Preliminary Statement
Kerry Group PLC
28 February 2006
Kerry Group plc Annual Results 2005
28 February, 2006
Kerry, the global ingredients, flavours and consumer foods group, reports
preliminary results for the year ended 31 December 2005.
Financial Highlights
• Sales revenue increased by 7% to €4.4 billion
• Trading profit growth of 7% to €380m
• Trading margin maintained at 8.6%
• Profit after tax up 16% to €236m
• Adjusted EPS* up 7.1% to 131.6 cent
• Final dividend per share up 15.8% to 11 cent
• Free cash flow of €248m
• R&D expenditure increased to €125m
*before intangible amortisation and non-trading items
Kerry Group Chief Executive Hugh Friel said 'Kerry achieved a solid business
performance in 2005, delivering good top-line and earnings growth in a
challenging year for the global food industry. The Group's business units were
to the fore in providing innovative technologies and solutions to meet customer
needs for 'clean label', natural food and beverages and therapeutical products.
Kerry's leading technologies, nutritional focus and the strong market
positioning of its broad geographic spread of businesses, augur well for the
future profitable growth and development of the Group. We continue to pursue
value and technology enhancing acquisition opportunities and are confident of
meeting market growth expectations in 2006'.
Kerry Group plc
Preliminary Statement
Results for the year ended 31 December 2005
Kerry Group maintained its record of sustained profit growth and strong cash
flows in 2005 - the Group's twentieth year as a public company. Kerry achieved
a solid business performance, delivering good top-line and earnings growth in a
challenging year for the global food industry due primarily to significant raw
material and energy cost inflation. Group businesses were well positioned to
meet divergent consumer, nutritional, well-being and lifestyle requirements.
The breadth of Kerry's ingredients, bio-science and flavour technologies meant
that the Group's strategic business units were to the fore in providing
innovative technologies and solutions to meet customer needs for 'clean label',
natural food and beverages and therapeutical products.
In 2005, the Group made substantial operational progress in re-organising and
refocusing its applications, processing and business support structures to meet
changing marketplace requirements and industry growth sectors. Portfolio
optimisation and elimination of non-core activities is on-going. Significant
progress was also achieved in progressing the Group's business expansion into
developing growth markets in Eastern Europe, South America and Asia.
Expenditure on research and development in 2005 increased to €125m (2004: €111m)
reflecting the Group's broader technological platforms and its commitment and
focus on consumer nutritional and lifestyle requirements.
Results
Sales revenue in 2005 increased by 7% to €4.43 billion with a solid growth
performance in the Group's ingredients and consumer foods divisions and
throughout regional geographic markets. On a like-for-like basis, Group sales
revenue increased by 4% year-on-year. Notwithstanding the significant input
cost inflation and surge in energy costs, trading profit increased by 7% to
€380m. Together with an adverse trading currency transaction impact of €24m
(2004 : €20m) and despite good margin recovery in the second half of the year,
this resulted in a Group trading margin of 8.6%, similar to the prior year
level.
Profit after taxation increased by 16% to €236m. Basic earnings per share
increased by 15.2% to 126.1 cent. Adjusted earnings per share increased by 7.1%
to 131.6 cent.
Business Reviews
Food Ingredients
Kerry's food ingredients businesses increased sales revenue by 9% to €3 billion,
reflecting like-for-like sales growth of 5%. Trading profits increased by 9% to
€284m which represents a trading margin of 9.4%, similar to the year earlier
level.
Good progress was achieved in all major markets reflecting the Group's broad
range of ingredients and flavours technologies and its capacity to provide
innovative formulations to enhance taste, texture, nutritional profile,
convenience, shelf life or functionality of food and beverage applications.
Group businesses continued to invest significant resources in technology
development, delivery formats and business support systems/facilities to address
marketplace changes. While successfully extending applications into new niche
markets, Kerry's ingredients businesses also continued to make excellent
progress in market development in emerging growth markets. In its first full
year of operation, Kerry Bio-Science (formerly Quest Food Ingredients) made
significant progress in restructuring its operations and positioning market
representative structures. A new divisional headquarters was established in
Almere, the Netherlands and independent representative offices were established
in European, American, North African, South African and Asian markets. In 2005,
a Kerry Group Nutrition Technical Centre was also established in Almere to
support all Group businesses and their customers through provision of specialist
science based nutritional information and expertise embracing nutrition,
physiology, bio-chemistry, food science and toxicology disciplines, including
management of clinical trials. Mastertaste consolidated and re-organised its
facilities following the 2004 acquisitions of U.S. based Manheimer and
Flavurence and Italy based Fructamine. A divisional Mastertaste headquarters
and flavours and fragrance technical centre was established at the Manheimer
site in Teterboro, New Jersey. All flavour development, applications and
production for West Coast, USA was consolidated at one site in Los Angeles.
In European ingredients markets sales revenue increased by 9% to €1,264m,
reflecting like-for-like sales growth of 5%. With manufacturing operations now
established in nine European countries and sales/country representative offices
in all other major markets including Russia and Eastern Europe, the Group's
ingredients, flavours and bio-science businesses are well positioned to
capitalise on market growth trends and evolving consumer needs. While
conditions in seasonings and coatings markets proved highly competitive, Kerry
recorded satisfactory growth in the UK, France, Italy and Germany. A €2m
investment programme at the Wittstock facility in Germany was completed,
increasing production capacity and plant efficiencies. The UK based EBI
business again achieved good growth through added value coatings applications
into the quick-serve-restaurant sector. Despite the slowdown in the overall
prepared meals market in the second half of 2005, Kerry continued to achieve
good progress in premium market sectors through seasonings, culinary
applications and sauces.
Conditions in European snack seasonings markets proved challenging. However,
Kerry gained sales volume through continued market development in Eastern Europe
and in Russia.
Further progress was achieved through functional dairy ingredient solutions for
infant and medical nutrition, sports and lifestyle nutrition, confectionery and
beverage markets globally from Kerry's specialist dairy ingredients facilities
in Ireland. Ultranor(R) HT10 was launched for use in functional beverages,
yoghurt, smoothies and dessert applications. A unique milk protein concentrate,
Ultranor(R) HT10 delivers high levels of calcium in a stable/colloidal form.
The Beatreme(R) range of dairy and cultured milk ingredients was also
successfully expanded to meet requirements for natural dairy ingredients in
confectionery, biscuit and culinary applications. Cremo Ingredients, acquired
in 2004, performed well through dairy flavourings for savoury and culinary
applications.
In 2005, Kerry's sweet ingredients business in Europe achieved good volume
growth through coated products in the health cereal sector and fresh dairy
products markets. Progress was achieved through innovative crunchy cereal
inclusions and biscuit inclusions in the growing cheese cake sector. A €2.5m
investment programme was completed at the York (UK) based facilities to cater
for market growth opportunities. Due to the relative maturity of the European
chilled and frozen dairy product markets, the market for fruit preparations was
static - except for health and well-being growth niches including nutritional
beverages and probiotics. Progress was also achieved through fruit fillings
for health lines in confectionery and biscuit applications.
Kerry Bio-Science continued to progress application of its protein hydrolysates,
emulsifiers, yeast flavourings, enzymes, hydrocolloids, cultures and
fermentation products in the areas of nutrition, flavour, texture and shelf life
of food and beverages. Bio-Science technologists also assisted developments of
new applications through other Kerry Ingredients businesses facilitating
technical differentiation and added-value opportunities. Fermented ingredients
introduced promising new bio-security product developments but profitability was
impacted by a delay in recovering raw material price increases. Texture systems
achieved good growth in the European dairy and meat sectors. Enzymes grew
satisfactorily in confectionery and meat tenderising markets but sales of
brewing enzymes were slightly reduced due to the decline in beer consumption in
Western Europe. Sheffield(TM) Pharma Ingredients progressed its business
development in European markets, investing in new application facilities and
sales structures. Its products and project pipeline is encouraging through
global extension of approved biotech and fermentation based drugs and
application of new media formulations. Sheffield(TM) brand excipients also
strengthened its market position in Europe in 2005.
Mastertaste made good progress in 2005 in European markets. The division's
technical and development facilities based in the UK and Italy were complemented
by the establishment of country representative offices in Germany, Poland,
France and Spain. Advances in the UK market included successful launches of
natural 'Chef-Style' clean label flavours for a range of food applications and
development of beverage flavours for the rapidly changing non-alcoholic drinks
sector. In the first full year following the acquisition of Fructamine,
Mastertaste Italy grew market share across flavoured beverages, confectionery
and savoury markets. Progress was also achieved through Mastertaste's
functional flavours in Europe including the launch of its patented Zesti(R)
anti-microbial flavours factor.
In American ingredients markets, sales revenue increased by 8% to €1.2 billion,
reflecting like-for-like growth of 4% relative to 2004. This was a satisfactory
performance against the background of a changing marketplace, particularly in
the USA. New product development accelerated as the year progressed, as food
and beverage companies responded by repositioning products and new offerings to
meet consumer nutritional requirements. Kerry business units have refocused and
restructured to reflect customer needs and market growth opportunities.
Innovation in the nutritional snack bar sector regained momentum with a
refocusing to tasty nutritional offerings. Kerry's sweet application specific
ingredients technologies recorded good growth in the sector through delivery of
required nutritional benefits with preferred taste profiles. In the sweet
ingredients sector Kerry also benefited from new nutritional and indulgence
product launches in the ready-to-eat cereal and premium ice-cream sectors.
In the speciality dairy sector Kerry has restructured its facilities and focus
to maximise market growth opportunities for specialist functional nutritional
ingredients and delivery through proprietary liquid formats. A €8.2m
investment programme at the Covington, Ohio facility was completed to facilitate
production of nutritional beverage ingredient lines.
The combination of Kerry's seasonings and coatings technologies produced good
results in the R.T.U. sauce and meat sectors. Application of bold and ethnic
flavours achieved success through regional snack manufacturers. Good growth
continued in the natural and organic snack markets through Kerry's market
leading organic seasoning applications. Development of Nutriant soy proteins
and soy isolates achieved good results in nutrition bar, high-acid beverage and
organic growth markets.
In the U.S. market, the Kerry Food & Beverage business unit consolidated its
beverage and food brands into a new commercial structure focused on the
foodservice, retail and warehouse club channels. Good year-on-year growth was
again achieved across global and national chain restaurant accounts and coffee
house chains through launches of custom developed coffee syrups and speciality
beverage mixes. Da Vinci brand coffee syrups delivered growth through broadline
foodservice distributors. Oregon Chai successfully launched three new
speciality teas and three new flavours of JetTea smoothies were also introduced.
In Mexico and Central American markets, progress continued through innovative
health and convenience ingredients solutions for regional and multi-national
food companies. Seasonings performed well in the snack food segment with good
market development in the Central American region. Beverage and culinary
applications also made encouraging progress in the foodservice sector. Another
strong performance was achieved in South American markets through Kerry's market
leading ingredients capabilities in the ice-cream, dairy and meat industries.
In American markets, Mastertaste completed its flavours, fragrance and natural
products restructuring programme following its 2004 acquisitions. Raw material
pricing and availability was heavily impacted by the series of hurricanes which
struck Louisiana, Mississippi, Florida, Georgia and Alabama. Nevertheless
progress was satisfactory in the flavours sector through anti-microbial and
steromulsion functional flavours, certified organic flavours and the division's
broad range of herbal and botanical extracts. The natural products business
made good progress through citrus oils and fractions into the beverage industry
and through health and wellness offerings through its Crystals(R) unique
freeze-drying capability. Manheimer Fragrances achieved good growth,
particularly in the second half of 2005, in the home environmental and personal
care sectors. Mastertaste Canada performed well in the beverage, dairy and
dessert sectors. An investment programme to expand flavour development
technical capabilities to meet the requirements of the Canadian market was
completed at the Granby, Quebec facility.
Kerry Bio-Science texture systems achieved satisfactory growth in the U.S.
market and completed an investment programme to expand production capacity.
Fermented ingredients achieved growth through cultured dairy products and
organic shelf life extender products for dairy, culinary and meat markets.
Emulsifiers had a difficult year in the U.S. market in 2005 due to a poor
performance in the bakery sector. However, the launch of new trans-fatty acid
free products in 2006 is expected to contribute good business growth and restore
emulsifiers positioning in higher value added products.
Kerry Bio-Science Sheffield(TM) Pharma Ingredients significantly extended its
product and project pipeline in American markets in 2005. Sheffield(TM) Pharma
Ingredients produces cell nutrition components comprising hydrolysed proteins
and yeast extracts for growth of cells in a variety of applications including
cell culture, pharmaceutical fermentation, food fermentation and diagnostic
media. Sheffield(TM) Pharma excipient sales growth was also strong in American
markets in 2005 due to regional regulatory approval of new prescription drug
launches utilising Sheffield(TM) solid dose drug delivery components.
In Asia Pacific markets Kerry again significantly advanced its regional
development and achieved a solid business performance. Sales revenue in 2005
grew by 16% to €332m, reflecting like-for-like growth of 7%. Double digit
growth was achieved in Asian markets through Kerry's nutritional technologies in
the segmenting infant, growing and adult markets. Nutritional bases and
speciality lipids achieved excellent results across hot and cold beverage
sectors. In North Asia the Da Vinci range of branded sauces, syrups, smoothies
and chai teas also made encouraging progress. The savoury sector grew by 10%
year-on-year and Kerry continued to grow market share through its combined
ethnic and dairy flavourings in the snacks and biscuit sectors. Kerry's
seasoned coatings and marinades also developed in line with the fast growing
seafood and meat processing industries in the region. In China the Group's €20m
investment programme commenced in 2005. The acquisition of Lanli in Hangzhou,
Zhejiang Province was completed in March and the development of a new
multi-processing ingredients facility and regional technical centre on an
adjacent 16 acre greenfield site will be progressed in 2006.
Kerry Bio-Science technologies significantly boosted the Group's business
development in Asia Pacific markets in 2005. Supporting all Group businesses,
Kerry Bio-Science assisted technology development in bakery, dairy,
confectionery, beverage and meat processing industries. The Esterol emulsifier
facility in Malaysia improved profitability due to a focus on added value
product development. An investment programme will commence in 2006 to extend
production capacity at the Esterol plant to meet growing regional demand.
Sheffield(TM) branded excipients also grew sales in Asia Pacific markets.
In Australia and New Zealand good growth was achieved in the food and beverage
sector driven by expansion of Kerry's wet processing facilities. In the added
value meat sector new product launches were achieved through novel sauce systems
providing greater functionality and enhanced flavour. Excellent progress was
again achieved through Kerry's Pinnacle branded range of speciality pastries and
cakes in major multiple retail chains. The Pinnacle range was also successfully
introduced through supermarket outlets in Thailand.
Mastertaste flavours and fragrance continued to successfully develop its
regional business platform through the division's Australian and China based
facilities.
Consumer Foods
Against a background of static food prices and further grocery channel
consolidation in the UK and Irish markets, Kerry Foods performed well in 2005.
Despite a slow down in growth of chilled convenience foods and a decline in
frozen food categories, Kerry Foods' strong market positioning, coupled with its
customer profile and dedicated national distribution facilities, delivered
satisfactory growth year-on-year. Growth was achieved across branded chilled
convenience growth segments, food-to-go growth categories, premium convenience
meats, prepared foods and cheese and spreads growth sectors. The division
achieved a 4% increase in sales revenue to €1.7 billion, reflecting a 2% growth
in sales revenue on a like-for-like basis. Trading profits increased by 4% to
€123m which represents a trading margin of 7.1%, similar to the year earlier
level.
In the UK market fresh sausage sales grew by 7% year-on-year. Richmond remains
the No.1 brand delivering 15% growth in 2005. Walls, the second largest brand
saw growth through Wall's Favourite Recipe premium range and Wall's Micro
Sausages. Mattessons experienced a decline in the standard sliced meats sector
but successfully launched Mattessons Fridge Raiders - an innovative meat
snacking product. Following the closure of the leased Bristol manufacturing
facility, a €7.3m investment programme was completed at the Enniskillen
(Northern Ireland) site, successfully transforming production facilities at the
site for production of Mattessons Fridge Raiders, Mr Brains meat products and
Wall's Micro Sausages.
At the beginning of 2005, volume growth in the UK chilled ready meals market
continued to increase at an annualised rate of 12%, but by year-end growth had
slowed to 4%. However, Kerry Foods again saw satisfactory growth in chilled
ready meals due to its focus on premium growth categories. Kerry's position in
the premium sector of the market and the ethnic sub-category was considerably
strengthened in August 2005 with the completion of the Stg£124m acquisition of
Noon Group Limited. Noon is market leader in the development and production of
authentic Asian chilled ready meals in the UK. Operating from three modern
production facilities located in south-west London, Noon produces a range of
premium quality Indian, Oriental, Thai and other international cuisine ready
meals, snacks and accompaniments principally for major UK multiple retailers.
Due to consumer concerns regarding quality issues in the UK frozen ready meals
market, the overall category declined by 15% year-on-year. Rye Valley Foods
gained considerable new business during 2005, thus achieving satisfactory sales
growth and consolidating its position as market leader in the sector.
Profitability was however reduced relative to 2004 due to intense sectoral
competition arising from the downturn in the overall frozen market.
Conditions in the UK speciality poultry sector remained challenging but Kerry
Foods recorded a satisfactory performance in the sector through added value
product development.
In the UK convenience store marketplace, Kerry Foods Direct to Store continued
to outperform its competitors and gain new customer supply contracts.
Profitability of the business unit was slightly reduced relative to 2004 due to
higher distribution costs.
Kerry Foods recorded excellent progress in the UK and Irish cheese and dairy
spreads markets in 2005. In the Irish cheese market Kerry's Charleville,
EasiSingles and Cheestrings brands outgrew overall market growth rates. Low
Low cheese made significant progress as Ireland's fastest growing cheese brand
in 2005, while the Coleraine brand maintained its leading position in Northern
Ireland. Cheestrings again grew market share in the UK and Irish cheese snacks
markets and in France its Ficello brand is now stocked by the majority of major
retail groups. In the growing adult cheese snacks sector in the UK, Brunchettas
has already established good retailer listings. In the dairy and low-fat
spreads sector Low Low showed the strongest growth in the Irish market in 2005,
due to the continued success of Low Low Gold and the successful launch of the
brand into the premium lower cholesterol sector. Golden Cow, Kerrymaid and
Golden Olive consolidated their respective positions in the Irish market.
Introduction of a new identity across the Denny range reflecting the heritage
and 'homeliness' of the brand in early 2005 assisted its growth and development
- particularly in premium market segments. Denny Gold Medal and Denny Select
sausage continued to grow. Denny cooked meats experienced double digit growth
driven by strong sales growth within premium sectors and positive consumer
reaction to new product innovations. Ballyfree cooked meats outperformed market
growth rates in the pieces and super-premium sectors as the brand continues to
lead premiumisation and innovation in the category.
Freshways, Irelands largest manufacturer and distributor of ready-to-go
sandwiches, also successfully redesigned its brand identity and packaging
formats in 2005 - increasing consumer awareness and visibility of the product.
Dawn Omega Milk, the first milk on the market to offer fresh milk as a medium to
introduce essential Omega-3 fatty acids, again made good progress and Dawn fruit
flavoured milk was also successfully introduced to the Irish market.
Kerry Spring mineral water and its market leading still flavoured offerings
benefited from the continued growth of the sector in Ireland as consumers
increasingly shift from carbonated soft drinks.
Geographic Markets
Total Group sales revenue across European markets increased by 6% to €2.9
billion. In American markets sales revenue increased by 8% to €1.2 billion.
Sales revenue in Asia Pacific markets grew by 16% to €332m.
Finance
Earnings before finance costs, tax, non-trading items, depreciation and
amortisation (EBITDA) increased by 8% to €482m. Working capital was broadly
similar to the 2004 level. Allowing for capital expenditure of €120m (net of
proceeds from asset disposals of €29m), finance payments of €64m and tax of
€51m, free cash flow available to the Group was €248m.
Expenditure on Group acquisitions in 2005 amounted to €234m. Net debt at
year-end amounted to €1.3 billion compared to €1.1 billion at the end of 2004.
An additional €250m term facility was negotiated with Group banks during 2005.
This term facility is due to mature in the year 2010. Net debt to EBITDA at 2.6
times was unchanged. Finance costs were €68m compared to the 2004 level of
€52m, with EBITDA to net interest covered 8 times (2004 : 9.3 times).
Dividend
The Board has declared a final dividend of 11 cent per share, an increase of
15.8% on 2004. Together with the interim dividend of 5 cent per share, this
raises the total dividend payment for the year to 16 cent per share, an increase
of 14.3% on the 2004 dividend. The final dividend will be paid on 26 May 2006
to shareholders registered on the record date 21 April 2006.
Events after the Balance Sheet date
Since year-end the Group has sold the St. Brendans Irish Cream Liqueur business
following agreement on a Management Buy Out of the business in association with
Luxco (formerly the David Sherman Corporation) - the St. Brendan's brands' long
serving U.S. Importer and Distributor. St Brendan's is a specialist alcoholic
beverage business which fits ideally with the new ownership structure agreed by
management and Luxco.
Annual Report and Annual General Meeting
The Group's Annual Report will be published in April and the Annual General
Meeting will be held in Tralee on 19 May 2006.
Future Prospects
Kerry's leading technologies, nutritional focus and the strong market
positioning of its broad geographic spread of businesses, augur well for the
future profitable growth and development of the Group.
Exploiting its market leading Kerry Bio-Science technologies across its flavour
development and unrivalled ingredients applications platforms will contribute
increased added-value product innovation through the Group's valued
international customer base. With the increased focus on personalised nutrition
and nutrigenetics, Kerry Bio-Science Sheffield(TM) branded products are well
positioned in several compounds in final clinical approval stage.
In the Group's selected consumer foods markets, Kerry Foods' leading brands and
focus on premium growth sectors will continue to deliver on consumer nutritional
and convenience requirements.
The Group continues to pursue value and technology enhancing acquisition
opportunities and in 2006 expects to deliver results in line with market
expectations.
Results for the year ended 31 December 2005
Kerry Group plc
Consolidated Income Statement
for the year ended 31 December 2005
2005 2004
Notes €'000 €'000
Revenue 1 4,429,777 4,128,736
___________ ___________
Trading profit 1 380,213 355,780
Intangible asset amortisation (10,331) (9,822)
Non-trading items 2 (3,623) (25,516)
___________ ___________
Operating profit 366,259 320,442
Finance costs (68,353) (51,815)
___________ ___________
Profit before taxation 297,906 268,627
Income taxes (62,030) (64,577)
___________ ___________
Profit after taxation and attributable to equity shareholders 235,876 204,050
___________ ___________
Earnings per ordinary share (cent)
- basic 3 126.1 109.5
- fully diluted 3 125.5 108.9
The financial statements were approved by the Board of Directors on 27 February 2006 and signed on its behalf by:
Denis Buckley, Chairman
Hugh Friel, Chief Executive
Kerry Group plc
Consolidated Balance Sheet
as at 31 December 2005 2005 2004
€'000 €'000
Non-current assets
Property, plant and equipment 1,066,931 960,667
Intangible assets 1,633,367 1,354,845
Financial asset investments 12,442 -
Deferred tax assets 12,115 12,812
___________ ____________
2,724,855 2,328,324
___________ ____________
Current assets
Inventories 544,438 457,662
Trade and other receivables 558,831 566,938
Cash and cash equivalents 163,903 65,328
Financial assets 1,862 -
Assets classified as held for sale 10,415 4,418
___________ ____________
1,279,449 1,094,346
___________ ____________
Total assets 4,004,304 3,422,670
___________ ____________
Current liabilities
Trade and other payables 845,285 729,142
Financial liabilities 143,854 64,293
Tax liabilities 44,659 47,118
Provisions - 12,661
Deferred income 3,078 3,142
Liabilities classified as held for sale 1,899 -
___________ ____________
1,038,775 856,356
___________ ____________
Non-current liabilities
Financial liabilities 1,297,210 1,138,473
Retirement benefit obligation 249,103 199,262
Other non-current liabilities 107,297 132,436
Deferred tax liabilities 112,276 103,279
Deferred income 21,959 24,704
___________ ____________
1,787,845 1,598,154
___________ ____________
Total liabilities 2,826,620 2,454,510
___________ ____________
Net assets 1,177,684 968,160
___________ ____________
Capital and reserves
Share capital 23,399 23,356
Share premium account 378,979 375,032
Other reserves 23,501 (7,261)
Retained earnings 751,805 577,033
___________ ____________
Shareholders' equity 1,177,684 968,160
___________ ____________
The financial statements were approved by the Board of Directors on 27 February 2006 and signed on its behalf by:
Denis Buckley, Chairman
Hugh Friel, Chief Executive
Kerry Group plc
Consolidated Statement of Recognised Income and Expense
for the year ended 31 December 2005
2005 2004
€'000 €'000
Fair value movements on available-for-sale investments 12,209 -
Fair value movements on cash flow hedges (3,383) -
Exchange difference on translation of foreign operations 17,747 (7,601)
Actuarial losses on defined benefit pension schemes (50,387) (21,402)
Deferred tax on items taken directly to reserves 16,412 1,926
___________ ____________
Net expense recognised directly in equity (7,402) (27,077)
Transfers
Cash flow hedges to profit or loss from equity 857 -
Sale of available-for-sale investments (6,218) -
Profit for the year after taxation 235,876 204,050
___________ ____________
Total recognised income and expense for the year attributable to equity 223,113 176,973
shareholders
___________ ____________
Kerry Group plc
Consolidated Reconciliation of Changes in Shareholders' Equity
for the year ended 31 December 2005
2005 2004
€'000 €'000
At beginning of year 968,160 805,730
Impact of adoption of IAS 32 and IAS 39 9,550 -
___________ ____________
At beginning of year as adjusted 977,710 805,730
Total recognised income and expense for the year 223,113 176,973
Dividends paid (27,129) (24,468)
Shares issued during the year 4,014 10,021
Share issue costs (24) (96)
___________ ____________
At end of year 1,177,684 968,160
___________ ____________
Kerry Group plc
Consolidated Cash Flow Statement
for the year ended 31 December 2005
2005 2004
€'000 €'000
Operating activities
Trading profit 380,213 355,780
Adjustments for:
Depreciation (net) 101,643 91,585
Change in working capital 260 35,306
Exchange translation adjustment 494 (914)
___________ ____________
Cash generated from operations 482,610 481,757
Income taxes paid (50,656) (53,618)
Interest received 1,752 383
Finance costs paid (66,066) (46,158)
___________ ____________
Net cash from operating activities 367,640 382,364
___________ ____________
Investing activities
Purchase of non-current assets (149,262) (110,235)
Proceeds on the sale of non-current assets 28,928 18,010
Capital grants received 446 907
Purchase of subsidiary undertakings (233,688) (695,701)
Proceeds from disposal of businesses 2,759 -
Payment of deferred payables (11,353) (29,955)
Expenditure on non-trading items (15,236) (16,785)
Consideration adjustment on previous acquisitions (18) (935)
___________ ____________
Net cash used in investing activities (377,424) (834,694)
___________ ____________
Financing activities
Dividends paid (27,129) (24,468)
Issue of share capital 3,990 9,925
Net proceeds from bank borrowings 199,349 429,388
(Decrease) / increase in bank overdrafts (72,853) 45,951
___________ ____________
Net cash from financing activities 103,357 460,796
___________ ____________
Net increase in cash and cash equivalents 93,573 8,466
Cash and cash equivalents at beginning of year 65,328 56,862
Exchange translation adjustment on cash and cash equivalents 5,002 -
___________ ____________
Cash and cash equivalents at end of year 163,903 65,328
___________ ____________
Reconciliation of Net Cash Flow to Movement in Net Debt
for the year ended 31 December 2005
Net increase in cash and cash equivalents 93,573 8,466
Cash inflow from debt financing (126,496) (475,339)
___________ ____________
Changes in net debt resulting from cash flows (32,923) (466,873)
Exchange translation adjustment on net debt (104,997) 34,635
___________ ____________
Movement in net debt in the year (137,920) (432,238)
Net debt at beginning of year (1,137,438) (705,200)
___________ ____________
Net debt at end of year (1,275,358) (1,137,438)
___________ ____________
Kerry Group plc
Notes to the Financial Statements
for the year ended 31 December 2005
1. Analysis of results
2005 2004
Unallocated Unallocated
Ingredients Consumer and Group Total Ingredients Consumer and Group
By business segment: Foods eliminations Foods eliminations Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Revenue 3,021,944 1,725,839 (318,006) 4,429,777 2,780,779 1,660,533 (312,576) 4,128,736
_________ _________ ________ _________ _________ _________ ________ _________
Trading profit 283,816 123,018 (26,621) 380,213 261,433 118,361 (24,014) 355,780
Intangible asset amortisation (9,263) (477) (591) (10,331) (9,012) (409) (401) (9,822)
Non-trading items (12,127) 2,227 6,277 (3,623) (33,119) 868 6,735 (25,516)
_________ _________ ________ ________ ________ ________ ________ ________
Operating profit 262,426 124,768 (20,935) 366,259 219,302 118,820 (17,680) 320,442
_________ _________ ________ ________ ________ ________
Finance costs (68,353) (51,815)
________ ________
Profit before taxation 297,906 268,627
Income taxes (62,030) (64,577)
________ ________
Profit after taxation and
attributable to equity
shareholders 235,876 204,050
________ ________
Segment assets and liabilities
Segment assets 2,485,988 1,067,629 450,687 4,004,304 2,237,498 835,318 349,854 3,422,670
Segment liabilities 591,435 478,155 1,757,030 2,826,620 565,592 385,161 1,503,757 2,454,510
________ ________ __________ ________ ________ ________ __________ ________
Net assets 1,894,553 589,474 (1,306,343) 1,177,684 1,671,906 450,157 (1,153,903) 968,160
________ ________ __________ ________ ________ ________ __________ ________
Other segmental information
Property, plant and equipment
additions 86,266 53,368 4,124 143,758 76,578 35,769 300 112,647
Intangible asset additions 2,061 141 1,274 3,476 415 650 620 1,685
Depreciation (net) 65,431 35,671 541 101,643 57,233 33,834 518 91,585
________ ________ __________ ________ ________ ________ __________ ________
2005 2004
Europe Americas Asia Total Europe Americas Asia Total
Pacific Pacific
By destination: €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Revenue by location of
customers 2,885,039 1,212,877 331,861 4,429,777 2,721,074 1,120,884 286,778 4,128,736
Segment assets by location 2,707,101 1,112,956 184,247 4,004,304 2,335,551 935,742 151,377 3,422,670
Property, plant and equipment
additions 108,815 29,239 5,704 143,758 86,821 19,831 5,995 112,647
Intangible asset additions 1,817 1,659 - 3,476 1,270 415 - 1,685
2. Non-trading items
2005 2004
€'000 €'000
Acquisition and other restructuring costs - (41,108)
Profit on sale of non-current assets 14,702 15,592
Loss on sale of businesses and plant closures (18,325) -
________ ________
(3,623) (25,516)
Tax credit on non-trading items 3,665 10,342
________ ________
42 (15,174)
________ ________
The profit on sale of non-current assets primarily relates to the sale of Irish
properties, plant and equipment and the disposal of available-for-sale
investments.
The loss on sale of businesses and plant closures relates to the sale of non-
core businesses and the closure of plants. They include the sale of the chestnut
business in Italy, the closure of the poultry factory in Limerick, Ireland and
the closure and sale of plants and businesses in the UK following the
integration of recent acquisitions.
The acquisition and other restructuring costs in 2004 relate to the integration
of Quest Food Ingredients, other acquisitions made in 2004 and 2003 and the
rationalisation of existing businesses.
The 2004 profit on sale of non-current assets relates to the sale of
available-for-sale investments and property, plant and equipment.
3. Earnings per ordinary share
EPS 2005 EPS 2004
Notes cent €'000 cent €'000
Basic earnings per share
Profit after taxation and attributable to equity shareholders 126.1 235,876 109.5 204,050
Intangible asset amortisation 5.5 10,331 5.3 9,822
Non-trading items (net of tax) 2 - (42) 8.1 15,174
________ ________ _____ ________
Adjusted earnings * 131.6 246,165 122.9 229,046
________ ________ _____ ________
Diluted earnings per share
Profit after taxation and attributable to equity shareholders 125.5 235,876 108.9 204,050
Adjusted earnings* 131.0 246,165 122.3 229,046
The basic weighted average number of ordinary shares in issue for the year was
187,051,129 (2004: 186,401,228). The diluted weighted average number of ordinary
shares in issue for the year was 187,929,702 (2004: 187,308,737). The dilution
arises in respect of executive share options outstanding.
* In addition to the basic and diluted earnings per share, an adjusted earnings
per share is also provided as it is considered more reflective of the Group's
underlying trading performance. Adjusted earnings is profit after taxation
before intangible asset amortisation and non-trading items (net of tax).
4. General information and accounting policies
The financial information set out in this document does not constitute full
statutory accounts for the years ended 31 December 2005 or 2004 but is derived
from same. The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as adopted for use
in the European Union and their interpretations as issued by the International
Accounting Standards Board and the International Financial Reporting
Interpretations Committee, applicable Irish law and the Listing Rules of the
Irish and London Stock Exchanges. The 2005 and 2004 accounts have been audited
and received unqualified audit reports. The 2005 financial statements were
approved by the Board of Directors on 27 February 2006.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of available-for-sale financial
asset investments, financial assets and financial liabilities (including
derivative financial instruments), which are held at fair value. The Group's
accounting policies will be included in the Annual Report to be published in
April 2006.
For further information please contact:
Frank Hayes
Director of Corporate Affairs Tel no + 353 66 7182304
Fax no + 353 66 7182972
Kerry Web Site www.kerrygroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 hours ago Cambridge Cognition Holdings
- 3 hours ago Shell
- 3 hours ago Centrica
- 4 hours ago Optima Health
- 5 hours ago Centrica