Kerry Regulatory News (KYGA)

28 Feb 2006 07:01

Kerry Group PLC28 February 2006 Kerry Group plc Annual Results 2005 28 February, 2006 Kerry, the global ingredients, flavours and consumer foods group, reportspreliminary results for the year ended 31 December 2005. Financial Highlights • Sales revenue increased by 7% to €4.4 billion• Trading profit growth of 7% to €380m• Trading margin maintained at 8.6%• Profit after tax up 16% to €236m• Adjusted EPS* up 7.1% to 131.6 cent• Final dividend per share up 15.8% to 11 cent• Free cash flow of €248m• R&D expenditure increased to €125m *before intangible amortisation and non-trading items Kerry Group Chief Executive Hugh Friel said "Kerry achieved a solid businessperformance in 2005, delivering good top-line and earnings growth in achallenging year for the global food industry. The Group's business units wereto the fore in providing innovative technologies and solutions to meet customerneeds for 'clean label', natural food and beverages and therapeutical products.Kerry's leading technologies, nutritional focus and the strong marketpositioning of its broad geographic spread of businesses, augur well for thefuture profitable growth and development of the Group. We continue to pursuevalue and technology enhancing acquisition opportunities and are confident ofmeeting market growth expectations in 2006". Kerry Group plc Preliminary Statement Results for the year ended 31 December 2005 Kerry Group maintained its record of sustained profit growth and strong cashflows in 2005 - the Group's twentieth year as a public company. Kerry achieveda solid business performance, delivering good top-line and earnings growth in achallenging year for the global food industry due primarily to significant rawmaterial and energy cost inflation. Group businesses were well positioned tomeet divergent consumer, nutritional, well-being and lifestyle requirements.The breadth of Kerry's ingredients, bio-science and flavour technologies meantthat the Group's strategic business units were to the fore in providinginnovative technologies and solutions to meet customer needs for 'clean label',natural food and beverages and therapeutical products. In 2005, the Group made substantial operational progress in re-organising andrefocusing its applications, processing and business support structures to meetchanging marketplace requirements and industry growth sectors. Portfoliooptimisation and elimination of non-core activities is on-going. Significantprogress was also achieved in progressing the Group's business expansion intodeveloping growth markets in Eastern Europe, South America and Asia. Expenditure on research and development in 2005 increased to €125m (2004: €111m)reflecting the Group's broader technological platforms and its commitment andfocus on consumer nutritional and lifestyle requirements. Results Sales revenue in 2005 increased by 7% to €4.43 billion with a solid growthperformance in the Group's ingredients and consumer foods divisions andthroughout regional geographic markets. On a like-for-like basis, Group salesrevenue increased by 4% year-on-year. Notwithstanding the significant inputcost inflation and surge in energy costs, trading profit increased by 7% to€380m. Together with an adverse trading currency transaction impact of €24m(2004 : €20m) and despite good margin recovery in the second half of the year,this resulted in a Group trading margin of 8.6%, similar to the prior yearlevel. Profit after taxation increased by 16% to €236m. Basic earnings per shareincreased by 15.2% to 126.1 cent. Adjusted earnings per share increased by 7.1%to 131.6 cent. Business Reviews Food Ingredients Kerry's food ingredients businesses increased sales revenue by 9% to €3 billion,reflecting like-for-like sales growth of 5%. Trading profits increased by 9% to€284m which represents a trading margin of 9.4%, similar to the year earlierlevel. Good progress was achieved in all major markets reflecting the Group's broadrange of ingredients and flavours technologies and its capacity to provideinnovative formulations to enhance taste, texture, nutritional profile,convenience, shelf life or functionality of food and beverage applications.Group businesses continued to invest significant resources in technologydevelopment, delivery formats and business support systems/facilities to addressmarketplace changes. While successfully extending applications into new nichemarkets, Kerry's ingredients businesses also continued to make excellentprogress in market development in emerging growth markets. In its first fullyear of operation, Kerry Bio-Science (formerly Quest Food Ingredients) madesignificant progress in restructuring its operations and positioning marketrepresentative structures. A new divisional headquarters was established inAlmere, the Netherlands and independent representative offices were establishedin European, American, North African, South African and Asian markets. In 2005,a Kerry Group Nutrition Technical Centre was also established in Almere tosupport all Group businesses and their customers through provision of specialistscience based nutritional information and expertise embracing nutrition,physiology, bio-chemistry, food science and toxicology disciplines, includingmanagement of clinical trials. Mastertaste consolidated and re-organised itsfacilities following the 2004 acquisitions of U.S. based Manheimer andFlavurence and Italy based Fructamine. A divisional Mastertaste headquartersand flavours and fragrance technical centre was established at the Manheimersite in Teterboro, New Jersey. All flavour development, applications andproduction for West Coast, USA was consolidated at one site in Los Angeles. In European ingredients markets sales revenue increased by 9% to €1,264m,reflecting like-for-like sales growth of 5%. With manufacturing operations nowestablished in nine European countries and sales/country representative officesin all other major markets including Russia and Eastern Europe, the Group'singredients, flavours and bio-science businesses are well positioned tocapitalise on market growth trends and evolving consumer needs. Whileconditions in seasonings and coatings markets proved highly competitive, Kerryrecorded satisfactory growth in the UK, France, Italy and Germany. A €2minvestment programme at the Wittstock facility in Germany was completed,increasing production capacity and plant efficiencies. The UK based EBIbusiness again achieved good growth through added value coatings applicationsinto the quick-serve-restaurant sector. Despite the slowdown in the overallprepared meals market in the second half of 2005, Kerry continued to achievegood progress in premium market sectors through seasonings, culinaryapplications and sauces. Conditions in European snack seasonings markets proved challenging. However,Kerry gained sales volume through continued market development in Eastern Europeand in Russia. Further progress was achieved through functional dairy ingredient solutions forinfant and medical nutrition, sports and lifestyle nutrition, confectionery andbeverage markets globally from Kerry's specialist dairy ingredients facilitiesin Ireland. Ultranor(R) HT10 was launched for use in functional beverages,yoghurt, smoothies and dessert applications. A unique milk protein concentrate,Ultranor(R) HT10 delivers high levels of calcium in a stable/colloidal form.The Beatreme(R) range of dairy and cultured milk ingredients was alsosuccessfully expanded to meet requirements for natural dairy ingredients inconfectionery, biscuit and culinary applications. Cremo Ingredients, acquiredin 2004, performed well through dairy flavourings for savoury and culinaryapplications. In 2005, Kerry's sweet ingredients business in Europe achieved good volumegrowth through coated products in the health cereal sector and fresh dairyproducts markets. Progress was achieved through innovative crunchy cerealinclusions and biscuit inclusions in the growing cheese cake sector. A €2.5minvestment programme was completed at the York (UK) based facilities to caterfor market growth opportunities. Due to the relative maturity of the Europeanchilled and frozen dairy product markets, the market for fruit preparations wasstatic - except for health and well-being growth niches including nutritionalbeverages and probiotics. Progress was also achieved through fruit fillingsfor health lines in confectionery and biscuit applications. Kerry Bio-Science continued to progress application of its protein hydrolysates,emulsifiers, yeast flavourings, enzymes, hydrocolloids, cultures andfermentation products in the areas of nutrition, flavour, texture and shelf lifeof food and beverages. Bio-Science technologists also assisted developments ofnew applications through other Kerry Ingredients businesses facilitatingtechnical differentiation and added-value opportunities. Fermented ingredientsintroduced promising new bio-security product developments but profitability wasimpacted by a delay in recovering raw material price increases. Texture systemsachieved good growth in the European dairy and meat sectors. Enzymes grewsatisfactorily in confectionery and meat tenderising markets but sales ofbrewing enzymes were slightly reduced due to the decline in beer consumption inWestern Europe. Sheffield(TM) Pharma Ingredients progressed its businessdevelopment in European markets, investing in new application facilities andsales structures. Its products and project pipeline is encouraging throughglobal extension of approved biotech and fermentation based drugs andapplication of new media formulations. Sheffield(TM) brand excipients alsostrengthened its market position in Europe in 2005. Mastertaste made good progress in 2005 in European markets. The division'stechnical and development facilities based in the UK and Italy were complementedby the establishment of country representative offices in Germany, Poland,France and Spain. Advances in the UK market included successful launches ofnatural 'Chef-Style' clean label flavours for a range of food applications anddevelopment of beverage flavours for the rapidly changing non-alcoholic drinkssector. In the first full year following the acquisition of Fructamine,Mastertaste Italy grew market share across flavoured beverages, confectioneryand savoury markets. Progress was also achieved through Mastertaste'sfunctional flavours in Europe including the launch of its patented Zesti(R)anti-microbial flavours factor. In American ingredients markets, sales revenue increased by 8% to €1.2 billion,reflecting like-for-like growth of 4% relative to 2004. This was a satisfactoryperformance against the background of a changing marketplace, particularly inthe USA. New product development accelerated as the year progressed, as foodand beverage companies responded by repositioning products and new offerings tomeet consumer nutritional requirements. Kerry business units have refocused andrestructured to reflect customer needs and market growth opportunities.Innovation in the nutritional snack bar sector regained momentum with arefocusing to tasty nutritional offerings. Kerry's sweet application specificingredients technologies recorded good growth in the sector through delivery ofrequired nutritional benefits with preferred taste profiles. In the sweetingredients sector Kerry also benefited from new nutritional and indulgenceproduct launches in the ready-to-eat cereal and premium ice-cream sectors. In the speciality dairy sector Kerry has restructured its facilities and focusto maximise market growth opportunities for specialist functional nutritionalingredients and delivery through proprietary liquid formats. A €8.2minvestment programme at the Covington, Ohio facility was completed to facilitateproduction of nutritional beverage ingredient lines. The combination of Kerry's seasonings and coatings technologies produced goodresults in the R.T.U. sauce and meat sectors. Application of bold and ethnicflavours achieved success through regional snack manufacturers. Good growthcontinued in the natural and organic snack markets through Kerry's marketleading organic seasoning applications. Development of Nutriant soy proteinsand soy isolates achieved good results in nutrition bar, high-acid beverage andorganic growth markets. In the U.S. market, the Kerry Food & Beverage business unit consolidated itsbeverage and food brands into a new commercial structure focused on thefoodservice, retail and warehouse club channels. Good year-on-year growth wasagain achieved across global and national chain restaurant accounts and coffeehouse chains through launches of custom developed coffee syrups and specialitybeverage mixes. Da Vinci brand coffee syrups delivered growth through broadlinefoodservice distributors. Oregon Chai successfully launched three newspeciality teas and three new flavours of JetTea smoothies were also introduced. In Mexico and Central American markets, progress continued through innovativehealth and convenience ingredients solutions for regional and multi-nationalfood companies. Seasonings performed well in the snack food segment with goodmarket development in the Central American region. Beverage and culinaryapplications also made encouraging progress in the foodservice sector. Anotherstrong performance was achieved in South American markets through Kerry's marketleading ingredients capabilities in the ice-cream, dairy and meat industries. In American markets, Mastertaste completed its flavours, fragrance and naturalproducts restructuring programme following its 2004 acquisitions. Raw materialpricing and availability was heavily impacted by the series of hurricanes whichstruck Louisiana, Mississippi, Florida, Georgia and Alabama. Neverthelessprogress was satisfactory in the flavours sector through anti-microbial andsteromulsion functional flavours, certified organic flavours and the division'sbroad range of herbal and botanical extracts. The natural products businessmade good progress through citrus oils and fractions into the beverage industryand through health and wellness offerings through its Crystals(R) uniquefreeze-drying capability. Manheimer Fragrances achieved good growth,particularly in the second half of 2005, in the home environmental and personalcare sectors. Mastertaste Canada performed well in the beverage, dairy anddessert sectors. An investment programme to expand flavour developmenttechnical capabilities to meet the requirements of the Canadian market wascompleted at the Granby, Quebec facility. Kerry Bio-Science texture systems achieved satisfactory growth in the U.S.market and completed an investment programme to expand production capacity.Fermented ingredients achieved growth through cultured dairy products andorganic shelf life extender products for dairy, culinary and meat markets.Emulsifiers had a difficult year in the U.S. market in 2005 due to a poorperformance in the bakery sector. However, the launch of new trans-fatty acidfree products in 2006 is expected to contribute good business growth and restoreemulsifiers positioning in higher value added products. Kerry Bio-Science Sheffield(TM) Pharma Ingredients significantly extended itsproduct and project pipeline in American markets in 2005. Sheffield(TM) PharmaIngredients produces cell nutrition components comprising hydrolysed proteinsand yeast extracts for growth of cells in a variety of applications includingcell culture, pharmaceutical fermentation, food fermentation and diagnosticmedia. Sheffield(TM) Pharma excipient sales growth was also strong in Americanmarkets in 2005 due to regional regulatory approval of new prescription druglaunches utilising Sheffield(TM) solid dose drug delivery components. In Asia Pacific markets Kerry again significantly advanced its regionaldevelopment and achieved a solid business performance. Sales revenue in 2005grew by 16% to €332m, reflecting like-for-like growth of 7%. Double digitgrowth was achieved in Asian markets through Kerry's nutritional technologies inthe segmenting infant, growing and adult markets. Nutritional bases andspeciality lipids achieved excellent results across hot and cold beveragesectors. In North Asia the Da Vinci range of branded sauces, syrups, smoothiesand chai teas also made encouraging progress. The savoury sector grew by 10%year-on-year and Kerry continued to grow market share through its combinedethnic and dairy flavourings in the snacks and biscuit sectors. Kerry'sseasoned coatings and marinades also developed in line with the fast growingseafood and meat processing industries in the region. In China the Group's €20minvestment programme commenced in 2005. The acquisition of Lanli in Hangzhou,Zhejiang Province was completed in March and the development of a newmulti-processing ingredients facility and regional technical centre on anadjacent 16 acre greenfield site will be progressed in 2006. Kerry Bio-Science technologies significantly boosted the Group's businessdevelopment in Asia Pacific markets in 2005. Supporting all Group businesses,Kerry Bio-Science assisted technology development in bakery, dairy,confectionery, beverage and meat processing industries. The Esterol emulsifierfacility in Malaysia improved profitability due to a focus on added valueproduct development. An investment programme will commence in 2006 to extendproduction capacity at the Esterol plant to meet growing regional demand.Sheffield(TM) branded excipients also grew sales in Asia Pacific markets. In Australia and New Zealand good growth was achieved in the food and beveragesector driven by expansion of Kerry's wet processing facilities. In the addedvalue meat sector new product launches were achieved through novel sauce systemsproviding greater functionality and enhanced flavour. Excellent progress wasagain achieved through Kerry's Pinnacle branded range of speciality pastries andcakes in major multiple retail chains. The Pinnacle range was also successfullyintroduced through supermarket outlets in Thailand. Mastertaste flavours and fragrance continued to successfully develop itsregional business platform through the division's Australian and China basedfacilities. Consumer Foods Against a background of static food prices and further grocery channelconsolidation in the UK and Irish markets, Kerry Foods performed well in 2005.Despite a slow down in growth of chilled convenience foods and a decline infrozen food categories, Kerry Foods' strong market positioning, coupled with itscustomer profile and dedicated national distribution facilities, deliveredsatisfactory growth year-on-year. Growth was achieved across branded chilledconvenience growth segments, food-to-go growth categories, premium conveniencemeats, prepared foods and cheese and spreads growth sectors. The divisionachieved a 4% increase in sales revenue to €1.7 billion, reflecting a 2% growthin sales revenue on a like-for-like basis. Trading profits increased by 4% to€123m which represents a trading margin of 7.1%, similar to the year earlierlevel. In the UK market fresh sausage sales grew by 7% year-on-year. Richmond remainsthe No.1 brand delivering 15% growth in 2005. Walls, the second largest brandsaw growth through Wall's Favourite Recipe premium range and Wall's MicroSausages. Mattessons experienced a decline in the standard sliced meats sectorbut successfully launched Mattessons Fridge Raiders - an innovative meatsnacking product. Following the closure of the leased Bristol manufacturingfacility, a €7.3m investment programme was completed at the Enniskillen(Northern Ireland) site, successfully transforming production facilities at thesite for production of Mattessons Fridge Raiders, Mr Brains meat products andWall's Micro Sausages. At the beginning of 2005, volume growth in the UK chilled ready meals marketcontinued to increase at an annualised rate of 12%, but by year-end growth hadslowed to 4%. However, Kerry Foods again saw satisfactory growth in chilledready meals due to its focus on premium growth categories. Kerry's position inthe premium sector of the market and the ethnic sub-category was considerablystrengthened in August 2005 with the completion of the Stg£124m acquisition ofNoon Group Limited. Noon is market leader in the development and production ofauthentic Asian chilled ready meals in the UK. Operating from three modernproduction facilities located in south-west London, Noon produces a range ofpremium quality Indian, Oriental, Thai and other international cuisine readymeals, snacks and accompaniments principally for major UK multiple retailers. Due to consumer concerns regarding quality issues in the UK frozen ready mealsmarket, the overall category declined by 15% year-on-year. Rye Valley Foodsgained considerable new business during 2005, thus achieving satisfactory salesgrowth and consolidating its position as market leader in the sector.Profitability was however reduced relative to 2004 due to intense sectoralcompetition arising from the downturn in the overall frozen market. Conditions in the UK speciality poultry sector remained challenging but KerryFoods recorded a satisfactory performance in the sector through added valueproduct development. In the UK convenience store marketplace, Kerry Foods Direct to Store continuedto outperform its competitors and gain new customer supply contracts.Profitability of the business unit was slightly reduced relative to 2004 due tohigher distribution costs. Kerry Foods recorded excellent progress in the UK and Irish cheese and dairyspreads markets in 2005. In the Irish cheese market Kerry's Charleville,EasiSingles and Cheestrings brands outgrew overall market growth rates. LowLow cheese made significant progress as Ireland's fastest growing cheese brandin 2005, while the Coleraine brand maintained its leading position in NorthernIreland. Cheestrings again grew market share in the UK and Irish cheese snacksmarkets and in France its Ficello brand is now stocked by the majority of majorretail groups. In the growing adult cheese snacks sector in the UK, Brunchettashas already established good retailer listings. In the dairy and low-fatspreads sector Low Low showed the strongest growth in the Irish market in 2005,due to the continued success of Low Low Gold and the successful launch of thebrand into the premium lower cholesterol sector. Golden Cow, Kerrymaid andGolden Olive consolidated their respective positions in the Irish market. Introduction of a new identity across the Denny range reflecting the heritageand 'homeliness' of the brand in early 2005 assisted its growth and development- particularly in premium market segments. Denny Gold Medal and Denny Selectsausage continued to grow. Denny cooked meats experienced double digit growthdriven by strong sales growth within premium sectors and positive consumerreaction to new product innovations. Ballyfree cooked meats outperformed marketgrowth rates in the pieces and super-premium sectors as the brand continues tolead premiumisation and innovation in the category. Freshways, Irelands largest manufacturer and distributor of ready-to-gosandwiches, also successfully redesigned its brand identity and packagingformats in 2005 - increasing consumer awareness and visibility of the product.Dawn Omega Milk, the first milk on the market to offer fresh milk as a medium tointroduce essential Omega-3 fatty acids, again made good progress and Dawn fruitflavoured milk was also successfully introduced to the Irish market. Kerry Spring mineral water and its market leading still flavoured offeringsbenefited from the continued growth of the sector in Ireland as consumersincreasingly shift from carbonated soft drinks. Geographic Markets Total Group sales revenue across European markets increased by 6% to €2.9billion. In American markets sales revenue increased by 8% to €1.2 billion.Sales revenue in Asia Pacific markets grew by 16% to €332m. Finance Earnings before finance costs, tax, non-trading items, depreciation andamortisation (EBITDA) increased by 8% to €482m. Working capital was broadlysimilar to the 2004 level. Allowing for capital expenditure of €120m (net ofproceeds from asset disposals of €29m), finance payments of €64m and tax of€51m, free cash flow available to the Group was €248m. Expenditure on Group acquisitions in 2005 amounted to €234m. Net debt atyear-end amounted to €1.3 billion compared to €1.1 billion at the end of 2004.An additional €250m term facility was negotiated with Group banks during 2005.This term facility is due to mature in the year 2010. Net debt to EBITDA at 2.6times was unchanged. Finance costs were €68m compared to the 2004 level of€52m, with EBITDA to net interest covered 8 times (2004 : 9.3 times). Dividend The Board has declared a final dividend of 11 cent per share, an increase of15.8% on 2004. Together with the interim dividend of 5 cent per share, thisraises the total dividend payment for the year to 16 cent per share, an increaseof 14.3% on the 2004 dividend. The final dividend will be paid on 26 May 2006to shareholders registered on the record date 21 April 2006. Events after the Balance Sheet date Since year-end the Group has sold the St. Brendans Irish Cream Liqueur businessfollowing agreement on a Management Buy Out of the business in association withLuxco (formerly the David Sherman Corporation) - the St. Brendan's brands' longserving U.S. Importer and Distributor. St Brendan's is a specialist alcoholicbeverage business which fits ideally with the new ownership structure agreed bymanagement and Luxco. Annual Report and Annual General Meeting The Group's Annual Report will be published in April and the Annual GeneralMeeting will be held in Tralee on 19 May 2006. Future Prospects Kerry's leading technologies, nutritional focus and the strong marketpositioning of its broad geographic spread of businesses, augur well for thefuture profitable growth and development of the Group. Exploiting its market leading Kerry Bio-Science technologies across its flavourdevelopment and unrivalled ingredients applications platforms will contributeincreased added-value product innovation through the Group's valuedinternational customer base. With the increased focus on personalised nutritionand nutrigenetics, Kerry Bio-Science Sheffield(TM) branded products are wellpositioned in several compounds in final clinical approval stage. In the Group's selected consumer foods markets, Kerry Foods' leading brands andfocus on premium growth sectors will continue to deliver on consumer nutritionaland convenience requirements. The Group continues to pursue value and technology enhancing acquisitionopportunities and in 2006 expects to deliver results in line with marketexpectations. Results for the year ended 31 December 2005 Kerry Group plcConsolidated Income Statementfor the year ended 31 December 2005 2005 2004 Notes •'000 •'000 Revenue 1 4,429,777 4,128,736 ___________ ___________ Trading profit 1 380,213 355,780 Intangible asset amortisation (10,331) (9,822)Non-trading items 2 (3,623) (25,516) ___________ ___________Operating profit 366,259 320,442Finance costs (68,353) (51,815) ___________ ___________Profit before taxation 297,906 268,627Income taxes (62,030) (64,577) ___________ ___________Profit after taxation and attributable to equity shareholders 235,876 204,050 ___________ ___________ Earnings per ordinary share (cent) - basic 3 126.1 109.5 - fully diluted 3 125.5 108.9 The financial statements were approved by the Board of Directors on 27 February 2006 and signed on its behalf by: Denis Buckley, ChairmanHugh Friel, Chief Executive Kerry Group plcConsolidated Balance Sheetas at 31 December 2005 2005 2004 •'000 •'000Non-current assetsProperty, plant and equipment 1,066,931 960,667Intangible assets 1,633,367 1,354,845Financial asset investments 12,442 -Deferred tax assets 12,115 12,812 ___________ ____________ 2,724,855 2,328,324 ___________ ____________Current assetsInventories 544,438 457,662Trade and other receivables 558,831 566,938Cash and cash equivalents 163,903 65,328Financial assets 1,862 -Assets classified as held for sale 10,415 4,418 ___________ ____________ 1,279,449 1,094,346 ___________ ____________Total assets 4,004,304 3,422,670 ___________ ____________Current liabilitiesTrade and other payables 845,285 729,142Financial liabilities 143,854 64,293Tax liabilities 44,659 47,118Provisions - 12,661Deferred income 3,078 3,142Liabilities classified as held for sale 1,899 - ___________ ____________ 1,038,775 856,356 ___________ ____________Non-current liabilitiesFinancial liabilities 1,297,210 1,138,473Retirement benefit obligation 249,103 199,262Other non-current liabilities 107,297 132,436Deferred tax liabilities 112,276 103,279Deferred income 21,959 24,704 ___________ ____________ 1,787,845 1,598,154 ___________ ____________Total liabilities 2,826,620 2,454,510 ___________ ____________Net assets 1,177,684 968,160 ___________ ____________Capital and reservesShare capital 23,399 23,356Share premium account 378,979 375,032Other reserves 23,501 (7,261)Retained earnings 751,805 577,033 ___________ ____________Shareholders' equity 1,177,684 968,160 ___________ ____________ The financial statements were approved by the Board of Directors on 27 February 2006 and signed on its behalf by: Denis Buckley, ChairmanHugh Friel, Chief Executive Kerry Group plcConsolidated Statement of Recognised Income and Expensefor the year ended 31 December 2005 2005 2004 •'000 •'000 Fair value movements on available-for-sale investments 12,209 -Fair value movements on cash flow hedges (3,383) -Exchange difference on translation of foreign operations 17,747 (7,601)Actuarial losses on defined benefit pension schemes (50,387) (21,402)Deferred tax on items taken directly to reserves 16,412 1,926 ___________ ____________Net expense recognised directly in equity (7,402) (27,077) TransfersCash flow hedges to profit or loss from equity 857 -Sale of available-for-sale investments (6,218) -Profit for the year after taxation 235,876 204,050 ___________ ____________Total recognised income and expense for the year attributable to equity 223,113 176,973shareholders ___________ ____________ Kerry Group plcConsolidated Reconciliation of Changes in Shareholders' Equityfor the year ended 31 December 2005 2005 2004 •'000 •'000 At beginning of year 968,160 805,730Impact of adoption of IAS 32 and IAS 39 9,550 - ___________ ____________At beginning of year as adjusted 977,710 805,730 Total recognised income and expense for the year 223,113 176,973Dividends paid (27,129) (24,468)Shares issued during the year 4,014 10,021Share issue costs (24) (96) ___________ ____________At end of year 1,177,684 968,160 ___________ ____________ Kerry Group plcConsolidated Cash Flow Statementfor the year ended 31 December 2005 2005 2004 •'000 •'000Operating activitiesTrading profit 380,213 355,780Adjustments for:Depreciation (net) 101,643 91,585Change in working capital 260 35,306Exchange translation adjustment 494 (914) ___________ ____________Cash generated from operations 482,610 481,757 Income taxes paid (50,656) (53,618)Interest received 1,752 383Finance costs paid (66,066) (46,158) ___________ ____________Net cash from operating activities 367,640 382,364 ___________ ____________Investing activitiesPurchase of non-current assets (149,262) (110,235)Proceeds on the sale of non-current assets 28,928 18,010Capital grants received 446 907Purchase of subsidiary undertakings (233,688) (695,701)Proceeds from disposal of businesses 2,759 -Payment of deferred payables (11,353) (29,955)Expenditure on non-trading items (15,236) (16,785)Consideration adjustment on previous acquisitions (18) (935) ___________ ____________Net cash used in investing activities (377,424) (834,694) ___________ ____________Financing activitiesDividends paid (27,129) (24,468)Issue of share capital 3,990 9,925Net proceeds from bank borrowings 199,349 429,388(Decrease) / increase in bank overdrafts (72,853) 45,951 ___________ ____________Net cash from financing activities 103,357 460,796 ___________ ____________ Net increase in cash and cash equivalents 93,573 8,466Cash and cash equivalents at beginning of year 65,328 56,862Exchange translation adjustment on cash and cash equivalents 5,002 - ___________ ____________Cash and cash equivalents at end of year 163,903 65,328 ___________ ____________Reconciliation of Net Cash Flow to Movement in Net Debtfor the year ended 31 December 2005 Net increase in cash and cash equivalents 93,573 8,466Cash inflow from debt financing (126,496) (475,339) ___________ ____________Changes in net debt resulting from cash flows (32,923) (466,873) Exchange translation adjustment on net debt (104,997) 34,635 ___________ ____________Movement in net debt in the year (137,920) (432,238)Net debt at beginning of year (1,137,438) (705,200) ___________ ____________Net debt at end of year (1,275,358) (1,137,438) ___________ ____________ Kerry Group plcNotes to the Financial Statementsfor the year ended 31 December 2005 1. Analysis of results 2005 2004 Unallocated Unallocated Ingredients Consumer and Group Total Ingredients Consumer and GroupBy business segment: Foods eliminations Foods eliminations Total •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 Revenue 3,021,944 1,725,839 (318,006) 4,429,777 2,780,779 1,660,533 (312,576) 4,128,736 _________ _________ ________ _________ _________ _________ ________ _________ Trading profit 283,816 123,018 (26,621) 380,213 261,433 118,361 (24,014) 355,780 Intangible asset amortisation (9,263) (477) (591) (10,331) (9,012) (409) (401) (9,822)Non-trading items (12,127) 2,227 6,277 (3,623) (33,119) 868 6,735 (25,516) _________ _________ ________ ________ ________ ________ ________ ________ Operating profit 262,426 124,768 (20,935) 366,259 219,302 118,820 (17,680) 320,442 _________ _________ ________ ________ ________ ________Finance costs (68,353) (51,815) ________ ________Profit before taxation 297,906 268,627 Income taxes (62,030) (64,577) ________ ________Profit after taxation andattributable to equityshareholders 235,876 204,050 ________ ________ Segment assets and liabilities Segment assets 2,485,988 1,067,629 450,687 4,004,304 2,237,498 835,318 349,854 3,422,670Segment liabilities 591,435 478,155 1,757,030 2,826,620 565,592 385,161 1,503,757 2,454,510 ________ ________ __________ ________ ________ ________ __________ ________Net assets 1,894,553 589,474 (1,306,343) 1,177,684 1,671,906 450,157 (1,153,903) 968,160 ________ ________ __________ ________ ________ ________ __________ ________ Other segmental information Property, plant and equipment additions 86,266 53,368 4,124 143,758 76,578 35,769 300 112,647Intangible asset additions 2,061 141 1,274 3,476 415 650 620 1,685Depreciation (net) 65,431 35,671 541 101,643 57,233 33,834 518 91,585 ________ ________ __________ ________ ________ ________ __________ ________ 2005 2004 Europe Americas Asia Total Europe Americas Asia Total Pacific PacificBy destination: •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 Revenue by location of customers 2,885,039 1,212,877 331,861 4,429,777 2,721,074 1,120,884 286,778 4,128,736 Segment assets by location 2,707,101 1,112,956 184,247 4,004,304 2,335,551 935,742 151,377 3,422,670 Property, plant and equipment additions 108,815 29,239 5,704 143,758 86,821 19,831 5,995 112,647Intangible asset additions 1,817 1,659 - 3,476 1,270 415 - 1,685 2. Non-trading items 2005 2004 •'000 •'000 Acquisition and other restructuring costs - (41,108)Profit on sale of non-current assets 14,702 15,592Loss on sale of businesses and plant closures (18,325) - ________ ________ (3,623) (25,516) Tax credit on non-trading items 3,665 10,342 ________ ________ 42 (15,174) ________ ________ The profit on sale of non-current assets primarily relates to the sale of Irishproperties, plant and equipment and the disposal of available-for-sale investments. The loss on sale of businesses and plant closures relates to the sale of non-core businesses and the closure of plants. They include the sale of the chestnutbusiness in Italy, the closure of the poultry factory in Limerick, Ireland andthe closure and sale of plants and businesses in the UK following theintegration of recent acquisitions. The acquisition and other restructuring costs in 2004 relate to the integrationof Quest Food Ingredients, other acquisitions made in 2004 and 2003 and therationalisation of existing businesses. The 2004 profit on sale of non-current assets relates to the sale ofavailable-for-sale investments and property, plant and equipment. 3. Earnings per ordinary share EPS 2005 EPS 2004 Notes cent •'000 cent •'000 Basic earnings per share Profit after taxation and attributable to equity shareholders 126.1 235,876 109.5 204,050Intangible asset amortisation 5.5 10,331 5.3 9,822Non-trading items (net of tax) 2 - (42) 8.1 15,174 ________ ________ _____ ________Adjusted earnings * 131.6 246,165 122.9 229,046 ________ ________ _____ ________Diluted earnings per share Profit after taxation and attributable to equity shareholders 125.5 235,876 108.9 204,050Adjusted earnings* 131.0 246,165 122.3 229,046 The basic weighted average number of ordinary shares in issue for the year was187,051,129 (2004: 186,401,228). The diluted weighted average number of ordinaryshares in issue for the year was 187,929,702 (2004: 187,308,737). The dilutionarises in respect of executive share options outstanding. * In addition to the basic and diluted earnings per share, an adjusted earningsper share is also provided as it is considered more reflective of the Group'sunderlying trading performance. Adjusted earnings is profit after taxationbefore intangible asset amortisation and non-trading items (net of tax). 4. General information and accounting policies The financial information set out in this document does not constitute fullstatutory accounts for the years ended 31 December 2005 or 2004 but is derivedfrom same. The consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards as adopted for usein the European Union and their interpretations as issued by the InternationalAccounting Standards Board and the International Financial ReportingInterpretations Committee, applicable Irish law and the Listing Rules of theIrish and London Stock Exchanges. The 2005 and 2004 accounts have been auditedand received unqualified audit reports. The 2005 financial statements wereapproved by the Board of Directors on 27 February 2006. The consolidated financial statements have been prepared under the historicalcost convention, as modified by the revaluation of available-for-sale financialasset investments, financial assets and financial liabilities (includingderivative financial instruments), which are held at fair value. The Group'saccounting policies will be included in the Annual Report to be published inApril 2006. For further information please contact:Frank HayesDirector of Corporate Affairs Tel no + 353 66 7182304 Fax no + 353 66 7182972Kerry Web Site www.kerrygroup.com This information is provided by RNS The company news service from the London Stock Exchange