1st Mar 2006 07:02
Glanbia PLC01 March 2006 NEWS RELEASE A World of dairyGlanbia Corporate Communications foods and nutritionalTelephone + 353 56 777 2200 ingredientsFacsimile + 353 56 77 50834www.glanbia.com 2005 Results For further information contactGlanbia plc + 353 56 777 2200Geoff Meagher, Deputy Group Managing Director/Group Finance DirectorSiobhan Talbot, Deputy Group Finance DirectorGeraldine Kearney, Corporate Communications + 353 87 231 9430Hogarth Partnership UK + 44 207 357 9477John 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 nutritionalingredients Group, announces its full year results for the year ended 31December 2005, prepared under International Financial Reporting Standards(IFRS). 2005 Summary Results Glanbia delivered a satisfactory performance overall in 2005. A difficult yearin Ireland impacted the Group's results, as Irish operations continue to beaffected by a combination of ongoing EU reform, inflationary pressures and acompetitive market environment. International operations performed well. USAFood Ingredients delivered a solid result, together with strong organic growthin the evolving Nutritionals business. Joint ventures in New Mexico and Nigeria,which are central to the strategic development of the Group, are progressingwell reaching key milestones in plant commissioning, production and customerperformance. 2005 2004 Change Revenue €1,830.0 m €1,753.6 m Up 4%Operating profit pre exceptional €80.6 m €86.3 m Down 7%Operating margin pre exceptional 4.4 % 4.9 % Down 50 bpsNet financing costs pre exceptional(1) (€12.8 m) (€16.1 m) Down 21%Share of results of associates and jointventures(2) €0.9 m (€1.5 m) Up 160%Profit before tax pre exceptional on acomparable basis (1) €68.7 m €68.6 m SimilarProfit after tax pre exceptional on acomparable basis (1) €61.1 m €60.2 m Up 2%Exceptional items(3) €0.5 m €1.3 m See noteEarnings per share 21.04 c 21.03 c SimilarAdjusted 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 €215.7 m €260.9 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 €15.7 million for productivity and efficiency initiatives in Irish operations and a €5.3 million charge for the prepayment of US$100 million preferred securities and €0.3 million relating to prior disposals, offset by €11 million realised from the sale of quoted investments, a €3.9 million foreign exchange credit arising from the implementation of IFRS and a tax credit of €6.9 million primarily relating to a prior business disposal. John Moloney, Group Managing Director, said: "Solid business execution in challenging circumstances in Ireland and a goodinternational performance underpin the 2005 results. While there are ongoingchallenges in Irish operations and unpredictibility in energy prices, we expectkey cost and product development initiatives in these businesses together withongoing international development to underpin the delivery of 2006 results inline with current guidance. Growing momentum within the business supports theGroup'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 financialinformation. A detailed IFRS restatement document is available on the Group'swebsite at www.glanbia.com. Income statement Revenue increased by 4% to €1,830.0 million (2004: €1,753.6 million). Thedifficult environment in Ireland impacted overall profitability and margins.Operating profit pre exceptional was down 7% to €80.6 million (2004: €86.3million) and the operating margin pre exceptional declined 50 basis points to4.4% (2004: 4.9%). Net financing costs pre exceptional, which includes Group interest andnon-equity minority interest for preferred securities and preference shares,reduced by €3.3 million to €12.8 million as the Group continues to benefit froma refinancing during the year. This compares with €16.1 million in 2004,comprising €5.7 million Group interest and €10.4 million non-equity minorityinterest. Due to the timing of the implementation of IAS 32 and 39, interest onpreferred securities and preference shares is shown in the income statement aspart 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 andtax, amounted to a profit of €932,000 in 2005, compared with a loss of €1.5million in 2004. This result reflects the improved performance in GlanbiaCheese, the Group's UK joint venture with Leprino Foods. Profit before tax pre exceptional, including share of joint ventures andassociates, amounting to €68.7 million was similar to last year (2004: €68.6million). Profit after tax pre exceptional increased marginally to €61.1 million(2004: €60.2 million). These figures are on a comparable basis after totalfinancing costs. Taxation for the year amounted to €657,000, compared with €8.4 million in 2004.This is as a consequence of an exceptional of €6.9 million, primarily due to atax credit relating to a prior disposal of assets in the USA. Net exceptionals for the year amounted to a €521,000 compared with €1.3 millionin 2004. These include €11 million profit on the sale of quoted investments, a€3.9 million foreign exchange credit arising from the implementation of IFRS anda €6.9 million tax credit outlined under taxation. These gains were offset byrestructuring charges to improve competitiveness in Ireland of €15.7 million(Agribusiness and Property €1.2 million, Consumer Foods €11.9 million and FoodIngredients €2.6 million), the cancellation cost of €5.3 million for theprepayment of US$100 million preferred securities and €0.3 million relating toprior 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 theprepayment of the US$100 million preferred securities and a renewal offacilities of over €400 million to July 2010 with core banking relationships.Net debt at the year end amounted to €215.7 million, down 17% (2004: €260.9million). While the Group continues to invest for the future with capital anddevelopment expenditure during the year of €71.6 million, the overallimprovement in the Group's debt is mainly as a result of a number of initiativesto reduce investment in seasonal working capital. The increase in the Group retirement benefit obligations to €165.0 million(2004: €126.7 million) is primarily related to the reduction in the discountrate assumptions used in the actuarial valuations. The discount rate applied topension schemes in Ireland is 4.3% (2004: 4.8%), whilst the rate applied to UKschemes 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 witha 3.09 cent per share final dividend in 2004. This brings the total dividend forthe 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 theregister as at Friday 21 April, 2006. Irish dividend withholding tax will bededucted at the standard rate where appropriate. The AGM will be held on Tuesday16 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 internationaljoint ventures in the UK, USA and Nigeria. The Group is organised into threeoperating divisions of Agribusiness and Property, Consumer Foods and FoodIngredients, which includes the evolving Nutritionals business. The operatingmargins stated below are before exceptional items. AGRIBUSINESS AND PROPERTY •'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 isthe key linkage with the Group's 5,700 Irish farmer supply base and Property hasresponsibility for the maximisation of value from the Group's propertyportfolio. Agribusiness had a difficult year arising from poor global grainmarkets and the changing patterns of farm purchasing. These conditions led to adecline in performance and operating margin. Revenue was up 1% to €229.1 million(2004: €227.4 million). Operating profit was down 10% to €10.7 million (2004:€11.9 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 brancheswere closed as part of ongoing cost reduction and efficiency initiatives, whichfollows the closure of 12 branches in 2004. Rationalisation costs during theperiod amounted to €1.2 million. A programme of investment in new technology andbusiness systems began during the year. This division also commenced theroll-out of new branch formats incorporating a wider product range and customeroffering, focused on the needs of rural communities with expanding populations. In Ireland, the environment for farming is for ongoing change during MTR whichimpacts Agribusiness, in particular. The challenge continues to be toeffectively manage this business during this period of change. CONSUMER FOODS •'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 pigmeat, had a mixed year. A good improvement in performance from the pig meatbusiness was offset by competitive markets in the liquid milk and chilled foodssegments and the effects of rationalisation initiatives undertaken in thesebusinesses during the year. Revenue for the division was up 9% to €493.6 million(2004: €451.1 million), mainly due to stronger pig meat markets. Operatingprofit was down 3% to €27.1 million (2004: €27.9 million), leading to a 70 basispoints reduction in the operating margin to 5.5% for this division overall(2004: 6.2%). Liquid milk: This business performed satisfactorily in a challengingenvironment, with increasing cost pressures, rising imports from NorthernIreland and the continuing growth of own brand milk. In February 2005 Glanbiaconcluded an agreement with Dairygold Co-operative Society Limited to take onthe CMP liquid milk, cream and juice brands for a consideration of €10 million.This business has been successfully integrated into Glanbia and extends theGroup'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 tradingenvironment was very competitive. Additional marketing investment was made inpromoting key brands and new products to improve market share. Performance wasalso affected by the costs and timing associated with implementing a significantreorganisation of the Group's Yoplait manufacturing facility. Rationalisation during the year, in liquid milk and chilled foods, focused onimproving the competitiveness and productivity of these businesses. The totalexceptional cost incurred amounted to €11.9 million. This relates to €5.7million for the rationalisation plan at the Inch Yoplait facility, €3.3 millionfor the rationalisation of the Cork distribution business and €2.3 million forthe reorganisation of the Dublin distribution operation. Other costs relate tosales and administration redundancies. Although markets remain competitive, the benefits of rationalisation, productinnovation and marketing underpin an improving outlook for Consumer Foods. Pig meat: This business delivered an improved performance in 2005, after asevere market downturn in 2004. Markets recovered during the year but at aslower rate than anticipated and performance was helped by increasedefficiencies at all facilities. Pig meat markets are forecast to remainreasonably stable in 2006. FOOD INGREDIENTS •'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 isengaged in the production of cheese, butter, dairy spreads and whey proteiningredients. This division also includes the Group's evolving Nutritionalsbusiness which has a growing customer base in the USA, Europe and Asia. The USAoperations and Nutritionals delivered a solid performance in 2005, growingprofitability and margins. The impact of reduced EU market supports on the Irishbased business crystallised in the second half, leading to a significantdeterioration in profitability. Overall revenue increased by 3% to €1.11 billion(2004: €1.08 billion). Operating profit was down 8% to €42.7 million (2004:€46.4 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 theIrish Food Ingredients business in the latter half of 2005. Ireland: As a consequence of the EU Mid Term Review (MTR) of the CommonAgricultural Policy, there is significant ongoing change in dairy marketsarising from the reduction in EU dairy market supports. Despite this, in 2004and early 2005 markets remained reasonably stable. However, as expected thesechanges began to impact performance in the second half. While revenue wasmarginally up for the year, pricing and inflationary cost pressures, mainlyenergy, led to a sharp downturn in profitability and margins. During the year,contract manufacturing agreements on milk processing and an agreement on a newjoint venture to manufacture and market dairy spreads and butterfat productswere completed. This resulted in a restructuring of the cheddar cheesemanufacturing facilities at a cost of €2.6 million. The business continues tofocus on the effective management of the impact of MTR through a combination ofefficiencies, cost control and balanced pricing and product mix. USA: This operation performed well. Market demand is strong and growing steadilyand Glanbia's facilities continue to enhance output. The 30% expansion in cheeseproduction at the Gooding facility in 2004 enabled the business to meet growingcustomer demand for American style barrel cheese during the year. This demand isdriven by strong key account performance in the food service and retail sectors.In 2005 market prices for cheese were lower although volume growth enhancedmargins. Nutritionals: This business continued to make steady progress in 2005 and isshowing good organic growth. Kortus Foods Ingredients Services GmbH, the Germanbased nutrient delivery systems business acquired in 2004, performed ahead ofexpectations. Substantial investment was made in 2005 in building a strong teamwith 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 highcost of energy is an issue for the Group. Any significant and sustained upwardshift in pricing from current levels would be a cause for concern and theoverall management and consumption of energy is a key objective for thisbusiness in 2006. The Group's USA operations continue to perform well and good progress isexpected in Nutritionals during 2006. INTERNATIONAL JOINT VENTURES The Group has a number of significant international Joint Ventures producingcheese, whey and milk products. UK: Glanbia Cheese, a joint venture with Leprino, produces mozzarella cheese forthe European market. This business reported an improved performance arising fromincreased demand and the benefits of investment. Nigeria: Nutricima is a US$25million joint venture with PZ Cussons plc. During2005 the new milk factory opened on schedule. Sales of powdered milk beganmid-year, followed by the launch of evaporated milk later in the year. Productshave been well received in the market and sales are ahead of expectations. USA: Commissioning of the Southwest Cheese facility began in October 2005, andis 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 NewMexico. This joint venture, with the main partners Dairy Farmers of America andSelect Milk Producers Inc., will make Glanbia the number 1 producer of Americancheese, when it reaches full production. Overall this development is progressingwell and initial customer feedback has been very positive. Strategy Glanbia's strategy is to build international relevance in cheese, nutritionalingredients and selected consumer foods, balancing our strong market positionsin Ireland with an increasing presence in overseas markets. The Joint Venturesin Nigeria and the USA are central to this strategic development, as is thecontinuing development of our evolving Nutritionals business. Outlook The Group expects to deliver 2006 results in line with current guidance. Whilethere are ongoing challenges in Irish operations and unpredictability in energyprices, we expect key cost and product development initiatives in thesebusinesses together with ongoing international development to underpin the 2006results. Growing momentum within the business maintains Glanbia's steadyprogress towards double digit growth in 2007. Consolidated income statementfor the year ended 31 December 2005 2005 2004 Pre- Pre- exceptional Exceptional Total exceptional Exceptional Total Notes •'000 •'000 •'000 •'000 •'000 •'000 Revenue 2 1,830,012 - 1,830,012 1,753,645 - 1,753,645Cost of sales (1,590,049) - (1,590,049) (1,529,413) - (1,529,413) ------- ------- ------- ------- ------- ------- Gross profit 239,963 - 239,963 224,232 - 224,232Distributionexpenses (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 89,152Finance income 4 4,209 - 4,209 3,033 - 3,033Finance costs (note) 4 (16,995) (5,304) (22,299) (8,756) - (8,756)Share of results of joint venturesand associates 932 - 932 (1,523) - (1,523) ------- ------- ------- ------- ------- ------- Profit beforetaxation (note) 68,715 (6,414) 62,301 79,011 2,895 81,906Income taxes (7,592) 6,935 (657) (8,386) - (8,386) ------- ------- ------- ------- ------- ------- Profit after taxation (note) 61,123 521 61,644 70,625 2,895 73,520Loss for the year from discontinuedoperations - - - - (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 61,119Non-equity minority interest - 10,387Equity 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'stransition 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 preferredsecurities and preference shares is shown in the income statement as part offinance costs for 2005 and as non-equity minority interest for 2004. On acomparable basis, the profit after taxation, pre-exceptional items for 2005 was€61.1 million compared to €60.2 million for 2004. Consolidated statement of recognised income and expensefor the year ended 31 December 2005 2005 2004 •'000 •'000 Actuarial loss - defined benefit schemes (42,303) (45,755)Deferred tax on pension loss 4,054 5,059Currency 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 21,254Non-equity minority interest - 4,299Equity minority interest 317 413 ------- ------- 16,888 25,966 ------- ------- Consolidated balance sheetas at 31 December 2005 Notes 2005 2004 •'000 •'000ASSETSNon-current assetsProperty, plant and equipment 332,003 302,057Intangible assets 57,963 36,698Investments in associates 11,090 10,918Investments in joint ventures 59,832 48,281Available for sale investments 29,511 -Other investments - 28,672Trade and other receivables 56,874 51,942Derivative financial instruments 1,825 -Deferred tax assets 15,869 12,299 -------- -------- 564,967 490,867 -------- --------Current assetsInventories 144,250 133,419Trade and other receivables 143,610 172,622Derivative financial instruments 1,125 -Cash and cash equivalents (see notebelow) 7 104,405 51,625 -------- -------- 393,390 357,666 -------- -------- Total assets 958,357 848,533 -------- -------- EQUITYIssued capital and reserves attributable toequity holders of the parentShare capital 97,964 95,208Other reserves 117,059 116,414Retained earnings (97,604) (97,797) -------- -------- 117,419 113,825Equity minority interest 6,299 6,085Non-equity minority interest - 110,384 -------- --------Total equity 123,718 230,294 -------- -------- LIABILITIESNon-current liabilitiesBorrowings (see note below) 7 319,727 198,682Deferred tax liabilities 34,471 30,375Retirement benefit obligations 165,016 126,676Provisions for other liabilities and 6,072 5,348chargesCapital grants 14,855 15,276 -------- -------- 540,141 376,357 -------- --------Current liabilitiesBorrowings (see note below) 7 330 3,509Provisions for other liabilities and 8,433 1,291chargesTrade and other payables 278,583 228,901Current tax liabilities 4,605 8,181Derivative 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'stransition 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 netborrowings, which on a comparable basis were €215.7 million at 31 December 2005and €260.9 million at 1 January 2005. Consolidated cash flow statementfor the year ended 31 December 2005 2005 2004 •'000 •'000Cash flows from operating activitiesCash generated from operations 162,905 83,447Interest received 670 573Interest paid (23,177) (11,439)Tax paid (3,777) (4,955) -------- --------Net cash from operating activities 136,621 67,626 -------- -------- Cash flows from investing activitiesAcquisition of subsidiary, net of cashacquired (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 cashdisposed (147) 83,277Disposal of available for sale investments 14,394 -Proceeds from sale of property, plant and 4,418 1,409equipment -------- --------Net cash used in investing activities (52,894) (41,628) -------- -------- Cash flows from financing activitiesProceeds from issue of ordinary shares 731 215Sharesave 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 cashequivalents 51,041 (7,400) Cash and cash equivalents at the beginning 51,625 59,775of the yearEffects of exchange rate changes on cashand cash equivalents 1,739 (750) -------- -------- Cash and cash equivalents at the end of the 104,405 51,625year -------- -------- Notes to the financial statementsfor the year ended 31 December 2005 1 Basis of preparation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards ("IFRS") and IFRIC interpretations endorsed by theEuropean Union and those parts of the Companies Acts, 1963 to 2005 applicable tocompanies reporting under IFRS. The financial statements have been preparedunder the historical cost convention as modified by the revaluation of land andbuildings, available for sale investments, and financial assets and liabilitiesheld for trading. The Group's date of transition to IFRS is 4 January 2004. The comparativefigures have been restated to reflect IFRS, except where otherwise required orpermitted by IFRS 1, First Time Adoption of International Financial ReportingStandards. The financial information set out in this document does not constitute fullstatutory financial statements but has been derived from the Group financialstatements for the year ended 31 December 2005 (referred to as the 2005financial statements). The 2005 financial statements have been audited and havereceived an unqualified audit report. The financial statements were approved by the Board of Directors on 28 February2006 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 •'000 •'000 •'000 •'000 •'000 Total gross segment revenue 493,667 1,215,559 239,826 - 1,949,052Inter-segmentrevenue (85) (108,271) (10,684) - (119,040) -------- -------- -------- ------- -------- Revenue 493,582 1,107,288 229,142 - 1,830,012 -------- -------- -------- ------- -------- Operating profitpre exceptionalitems 27,139 42,746 10,684 - 80,569Exceptional (11,860) (2,649) (1,160) 14,559 (1,110)items -------- -------- -------- ------- -------- 15,279 40,097 9,524 14,559 79,459 -------- -------- -------- ------- Finance incomeand costs (18,090) Share of profitsof joint venturesventures andassociates 551 (116) 497 - 932 -------- Profit before tax 62,301Tax (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 •'000 •'000 •'000 •'000 •'000 Total gross 458,103 1,195,646 236,492 - 1,890,241segment revenueInter-segmentrevenue (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 - 86,257pre exceptionalitemsExceptionalitems 2,594 - 1,099 (798) 2,895 ------- -------- -------- -------- -------- 30,500 46,440 13,010 (798) 89,152 ------- -------- -------- -------- Finance incomeand costs (5,723)Share oflosses ofjoint venturesand associates (1,671) (152) 300 - (1,523) -------- Profit before tax 81,906Tax (8,386) -------- Profit for year from 73,520continuing operationsDiscontinuedoperations (1,601) - - - (1,601) -------- Profit for the year 71,919 -------- 3 Exceptional items 2005 2004 Notes •'000 •'000 Foreign currency translation (a) 3,931 (798)(Loss) / profit on sale or termination ofoperations (b) (331) 3,693Restructuring cost (c) (15,669) -Profit on sale of quoted investments (d) 10,959 - ------- ------- (1,110) 2,895 Finance cost - cancellation of preferredsecurities (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 •'000 •'000 Interest income (i) 4,209 3,033 --------- ------- (b) Finance costs - pre exceptional 2005 *2004 •'000 •'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 andpreference shares (6,595) (10,387) --------- ------- Total finance costs - pre exceptional (ii) (16,995) (19,143) --------- ------- Finance costs - exceptionalCancellation 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 IAS39 only in respect of the 2005 figures and not the comparative period. Thefigures for 2004 above include the finance cost of preferred securities andpreference 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 €12.8 million compared to €16.1 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 €5.3 million, which has been disclosed as an exceptional item. 5 Dividends The dividends paid in 2005 and 2004 were €15.6 million (5.36 cent per share) and€14.8 million (5.10 cent per share) respectively. An interim dividend in respectof the year ended 31 December 2005 of 2.27 cent per share was paid during theyear. A final dividend of 3.24 cent per share, amounting to a total dividend inrespect of 2005 of €16.1 million (5.51 cent per share), is to be proposed at theAnnual General Meeting on 16 May 2006. These financial statements do not reflectthis final dividend payable. 6 Earnings per share Basic 2005 2004 •'000 •'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 sharesin issue 291,469,902 290,617,359Adjustments 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 •'000 •'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 •'000 •'000 Borrowings due within one year 330 3,509Borrowings due after one year 319,727 198,682Less:Cash and cash equivalents (104,405) (51,625) -------- ------- Net Group borrowings as presented in the 215,652 150,566consolidated 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'stransition 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 netborrowings 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 €38 million cumulative redeemable preference shares, the US$100 million 7.99% preferred securities were cancelled during 2005. 8 Cash generated from operations 2005 2004 •'000 •'000 Profit for the year 61,644 71,919 Non-cash restructuring costs 2,172 -Loss on disposal/termination of operations - 156Share of result of associates (932) 1,523Income taxes 657 8,386Depreciation 23,518 25,030Amortisation 3,313 2,558Cost of share options 161 76Exchange losses 196 634Exchange gains - exceptional (3,931) -Gain on disposal of investments (10,959) -Gain on disposal of property, plant andequipment (2,509) (1,849)Interest income (4,209) (3,274)Interest expense 22,299 8,997Amortisation of government grants received (1,424) (1,228) --------- ------- Net profit before changes in working capital 89,996 112,928Change in net working capitalIncrease 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 ExchangeRelated Shares:
Glanbia