2nd Mar 2005 07:02
Glanbia PLC02 March 2005 News Release Glanbia plcCorporate Communications Department Glanbia HouseTelephone + 353 56 7772200 Kilkenny IrelandFacsimile + 353 56 7750834www.glanbia.com 2004 Results for the year ended January 1, 2005 For further information contactGlanbia plc +353 56 777 2200 Geoff Meagher, Finance Director Geraldine Kearney, Corporate Communications, + 353 87 231 9430 Hogarth PartnershipUK +44 207 357 9477John Olsen 2004 RESULTS 2 March 2005 Good progress and improved performance Restructuring completed and group reorganised for growth Glanbia plc, an international Consumer Foods, Food Ingredients and NutritionalsGroup, announces its 2004 Results for the year ended January 1, 2005. Commenting today John Moloney, Group Managing Director, said: "Overall the Group performed satisfactorily in 2004 delivering results in linewith expectations, notwithstanding the challenging trading environment inIreland, particularly the difficult pigmeat sector. We are pleased with theprogress made on the development and implementation of the Group's strategy andthe completion of the Group restructuring programme. For 2005 our focus will be on the completion of the major strategic dairyprocessing investments in New Mexico and Nigeria, development initiatives whichbuild scale and diversity and driving cost efficiencies that enhanceperformance. The trading outlook across the Group has some challenges,particularly in the context of managing the impact of EU dairy sector reform.However with our strong market positions and evolving Nutritionals business, theGroup is well positioned for growth." Summary Results Financial Highlights • Turnover (1) up 10% to €1.83 billion (2003: €1.66 billion). • Operating profit (2) down by 5.6% to €83.5 million (2003: €88.5 million), impacted by the sharp downturn in the Fresh Pork business. • Profit before tax and exceptional items up 1% to €77.7 million (2003: €77.1 million). • Operating margin 4.6% (2003: 4.5%). • Adjusted earnings per share (3) up 4.4% to 20.10 cent per share (2003: 19.26 cent). • Earnings per share 20.41 cent (2003: loss per share 12.01 cent). • Total dividend for the year up 5% to 5.25 cent per share (2003: 5.0 cent). • Total financing costs reduced substantially to €16.4 million (4) (2003: €26.0 million). (1) Continuing operations(2) Continuing operations, pre exceptional items. Total exceptional items: gain of €1.2 million (2003: charge of €92.0 million)(3) Pre exceptional items and amortisation of goodwill.(4) Includes net interest of €5.96 million and €10.39 million for preferred securities (non-equity minority interest). Operational Highlights • A satisfactory performance with results in line with expectations. • Restructuring completed and Group organised around key areas for strategic development. • Demanding trading conditions in liquid milk and chilled foods businesses. • Difficult year for the pigmeat sector but positive signs of a recovery towards year end. • Strong growth in Food Ingredients, led by positive US markets and increased US capacity. • Strategic investments in New Mexico and Nigeria to be commissioned in 2005. • Group Innovation Centre opened and first Nutritionals acquisition in Europe completed. Results In 2004 the Group completed a programme of planned restructuring, whichculminated during the year with the sale of Glanbia Foods Ltd and the relatedGlanbia Milk operations. The Group has retained a 25% interest in a new cheeseentity, The Cheese Company Holdings Limited. 1 January 2005 3 January 2004 ChangeGroup turnover €1,828.7 m €1,659.2 m Up 10%Continuing operationsOperating profit €83.5 m €88.5 m Down 5.6%Continuing operations, preexceptional itemsProfit before tax €77.7 m €77.1 m Up 1%Pre exceptional itemsExceptional items €1.2 m •(92.0) m Restructuring completed Profit before tax €78.9 m •(14.9)mPost exceptional itemsAdjusted earning per share 20.10 c 19.26 c Up 4.4% Pre exceptional items andamortisation of goodwill Dividend per share 5.25 c 5.00 c Up 5%Net debt €150.6 m €153.8 mFinancing cover 5.2 times 3.5 timesNet interest and preferredsecurities/Operating profit Turnover for continuing operations increased by 10% to €1,828.7 million (2003:€1,659.2 million). Total Group turnover declined 10% to €1,846.0 million (2003:€2,041.1 million) as a result of the planned restructuring of the Group's UKoperations. The Group share of the turnover of joint ventures increased 9.2% to€75.0 million (2003: €68.7 million). Operating profit before exceptional items from continuing operations declined5.6% to €83.5 million (2003: €88.5 million), mainly as a result of the poorperformance of the Fresh Pork business, which was impacted by difficulties inthe Irish pigmeat sector during the year. Operating profit, pre exceptionals andincluding share of joint venture and associates, declined by 8.8% to €84.6million (2003: €92.8 million). Profit before tax increased to €78.9 million as against a loss before tax in2003 of €14.9 million. The pre tax loss in 2003 reflects the €92.0 millionexceptional charges in that year, as a consequence of the planned Grouprestructuring, compared with a gain in 2004 of €1.2 million principally on thesale of assets. Adjusted earnings per share amounted to 20.10c up 4.4% (2003: 19.26c), whileearnings per share amounted to 20.41c compared with a loss per share of 12.01cin 2003. The dividend for the year, including the proposed final dividend,amounted to 5.25c per share (2003: 5.00c), representing an annual increase of5%. Net debt decreased €3.2 million to €150.6 million (2003: €153.8 million),notwithstanding €126.3 million in capital expenditure and developmentinitiatives in 2004. The overall improvement in the Group's debt reflects theproceeds of the disposal of Glanbia Foods Ltd (the UK hard cheese operation) andsolid cash flow from operations. The interest charge declined to €6.0 million (2003: €15.0 million). Thisincludes an interest credit of €2.5 million in respect of a Stg£35.0 millionloan note from The Cheese Company Holdings Limited. The interest charge declineddue to a changing mix of debt and a more favourable interest rate environment. The Group has a non-equity minority interest charge of €10.4 million relating topreferred securities (2003: €11.0 million). The total financing charge for the Group declined €9.6 million to €16.4 million(2003: €26.0 million). Financing cover was 5.2 times in 2004, compared with 3.5times in 2003. Dividends The Board is recommending a final dividend of 3.09c per share, compared with a2.94c per share final dividend in 2003. This brings the total dividend for theyear to 5.25c per share (2003: 5.0c per share), representing a 5% increase.Dividends will be paid on Monday, 23 May 2005 to shareholders on the register asat Friday, 22 April 2005, the record date. Irish dividend withholding tax willbe deducted at the standard rate where appropriate. Development initiatives 2004 In 2004, as part of the overall capital expenditure programme, the Group spent€68.3 million on a number of development initiatives aligned with the Group'sdevelopment strategy, which is centred on high growth areas in Consumer Foods,Food Ingredients and Nutritionals. This included investment in Southwest CheeseCompany LLC (New Mexico), Nigeria, Germany and organic expansion of our Idahofacilities. Organic Growth • Three new plant extensions were commissioned in 2004 at the Group's USA facilities. Production at the Gooding cheese facility expanded by 25% to meet the growing demand for cheddar cheese primarily from the food service and retail sectors. Two expansion projects at the Richfield whey plant increased production of current nutritional brands as well as new product development, reflecting the growing nutritional marketplace demand. • In 2004 Consumer Foods Ireland reorganised its management structure merging its two consumer facing businesses - liquid milk and chilled foods. This business also expanded its customer support functions with investments in people, realigned structures and change processes, supported by new management information systems. • There were a number of successful new products launched in 2004. In addition to a range of chocolate and strawberry flavoured milks Consumer Foods Ireland introduced two new soup ranges "Avonmore Connoisseur" and "Avonmore Kidz". A range of fresh meat sauces was also launched under the Avonmore brand in the latter half of the year. This new product momentum will continue into 2005 with the development of new products and product extensions planned. Acquisitions • Glanbia acquired a German based nutrient delivery systems business, Kortus Food Ingredients Services GmbH ("Kortus") for €14.5 million. Kortus specialises in the production, research and development of customised nutrient systems for customers in the Infant Formula, Clinical Nutrition and Dietetics markets. This business gives Glanbia a platform for growth in those sectors as well as access to a strong sales presence in Germany and Austria. Joint Ventures • The new US$190 million production facility in New Mexico, the Southwest Cheese Company LLC joint venture with Dairy Farmers of America Inc. and Select Milk Producers Inc. is on target to begin commissioning in October 2005. In addition to over 110,000 tonnes of cheese the plant will also produce 7,500 tonnes of high quality value-added whey proteins, all of which will be available for the development of the Group's Nutritionals business. • The 50:50 joint venture with PZ Cussons plc to build a new US$25 million facility in Nigeria is set to begin commissioning in April 2005. This creates opportunities for a new route to market for Food Ingredients Ireland. • Glanbia concluded a 50:50 joint venture agreement with Nashs Mineral Waters (Marketing) Limited for a cash consideration of €1.3 million. 2005 TO DATE Since year-end Glanbia and Dairygold Co-operative Society Limited announcedthat, subject to approval of the Irish Competition Authority, Glanbia willoperate the CMP liquid milk, cream and juice brand. In addition Glanbia andDairygold also reached agreement in principle to enter into a contractmanufacturing arrangement to maximise utilisation of their respective milkprocessing facilities. The agreements with Dairygold demonstrate the continuinginternal drive for production and cost efficiencies in response to the effectsof the Mid Term Review (MTR) of the Common Agricultural Policy (CAP) on themarket landscape. Operations Review Glanbia is now organised into cohesive business units structured arounddeveloping the Group's strategic focus on Consumer Foods, Food Ingredients andNutritionals. Agribusiness As anticipated, 2004 was a challenging year for the Agribusiness division andoverall turnover declined by 3.0% to €227.4 million (2003: €234.5 million).Operating profit declined 15.1% to €12.1 million (2003: €14.2 million)reflecting the combined effects of poor grain markets and the influence ofchanging demand patterns and pricing in an evolving farming sector. Operatingmargin reduced to 5.3% (2003: 6.1%). During 2004 the division continued itsefficiency and cost management programme and the number of retail branch outletswas reduced by 12 to 70 branches. With its evolving structure and more efficientcost base Agribusiness is well positioned to provide a full product offering tocustomers. Consumer Foods Overall the Consumer Foods Division had a challenging year. Turnover at €543.5million (2003: €900.4 million) was down reflecting the completion of the plannedUK restructuring programme. Operating profit declined to €27.8 million (2003:€44.8 million) reflecting the impact of the UK restructuring programme and asharp decline in the performance of the Fresh Pork business. Operating marginimproved to 5.1% (2003: 5.0%). Liquid Milk and Chilled Foods Against the background of a competitive grocery trade and food retail market inIreland, the liquid milk and chilled foods businesses performed reasonably well,although both turnover and profitability reduced in 2004. The liquid milkbusiness was impacted by increased milk imports from Northern Ireland. During 2004 a substantial investment was made integrating the supply chainprocesses of liquid milk and chilled foods and while there is further workplanned in this area this new structure is beginning to yield benefits. With acommon set of customers and distribution channels, further opportunities interms of sales, distribution, customer service and product innovation will bedeveloped in 2005. Consumer Foods continued to consolidate its position in 2004 with Ireland'sleading dairy food and beverage brands - comprising Avonmore, Premier, Yoplait,Snowcream and Kilmeaden. The ongoing development and extension of the productrange for taste, nutrition, variety and convenience was a critical factor inmaintaining this leading market position. Fresh Pork Profitability in Glanbia Meats declined sharply in 2004 due to a weak porkmarket and very competitive market supply dynamics. The pigmeat industry iscyclical and this has been compounded in recent years by overcapacity relativeto the available supply of pigs. During 2004 the industry consolidated with areduction in the number of processors and as anticipated, trading conditionsimproved late in the year with some margin recovery and growing internationaldemand. The Group expects an improved performance from Glanbia Meats in 2005.Glanbia, with its modern plant and efficient operations is well positioned tobenefit in this stronger industry and operating environment. UK Mozzarella Cheese Joint Venture While the overall market for mozzarella cheese grew, trading conditions remainedhighly competitive as dairy processors reposition their product portfolios inthe wake of the implementation of MTR in EU dairy markets. This gave rise toaggressive price competition during the year. As a leading supplier ofinnovative products, volumes at Glanbia Cheese grew, however profits weredepressed by the poor pricing environment. This market environment is expectedto improve somewhat in 2005. The strength of the Glanbia Cheese market position,quality product and unique technology places this business in a good position tobenefit as these developments unfold. Food Ingredients This division delivered a good result, driven by a strong contribution from theGroup's US cheese operations and a satisfactory performance from the Irishbusiness. Turnover increased 18.6% to €1,075.2 million (2003: €906.2 million).Operating profit grew 32.6% to €44.8 million (2003: €33.8 million) and operatingmargin grew 44 basis points to 4.2% (2003: 3.7%). There was a small positivecontribution from the Nutritionals business. Food Ingredients USA Solid volume growth, good demand for whey, improved market pricing for cheeseand increased capacity at the Idaho facilities resulted in a strong performanceoverall from the US business. Turnover and profits increased substantially withan improvement in margins. As part of an ongoing programme of investment - total €18.6 million - anincrease in capacity at the Idaho facilities for cheese and whey products wascompleted during 2004. A further phase of investment to add new plant for theproduction of protein isolates, which is a core product in the Nutritionalsbusiness, was also commenced in 2004 and has recently been commissioned. Milkproduction in Idaho is expected to be strong in 2005 and market demandindications are positive. Food Ingredients Ireland Food Ingredients Ireland had a satisfactory year against a backdrop of solidmarket demand. The combined benefits of rationalisation, an enhanced product mixfrom innovation and increased capacity utilisation contributed to theperformance of the business. Market demand was better than anticipated and this underpinned a stable productand raw material pricing structure during the year. However with theimplementation of MTR, this situation is not expected to persist and arebalancing of the pricing structure in the sector is expected in the shorterterm. Food Ingredients Ireland as a large manufacturing operation will continueto examine opportunities to minimise the impact of inflationary cost increases.The recently announced agreement with Dairygold Co-operative is a logicaldevelopment in this regard. Nutritionals Glanbia Nutritionals made progress in 2004, achieving good sales growthsupported by the additional capacity in specialised whey protein isolateproducts in Idaho. The business also developed and launched advanced,differentiated and branded ingredients, targeted at a range of nutritionalrequirements such as weight management, immune enhancement and performance.These products were developed in partnership with customers at the Idaho Centreof Excellence in the USA and the Group's Innovation Centre in Ireland. All theproducts have received a positive response. Investment was made during the year in resourcing and organising theNutritionals development programme and an acquisition of Kortus for €14.5million was made in Germany during the year. Glanbia's expertise and leading global position in the fractionation andutilisation of whey proteins is the strategic rationale for this evolvingbusiness, and the Group's strategy is to become a key global provider ofnutritional ingredients and nutritional solutions in this high growth market,through a range of initiatives in capacity expansion, research and development,and acquisition and joint ventures in both dairy and non dairy sectors. Finance Review Before exceptional items and goodwill amortisation, adjusted earnings per shareincreased 4.4% to 20.10 cent (2003: 19.26 cent). Earnings per share were 20.41cent (2003: loss per share 12.01 cent), reflecting the completion of the plannedrestructuring of the Group. The average number of shares in issue during theyear was 290.6 million (2003: 290.3 million). Net cash inflow from operating activities amounted to €83.4 million for theyear. Capital investment was €126.3 million and proceeds of disposals €84.7million. The Balance Sheet is materially changed, principally arising from thedisposal of Glanbia Foods Limited during the year. Capital employed hasincreased from €298 million to €337.9 million. Net borrowings as at 1 January 2005 amounted to €150.6 million, compared with€153.8 million as at 3 January, 2004. Non-equity minority interests amounted to€110.38 million compared with €115.76 million the previous year, the differencearises on currency translation only. Total financing (net borrowings and non equity minority interests) gives aFinancing/EBITDA ratio of 2.29 times (2003: 2.07 times). International Financial Reporting Standards It will become mandatory for all EU listed companies to report theirconsolidated financial statements under International Financial ReportingStandards (IFRS) from 2005 onwards. This will apply to the Group for its June2005 Interim Results and Glanbia has established a programme to ensure fullcompliance with IFRS. The main impact on the Group's financial statements isexpected to be the implementation of IAS 19 'Employers Benefits' and therecognition on the Balance Sheet of pension fund deficits. Board Changes The Chairman, Mr Tom Corcoran, will retire from the Board of Glanbia plc in June2005 and the Board will select and appoint a successor at that time. 2005 Outlook "For 2005 our focus will be on the completion of the major strategic dairyprocessing investments in New Mexico and Nigeria, development initiatives whichbuild scale and diversity and driving cost efficiencies that enhanceperformance. The trading outlook across the Group has some challenges,particularly in the context of managing the impact of EU dairy sector reform.However with our strong market positions and evolving Nutritionals business, theGroup is well positioned for growth." ANNUAL REPORT AND ANNUAL GENERAL MEETING The 2004 Annual Report for the Group will be published in April. The AnnualGeneral Meeting will take place in the Newpark Hotel, Kilkenny on 17 May 2005.Ends Note to Editors: ABOUT GLANBIA The business units of Glanbia plc are structured around developing the Group'sstrategic focus on the Consumer Foods, Food Ingredients and Nutritionalsmarkets. There are three operational divisions of Glanbia: • Agribusiness Division - the key linkage between Glanbia and its Irish raw materials supply base of 5,700 farmer suppliers. This business is engaged primarily in feed milling, milk assembly and the marketing of a range of farm inputs, including fertilisers, feed and grain through a retail branch network. • Consumer Foods - includes liquid milk, chilled foods and pork processing as well as the UK mozzarella cheese joint venture. • In Ireland Glanbia is the leading supplier of branded and value-added liquid milk, fresh dairy, cheeses, soups and spreads in the retail market. Glanbia Meats is the leading Irish fresh pork and bacon processor selling to Irish and International markets. • Food Ingredients - comprising the US and Irish dairy ingredients operations and the Group's developing Nutritionals business. Glanbia processes a range of milk, cheese and whey protein ingredients at facilities in Ireland and the US for sale on international markets. Glanbia Nutritionals supplies the global nutrition industry with a range of solutions designed to address specific health and wellness benefits. Glanbia plc Consolidated Profit and Loss Account for the Year ended 01 January 2005 Pre- Pre- exceptional Exceptional Total exceptional Exceptional Total 2004 2004 2004 2003 2003 2003 Notes •'000 •'000 •'000 •'000 •'000 •'000TurnoverContinuing 1,828,661 - 1,828,661 1,659,153 - 1,659,153operationsDiscontinued 92,400 - 92,400 450,607 - 450,607operationsLess share ofturnover ofjoint venture (75,016) - (75,016) (68,687) - (68,687) -------- -------- -------- -------- -------- --------Group turnover 1 1,846,045 - 1,846,045 2,041,073 - 2,041,073 Cost of sales (1,612,927) - (1,612,927) (1,773,537) - (1,773,537) -------- -------- -------- -------- -------- --------Gross profit 233,118 - 233,118 267,536 - 267,536 Distribution costs (82,171) - (82,171) (94,697) - (94,697)Administrativeexpenses 2 (66,525) 400 (66,125) (80,970) (16,451) (97,421) -------- -------- -------- -------- -------- --------Operating profitContinuing operations 83,503 400 83,903 88,472 (16,451) 72,021Discontinued 919 - 919 3,397 - 3,397operations -------- -------- -------- -------- -------- -------- Group operatingprofit 84,422 400 84,822 91,869 (16,451) 75,418 Share of operating 201 - 201 916 - 916profit of joint -------- -------- -------- -------- -------- --------ventures & associatesOperating profitincluding jointventures & associates 1 84,623 400 85,023 92,785 (16,451) 76,334 Loss on saleof operation 3 - (2,601) (2,601) - (28,190) (28,190)Provision forloss on saleof operation 4 - - - - (49,146) (49,146)Profit on sale of fixed assets 5 - 929 929 - 11,594 11,594Profit/(loss) ontermination ofoperations 6 - 2,445 2,445 - (9,827) (9,827)Group interest (5,964) - (5,964) (15,023) - (15,023)Share of interestof joint venturesand associates (917) - (917) (627) - (627) -------- -------- -------- -------- -------- -------- Profit/(loss)before taxation 77,742 1,173 78,915 77,135 (92,020) (14,885)Taxation (8,805) - (8,805) (10,272) 1,546 (8,726) -------- -------- -------- -------- -------- -------- Profit/(loss) after taxation 68,937 1,173 70,110 66,863 (90,474) (23,611) -------- -------- -------- -------- Equity minorityinterest (413) (251)Non-equityminority interest (10,387) (11,005) -------- -------- Profit/(loss) for the year 59,310 (34,867)Dividends 7 (15,268) (14,515) -------- --------Profit retained /(loss)absorbed forthe year 44,042 (49,382) ======== ======== Earnings per share 8 20.41 c (12.01)cAdjusted earnings per share 8 20.10 c 19.26 c Glanbia plc Consolidated Balance Sheet as at 1 January 2005 2004 2003 •'000 •'000 Assets employedFixed assetsTangible assets 321,780 363,641Intangible assets 16,652 2,466 Financial assetsInvestments in joint ventures:Share of gross assets 86,632 40,542Share of gross liabilities (36,805) (27,598) -------- --------- 49,827 12,944 Investments in associates 9,908 9,607Other investments 29,869 13,035 -------- --------- 89,604 35,586 -------- --------- 428,036 401,693 -------- ---------Current assetsStocks 133,419 202,736Debtors 230,792 214,136Cash and bank balances 51,625 59,775 -------- --------- 415,836 476,647Creditors - Amounts falling due within one year 250,871 352,446 -------- --------- Net current assets 164,965 124,201 -------- --------- Total assets less current liabilities 593,001 525,894 -------- --------- Less:Non-current liabilitiesCreditors - Amounts falling due after more than oneyear 210,362 183,682 Provision for liabilities and chargesDeferred taxation 29,493 27,559Capital grants 15,276 16,611 -------- --------- 337,870 298,042 ======== ========= Capital and reservesCalled up equity share capital 17,559 17,551Share premium account 80,212 80,005Merger reserve 113,148 113,148Revenue reserves 9,907 (34,088)Own shares (2,563) (3,235)Capital reserves 3,138 3,231 -------- ---------Equity shareholders' funds 221,401 176,612Equity minority interests 6,085 5,671Non-equity minority interests 110,384 115,759 -------- --------- 337,870 298,042 ======== ========= The financial statements were approved by the Board of Directors on 1 March 2005and signed on its behalf by TP Corcoran, JJ Moloney and GJ Meagher, directors. Glanbia plc Consolidated Cash Flow Statement For the Year Ended 1 January 2005 2004 2004 2003 2003 •'000 •'000 •'000 •'000 Group operating profit 84,422 91,869Reorganisation and merger costs - (338)Profit on disposal of fixed assets (920) (415)Depreciation 29,320 38,125Capital grants released (1,228) (1,443)Increase in stocks (10,498) (35,004)Increase in debtors (1,807) (2,333)(Decrease) / increase in creditors (16,118) 3,749Goodwill amortisation 273 297 ------- ------- Net cash inflow from operating 83,444 94,507activities Returns on investments and servicing of finance Interest received 573 277Interest paid (11,349) (16,676)Finance lease interest (90) (149)Dividends paid to equityminority interest - (1,463)Dividends paid to nonequity minority interest (9,674) (20,540) (10,295) (28,306) ------- ------ Taxation (4,955) (9,816) Capital expenditure and financial investment Purchase of fixed assets (60,946) (41,741)Disposal of fixed assets 1,409 2,629Purchase of investments (55,211) (114,748) (2,410) (41,522) ------- ------ Acquisitions and disposals Purchase of subsidiaryundertakings (10,157) -Disposal of subsidiary 76,781 795undertakingsTermination of operation 6,496 (1,851)Fire insurance proceeds (net - 73,120 7,332 6,276of redundancy and other costs) ------- ------ Equity dividends paid (14,813) (14,080) ------- -------Cash inflow before management 1,508 7,059of liquid resources andfinances Financing Decrease in term loans (8,513) (34,478)Decrease in finance leases (613) (987)Minority interest redemption - (100)Share capital issued 215 -Capital grants received 3 (8,908) 5 (35,560) ------- ------- ------ ------- Decrease in cash in year (7,400) (28,501) ------- ------- Reconciliation of net cashflow to movement in net debtDecrease in cash in year (7,400) (28,501)Decrease in debt and finance 9,126 35,465leasing ------- ------- Change in net debt resulting from cash 1,726 6,964flows Translation difference 1,505 15,547 ------- -------Movement in net debt in year 3,231 22,511Net debt at 3 January2004 (153,797) (176,308) ------- -------Net debt at 1 January2005 (150,566) (153,797) ------- ------- Glanbia plc Notes to the Financial Statements 1. Segmental analysis 2004 2003Analysis by class of business •'000 •'000TurnoverConsumer Foods 543,524 900,411Food Ingredients 1,075,153 906,210Agribusiness 227,368 234,452 ------- ------- 1,846,045 2,041,073 ======= ======= Operating profit 2004 2003(Pre-exceptional operating profit including share of •'000 •'000profits of joint venture and associates)Consumer Foods 27,755 44,773Food Ingredients 44,770 33,765Agribusiness 12,098 14,247 ------- ------- 84,623 92,785 ======= ======= 2. Exceptional items 2004 2003 •'000 •'000 Redundancy credit/(cost) arising fromfire at Roosky plant (note 5) 230 (9,505) Restructuring credit/(cost) associatedwith EU Commissions Mid Term Review ofthe Common Agricultural Policy 170 (6,946) ------- ------- 400 (16,451) ======= ======= The credit in 2004 arises from the release of redundancy provisions no longerrequired. 3. Loss on sale of operation The loss arises primarily from the sale by the Group of a 75% interest in its UK hard cheese business in April 2004 (see note 4). The Group also incurred additional costs relating to prior period disposals. UK Hard Cheese Others Total •'000 •'000 •'000 Loss on disposal of asset (2,520) (81) (2,601) ======== ======= ======= The loss on sale in 2003 arose mainly from the Group's sale of its UK Fresh Meats operation at West Bromwich. The Group also disposed of a pig farm during 2003 and recognised an additional loss representing increased pension obligations to former employees of the UK Dairies operation which was disposed of in a prior period. 4. Provision for loss on sale of operation The 2003 provision arose from the sale by the Group in April 2004 of a 75%interest in its UK hard cheese business. 2004 2003 •'000 •'000 Loss on disposal of asset after year end - (18,629)Write back of goodwill on asset disposed afteryear end - (30,517) ------- ------- - (49,146) ======= ======= 5. Profit on sale of fixed assets The 2004 profit arises from the sale of a site in the Consumer Foods business. 2004 2003 •'000 •'000 Profit on disposal of tangible assets 929 11,594 ======= ======= The profit in 2003 arose from the excess of insurance proceeds received over thenet book value of assets destroyed by fire at the pigmeat processing plant inRoosky, Ireland on 8 May 2002. 6. Profit / (loss) on termination of operations The gain arises from the sale by the Group of its UK Fresh Meats and UK ConsumerMeats plants at Drongan, Gainsborough and Milton Keynes during 2004, followingthe sale of its UK Fresh Meats business in 2003 and the closure of its UKConsumer Meats business in 2002. 2004 2003 •'000 •'000 Profit / (loss) arising on termination ofoperations 2,445 (8,578)Goodwill written off on termination - (1,249) ------- ------- 2,445 (9,827) ======= ======= The loss in 2003 relates to the closure of the Group's UK Fresh Meats operationsat Drongan and Gainsborough, and an adjustment to the loss arising from theclosure of the Group's UK Consumer Meats operation in June 2002. 7. Dividends 2004 2003 Interim dividend paid per share (cent) 2.16 2.06Final dividend proposed per share (cent) 3.09 2.94 ------- ------- 5.25 5.00 ======= ======= Total dividend (•'000) (15,268) (14,515) ======= ======= 8. Earnings per share 2004 2003 •'000 •'000 Profit / (loss) after taxation and minorityinterest 59,310 (34,867) ======= ======= Weighted average number of ordinary shares in issue 290.617 290.303(million) ======= ======= Earnings per share 20.41c (12.01c) ======= ======= Adjustments:Goodwill amortisation 0.10c 0.10cExceptional items (0.14c) 5.13cLoss on sale of operations 0.89c 9.71cProvision for loss on sale of operations - 16.93cProfit on sale of fixed assets (0.32c) (3.99c)(Gain) / loss on termination of operations (0.84c) 3.39c ------- -------Adjusted Earnings per Share 20.10c 19.26c ======= ======= 9. Debtors Included in Debtors of €230.8 million is a subordinated secured loan of €51.9million granted by The Cheese Company Holdings Limited in 2004, representing part proceeds arising on the sale by the Group of a 75% interest in its UK hard cheese business. The loan note yields interest at 1.75% above LIBOR. The principle and compounded interest is repayable over 40 quarterly instalments from 1 April 2008 to 1 January 2018. 10. Group borrowings 2004 2003 •'000 •'000 Borrowings due within one year 3,509 43,221Borrowings due after one year 198,682 170,351Less:Cash and bank balances (51,625) (59,775) ------- ------- Net borrowings 150,566 153,797 ======= ======= 11. Accounting policies These accounts have been prepared under the historical cost convention using thesame accounting policies as detailed in the 2003 annual financial statements,with the exception of a new accounting policy being adopted in respect of OwnShares as required under Urgent Issues Task Force Abstract 38 'Accounting forESOP Trusts' issued in December 2003. This new policy reclassified Own Sharesheld of €2.6 million from Other Investments to Equity Shareholders' Funds and has no impact on the Group's consolidated profit and loss account. 12. Basis of preparation and reporting currency The financial information set out in this document does not constitute fullstatutory accounts for the year ended 1 January 2005 (referred to as 2004accounts) or 3 January 2004 (referred to as 2003 accounts) but is derived fromsame. The 2004 and 2003 accounts have been audited and received unqualified audit reports. The 2004 financial statements were approved by the Board of Directors on 1 March 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Glanbia