and Consumer Foods businesses. We note that there is no certainty that this review will lead to a transaction. Further communication will be made in due course as appropriate.

Future Prospects

The scale and pace of change seen over the last 12 months has led to customers fundamentally reassessing their portfolios, ways of working and business models. This has created an environment where customers are more open to change and are looking for partners to help them pivot at pace, to address both short-term challenges and opportunities, while also allowing them to target more meaningful, purposeful, step change innovations as they look out into the future. Sustainability, localisation, speed to market and innovation process agility have been elevated in importance as customers strive to win market share. Against this backdrop, Kerry's proactive approach and co-creation business model is ideally placed to support customers through these changing market dynamics.

Looking to the year ahead, within Taste & Nutrition, we see strong growth prospects in the retail channel, with continued recovery in foodservice, underpinned by a very good innovation pipeline and strong customer engagement. The shorter-term impact from COVID-19 will continue through Q1, where we are expecting flat to positive volume growth in this quarter, with an overall outlook for strong recovery and good growth in the full year.

Our Consumer Foods business has a good growth outlook supported by continued innovation and the strength of our brands.

We will continue to invest for growth and enablement of our business model, while continuing to pursue M&A opportunities aligned to our strategic growth priorities. Kerry's unique business model, broad taste and nutrition portfolio and industry-leading integrated solutions capabilities are more critical than ever, as we support our customers through this dynamic environment.

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.

	CONTACT INFORMATION
	Media
	James Dunny , Director of External 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

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

Consolidated Income Statement
for the financial year ended 31 December 2020
		Before	Non-		Before	Non-
	Non-Trading		Trading	Non-Trading		Trading
		Items	Items	Total	Items	Items	Total
		2020	2020	2020	2019	2019	2019
	Notes	€'m	€'m	€'m	€'m	€'m	€'m
Continuing operations
Revenue	2	6,953.4	-	6,953.4	7,241.3	-	7,241.3
		_______	_______	_______	_______	_______	_______
Trading profit	2	797.2	-	797.2	902.7	-	902.7
Intangible asset amortisation		(70.1)	-	(70.1)	(64.3)	-	(64.3)
Non-trading items	3	-	(19.4)	(19.4)	-	(110.9)	(110.9)
		_______	_______	_______	_______	_______	_______
Operating profit		727.1	(19.4)	707.7	838.4	(110.9)	727.5
Finance income		0.2	-	0.2	0.3	-	0.3
Finance costs		(72.6)	-	(72.6)	(81.9)	-	(81.9)
		_______	_______	_______	_______	_______	_______
Profit before taxation		654.7	(19.4)	635.3	756.8	(110.9)	645.9
Income taxes		(85.1)	3.9	(81.2)	(98.6)	19.2	(79.4)
		_______	_______	_______	_______	_______	_______
Profit after taxation attributable to owners of the parent		569.6	(15.5)	554.1	658.2	(91.7)	566.5
		_______	_______	_______	_______	_______	_______
Earnings per A ordinary share				Cent			Cent
- basic	4			313.0			320.4
- diluted	4			312.5			319.9
				_______			_______

Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2020
					2020	2019
					€'m	€'m
Profit after taxation attributable to owners of the parent					554.1	566.5
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges					7.9	7.2
Cash flow hedges - reclassified to profit or loss from equity					2.9	0.1
Net change in cost of hedging					(0.9)	0.6
Deferred tax effect of fair value movements on cash flow hedges					(2.0)	(1.4)
Exchange difference on translation of foreign operations					(282.3)	67.0
Fair value movement on revaluation of financial assets held at fair value through other comprehensive income					(1.3)	(1.0)
Disposal of financial assets fair value movement reclassified to profit or loss					0.7	-
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation					(67.0)	14.0
Deferred tax effect of re-measurement on retirement benefits obligation					11.8	(2.0)
					_______	_______
Net (expense)/income recognised directly in total other comprehensive income					(330.2)	84.5
					_______	_______
Total comprehensive income					223.9	651.0
					_______	_______

Consolidated Balance Sheet					31 December	31 December
as at 31 December 2020					2020	2019
					€'m	€'m
Non-current assets
Property, plant and equipment					1,990.6	2,062.9
Intangible assets					4,687.1	4,589.7
Financial asset investments					37.0	41.7
Investment in joint ventures					17.8	16.2
Other non-current financial instruments					82.0	82.7
Deferred tax assets					33.8	38.9
					_______	_______
					6,848.3	6,832.1
					_______	_______
Current assets
Inventories					975.6	993.3
Trade and other receivables					1,042.0	1,066.3
Cash at bank and in hand					563.1	554.9
Other current financial instruments					14.1	57.7
					_______	_______
					2,594.8	2,672.2
					_______	_______
Total assets					9,443.1	9,504.3
					_______	_______
Current liabilities
Trade and other payables					1,543.3	1,643.0
Borrowings and overdrafts					2.8	190.8
Other current financial instruments					10.0	12.1
Tax liabilities					132.6	140.7
Provisions					5.2	25.2
Deferred income					2.4	2.2
					_______	_______
					1,696.3	2,014.0
					_______	_______
Non-current liabilities
Borrowings					2,505.8	2,355.3
Other non-current financial instruments					0.5	-
Retirement benefits obligation					54.4	11.9
Other non-current liabilities					144.9	167.9
Deferred tax liabilities					330.2	338.9
Provisions					36.1	33.2
Deferred income					19.4	20.9
					_______	_______
					3,091.3	2,928.1
					_______	_______
Total liabilities					4,787.6	4,942.1
					_______	_______
Net assets					4,655.5	4,562.2
					_______	_______
Issued capital and reserves attributable to owners of the parent
Share capital					22.1	22.1
Share premium					398.7	398.7
Other reserves					(379.5)	(119.0)
Retained earnings					4,614.2	4,260.4
					_______	_______
Shareholders' equity					4,655.5	4,562.2
					_______	_______

Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2020
				Note	Share Capital €'m	Share Premium €'m	Other Reserves €'m	Retained Earnings €'m	Total €'m
Group:
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 taxation 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
Profit after taxation attributable to owners of the parent					-	-	-	554.1	554.1
Other comprehensive expense					-	-	(273.0)	(57.2)	(330.2)
					_______	_______	_______	_______	______
Total comprehensive (expense)/income					-	-	(273.0)	496.9	223.9
Shares issued during the financial year					-	-	-	-	-
Dividends paid				5	-	-	-	(143.1)	(143.1)
Share-based payment expense					-	-	12.5	-	12.5
					_______	_______	_______	_______	______
At 31 December 2020					22.1	398.7	(379.5)	4,614.2	4,655.5
					_______	_______	_______	_______	______

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 2019	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)
Other comprehensive (expense)/income	(0.6)	-	-	-	(282.3)	10.8	(0.9)	(273.0)
Share-based payment expense	-	-	-	12.5	-	-	-	12.5
	_______	_______	_______	_______	_______	_______	_______	______
At 31 December 2020	-	1.7	0.3	90.2	(472.0)	2.6	(2.3)	(379.5)
	_______	_______	_______	_______	_______	_______	_______	______

Consolidated Statement of Cash Flows
for the financial year ended 31 December 2020								2020	2019
						Notes		€'m	€'m
Operating activities
Trading profit								797.2	902.7
Adjustments for:
Depreciation (net)								200.7	191.4
Change in working capital								(108.7)	(63.9)
Pension contributions paid less pension expense								(23.4)	(26.7)
Payments on non-trading items								(39.7)	(89.1)
Exchange translation adjustment								(4.6)	(2.5)
								_______	______
Cash generated from operations								821.5	911.9
Income taxes paid								(74.7)	(67.2)
Finance income received								0.2	0.5
Finance costs paid								(74.8)	(81.3)
								_______	______
Net cash from operating activities								672.2	763.9
								_______	______
Investing activities
Purchase of assets (net)								(276.2)	(315.6)
Proceeds from the sale of assets								7.7	32.8
Capital grants received								0.1	3.0
Purchase of businesses (net of cash acquired)						6		(251.1)	(562.7)
Payments relating to previous acquisitions								(7.5)	(5.3)
								_______	______
Net cash used in investing activities								(527.0)	(847.8)
								_______	______
Financing activities
Dividends paid						5		(143.1)	(128.3)
Payment of lease liabilities								(37.0)	(35.5)
Issue of share capital								-	0.1
Repayment of borrowings (net of swaps)								(391.1)	(564.4)
Increase in borrowings								462.9	950.0
								_______	______
Net cash movement due to financing activities								(108.3)	221.9
								_______	______
Net increase in cash and cash equivalents								36.9	138.0
Cash and cash equivalents at beginning of the financial year								549.7	403.9
Exchange translation adjustment on cash and cash equivalents								(26.3)	7.8
								_______	______
Cash and cash equivalents at end of the financial year								560.3	549.7
								_______	______
Reconciliation of Net Cash Flow to Movement in Net Debt
Net increase in cash and cash equivalents								36.9	138.0
Cash flow from debt financing								(71.8)	(385.6)
								_______	______
Changes in net debt resulting from cash flows								(34.9)	(247.6)
Fair value movement on interest rate swaps (net of adjustment to borrowings)								7.6	12.5
Exchange translation adjustment on net debt								26.5	(4.2)
								_______	______
Movement in net debt in the financial year								(0.8)	(239.3)
Net debt at beginning of the financial year								(1,862.8)	(1,623.5)
								_______	______
Net debt at end of the financial year - pre lease liabilities								(1,863.6)	(1,862.8)
Lease liabilities								(81.5)	(109.4)
								_______	______
Total net debt* at the end of the financial year								(1,945.1)	(1,972.2)
								_______	______
*Prior year has been re-presented to include lease liabilities in total net debt.

Notes to the Financial Statements

for the financial year ended 31 December 2020

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 2020. 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 2020 or 2019 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 joint ventures are accounted for using the equity method.

The consolidated financial statements have been prepared on the going concern basis of accounting. The Directors have considered the Group's business activities and how it generates value, together with the main trends and factors likely to affect future development, business performance including liquidity and access to financing and position of the Group including the impact of the current COVID-19 pandemic. Due to the uncertainty of the ongoing duration and impact of the pandemic on mobility restrictions in different countries around the world, additional stressed scenarios, reflecting different levels and timing of recovery, have been considered. This analysis indicated that, notwithstanding the current global pandemic, it does not affect the Group's ability to continue as a going concern.

There are no material uncertainties that cast a significant doubt on the Group's ability to continue as a going concern over a period of at least 12 months.

The Group's accounting policies will be included in the 2020 Annual Report & Accounts, which will be published at the end of March, and are consistent with those described in the 2019 Annual Report & Accounts.

Critical accounting estimates and judgements

Preparation of the consolidated financial statements requires management to make certain estimations, assumptions and judgements that affect the reported profits, assets and liabilities.

Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based or as a result of new information or more experience. Such changes are recognised in the period in which the estimate is revised.

In particular, information about significant areas of estimation that have the most significant effect on the amounts recognised in the consolidated financial statements are described below and in the respective notes to the consolidated financial statements.

We have considered the impact of the COVID-19 pandemic on our business and the key impacts up to 31 December 2020 include:

-	All plants remained open except for a limited number of those that were mandated to close temporarily in specific jurisdictions. While there were changes to shift patterns and ways of working to ensure the safety of employees through additional segregation and cleaning routines, there were no indicators of impairment to property, plant and equipment.
-	The Group considered the impact of the global pandemic on its impairment risk around the carrying value of the goodwill and indefinite life intangible assets. The long-term outlook for the Group remains positive and supports our valuations and given there was significant headroom, no impairment was identified.
-	While supporting our customers during this crisis through the carrying of increased inventory and receivable balances, the Group has assessed the risks and to date, does not believe there are additional risks around the recovery of these assets.
-	The impact of the mobility restrictions globally has impacted the Group's revenue and profitability, most significantly in the foodservice part of the Group's business. Third party revenue in our Taste & Nutrition segment from the foodservice business was €1,390.5m (2019: €1,767.6m).

The impact of COVID-19 on the critical accounting estimates and judgements of business combinations and impairment of goodwill and intangibles, has also been assessed and is not considered material in the context of the consolidated financial statements.

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 2020 but do not 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

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 16 (Amendment)	Leases	1 June 2020
-	IFRS 7, IFRS 4 & IFRS 16 (Amendments)	Interest Rate Benchmark Reform - Phase 2	1 January 2021
-	IAS 1 (Amendments)	Presentation of Financial Statements	1 January 2022
-	IFRS 17	Insurance Contracts	1 January 2023

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 taste and nutrition, serving the food, beverage and pharmaceutical industries 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 a leader in our consumer foods categories in the chilled cabinet primarily in Ireland and in the UK.

			Taste & Nutrition 2020		Consumer Foods 2020	Group Eliminations and Unallocated 2020	Total 2020		Taste & Nutrition 2019	Consumer Foods 2019	Group Eliminations and Unallocated 2019	Total 2019
			€'m		€'m	€'m	€'m		€'m	€'m	€'m	€'m
External revenue		5,678.4			1,275.0	-	6,953.4		5,939.1	1,302.2	-	7,241.3
Inter-segment revenue		74.8			3.6	(78.4)	-		78.5	4.4	(82.9)	-
			_______		_______	_______	_______		_______	_______	_______	_______
Revenue			5,753.2		1,278.6	(78.4)	6,953.4		6,017.6	1,306.6	(82.9)	7,241.3
			_______		_______	_______	_______		_______	_______	_______	_______
Trading profit				814.2	99.2	(116.2)	797.2		918.5	98.9	(114.7)	902.7
			_______		_______	_______			_______	_______	_______
Intangible asset amortisation							(70.1)					(64.3)
Non-trading items							(19.4)					(110.9)
							_______					_______
Operating profit							707.7					727.5
Finance income							0.2					0.3
Finance costs							(72.6)					(81.9)
							_______					_______
Profit before taxation							635.3					645.9
Income taxes							(81.2)					(79.4)
							_______					_______
Profit after taxation attributable to owners of the parent								554.1				566.5
							_______					_______
Segment assets and liabilities
Segment assets		6,370.1			877.2	2,195.8	9,443.1		6,268.5	925.7	2,310.1	9,504.3
Segment liabilities		(1,295.0)			(332.9)	(3,159.7)	(4,787.6)		(1,565.7)	(311.8)	(3,064.6)	(4,942.1)
	_______				_______	_______	_______		_______	_______	_______	_______
Net assets		5,075.1			544.3	(963.9)	4,655.5		4,702.8	613.9	(754.5)	4,562.2
	_______				_______	_______	_______		_______	_______	_______	_______
Other segmental information
Property, plant and equipment additions				225.0	20.7	-	245.7		247.2	32.7	0.7	280.6
Depreciation (net)				178.5	21.7	0.5	200.7		164.6	22.7	4.1	191.4
Intangible asset additions				0.9	1.0	50.2	52.1		1.3	2.0	51.9	55.2
Intangible asset amortisation				23.7	6.4	40.0	70.1		23.0	6.8	34.5	64.3
	_______				_______	_______	_______		_______	_______	_______	_______

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 2020	Consumer Foods 2020	Total 2020		Taste & Nutrition 2019	Consumer Foods 2019	Total 2019
		€'m	€'m	€'m		€'m	€'m	€'m
Food		3,974.6	1,275.0	5,249.6		4,161.5	1,302.2	5,463.7
Beverage		1,407.1	-	1,407.1		1,507.6	-	1,507.6
Pharma		296.7	-	296.7		270.0	-	270.0
		_______	_______	_______		_______	_______	_______
External revenue		5,678.4	1,275.0	6,953.4		5,939.1	1,302.2	7,241.3
		_______	_______	_______		_______	_______	_______

Analysis by primary geographic market

Disaggregation of revenue from external customers is analysed by geographical split:
		Taste & Nutrition 2020	Consumer Foods 2020	Total 2020		Taste & Nutrition 2019	Consumer Foods 2019	Total 2019
		€'m	€'m	€'m		€'m	€'m	€'m
Republic of Ireland		171.1	262.2	433.3		184.9	252.5	437.4
Rest of Europe		1,204.0	1,012.8	2,216.8		1,271.5	1,049.7	2,321.2
Americas		3,085.4	-	3,085.4		3,197.8	-	3,197.8
APMEA		1,217.9	-	1,217.9		1,284.9	-	1,284.9
		_______	_______	_______		_______	_______	_______
External revenue		5,678.4	1,275.0	6,953.4		5,939.1	1,302.2	7,241.3
		_______	_______	_______		_______	_______	_______

Information about geographical areas
	Europe 2020	Americas 2020	APMEA 2020	Total 2020	Europe 2019	Americas 2019	APMEA 2019	Total 2019
	€'m	€'m	€'m	€'m	€'m	€'m	€'m	€'m
Segment assets by location	4,986.5	3,362.6	1,094.0	9,443.1	4,858.4	3,502.3	1,143.6	9,504.3
Property, plant and equipment additions	61.1	130.2	54.4	245.7	87.9	114.7	78.0	280.6
Intangible asset additions	51.6	0.5	-	52.1	54.3	0.9	-	55.2
	_______	_______	_______	_______	_______	_______	_______	_______

Kerry Group plc is domiciled in the Republic of Ireland and the revenues from external customers in the Republic of Ireland were €433.3m (2019: €437.4m). The non-current assets located in the Republic of Ireland are €903.1m (€930.3m).

Revenues from external customers include €1,420.6m (2019: €1,527.9m) in the UK and €2,509.8m (2019: €2,597.5m) in the USA. The non-current assets in the UK are €692.4m (2019: €737.2m) and in the USA are €2,035.6m (2019: €2,142.5m).

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. 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
				2020	2019
		Notes		€'m	€'m
Taste & Nutrition acquisition related and other costs		(i)		(17.5)	(80.7)
Consumer Foods Realignment Programme		(ii)		-	(26.7)
Loss on disposal of businesses and assets		(iii)		(1.9)	(3.5)
				_______	_______
				(19.4)	(110.9)
Tax on above				3.9	19.2
				_______	_______
Non-trading items (net of tax)				(15.5)	(91.7)
				_______	_______

(i) Taste & Nutrition acquisition related and other costs
Acquisition integration and restructuring costs of €13.1m (2019: €80.7m) primarily related to costs of integrating recent acquisitions into the Group's operations. These costs reflect the relocation of resources, the restructuring of operations in order to integrate the acquired businesses into the existing Kerry operating model and external costs associated with deal preparation, integration planning and due diligence. The Group has commenced a program to evolve and restructure our global business services model to better enable the business and support further growth, costs incurred to date are €4.4m (2019: €nil). A tax credit of €3.5m (2019: €14.9m) arose due to tax deductions available on acquisition integration and other costs.
(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 was €26.7m, which reflects redundancies, relocation of resources and the streamlining of operations. The associated tax credit was €4.5m.
(iii) Loss on disposal of businesses and assets
During the year, the Group disposed of property, plant and equipment in North America, Europe and APMEA for a consideration of €2.4m resulting in a loss of €1.9m for the year ended 31 December 2020. In 2019, 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.
A tax credit of €0.4m (2019: a tax charge of €0.2m) 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	2020	EPS	2019
		cent	€'m	cent	€'m
Basic earnings per share
Profit after taxation attributable to owners of the parent		313.0	554.1	320.4	566.5
Diluted earnings per share
Profit after taxation attributable to owners of the parent		312.5	554.1	319.9	566.5
		_______	_______	_______	_______

	2020	2019
	m's	m's
Number of Shares
Basic weighted average number of shares	177.0	176.8
Impact of share options outstanding	0.3	0.3
	_______	_______
Diluted weighted average number of shares	177.3	177.1
	_______	_______
Actual number of shares in issue as at 31 December	176.7	176.5
	_______	_______

5. Dividends

	2020	2019
	€'m	€'m
Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2019 dividend of 55.10 cent per A ordinary share paid 15 May 2020 (Final 2018 dividend of 49.20 cent per A ordinary share paid 10 May 2019)	97.3	86.7
Interim 2020 dividend of 25.90cent per A ordinary share paid 13 November 2020 (Interim 2019 dividend of 23.50 cent per A ordinary share paid 15 November 2019)	45.8	41.6
	_______	_______
	143.1	128.3
	_______	_______

Since the financial year end the Board has proposed a final 2020 dividend of 60.60 cent per A ordinary share which amounts to €107.1m. The payment date for the final dividend will be 14 May 2021 to shareholders registered on the record date as at 16 April 2021. The consolidated financial statements do not reflect this dividend.

6. Business combinations

During 2020, the Group completed a total of three acquisitions, all of which are 100% owned by the Group.

		Total
		2020
		€'m
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment		21.2
Brand related intangibles		124.1
Current assets
Cash at bank and in hand		1.2
Inventories		11.1
Trade and other receivables		16.8
Current liabilities
Trade and other payables		(19.1)
Non-current liabilities
Deferred tax liabilities		(23.0)
Other non-current liabilities		(1.5)
		________
Total identifiable assets		130.8
Goodwill		149.2
		________
Total consideration		280.0
		________
Satisfied by:
Cash		270.3
Deferred payment		9.7
		________
		280.0
		________
Net cash outflow on acquisition:
		Total
		2020
		€'m
Cash		270.3
Less: cash and cash equivalents acquired		(1.2)
Less: prepayments made in 2019 in relation to 2020 acquisitions		(18.0)
		________
		251.1
		________

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 2019, 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. €30.9m of goodwill recognised is expected to be deductible for income tax purposes.

Transaction expenses related to these acquisitions of €1.4m 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 €16.8m and a gross contractual value of €16.8m .

In relation to the €18.7m prepayments made in 2019 relating to future acquisitions, €18.0m is attributable to 2020 acquisitions with the €0.7m remaining prepayment for acquisitions yet to be completed.

From the date of acquisition, the acquired businesses have contributed €23.8m of revenue and €1.6m 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 €75.0m of revenue and €5.3m of profit after taxation attributable to owners of the parent to the Group.

The following acquisitions were completed by the Group during 2020:

Acquisition	Acquired	Principal activity
Tecnispice, Sociedad Anónima	April	Tecnispice, located in Guatemala, is a leading savoury taste business serving the meat and snacks markets incorporating spices, herbs and seasonings. Global Spice, a sister company of Tecnispice, based in Costa Rica was also acquired as part of this transaction.
Bio-K Plus International Inc.	October	Bio-K+, based in Canada, is a leading biotechnology company with probiotics in beverage and supplement applications.
Shandong Tianbo Food Ingredients Co., Ltd	November	Shandong Tianbo (Jining Nature Group) is a leading manufacturer of savoury flavours and seasonings serving the meat, snacks and meals markets, based in China.

7. Events after the balance sheet date

Since the financial year end, the Group has proposed a final dividend of 60.60 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 2020.

8. General information

The statutory financial statements of Kerry Group plc for the financial year ended 31 December 2020 were approved by the Board of Directors and authorised for issue on 15 February 2021 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 2019, to which an unqualified audit opinion was received, were annexed to the annual return and filed with the Registrar of Companies.

FINANCIAL DEFINITIONS

1.  Revenue

Volume performance

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

Volume performance 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 performance positively or negatively depending on whether raw material prices move up or down. A full reconciliation to reported revenue performance is detailed in the revenue reconciliation below.

Revenue Reconciliation

2020	Volume performance	Price	Transaction currency	Acquisitions/ Disposals	Translation currency	Reported revenue performance
Taste & Nutrition	(3.0%)	0.1%	(0.1%)	1.2%	(2.6%)	(4.4%)
Consumer Foods	(2.6%)	1.2%	-	-	(0.7%)	(2.1%)
	________	________	________	________	________	________
Group	(2.9%)	0.3%	(0.1%)	1.0%	(2.3%)	(4.0%)
2019
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%
	________	________	________	________	________	________

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.

	2020	2019
	€'m	€'m
Profit after taxation attributable to owners of the parent	554.1	566.5
Finance income	(0.2)	(0.3)
Finance costs	72.6	81.9
Income taxes	81.2	79.4
Non-trading items	19.4	110.9
Intangible asset amortisation	70.1	64.3
Depreciation (net of capital grant amortisation)	200.7	191.4
	_______	_______
EBITDA	997.9	1,094.1
	_______	_______

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.

	2020	2019
	€'m	€'m
Operating profit	707.7	727.5
Intangible asset amortisation	70.1	64.3
Non-trading items	19.4	110.9
	_______	_______
Trading profit	797.2	902.7
	_______	_______

4.  Trading Margin

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

	2020	2019
	€'m	€'m
Trading profit	797.2	902.7
Revenue	6,953.4	7,241.3
	_______	_______
Trading margin	11.5%	12.5%
	_______	_______

5.  Operating Profit

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

	2020	2019
	€'m	€'m
Profit before taxation	635.3	645.9
Finance income	(0.2)	(0.3)
Finance costs	72.6	81.9
	_______	_______
Operating profit	707.7	727.5
	_______	_______

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

The performance 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 performance 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.

	2020	2019
	EPS	EPS
	cent	cent
Basic earnings per share	313.0	320.4
Brand related intangible asset amortisation	23.6	21.4
Non-trading items (net of related tax)	8.8	51.9
	_______	_______
Adjusted earnings per share	345.4	393.7
Impact of retranslating prior year adjusted earnings per share at current year average exchange rates	-	(12.3)
	_______	_______
Adjusted earnings per share on a constant currency basis	345.4	381.4
	_______	_______
Performance in adjusted earnings per share on a constant currency basis	(9.4%)	8.3%
	_______	_______

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'.

	2020	2019
	€'m	€'m
Net cash from operating activities	672.2	763.9
Difference between movement in monthly average working capital and movement in the financial year end working capital	6.2	(25.6)
Expenditure on acquisition integration and restructuring costs	39.7	89.1
Purchase of assets	(276.2)	(315.6)
Payment of lease liabilities	(37.0)	(35.5)
Proceeds from the sale of property, plant and equipment	2.4	32.8
Capital grants received	0.1	3.0
Exchange translation adjustments	4.6	2.5
	_______	_______
Free cash flow	412.0	514.6
	_______	_______

8.  Cash Conversion

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

	2020	2019
	€'m	€'m
Free cash flow	412.0	514.6
Profit after taxation attributable to owners of the parent	554.1	566.5
Brand related intangible asset amortisation	41.7	37.8
Non-trading items (net of related tax)	15.5	91.7
	_______	_______
Adjusted earnings after taxation	611.3	696.0
	_______	_______
Cash Conversion	67%	74%
	_______	_______

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 and deferred payments in relation to acquisitions.

	Covenant	2020 Times	2019 Times
Net debt: EBITDA	Maximum 3.5	1.9	1.8
EBITDA: Net interest	Minimum 4.0	13.8	13.2

10.  Average Capital Employed

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

			2020	H1 2020	2019	H1 2019	2018
			€'m	€'m	€'m	€'m	€'m
Shareholders' equity			4,655.5	4,508.5	4,562.2	4,186.5	4,034.4
Goodwill amortised (pre conversion to IFRS)			527.8	527.8	527.8	527.8	527.8
			_______	______	_______	_______	_______
Adjusted equity			5,183.3	5,036.3	5,090.0	4,714.3	4,562.2
Net debt - pre lease liabilities			1,863.6	1,996.4	1,862.8	1,918.2	1,623.5
			_______	______	_______	_______	_______
Total			7,046.9	7,032.7	6,952.8	6,632.5	6,185.7
			_______	______	_______	_______	_______
Average capital employed			7,010.8		6,590.3
			_______		_______

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.

	2020	2019
	€'m	€'m
Profit after taxation attributable to owners of the parent	554.1	566.5
Non-trading items (net of related tax)	15.5	91.7
Brand related intangible asset amortisation	41.7	37.8
Net finance costs	72.4	81.6
	_______	_______
Adjusted profit	683.7	777.6
	_______	_______
Average capital employed	7,010.8	6,590.3
	_______	_______
Return on average capital employed	9.8%	11.8%
	_______	_______

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.

	2020	2019
Share price (1 January)	€111.10	€86.50
Interim dividend (cent)	25.9	23.5
Dividend paid (cent)	55.1	49.2
Share price (31 December)	€118.50	€111.10
	_______	_______
Total shareholder return	7.4%	29.3%
	_______	_______

13.  Market Capitalisation

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

	2020	2019
Share price (31 December)	€118.50	€111.10
Shares in issue ('000)	176,700.0	176,514.9
	_______	_______
Market capitalisation (€'m)	20,939.0	19,610.8
	_______	_______

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.  Total Net Debt

Total net debt comprises borrowings and overdrafts, interest rate derivative financial instruments, lease liabilities and cash at bank and in hand.

 

END

 

 

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