Glanbia PLC - Final Results
RNS Number:0996Z
Glanbia PLC
01 March 2006
NEWS RELEASE A World of
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2005 Results
For further information contact
Glanbia plc + 353 56 777 2200
Geoff Meagher, Deputy Group Managing Director/Group Finance Director
Siobhan Talbot, Deputy Group Finance Director
Geraldine Kearney, Corporate Communications + 353 87 231 9430
Hogarth Partnership UK + 44 207 357 9477
John Olsen
This document is available in PDF format on www.glanbia.com
GOOD INTERNATIONAL PERFORMANCE; DIFFICULT YEAR IN IRELAND
STRATEGIC DEVELOPMENT PROGRESSING WELL
1 March 2006 - Glanbia plc, the international dairy foods and nutritional
ingredients Group, announces its full year results for the year ended 31
December 2005, prepared under International Financial Reporting Standards
(IFRS).
2005 Summary Results
Glanbia delivered a satisfactory performance overall in 2005. A difficult year
in Ireland impacted the Group's results, as Irish operations continue to be
affected by a combination of ongoing EU reform, inflationary pressures and a
competitive market environment. International operations performed well. USA
Food Ingredients delivered a solid result, together with strong organic growth
in the evolving Nutritionals business. Joint ventures in New Mexico and Nigeria,
which are central to the strategic development of the Group, are progressing
well reaching key milestones in plant commissioning, production and customer
performance.
2005 2004 Change
Revenue Euro1,830.0 m Euro1,753.6 m Up 4%
Operating profit pre exceptional Euro80.6 m Euro86.3 m Down 7%
Operating margin pre exceptional 4.4 % 4.9 % Down 50 bps
Net financing costs pre exceptional(1) (Euro12.8 m) (Euro16.1 m)
Down 21%
Share of results of associates and joint
ventures(2) Euro0.9 m (Euro1.5 m) Up 160%
Profit before tax pre exceptional on a
comparable basis (1) Euro68.7 m Euro68.6 m Similar
Profit after tax pre exceptional on a
comparable basis (1) Euro61.1 m Euro60.2 m Up 2%
Exceptional items(3) Euro0.5 m Euro1.3 m See note
Earnings per share 21.04 c 21.03 c Similar
Adjusted earnings per share 20.86 c 20.59 c Up 1%
Dividend per share 5.51 c 5.25 c Up 5%
Net debt on a comparable basis Euro215.7 m Euro260.9 m Down 17%
(1) Due to the timing of the implementation of the relevant IFRS standard,
interest on preferred securities and preference shares in the income
statement is shown as part of Group interest in the current financial year
and as part of non-equity minority interest in the previous year.
(2) In accordance with the relevant IFRS standard this is after interest and
tax.
(3) Exceptional items are primarily made up of a restructuring cost of Euro15.7
million for productivity and efficiency initiatives in Irish operations and
a Euro5.3 million charge for the prepayment of US$100 million preferred
securities and Euro0.3 million relating to prior disposals, offset by Euro11
million realised from the sale of quoted investments, a Euro3.9 million foreign
exchange credit arising from the implementation of IFRS and a tax credit of
Euro6.9 million primarily relating to a prior business disposal.
John Moloney, Group Managing Director, said:
'Solid business execution in challenging circumstances in Ireland and a good
international performance underpin the 2005 results. While there are ongoing
challenges in Irish operations and unpredictibility in energy prices, we expect
key cost and product development initiatives in these businesses together with
ongoing international development to underpin the delivery of 2006 results in
line with current guidance. Growing momentum within the business supports the
Group's progress towards double digit growth in 2007.'
Announced 1 March, 2006
2005 Results
Results for the twelve months ended 31 December, 2005
These results are prepared under International Financial Reporting Standards
(IFRS) and all comparisons are based on a restatement of 2004 financial
information. A detailed IFRS restatement document is available on the Group's
website at www.glanbia.com.
Income statement
Revenue increased by 4% to Euro1,830.0 million (2004: Euro1,753.6 million). The
difficult environment in Ireland impacted overall profitability and margins.
Operating profit pre exceptional was down 7% to Euro80.6 million (2004: Euro86.3
million) and the operating margin pre exceptional declined 50 basis points to
4.4% (2004: 4.9%).
Net financing costs pre exceptional, which includes Group interest and
non-equity minority interest for preferred securities and preference shares,
reduced by Euro3.3 million to Euro12.8 million as the Group continues to benefit
from
a refinancing during the year. This compares with Euro16.1 million in 2004,
comprising Euro5.7 million Group interest and Euro10.4 million non-equity
minority
interest. Due to the timing of the implementation of IAS 32 and 39, interest on
preferred securities and preference shares is shown in the income statement as
part of Group interest in 2005 and as non-equity minority interest in 2004.
The Group's share of results of joint ventures and associates, post interest and
tax, amounted to a profit of Euro932,000 in 2005, compared with a loss of
Euro1.5
million in 2004. This result reflects the improved performance in Glanbia
Cheese, the Group's UK joint venture with Leprino Foods.
Profit before tax pre exceptional, including share of joint ventures and
associates, amounting to Euro68.7 million was similar to last year (2004:
Euro68.6
million). Profit after tax pre exceptional increased marginally to Euro61.1
million
(2004: Euro60.2 million). These figures are on a comparable basis after total
financing costs.
Taxation for the year amounted to Euro657,000, compared with Euro8.4 million in
2004.
This is as a consequence of an exceptional of Euro6.9 million, primarily due to
a
tax credit relating to a prior disposal of assets in the USA.
Net exceptionals for the year amounted to a Euro521,000 compared with Euro1.3
million
in 2004. These include Euro11 million profit on the sale of quoted investments,
a
Euro3.9 million foreign exchange credit arising from the implementation of IFRS
and
a Euro6.9 million tax credit outlined under taxation. These gains were offset by
restructuring charges to improve competitiveness in Ireland of Euro15.7 million
(Agribusiness and Property Euro1.2 million, Consumer Foods Euro11.9 million and
Food
Ingredients Euro2.6 million), the cancellation cost of Euro5.3 million for the
prepayment of US$100 million preferred securities and Euro0.3 million relating
to
prior disposals.
Earnings per share amounted to 21.04 cent compared with 21.03 cent in 2004,
while adjusted earnings per share was up 1% to 20.86 cent (2004: 20.59 cent).
Balance sheet and cash flow
In the first half of 2005 the Group completed a refinancing initiative with the
prepayment of the US$100 million preferred securities and a renewal of
facilities of over Euro400 million to July 2010 with core banking relationships.
Net debt at the year end amounted to Euro215.7 million, down 17% (2004:
Euro260.9
million). While the Group continues to invest for the future with capital and
development expenditure during the year of Euro71.6 million, the overall
improvement in the Group's debt is mainly as a result of a number of initiatives
to reduce investment in seasonal working capital.
The increase in the Group retirement benefit obligations to Euro165.0 million
(2004: Euro126.7 million) is primarily related to the reduction in the discount
rate assumptions used in the actuarial valuations. The discount rate applied to
pension schemes in Ireland is 4.3% (2004: 4.8%), whilst the rate applied to UK
schemes is 4.9% (2004: 5.5%).
Dividends and Annual General Meeting (AGM)
The Board is recommending a final dividend of 3.24 cent per share, compared with
a 3.09 cent per share final dividend in 2004. This brings the total dividend for
the year to 5.51 cent per share (2004: 5.25 cent per share), representing a 5%
increase. Dividends will be paid on Monday 22 May, 2006 to shareholders on the
register as at Friday 21 April, 2006. Irish dividend withholding tax will be
deducted at the standard rate where appropriate. The AGM will be held on Tuesday
16 May, 2006 and the Annual Report post out date is Tuesday 11 April, 2006.
Operations Review
Glanbia plc has operations in Ireland, Europe and the USA, with international
joint ventures in the UK, USA and Nigeria. The Group is organised into three
operating divisions of Agribusiness and Property, Consumer Foods and Food
Ingredients, which includes the evolving Nutritionals business. The operating
margins stated below are before exceptional items.
AGRIBUSINESS AND PROPERTY Euro'000 2005 2004 Change
Revenue 229,142 227,368 Up 1%
------------ ------- ------- ----------
Operating profit 10,684 11,911 Down 10%
------------ ------- ------- ----------
Operating margin 4.7% 5.2% Down 50 bps
------------ ------- ------- ----------
The Agribusiness and Property division has two business units. Agribusiness is
the key linkage with the Group's 5,700 Irish farmer supply base and Property has
responsibility for the maximisation of value from the Group's property
portfolio. Agribusiness had a difficult year arising from poor global grain
markets and the changing patterns of farm purchasing. These conditions led to a
decline in performance and operating margin. Revenue was up 1% to Euro229.1
million
(2004: Euro227.4 million). Operating profit was down 10% to Euro10.7 million
(2004:
Euro11.9 million) and the operating margin was down 50 basis points to 4.7%
(2004:
5.2%).
Agribusiness now operates from 61 locations. In 2005 a further nine branches
were closed as part of ongoing cost reduction and efficiency initiatives, which
follows the closure of 12 branches in 2004. Rationalisation costs during the
period amounted to Euro1.2 million. A programme of investment in new technology
and
business systems began during the year. This division also commenced the
roll-out of new branch formats incorporating a wider product range and customer
offering, focused on the needs of rural communities with expanding populations.
In Ireland, the environment for farming is for ongoing change during MTR which
impacts Agribusiness, in particular. The challenge continues to be to
effectively manage this business during this period of change.
CONSUMER FOODS Euro'000 2005 2004 Change
Revenue 493,582 451,124 Up 9%
------------ ------- ------- ----------
Operating profit 27,139 27,906 Down 3%
------------ ------- ------- ----------
Operating margin 5.5% 6.2% Down 70 bps
------------ ------- ------- ----------
The Consumer Foods Division, incorporating liquid milk, chilled foods and pig
meat, had a mixed year. A good improvement in performance from the pig meat
business was offset by competitive markets in the liquid milk and chilled foods
segments and the effects of rationalisation initiatives undertaken in these
businesses during the year. Revenue for the division was up 9% to Euro493.6
million
(2004: Euro451.1 million), mainly due to stronger pig meat markets. Operating
profit was down 3% to Euro27.1 million (2004: Euro27.9 million), leading to a 70
basis
points reduction in the operating margin to 5.5% for this division overall
(2004: 6.2%).
Liquid milk: This business performed satisfactorily in a challenging
environment, with increasing cost pressures, rising imports from Northern
Ireland and the continuing growth of own brand milk. In February 2005 Glanbia
concluded an agreement with Dairygold Co-operative Society Limited to take on
the CMP liquid milk, cream and juice brands for a consideration of Euro10
million.
This business has been successfully integrated into Glanbia and extends the
Group's overall market reach.
Chilled foods: This business, which incorporates the Group's branded yogurt,
cheese, spread, soup and sauce products, had a tough year. The trading
environment was very competitive. Additional marketing investment was made in
promoting key brands and new products to improve market share. Performance was
also affected by the costs and timing associated with implementing a significant
reorganisation of the Group's Yoplait manufacturing facility.
Rationalisation during the year, in liquid milk and chilled foods, focused on
improving the competitiveness and productivity of these businesses. The total
exceptional cost incurred amounted to Euro11.9 million. This relates to Euro5.7
million for the rationalisation plan at the Inch Yoplait facility, Euro3.3
million
for the rationalisation of the Cork distribution business and Euro2.3 million
for
the reorganisation of the Dublin distribution operation. Other costs relate to
sales and administration redundancies.
Although markets remain competitive, the benefits of rationalisation, product
innovation and marketing underpin an improving outlook for Consumer Foods.
Pig meat: This business delivered an improved performance in 2005, after a
severe market downturn in 2004. Markets recovered during the year but at a
slower rate than anticipated and performance was helped by increased
efficiencies at all facilities. Pig meat markets are forecast to remain
reasonably stable in 2006.
FOOD INGREDIENTS Euro'000 2005 2004 Change
Revenue 1,107,288 1,075,153 Up 3%
------------ ------- ------- ----------
Operating profit 42,746 46,440 Down 8%
------------ -------- -------- ----------
Operating margin 3.9% 4.3% Down 40 bps
------------ -------- -------- ----------
The Food Ingredients division has operations in Ireland and the USA and is
engaged in the production of cheese, butter, dairy spreads and whey protein
ingredients. This division also includes the Group's evolving Nutritionals
business which has a growing customer base in the USA, Europe and Asia. The USA
operations and Nutritionals delivered a solid performance in 2005, growing
profitability and margins. The impact of reduced EU market supports on the Irish
based business crystallised in the second half, leading to a significant
deterioration in profitability. Overall revenue increased by 3% to Euro1.11
billion
(2004: Euro1.08 billion). Operating profit was down 8% to Euro42.7 million
(2004:
Euro46.4 million) and the operating margin declined 40 basis points to 3.9%
(2004:
4.3%). This was a direct consequence of the decline in the performance of the
Irish Food Ingredients business in the latter half of 2005.
Ireland: As a consequence of the EU Mid Term Review (MTR) of the Common
Agricultural Policy, there is significant ongoing change in dairy markets
arising from the reduction in EU dairy market supports. Despite this, in 2004
and early 2005 markets remained reasonably stable. However, as expected these
changes began to impact performance in the second half. While revenue was
marginally up for the year, pricing and inflationary cost pressures, mainly
energy, led to a sharp downturn in profitability and margins. During the year,
contract manufacturing agreements on milk processing and an agreement on a new
joint venture to manufacture and market dairy spreads and butterfat products
were completed. This resulted in a restructuring of the cheddar cheese
manufacturing facilities at a cost of Euro2.6 million. The business continues to
focus on the effective management of the impact of MTR through a combination of
efficiencies, cost control and balanced pricing and product mix.
USA: This operation performed well. Market demand is strong and growing steadily
and Glanbia's facilities continue to enhance output. The 30% expansion in cheese
production at the Gooding facility in 2004 enabled the business to meet growing
customer demand for American style barrel cheese during the year. This demand is
driven by strong key account performance in the food service and retail sectors.
In 2005 market prices for cheese were lower although volume growth enhanced
margins.
Nutritionals: This business continued to make steady progress in 2005 and is
showing good organic growth. Kortus Foods Ingredients Services GmbH, the German
based nutrient delivery systems business acquired in 2004, performed ahead of
expectations. Substantial investment was made in 2005 in building a strong team
with a blend of skills in science-based research and development and marketing,
to drive this business forward.
As a large user of energy, particularly in Food Ingredients Ireland, the high
cost of energy is an issue for the Group. Any significant and sustained upward
shift in pricing from current levels would be a cause for concern and the
overall management and consumption of energy is a key objective for this
business in 2006.
The Group's USA operations continue to perform well and good progress is
expected in Nutritionals during 2006.
INTERNATIONAL JOINT VENTURES
The Group has a number of significant international Joint Ventures producing
cheese, whey and milk products.
UK: Glanbia Cheese, a joint venture with Leprino, produces mozzarella cheese for
the European market. This business reported an improved performance arising from
increased demand and the benefits of investment.
Nigeria: Nutricima is a US$25million joint venture with PZ Cussons plc. During
2005 the new milk factory opened on schedule. Sales of powdered milk began
mid-year, followed by the launch of evaporated milk later in the year. Products
have been well received in the market and sales are ahead of expectations.
USA: Commissioning of the Southwest Cheese facility began in October 2005, and
is the first phase in an 18 month scale up process towards full production.
Southwest Cheese is a US$190 million cheese and whey products facility in New
Mexico. This joint venture, with the main partners Dairy Farmers of America and
Select Milk Producers Inc., will make Glanbia the number 1 producer of American
cheese, when it reaches full production. Overall this development is progressing
well and initial customer feedback has been very positive.
Strategy
Glanbia's strategy is to build international relevance in cheese, nutritional
ingredients and selected consumer foods, balancing our strong market positions
in Ireland with an increasing presence in overseas markets. The Joint Ventures
in Nigeria and the USA are central to this strategic development, as is the
continuing development of our evolving Nutritionals business.
Outlook
The Group expects to deliver 2006 results in line with current guidance. While
there are ongoing challenges in Irish operations and unpredictability in energy
prices, we expect key cost and product development initiatives in these
businesses together with ongoing international development to underpin the 2006
results. Growing momentum within the business maintains Glanbia's steady
progress towards double digit growth in 2007.
Consolidated income statement
for the year ended 31 December 2005
2005 2004
Pre- Pre-
exceptional Exceptional Total exceptional Exceptional Total
Notes Euro'000 Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Revenue 2 1,830,012 - 1,830,012 1,753,645 - 1,753,645
Cost of sales (1,590,049) - (1,590,049) (1,529,413) - (1,529,413)
------- ------- ------- ------- ------- -------
Gross profit 239,963 - 239,963 224,232 - 224,232
Distribution
expenses (94,743) - (94,743) (77,857) - (77,857)
Administration
expenses 3 (64,651) (1,110) (65,761) (60,118)
2,895 (57,223)
------- ------- ------- ------- ------- -------
Operating profit 80,569 (1,110) 79,459 86,257 2,895 89,152
Finance income 4 4,209 - 4,209 3,033 - 3,033
Finance costs
(note) 4 (16,995) (5,304) (22,299) (8,756) - (8,756)
Share of results
of joint ventures
and associates 932 - 932 (1,523) - (1,523)
------- ------- ------- ------- ------- -------
Profit before
taxation (note) 68,715 (6,414) 62,301 79,011 2,895 81,906
Income taxes (7,592) 6,935 (657) (8,386) - (8,386)
------- ------- ------- ------- ------- -------
Profit after
taxation (note) 61,123 521 61,644 70,625 2,895 73,520
Loss for the year
from discontinued
operations - - - - (1,601) (1,601)
------- ------- ------- ------- ------- -------
Profit for
the year (note) 61,123 521 61,644 70,625 1,294 71,919
------- ------- ------- ------- ------- -------
Attributable to:
Equity holders
of the parent 61,327 61,119
Non-equity minority interest - 10,387
Equity minority interest 317 413
------- -------
61,644 71,919
------- -------
Basic earnings per share (cent)
- Continuing operations 21.04 21.58
- Discontinued operations - (0.55)
------- -------
6 21.04 21.03
------- -------
Diluted earnings per share (cent)
- Continuing operations 20.96 21.50
- Discontinued operations - (0.58)
------- -------
6 20.96 20.92
------- -------
Note:
The prior year comparative figures have been restated in line with the Group's
transition to IFRS on 4 January 2004, with the exception of IAS 32 and IAS 39,
which were implemented from 2 January 2005. Accordingly, interest on preferred
securities and preference shares is shown in the income statement as part of
finance costs for 2005 and as non-equity minority interest for 2004. On a
comparable basis, the profit after taxation, pre-exceptional items for 2005 was
Euro61.1 million compared to Euro60.2 million for 2004.
Consolidated statement of recognised income and expense
for the year ended 31 December 2005
2005 2004
Euro'000 Euro'000
Actuarial loss - defined benefit schemes (42,303) (45,755)
Deferred tax on pension loss 4,054 5,059
Currency translation differences (8,651) (5,257)
Fair value adjustments 2,144 -
------- -------
Net expense recognised directly in equity (44,756) (45,953)
Profit for the year 61,644 71,919
------- -------
Total recognised income for the year 16,888 25,966
------- -------
Attributable to:
Equity holders of the parent 16,571 21,254
Non-equity minority interest - 4,299
Equity minority interest 317 413
------- -------
16,888 25,966
------- -------
Consolidated balance sheet
as at 31 December 2005
Notes 2005 2004
Euro'000 Euro'000
ASSETS
Non-current assets
Property, plant and equipment 332,003 302,057
Intangible assets 57,963 36,698
Investments in associates 11,090 10,918
Investments in joint ventures 59,832 48,281
Available for sale investments 29,511 -
Other investments - 28,672
Trade and other receivables 56,874 51,942
Derivative financial instruments 1,825 -
Deferred tax assets 15,869 12,299
-------- --------
564,967 490,867
-------- --------
Current assets
Inventories 144,250 133,419
Trade and other receivables 143,610 172,622
Derivative financial instruments 1,125 -
Cash and cash equivalents (see note
below) 7 104,405 51,625
-------- --------
393,390 357,666
-------- --------
Total assets 958,357 848,533
-------- --------
EQUITY
Issued capital and reserves attributable to
equity holders of the parent
Share capital 97,964 95,208
Other reserves 117,059 116,414
Retained earnings (97,604) (97,797)
-------- --------
117,419 113,825
Equity minority interest 6,299 6,085
Non-equity minority interest - 110,384
-------- --------
Total equity 123,718 230,294
-------- --------
LIABILITIES
Non-current liabilities
Borrowings (see note below) 7 319,727 198,682
Deferred tax liabilities 34,471 30,375
Retirement benefit obligations 165,016 126,676
Provisions for other liabilities and 6,072 5,348
charges
Capital grants 14,855 15,276
-------- --------
540,141 376,357
-------- --------
Current liabilities
Borrowings (see note below) 7 330 3,509
Provisions for other liabilities and 8,433 1,291
charges
Trade and other payables 278,583 228,901
Current tax liabilities 4,605 8,181
Derivative financial instruments 2,547 -
-------- --------
294,498 241,882
-------- --------
Total liabilities 834,639 618,239
-------- --------
Total equity and liabilities 958,357 848,533
-------- --------
The prior year comparative figures have been restated in line with the Group's
transition to IFRS on 4 January 2004, with the exception of IAS 32 and IAS 39,
which were implemented from 2 January 2005. This impacts the presentation of net
borrowings, which on a comparable basis were Euro215.7 million at 31 December
2005
and Euro260.9 million at 1 January 2005.
Consolidated cash flow statement
for the year ended 31 December 2005
2005 2004
Euro'000 Euro'000
Cash flows from operating activities
Cash generated from operations 162,905 83,447
Interest received 670 573
Interest paid (23,177) (11,439)
Tax paid (3,777) (4,955)
-------- --------
Net cash from operating activities 136,621 67,626
-------- --------
Cash flows from investing activities
Acquisition of subsidiary, net of cash
acquired (19,366) (10,157)
Purchase of property, plant and equipment (46,979) (60,946)
Purchase of available for sale investments (5,214) (55,211)
Disposal of subsidiary, net of cash
disposed (147) 83,277
Disposal of available for sale investments 14,394 -
Proceeds from sale of property, plant and 4,418 1,409
equipment -------- --------
Net cash used in investing activities (52,894) (41,628)
-------- --------
Cash flows from financing activities
Proceeds from issue of ordinary shares 731 215
Sharesave scheme - receipt from trustees 2,191 -
Repayments of borrowings (20,242) (8,513)
Finance lease principal payments (519) (612)
Dividends paid to Company's shareholders (15,612) (14,814)
Repayment of minority interest (7) -
Capital grants received 772 -
Dividends paid to minority interests - (9,674)
-------- --------
Net cash used in financing activities (32,686) (33,398)
-------- --------
Net increase/(decrease) in cash and cash
equivalents 51,041 (7,400)
Cash and cash equivalents at the beginning 51,625 59,775
of the year
Effects of exchange rate changes on cash
and cash equivalents 1,739 (750)
-------- --------
Cash and cash equivalents at the end of the 104,405 51,625
year -------- --------
Notes to the financial statements
for the year ended 31 December 2005
1 Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards ('IFRS') and IFRIC interpretations endorsed by the
European Union and those parts of the Companies Acts, 1963 to 2005 applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention as modified by the revaluation of land and
buildings, available for sale investments, and financial assets and liabilities
held for trading.
The Group's date of transition to IFRS is 4 January 2004. The comparative
figures have been restated to reflect IFRS, except where otherwise required or
permitted by IFRS 1, First Time Adoption of International Financial Reporting
Standards.
The financial information set out in this document does not constitute full
statutory financial statements but has been derived from the Group financial
statements for the year ended 31 December 2005 (referred to as the 2005
financial statements). The 2005 financial statements have been audited and have
received an unqualified audit report.
The financial statements were approved by the Board of Directors on 28 February
2006 and signed on its behalf by MJ Walsh, JJ Moloney and GJ Meagher.
2 Segment information
Primary reporting format - business segments
At 31 December 2005 the Group is organised into three main business segments:
- Consumer Foods
- Food Ingredients
- Agribusiness and Property
The segment results for the year ended 31 December 2005 are as follows:
Consumer Food Agribusiness
2005 Foods Ingredients and Property Unallocated Group
Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Total gross
segment revenue 493,667 1,215,559 239,826 - 1,949,052
Inter-segment
revenue (85) (108,271) (10,684) - (119,040)
-------- -------- -------- ------- --------
Revenue 493,582 1,107,288 229,142 - 1,830,012
-------- -------- -------- ------- --------
Operating profit
pre exceptional
items 27,139 42,746 10,684 - 80,569
Exceptional (11,860) (2,649) (1,160) 14,559 (1,110)
items -------- -------- -------- ------- --------
15,279 40,097 9,524 14,559 79,459
-------- -------- -------- -------
Finance income
and costs (18,090)
Share of profits
of joint ventures
ventures and
associates 551 (116) 497 - 932
--------
Profit before tax 62,301
Tax (657)
--------
Profit for the year 61,644
--------
The segment results for the year ended 1 January 2005 are as follows:
Consumer Food Agribusiness
2004 Foods Ingredients and Property Unallocated Group
Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Total gross 458,103 1,195,646 236,492 - 1,890,241
segment revenue
Inter-segment
revenue (6,979) (120,493) (9,124) - (136,596)
------- -------- -------- -------- --------
Revenue 451,124 1,075,153 227,368 - 1,753,645
------- -------- -------- -------- --------
Operating profit 27,906 46,440 11,911 - 86,257
pre exceptional
items
Exceptional
items 2,594 - 1,099 (798) 2,895
------- -------- -------- -------- --------
30,500 46,440 13,010 (798) 89,152
------- -------- -------- --------
Finance income
and costs (5,723)
Share of
losses of
joint ventures
and associates (1,671) (152) 300 - (1,523)
--------
Profit before tax 81,906
Tax (8,386)
--------
Profit for year from 73,520
continuing operations
Discontinued
operations (1,601) - - - (1,601)
--------
Profit for the year 71,919
--------
3 Exceptional items
2005 2004
Notes Euro'000 Euro'000
Foreign currency translation (a) 3,931 (798)
(Loss) / profit on sale or termination of
operations (b) (331) 3,693
Restructuring cost (c) (15,669) -
Profit on sale of quoted investments (d) 10,959 -
------- -------
(1,110) 2,895
Finance cost - cancellation of preferred
securities (note 4) (5,304) -
Income taxes (e) 6,935 -
------- -------
521 2,895
------- -------
(a) The foreign currency translation gain arises on the repayment of loans
between fellow subsidiaries. Under IFRS, for 2005, loans between fellow
subsidiaries do not qualify as part of the net investment and therefore any
gains or losses on these loans are recognised in the income statement.
(b) This represents the revision of losses arising in prior years on
disposals, restructuring and termination of operations.
(c) The restructuring cost relates to costs of rationalisation programmes
carried out mainly in the Consumer Foods and Food Ingredients divisions in
Ireland.
(d) During the year, the Group benefited from the exchange of shares held in
Irish Agricultural Wholesale Society Limited for shares in IAWS Group plc.
The profit arises from the subsequent sale of these shares.
(e) A taxation benefit arising from the disposal of certain US operations in
prior years, which previously had not been recognised in the financial
statements, has now been finalised. This has given rise to a gain, which by
virtue of its scale and nature, has been separately disclosed as a
non-recurring exceptional item in the financial statements.
4 Finance income and costs
(a) Finance income
2005 2004
Euro'000 Euro'000
Interest income (i) 4,209 3,033
--------- -------
(b) Finance costs - pre exceptional
2005 *2004
Euro'000 Euro'000
Interest expense
- Bank borrowings repayable within five years (10,291) (3,970)
- Bank borrowings repayable after five years - (3,779)
- Senior notes - (917)
- Finance lease (109) (90)
--------- -------
(10,400) (8,756)
Finance cost of preferred securities and
preference shares (6,595) (10,387)
--------- -------
Total finance costs - pre exceptional (ii) (16,995) (19,143)
--------- -------
Finance costs - exceptional
Cancellation of preferred securities (iii) (5,304) -
--------- -------
Total finance costs (ii) (22,299) (19,143)
--------- -------
* The Group has availed of the option under IFRS 1 to implement IAS 32 and IAS
39 only in respect of the 2005 figures and not the comparative period. The
figures for 2004 above include the finance cost of preferred securities and
preference shares for comparability purposes only.
(i) Interest income consists mainly of interest on a Stg£35 million
subordinated secured loan note granted by The Cheese Company Holdings
Limited in 2004, representing part proceeds on the sale by the Group of a
75% interest in its UK hard cheese business.
(ii) The comparative figures for the year ended 1 January 2005 have been
restated in accordance with IFRS, with the exception of IAS 32 and IAS 39,
which were implemented from 2 January 2005. As a result, interest on
preferred securities and preference shares is shown as an interest charge
in the year ended 31 December 2005, and as non-equity minority interest in
the 2004 comparative numbers. On a comparable basis the net financing
costs, pre exceptional item, for 2005 was Euro12.8 million compared to
Euro16.1
million for 2004.
(iii) On 15 June 2005 the Group prepaid the US$100 million 7.99% cumulative
guaranteed preferred securities, giving rise to a cost of Euro5.3 million,
which has been disclosed as an exceptional item.
5 Dividends
The dividends paid in 2005 and 2004 were Euro15.6 million (5.36 cent per share)
and
Euro14.8 million (5.10 cent per share) respectively. An interim dividend in
respect
of the year ended 31 December 2005 of 2.27 cent per share was paid during the
year. A final dividend of 3.24 cent per share, amounting to a total dividend in
respect of 2005 of Euro16.1 million (5.51 cent per share), is to be proposed at
the
Annual General Meeting on 16 May 2006. These financial statements do not reflect
this final dividend payable.
6 Earnings per share
Basic
2005 2004
Euro'000 Euro'000
Profit attributable to equity holders of the Company 61,327 61,119
--------- ----------
Weighted average number of ordinary shares in issue 291,469,902 290,617,359
--------- ----------
Basic earnings per share (cent per share) 21.04 21.03
--------- ----------
Diluted
2005 2004
Weighted average number of ordinary shares
in issue 291,469,902 290,617,359
Adjustments for - share options 1,134,139 1,532,995
--------- ----------
Adjusted weighted average number of
ordinary shares 292,604,041 292,150,354
--------- ----------
Diluted earnings per share (cent per share) 20.96 20.92
--------- ----------
Adjusted
2005 2004
Euro'000 Euro'000
Profit attributable to equity holders of the Company 61,327 61,119
Exceptional items (521) (1,294)
--------- ----------
60,806 59,825
--------- ----------
Adjusted earnings per share (cent per share) 20.86 20.59
--------- ----------
7 Borrowings
2005 2004
Euro'000 Euro'000
Borrowings due within one year 330 3,509
Borrowings due after one year 319,727 198,682
Less:
Cash and cash equivalents (104,405) (51,625)
-------- -------
Net Group borrowings as presented in the 215,652 150,566
consolidated balance sheet
Prior period non-equity minority interest - 110,384
(see note below) -------- -------
Group borrowings on a comparable basis 215,652 260,950
-------- -------
The prior year comparative figures have been restated in line with the Group's
transition to IFRS on 4 January 2004, with the exception of IAS 32 and IAS 39,
which were implemented from 2 January 2005. This impacts the presentation of net
borrowings whereby the Group's preference shares and preferred securities are
shown as part of borrowings in 2005 and as part of non-equity minority interest
in prior years. The borrowings figure for 2005 above includes Euro38 million
cumulative redeemable preference shares, the US$100 million 7.99% preferred
securities were cancelled during 2005.
8 Cash generated from operations
2005 2004
Euro'000 Euro'000
Profit for the year 61,644 71,919
Non-cash restructuring costs 2,172 -
Loss on disposal/termination of operations - 156
Share of result of associates (932) 1,523
Income taxes 657 8,386
Depreciation 23,518 25,030
Amortisation 3,313 2,558
Cost of share options 161 76
Exchange losses 196 634
Exchange gains - exceptional (3,931) -
Gain on disposal of investments (10,959) -
Gain on disposal of property, plant and
equipment (2,509) (1,849)
Interest income (4,209) (3,274)
Interest expense 22,299 8,997
Amortisation of government grants received (1,424) (1,228)
--------- -------
Net profit before changes in working capital 89,996 112,928
Change in net working capital
Increase in inventory (5,501) (10,498)
Decrease/(increase) in short term receivables 35,419 (1,807)
Increase/(decrease) in short term liabilities 35,849 (17,176)
Increase in provisions 7,142 -
--------- -------
Cash generated from operations 162,905 83,447
--------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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