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RNS
Kerry Group PLC  -  KYGA   

Preliminary Statement of Results

Released 07:00 21-Feb-2017

RNS Number : 3795X
Kerry Group PLC
21 February 2017
 

21 February 2017

Kerry Group

Preliminary Statement of Results

for the year ended 31 December 2016

Kerry, the global taste & nutrition and consumer foods group, reports preliminary results for the year ended 31 December 2016 and appointment of Chief Executive Designate.

 HIGHLIGHTS

·    Adjusted EPS* up 7.1% to 323.4 cent

·    Group revenue of €6.1 billion reflecting 3.6% business volume growth

-    Taste & Nutrition €4.9 billion, +4% volume growth

-    Consumer Foods €1.3 billion, +2.1% volume growth

·    Trading profit increased by 7.1% to €750m

·    Group trading margin up 70 basis points to 12.2%

-    Taste & Nutrition +60bps to 14.7%

-    Consumer Foods +30bps to 8.8%

·    Final dividend per share of 39.2 cent (total 2016 dividend up 12% to 56 cent)

·    Record free cash flow of €570m (2015: €453m)

·    Industry-leading RD&A investment

* Before brand related intangible asset amortisation and non-trading items (net of related tax)

Commenting on the results Kerry Group Chief Executive Stan McCarthy said; "In 2016 Kerry delivered good volume growth and a strong financial performance including sustained business margin expansion, record free cash generation and 7.1% growth in adjusted earnings per share. The Group remains confident of its ability to sustain profitable growth throughout global markets. In 2017 we expect to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share".

Contact Information

 

Media

 

 

 

Frank Hayes

Director of Corporate Affairs

+353 66 7182304

corpaffairs@kerry.ie

Investor Relations

 

 

 

Brian Mehigan

Chief Financial Officer

+353 66 7182292

investorrelations@kerry.ie

Ronan Deasy

Group Financial Controller

+353 66 7182292

investorrelations@kerry.ie

William Lynch

Head of Investor Relations

+353 66 7182292

investorrelations@kerry.ie

Website

 

 

 

www.kerrygroup.com

 

 

 

PRELIMINARY STATEMENT OF RESULTS

For the year ended 31 December 2016

Kerry Group achieved good business volume growth momentum in a competitive market environment and delivered a strong financial performance including record cash generation in 2016. Group businesses responded well to the prevailing business environment, increased currency volatility and marketplace changes by accelerating product innovation and improved commercial effectiveness. Health & wellness trends continued to drive 'nutritionally minded' consumer choice, increasing demand for taste, active nutrition, higher protein, natural, 'free-from', authentic, clean-label, convenient food and beverage products. With growing 'away-from-home' consumption and increased market fragmentation through retail, foodservice and ecommerce channels, the overall marketplace was marked by significant product 'churn' as food and beverage providers targeted growth opportunities through differentiated, innovative product offerings.

Kerry's unique combined Taste & Nutrition Technologies and Systems were to the fore in meeting customers' innovation needs for customised solutions responding to consumer requirements. The Group's recent investments in its global, regional and in-market Technology & Innovation Centre network and Commercial / Application facilities, coupled with a significant increase in RD&A expenditure in Taste & Nutrition to 5.1% of divisional revenue in 2016, contributed to increased customer engagement and innovation activity. Performance was also assisted by businesses acquired in 2015 which provided a strong platform for international market development. While many developing markets were impacted by continuing geopolitical issues and significant currency volatility, Kerry continued to satisfactorily progress market development in all regions and recorded excellent growth in Asia - particularly in Q4. Groupwide performance in Q4 reflected good business development momentum against a strong prior year comparable.

Notwithstanding the uncertainty and sterling devaluation which followed the UK electorate vote on 23 June to leave the European Union, Kerry Foods, the Group's consumer foods division, performed well, capturing growing consumer demand for authentic, convenient, nutritionally balanced offerings meeting today's lifestyle and shopper requirements.

Business Performance

Group revenue on a reported basis increased slightly to €6.1 billion reflecting good volume growth offset by significant adverse currency movements and lower pricing. Business volumes grew satisfactorily during the year reflecting 3.6% growth year-on-year, good growth in North America, an improved performance in Latin American markets, challenging market conditions in the EMEA region (due to the prevailing deflationary environment and instability in regional developing markets) and a strong business performance throughout Asia. Net pricing was 2.1% lower against a background of approximately 4% lower raw material costs. Currency headwinds relative to 2015 contributed an adverse 4.1% translation impact and an adverse 0.3% transaction currency impact relative to revenue.

Taste & Nutrition achieved 4% growth in business volumes and pricing was 2.1% lower. Kerry Foods' business volumes increased by 2.1% and pricing reduced by 2%.

The Group trading margin increased by 70 basis points to 12.2%. This reflects a 60 basis points improvement in trading margin in Taste & Nutrition, a 30 basis points improvement in Kerry Foods' margin and reduced spending on the Kerryconnect programme.

Basic earnings per share increased by 1.4% to 302.9 cent. Adjusted earnings per share increased by 7.1% to 323.4 cent (2015: 301.9 cent). The Board recommends a final dividend of 39.2 cent per share, an increase of 12% on the final 2015 dividend. Together with the interim dividend of 16.8 cent per share, this brings the total dividend for the year to 56 cent, an increase of 12% on 2015.

Expenditure on research and development increased significantly due to increased investment in Taste & Nutrition to €261m (2015: €234m). Net capital expenditure amounted to €210m (2015: €229m). The Group achieved a record free cash flow of €570m (2015: €453m).   

Business Reviews

Taste & Nutrition

 

2016

Growth

Revenue

€4,880m

4%*

Trading profit

€716m

+8.1%

Trading margin

14.7%

+60bps

* Volume growth

Kerry provides the largest, most innovative portfolio of Taste & Nutrition Technologies and Systems, and Functional Ingredients & Actives for the global food, beverage and pharmaceutical industries.

Kerry's Taste & Nutrition Technologies and Systems continued to drive innovation and deliver consumer-preferred solutions in all end-use-markets across global and regional accounts serving retail and foodservice markets. With increased market fragmentation, channel diversification and growing demand for niche categories, food and beverage providers continue to seek innovative solutions to meet consumer requirements for 'clean label', 'free from', no added sugar, natural, more nutritious, authentic, sustainably produced products. This has contributed to significant marketplace disruption which, coupled with macro-economic issues, adversely effected performance in some developed markets - in particular in Europe. Regional developing markets impacted by geopolitical issues remain challenged but Asian developing markets provided solid growth opportunities. Overall performance was assisted by the Group's continued RD&A investment and by the contribution of acquisitions completed in 2015.  Integration of the acquired businesses has progressed satisfactorily to-date and the Group continues to invest in extending the acquired technologies into wider taste and nutrition applications in all regions.

Taste & Nutrition reported revenue increased by 3.5% to €4.9 billion, reflecting 4% volume growth and 2.1% net lower pricing. Trading profit grew by 8.1% to €716m, reflecting a 60 basis points improvement in divisional trading margin to 14.7%. In 2016 Taste & Nutrition accounted for 79% of Group revenue and 86% of Group trading profit.

Americas Region

Taste again grew market positioning as the number 1 driver of food and beverage purchasing throughout the Americas region in 2016. Health and wellness trends also combined to drive growth in demand for clean-label, organic and 'free-from' lines, which contributed to increased fragmentation in the marketplace and growth of niche categories. This fuelled innovation pipelines and assisted a solid performance by Kerry's Taste & Nutrition Technologies and Systems in North America and an improved performance in Latin American markets relative to 2015 - in particular in the taste, culinary and beverage sectors.

Sales revenue in the Americas region on a reported basis increased by 12.2% to €2,589m, reflecting 3.9% volume growth and 2.1% lower pricing.

Taste & Nutrition Technologies & Systems grew across the Group's core end-use-markets with strong momentum in foodservice and direct-to-retail growth sectors. Food Protection & Fermentation Technologies drove innovation in the meat, culinary, dairy and bakery sectors. Development in the meat and savoury products sector was assisted by Red Arrow Products, acquired in December 2015 - through its smoke and grill taste technologies which deliver the most authentic taste experiences in the marketplace.   Growth was achieved in the US, Canadian and Latin American processor markets and also through new launches and wider meal occasions in the foodservice sector. Fermentation Technologies also successfully introduced new gluten-free, organic and non-GMO lines to its portfolio which contributed to growth in the bakery category. A US $28m expansion programme at the Group's Rochester (MN) facility commenced in Q4 2016 to support capacity and technology advancement. Culinary Taste & Systems performed well in the meals sector. The dairy, dairy-free and yoghurt sectors also provided good growth opportunities for Kerry's taste technologies.  Continued growth was achieved in the confectionery and snacking sectors throughout American markets. Layering natural flavours and nutritional ingredients in snack seasonings systems drove innovation in the premium snacks and nutritional bar categories. Snacking as an eating occasion continues to increase, with millennials being at the forefront of category growth. Costa Rican based Baltimore Spice, acquired in July 2015, provided good growth opportunities in Latin America, particularly in Central American markets. The decline in the traditional R.T.E. cereals sector led to continued challenges in Sweet & Cereal Systems and a realignment of Kerry operations.

Awareness of sugar content, functionality, premiumisation, natural products, new packaging formats and innovation remain key drivers of growth in the beverage sector. Kerry's Beverage Taste & Systems maintained good growth, particularly in the foodservice and convenience store channels. Development in the nutritional beverage end-use-market, resulting from increased focus on 'active nutrition' and general wellness products, was driven by Kerry's liquid systems and taste technologies.

Island Oasis and Insight Beverages acquired in 2015 performed to expectations, broadening Kerry's market positioning, particularly in the c-store, hotel and catering channels. Kerry's branded beverage products including Da Vinci Gourmet and Big Train, continued to broaden market penetration in Latin American markets.

In the North American pharmaceutical sector, performance in excipients was advanced through new generic pharmaceutical lines formulated using Kerry's 'Sheffcoat' film coating system. Cell nutrition maintained strong growth through custom-developed complex media systems. Good progress was achieved in integrating the Wellmune® branded natural food, beverage and supplement immune enhancing ingredients business acquired in September 2015. In 2016 the sectoral application of Wellmune® was successfully extended with launches in sports nutrition, functional dairy beverages, yoghurt products and dietary supplements.

In line with investment to support Kerry's Taste & Nutrition strategic development and customer collaboration, the Group also opened a new Taste & Nutrition Discovery facility, bringing together marketplace consumer insights, scientific and applications expertise interactively, at the Beloit (WI) based Kerry Technology & Innovation Centre.

EMEA Region

European market conditions remained highly competitive in 2016, as the deflationary environment in the majority of developed markets limited growth and geopolitical issues continued to destabilise developing markets in the region. However, snacking and convenience trends provided positive growth momentum in the foodservice sector, benefiting Kerry's Taste & Nutrition Technologies and Systems. General wellness trends and the particular focus on sugar and calorie reduction, which has led to Governments legislating on measures to address such issues, also contributed to a strong demand for innovation and product differentiation which resulted in increased product churn in the year under review.   In 2016, in response to marketplace trends and to leverage the Group's in-market and regional investment in its Commercial / Application Centres and its Global Technology & Innovation Centre in Ireland, significant resources were deployed to advance commercial effectiveness and engagement across European markets.

Sales revenue in the EMEA region on a reported basis declined to €1,447m, reflecting a 6.4% adverse translation currency impact, an adverse 0.2% transaction currency impact, 0.7% volume growth and 2.1% lower pricing. The UK electorate vote to leave the European Union created market uncertainty and a significant devaluation of sterling. In respect of Brexit, Kerry Taste & Nutrition has a well established manufacturing footprint in the UK and in mainland Europe, and is well positioned to meet customer requirements in individual country markets.

While the overall taste market remained challenging in Europe in 2016, demand for innovation grew due to consumer requirements for 'authentic taste', 'better-for-you' and 'tailored-for-you' products. The foodservice channel provided the most favourable opportunities for growth of Kerry's technology portfolio. Kerry Taste Technologies and Systems recorded good growth in the beverage sector. Sugar reduction was a catalyst for strong innovation in the soft drinks category. Kerry's strong capability in botanical extracts marketed under the 'Simply Nature' brand achieved good growth in the adult soft drinks sector. Beverage systems performed well in the foodservice and c-store channels, benefiting from the expanded portfolio following the acquisitions of 'Island Oasis' and 'Insight Beverages' in 2015. Vendin S.L. based in Madrid was also acquired in June 2016 which further extended Kerry's distribution of beverage solutions to the vending and foodservice channels.

Dairy & Culinary also achieved good volume growth in the foodservice sector due to menu extension capitalising on appetiser and snacking trends. 'DairySource', Kerry's clean-label dairy portfolio launched in 2016 was favourably received. Development in the traditional snack sector was subdued but demand for premium, innovative savoury snacks provided good growth opportunities in mainland Europe and Russia. Primary dairy production reduced in some major exporting countries in H2 2016 which contributed to improved trading conditions in international dairy markets.

Cereal & Sweet technologies were impacted by the decline in breakfast cereal consumption, a relatively poor ice cream summer season and overall consumer trends in sugar based products. Savoury Taste benefitted from clean-label and broader recipe profiles in the prepared meals, soups, sauces and dressings categories. The overall meat sector in the UK and mainland Europe remained intensely competitive which impacted development but continued market development was achieved in Eastern European markets and Russia. Market conditions in Sub-Saharan Africa stabilised in 2016 providing more favourable growth opportunities.

Fermentation technologies achieved continued growth in the EMEA bakery category. Specialised proteins grew in confectionery applications and demand for allergen-free vegetarian proteins continues to increase. Bakery,  beverage and nutrition applications provided solid growth opportunities for Kerry's enzyme technology. Kerry's Europe-based nutritional technologies continued to benefit from increased demand, particularly from Asian markets, for sustainably produced premium quality nutritional ingredients for all life-stage applications, including infant nutrition products.

Asia-Pacific Region

Kerry achieved an excellent business and market development performance in the Asia-Pacific region in 2016. End-use-market growth was achieved throughout the Group's expanded geographic footprint in the region, with accelerated overall performance in Q4. Localisation of taste, allied to increased product launches, channel expansion and growth in consumer spending provided a strong impetus for innovation, benefiting Kerry's Taste, Nutrition & General Wellness technologies. Culinary and snacking trends provided strong growth opportunities, particularly in the dynamic regional foodservice channel.

Business volumes grew by 10.7% and net pricing was 1.9% lower. Reported revenue at €765m reflects a reduction of 2.4%, due to the 7.2% adverse impact of business disposals net of acquisitions (primarily the sale of the Pinnacle lifestyle bakery business in Australia completed in May 2015) and 4% negative currency translation impact.

Taste Technologies and Systems maintained strong growth in Indonesia, Japan and the Philippines with good momentum in the bakery and savoury snack sectors. Culinary Snack Systems outperformed market growth rates throughout South East Asian markets. Culinary sauces grew solidly in Australia, China, Singapore and Malaysia, particularly in the foodservice channel. Jungjin Foods acquired in March 2016 provided a strong platform for growth of Kerry's taste technologies and systems in South Korea. Market conditions in Australia and New Zealand proved more stable as food and beverage providers sought increased innovation in response to health and wellness trends. The growth in middle class households provided continued market development opportunities in South West Asia. Beverage Systems maintained strong development in the regional foodservice and c-store channels, in particular in China and Japan.

Kerry's specialised proteins and enzymes continued to grow applications in Asian markets. In the pharma sector the Group's cell nutrition and excipients business continued to gain new customer listings particularly in China. The addition of Wellmune® significantly broadened Kerry's functional nutritional ingredients and wellness portfolio in 2016 which developed significant new business wins in Asia, in particular through functional beverage applications. Regulatory changes in the Chinese infant nutrition sector benefited Kerry's Europe-based nutritional technologies. A major expansion programme at the Group's Nantong, China production and distribution centre was completed prior to year-end. To support the Group's expanding customer base in the region two new state-of-the-art production facilities were also commissioned in Batangas, the Philippines and in Cikarang, Indonesia.

Since year end the Group has reached agreement in principle to acquire Jurong, Shanghai based Tianning Flavour & Fragrance Co. Ltd., which strengthens Kerry's savoury and sweet flavour development capability in the Chinese food and beverage industry, and Adelaide, Australia based Taste Master - a leading flavours provider to the beverage, sweet & savoury snack and meat & culinary industries in Australia and New Zealand. Both transactions are scheduled for completion by the end of Q1 and the total consideration for the businesses being acquired amounts to €83m.

Consumer Foods

 

2016

Growth

Revenue

€1,333m

2.1%*

Trading profit

€117m

(6.7%)

Trading margin

8.8%

+30bps

* Volume growth

Kerry Foods is an industry-leading manufacturer of added-value branded and customer branded chilled food products to the Irish, UK and selected international markets.

The consumer foods marketplace continues to change with channel proliferation arising from growth of convenience, continued expansion of discounter chains, increase in online purchases and growth in demand for food-on-the-go. With new entrants disrupting the traditional grocery model and blurring lines between 'food-to-go' and foodservice, the food and beverage landscape has remained intensely competitive. In addition consumers have increasingly focused on health and wellness variants and 'better-for-you' lines. Retailers have responded through a renewed focus on customer branded offerings and 'better value', with a decline in deep cut promotions which has impacted volume growth. In 2016 Kerry Foods' e-tail branded sales outperformed market growth rates.

Kerry Foods' business volumes grew by 2.1% and net pricing decreased by 2% in 2016. Reported revenue at €1,333m declined by 9.7% due to adverse currency movements in 2016 and the disposal of non-core businesses net of acquisitions in 2015. Business efficiency improvements and the improved quality of Kerry Foods' portfolio contributed a 30 basis points increase in divisional trading margin to 8.8%. The underlying trading profit improvement was more than offset by the adverse currency movement and the business disposals resulting in a trading profit decrease of 6.7% to €117m.

In line with growth in snacking and 'food-to-go' trends, the division invested significant resources in expanding production and introduction of new processing technologies at the Attleborough and Ossett sites in Britain, Enniskillen and Portadown sites in Northern Ireland, and at the Shillelagh facility in the Republic of Ireland.

In the UK branded sector, the meat snacks category continued to show good growth where 'Mattessons' recorded steady momentum, building its range across multiple channels. 'Mattessons Savagers' launched in 2015 continued to broaden the appeal of the category through extension of the brand to the young adults segment. The introduction of the 'Fire & Smoke' range to the UK cooked meats market proved highly successful in both the delicatessen and pre-pack cooked meat categories - inspiring new usage occasions for cooked meats. 2016 proved to be a challenging year in the UK sausage category as major retailers sought to compete with discounters through EDLP strategies. 'Richmond' remains the number 1 sausage brand and the successful relaunch of the 'Wall's' fresh sausage portfolio, with product and packaging improvements, contributed strong volume and value growth. The 'Wall's Ready Baked' range continued to drive growth in the convenient sausage segment.

The children's cheese snack sector grew by 11% year-on year. 'Cheestrings' maintained its brand positioning in a competitive UK marketplace and successfully launched 'Cheestrings Scoffies' in September - extending the 'Cheestrings' snacking portfolio beyond the lunchbox occasion into an after-school snacking offering. The 'Yollies' children's yoghurt snack range recorded strong growth in the UK market in 2016. 'Pure' Kerry Foods' 'free from' brand continued to advance its positioning in the UK and Irish markets in 2016.

In UK customer branded segments, Kerry Foods maintained a strong performance in the prepared meals category, expanding its offering to the foodservice and 'direct-to-consumer' channels. Successful launches and innovation advanced customer positioning in the chilled meals sector. Introduction of 'health' lines in the frozen sector brought significant new customers to the category. The private label spreads sector proved extremely challenging due to consumer trends towards spreadable butter and growth of dairy-free spreads. A major investment programme at the Ossett (GB) facility was completed, creating a Centre of Excellence for production of spreadable butter through novel production technologies.

In Ireland, 'Dairygold' performed ahead of the market and successfully expanded into the growing butter category with the launch of 'Dairygold Softer'. The consumer trend away from traditional health offerings in the spreads category led to a decline in sales through the 'LowLow' brand. The 'Charleville' brand retained its brand leadership position in the cheese category. 'Cheestrings' continued to advance market development across mainland European markets.

'Denny' remains the number 1 meats brand in its core categories in the Irish market. The 'Denny Fresh Pack' was successfully launched in September, fulfilling shopper requirements for freshness and convenience. 'Fire & Smoke' continued to grow market share in the Irish market.

Financial Review

 

  % 2016 2015
  change €'m €'m

 

 

 

 

Revenue

0.4%

6,130.6

6,104.9

 

 

 

 

Trading profit

7.1%

749.6

700.1

Trading margin

 

12.2%

11.5%

Computer software amortisation

 

(23.4)

(18.7)

Finance costs (net)

 

(70.4)

(69.3)

Adjusted earnings before taxation

 

655.8

612.1

Income taxes (excluding non-trading items)

 

(86.7)

(81.1)

Adjusted earnings after taxation

7.2%

569.1

531.0

Brand related intangible asset amortisation

 

(23.0)

(18.7)

Non-trading items (net of related tax)

 

(13.0)

13.1

Profit after taxation

 

533.1

525.4

 

 

 

 

 

 

EPS

EPS

 

 

Cent

Cent

Adjusted EPS*

7.1%

323.4

301.9

Brand related intangible asset amortisation

 

(13.1)

(10.6)

Non-trading items (net of related tax)

 

(7.4)

7.4

Basic EPS

1.4%

302.9

298.7

* Before brand related intangible asset amortisation and non-trading items (net of related tax)

Analysis of Results

Revenue

On a reported basis Group revenue increased slightly by 0.4% to €6.1 billion (2015: €6.1 billion). Volumes grew by 3.6%, product pricing decreased by 2.1%, and there was a negative transaction related currency impact of 0.3%. Business acquisitions net of disposals contributed 3.3%, and there was a negative reporting currency impact of 4.1%.

In Taste & Nutrition, reported revenue increased by 3.5% to €4.9 billion (2015: €4.7 billion). Volumes grew by 4.0%, product pricing decreased by 2.1%, and there was a negative transaction related currency impact of 0.1%. Business acquisitions net of disposals contributed 4.9%, and there was a negative reporting currency impact of 3.2%.

In Consumer Foods, reported revenue decreased by 9.7% to €1.3 billion (2015: €1.5 billion). Volumes increased by 2.1%, product pricing decreased by 2.0%, and transaction related currency had a negative impact of 1.1%. There was a negative impact of business disposals net of acquisitions of 2.1% and a negative reporting currency impact of 6.6% due to weaker sterling.

Trading Profit & Margin

On a reported basis, Group trading profit increased by 7.1% to €749.6m (2015: €700.1m). Group trading profit margin increased 70 basis points (bps) to 12.2%. The improvement in Group trading profit margin is attributed to improved product mix, the positive impact from acquisitions net of disposals, operating leverage, a benefit from lower spend on the 1 Kerry Business Transformation Programme, and the positive arithmetical effect which lower pricing has on the trading margin calculation (the 'denominator effect').

Trading profit margin in Taste & Nutrition increased by 60 bps to 14.7%, due to the benefits of improved product mix underpinned by increased investment in R&D, the positive impact from acquisitions net of disposals, operating leverage and the positive denominator pricing effect. Trading profit margin in Consumer Foods increased by 30 bps to 8.8% due to the benefits of an improved product mix/portfolio, and the positive denominator pricing effect.

Computer Software Amortisation

Computer software amortisation increased to €23.4m (2015: €18.7m) reflecting the on-going progression of the Kerryconnect project. The capitalised element of the cost of this project is being amortised over a 7 year period.

Finance Costs (net)

Finance costs (net) for the year increased by €1.1m to €70.4m (2015: €69.3m). The cost of financing the high level of acquisition spend in late 2015, was largely offset by strong cash flow generated during the year and also from lower pension interest. The Group's average interest rate for the year was 3.5% (2015: 3.6%).

Taxation

The tax charge for the year, before non-trading items, was €86.7m (2015: €81.1m) representing an effective tax rate of 13.7% (2015: 13.7%).

Acquisitions

During the year the Group completed two bolt-on acquisitions, establishing manufacturing bases in two new geographies. Jungjin Foods was acquired in South Korea and Vendin S.L. was acquired in Spain.

Non-Trading Items

The Group recorded €13.0m of costs net of tax relating to the integration of the businesses acquired in 2015. This compares to an income of €13.1m in 2015, primarily due to profits realised on the disposal of non-core businesses.

Exchange Rates

Group results are impacted by fluctuations in exchange rates year on year versus the euro. The average rates below are the principal rates used for the translation of results. The closing rates below are used to translate assets and liabilities at year end.

 

 

Average Rates

 

Closing Rates

 

2016

2015

 

2016

2015

 

 

 

 

 

 

Australian Dollar

1.48

1.46

 

1.46

1.49

Brazilian Real

3.84

3.72

 

3.44

4.25

British Pound Sterling

0.82

0.73

 

0.86

0.73

Canadian Dollar

1.46

1.41

 

1.42

1.51

Malaysian Ringgit

4.58

4.30

 

4.73

4.69

Mexican Peso

20.67

17.46

 

21.87

18.73

Russian Ruble

74.13

68.07

 

63.81

79.70

South African Rand

16.08

13.90

 

14.50

16.95

US Dollar

1.11

1.12

 

1.05

1.09

Impact of Brexit

Since the UK referendum in June when the electorate voted to leave the European Union, our Business Brexit teams have been working through and managing the potential implications for Kerry. Whilst the details of the eventual outcomes are unclear, we have been planning for different scenarios, noting that there will be a number of potential effects, most noticeably on exchange rates, labour costs / availability and tariffs in relation to the movement of goods and services. We will continue to update our plans as greater clarity emerges. Given our well established manufacturing footprint in the UK and in the Eurozone, we are very well positioned to deal with the potential challenges and realise the opportunities that will arise.

Balance Sheet

A summary balance sheet as at 31 December is provided below:

    2016 2015
   

€'m

€'m

Property, plant & equipment

 

1,451.9

1,410.4

Intangible assets

 

3,444.3

3,482.6

Other non-current assets

 

285.7

290.5

Current assets

 

2,240.0

1,832.3

Total assets

 

7,421.9

7,015.8

Current liabilities

 

1,693.4

1,480.6

Non-current liabilities

 

2,634.5

2,745.1

Total liabilities

 

4,327.9

4,225.7

Net assets

 

3,094.0

2,790.1

Shareholders' equity   3,094.0 2,790.1

Intangible Assets

Intangible assets decreased by €38.3m to €3,444.3m (2015: €3,482.6m) as additions during the year were offset by foreign exchange movements and the annual amortisation charge.

Current Assets

Current assets increased by €407.7m to €2,240.0m (2015: €1,832.3m), primarily due to an increase in cash in hand at the year end, as a result of strong cash flow generated in the year.

Retirement Benefits

At the balance sheet date, the net deficit for defined benefit schemes (after deferred tax) was €291.9m (2015: €253.3m). The increase year on year is primarily driven by lower discount rates in the UK, the Eurozone and the US, the impact of which has been partially offset by cash contributions paid into the schemes during the year and a strong investment return on plan assets. The net deficit expressed as a percentage of market capitalisation at 31 December 2016 was 2.4% (2015: 1.9%). 

Free Cash Flow

Free cash flow is seen as an important indicator of the strength and quality of the business and of the availability of funds to the Group for reinvestment or for return to the shareholder. In 2016 the Group achieved a record free cash flow of €569.9m (2015: €452.6m) analysed below with a free cash flow to adjusted* earnings after tax conversion rate of 100% (2015: 85%). This reflects stronger profit, management of average working capital and timing of capital expenditure spend, offset by a higher level of pension contributions in 2016.

Free Cash Flow

 

2016

2015

 

 

€'m

€'m

Trading profit

 

749.6

700.1

Depreciation (net)

 

129.8

125.9

Movement in average working capital

 

137.7

(1.6)

Pension contributions paid less pension expense

 

(118.2)

(57.5)

Cash flow from operations

 

898.9

766.9

Finance costs paid (net)

 

(61.5)

(46.6)

Income taxes paid

 

(57.3)

(38.3)

Purchase of non-current assets

 

(210.2)

(229.4)

Free cash flow

 

569.9

452.6

* Before brand related intangible asset amortisation and non-trading items (net of related tax)

Net Debt

Net debt at the end of the year was €1,323.7m (2015: €1,650.1m). On 20 January 2017, the Group repaid US$192m of Senior Notes which matured on that date.

Key Financial Covenants

A significant portion of Group financing facilities are subject to financial covenants as set out in the facility agreements. The Group's balance sheet is in a healthy position. With a net debt to EBITDA* ratio of 1.5 times, the organisation has sufficient headroom to support its future growth plans. Group Treasury monitors compliance with all financial covenants and at 31 December the key covenants were as follows:

 

 

Covenant

2016

Times

2015

Times

Net debt: EBITDA*

Maximum 3.5

1.5

1.9

EBITDA: Net interest*

Minimum 4.75

14.0

17.3

* Calculated in accordance with lenders facility agreements which take account of adjustments as outlined in Financial Definitions.

Share Price and Market Capitalisation

The Company's shares traded in the range €61.87 to €84.05 during the year. The share price at 31 December 2016 was €67.90 (2015: €76.31) giving a market capitalisation of €12 billion (2015: €13.4 billion). Total Shareholder Return for 2016 was negative 10.3% (2015: +35%) as companies with UK operations and sterling exposure had their share price impacted as a result of the Brexit vote, while the wider consumer staples sector was affected by rotation into cyclical and interest rate sensitive shares after the US presidential election.

Dividend 

The Board recommends a final dividend of 39.2 cent per share (an increase of 12% on the 2015 final dividend) payable on 19 May 2017 to shareholders registered on the record date 28 April 2017. Together with the interim dividend of 16.8 cent per share, this brings the total dividend for the year to 56 cent, an increase of 12% on 2015.

Annual Report and Annual General Meeting

The Group's Annual Report will be published at the beginning of April and the Annual General Meeting will be held in Tralee on 4 May 2017.

Board & Management Changes

The Board announces that Mr Stan McCarthy, who became Chief Executive of the Group in January 2008, will retire as Chief Executive on 30 September 2017 and as a Director of the Group at year-end. The Board wishes to thank Mr McCarthy for his outstanding leadership as Chief Executive and for his career-long contribution to the growth of the organisation since 1976. 

The Group is pleased to announce that Mr Edmond Scanlon has been appointed Chief Executive Designate to succeed Mr McCarthy on his retirement. The appointment was overseen by the Board Nomination Committee, chaired by Group Chairman Mr Michael Dowling, and approved by the Board of Directors at its meeting on 20 February 2017.

Mr Edmond Scanlon is currently President and CEO Kerry Asia Pacific. Mr Scanlon joined Kerry's Graduate Development Programme in 1996 and worked in Finance until his appointment as Vice President Finance, Supply Chain and Operations of Kerry's Global Flavours Division in 2004. In 2007, he was appointed Vice President Mergers & Acquisitions, Kerry Americas region, before being appointed Global President Kerry Functional Ingredients & Actives in late 2008. In 2012, he was appointed President of Kerry China, prior to his appointment as President & CEO Kerry Asia Pacific region in November 2013.

As previously announced, Mr Michael Ahern, Mr James Devane and Mr John Joseph O'Connor retired from the Board on 31 December 2016. On 20 February 2017, the Board, on the recommendation of the Nomination Committee, agreed to appoint Mr Gerard Culligan and Mr Con Murphy to the Board with effect from 1 June 2017. Gerard Culligan operates his own business in the agribusiness sector and is a Director and co-owner of two private companies in the marine industry. He is also Chairman of Kilrush Credit Union based in County Clare, Ireland. Con Murphy operates his own business in the agribusiness sector and is Chairman of the Irish Montbeliarde Cattle Society. Both Mr Culligan and Mr Murphy were formerly Directors of Kerry Co-Operative Creameries Limited. As representatives of the wider community where the Kerry organisation was founded, they have extensive experience in the agriculture and food industry. 

Future Prospects

The Group remains confident of its ability to continue to profitably grow and develop in the changing global marketplace. Kerry's customer-focused business model and its unrivalled breadth and depth of Taste, Nutrition & General Wellness technologies and systems, supported by the Group's industry leading Technology & Innovation Centre network, represent a significant strategic advantage in responding to consumer trends and customer requirements. Our business model supports delivery across the broadening retail, foodservice and ecommerce landscape throughout global markets. In developed markets our well established technology leadership and strong customer alliances will sustain growth through delivery of customer-preferred, convenient, tasteful, nutritional food and beverage solutions. The Group is also well focused on business development opportunities in regional developing markets, with prospects for sustained strong growth throughout Asian markets.

In consumer foods' markets, Kerry Foods has demonstrated its resilience and ability to consistently respond to consumer needs across the increasingly fragmented retail, foodservice and e-tail channels.

In 2017, the Group expects to achieve good revenue growth and 5% to 9% growth in adjusted earnings per share to a range of 339.6 to 352.5 cent per share (2016: 323.4 cent per share). 

Disclaimer Forward Looking Statements

This Announcement contains forward looking statements which reflect management expectations based on currently available data. However actual results may differ materially from those expressed or implied by these forward looking statements. These forward looking statements speak only as of the date they were made and the Company undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise.

 

RESULTS FOR THE YEAR ENDED 31 December 2016

Consolidated Income Statement

 

 

 

 

 

 

 

for the financial year ended 31 December 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

 Non-Trading

Items

2016

 

 Non-Trading

Items

2016

Total

2016

Before

 Non-Trading

Items

2015

 

 Non-Trading

Items

2015

Total

2015

  Notes €'m €'m €'m €'m €'m €'m

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

 

Revenue 2 6,130.6 - 6,130.6 6,104.9 - 6,104.9

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Trading profit 2 749.6 - 749.6 700.1 - 700.1

 

 

 

 

 

 

 

 

Intangible asset amortisation

 

(46.4)

 

-

(46.4)

(37.4)

 

-

(37.4)

Non-trading items 3 - (21.0) (21.0) - 9.4 9.4

 

 

_______

_______

_______

_______

_______

_______

Operating profit

 

703.2

(21.0)

682.2

662.7

9.4

672.1

 

 

 

 

 

 

 

 

Finance income

 

1.1

-

1.1

1.8

-

1.8

Finance costs  

(71.5)

- (71.5) (71.1) - (71.1)

 

 

_______

_______

_______

_______

_______

_______

Profit before taxation

 

632.8

(21.0)

611.8

593.4

9.4

602.8

 

 

 

 

 

 

 

 

 

Income taxes

 

(86.7)

8.0

(78.7)

(81.1)

3.7

(77.4)

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

Profit after taxation and attributable to owners of the parent

546.1

(13.0)

533.1

512.3

13.1

525.4

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Earnings per A ordinary share

 

 

 

Cent

 

 

Cent

 - basic

4

 

 

302.9

 

 

298.7

 - diluted

4

 

 

302.0

 

 

298.4

 

 

 

 

_______

 

 

_______

 

             
Consolidated Statement of Comprehensive Income            
for the financial year ended 31 December 2016            

 

 

 

 

 

2016

2015

 

 

 

 

 

€'m

€'m

 

 

 

 

 

 

 

Profit after taxation and attributable to owners of the parent

 

 

533.1

525.4

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that are or may be reclassified subsequently to profit or loss:

 

 

 

Fair value movements on cash flow hedges

 

 

 

29.3

10.3

Cash flow hedges - reclassified to profit or loss from equity

 

 

 

(13.3)

2.9

Deferred tax effect of fair value movements on cash flow hedges

 

 

 

0.9

(1.4)

Exchange difference on translation and disposal of foreign operations

 

 

(17.9)

(25.5)

Deferred tax effect of exchange difference on translation of foreign operations

 

-

(0.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to profit or loss:

 

 

 

 

Re-measurement on retirement benefits obligation

 

 

 

(170.3)

141.1

Deferred tax effect of re-measurement on retirement benefits obligation

 

 

25.5

(25.2)

 

 

 

 

 

_______

_______

 

 

 

 

 

Net (expense)/income recognised directly in other comprehensive income

 

 

(145.8)

101.9

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

387.3

627.3

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet

 

 

 

 

 

 

as at 31 December 2016

 

 

 

 

31 December

31 December

 

 

 

 

 

2016

2015

 

 

 

 

 

€'m

€'m

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

1,451.9

1,410.4

Intangible assets

 

 

 

 

3,444.3

3,482.6

Financial asset investments

 

 

 

 

39.3

34.0

Investment in associates

 

 

 

 

40.7

38.9

Non-current financial instruments

 

 

 

 

153.0

174.4

Deferred tax assets

 

 

 

 

52.7

43.2

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

5,181.9

5,183.5

 

 

 

 

 

_______

_______

Current assets

 

 

 

 

 

 

Inventories

 

 

 

 

743.0

727.5

Trade and other receivables

 

 

 

 

847.3

831.2

Cash at bank and in hand

 

 

 

 

564.7

236.4

Other current financial instruments

 

 

 

 

80.1

15.7

Assets classified as held for sale

 

 

 

 

4.9

21.5

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

2,240.0

1,832.3

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Total assets

 

 

 

 

7,421.9

7,015.8

 

 

 

 

 

_______

_______

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

 

 

1,351.6

1,288.6

Borrowings and overdrafts

 

 

 

 

192.5

38.4

Other current financial instruments

 

 

 

 

20.9

25.1

Tax liabilities

 

 

 

 

95.2

94.1

Provisions

 

 

 

 

30.4

31.7

Deferred income

 

 

 

 

2.8

2.7

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

1,693.4

1,480.6

 

 

 

 

 

_______

_______

Non-current liabilities

 

 

 

 

 

 

Borrowings

 

 

 

 

1,867.0

2,011.5

Other non-current financial instruments

 

 

 

 

7.3

6.5

Retirement benefits obligation

 

 

 

 

352.8

305.7

Other non-current liabilities

 

 

 

 

95.1

93.9

Deferred tax liabilities

 

 

 

 

247.2

243.8

Provisions

 

 

 

 

40.8

59.1

Deferred income

 

 

 

 

24.3

24.6

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

2,634.5

2,745.1

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

4,327.9

4,225.7

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Net assets

 

 

 

 

3,094.0

2,790.1

 

 

 

 

 

_______

_______

Issued capital and reserves attributable to owners of the parent

 

 

 

Share capital

 

 

 

 

22.0

22.0

Share premium

 

 

 

 

398.7

398.7

Other reserves

 

 

 

 

(98.0)

(103.9)

Retained earnings

 

 

 

 

2,771.3

2,473.3

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

3,094.0

2,790.1

 

 

 

 

 

_______

_______

                     

 

Consolidated Statement of Changes in Equity

for the financial year ended 31 December 2016

 

 

 

 

 

 

 

 

Note

Share

Capital

€'m

Share

Premium

€'m

Other

Reserves

€'m

Retained

Earnings

€'m

 

Total

€'m

 

 

 

 

 

 

 

 

 

 

At 1 January 2015

 

 

 

 

22.0

398.7

(100.6)

1,915.5

2,235.6

 

 

 

 

 

 

 

 

 

 

Profit after tax attributable to owners of the parent

-

-

-

525.4

525.4

Other comprehensive income

 

 

-

-

(12.3)

114.2

101.9

Dividends paid

 

 

 

5

-

-

-

(81.8)

(81.8)

Share-based payment expense

 

 

-

-

9.0

-

9.0

 

 

 

 

 

_______

_______

_______

_______

_______

At 31 December 2015

 

 

 

 

22.0

398.7

(103.9)

2,473.3

2,790.1

 

 

 

 

 

 

 

 

 

 

Profit after tax attributable to owners of the parent

-

-

-

533.1

533.1

Other comprehensive income

 

-

-

(1.9)

(143.9)

(145.8)

Dividends paid

 

 

 

5

-

-

-

(91.2)

(91.2)

Share-based payment expense

 

-

-

7.8

-

7.8

 

 

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

 

 

 

22.0

398.7

(98.0)

2,771.3

3,094.0

 

 

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Reserves comprise the following:

 

 

 

 

 

 

 

 

 

Capital

Redemption

Reserve

              €'m

Other

Undenominated

Capital

                    €'m

Share-Based Payment

Reserve

€'m

Translation

Reserve

€'m

Hedging

Reserve

€'m

Total

€'m

 

 

 

 

 

 

 

 

 

 

At 1 January 2015

 

 

 

1.7

0.3

21.5

(103.6)

(20.5)

(100.6)

Total comprehensive (expense)/income

-

-

-

(25.5)

13.2

(12.3)

Share-based payment expense

-

-

9.0

-

-

9.0

 

 

 

 

_______

_______

_______

_______

_______

_______

At 31 December 2015

 

 

 

1.7

0.3

30.5

(129.1)

(7.3)

(103.9)

 

 

 

 

 

 

 

 

 

 

Total comprehensive (expense)/income

-

-

-

(17.9)

16.0

(1.9)

Share-based payment expense

-

-

7.8

-

-

7.8

 

 

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

 

1.7

0.3

38.3

(147.0)

8.7

(98.0)

 

 

 

 

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows

 

 

 

 

 

for the financial year ended 31 December 2016

 

 

 

2016

2015

 

 

 

 

 

 

Notes

 

€'m

€'m

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Trading profit

 

 

 

 

 

 

 

749.6

700.1

Adjustments for:

 

 

 

 

 

 

 

 

 

Depreciation (net)

 

 

 

 

 

 

 

129.8

125.9

Change in working capital

 

 

 

 

 

 

61.7

64.8

Pension contributions paid less pension expense

 

 

 

(118.2)

(57.5)

Payments on acquisition integration and restructuring costs

 

 

(21.2)

(26.4)

Exchange translation adjustment

 

 

 

 

0.1

(0.7)

 

 

 

 

 

 

 

 

_______

_______

Cash generated from operations

 

 

 

 

801.8

806.2

Income taxes paid

 

 

 

 

 

 

 

(57.3)

(38.3)

Finance income received

 

 

 

 

 

 

1.1

1.8

Finance costs paid

 

 

 

 

 

 

 

(62.6)

(48.4)

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

Net cash from operating activities

 

 

 

 

683.0

721.3

 

 

 

 

 

 

 

 

_______

_______

Investing activities

 

 

 

 

 

 

 

 

 

Purchase of assets

 

 

 

 

 

 

 

(223.8)

(252.2)

Proceeds from the sale of assets

 

 

 

 

12.1

12.7

Capital grants received

 

 

 

 

 

 

1.5

10.1

Purchase of businesses (net of cash acquired)

 

6

 

(22.2)

(888.1)

Purchase of share in associates

 

 

 

 

(6.7)

-

Income received from associates

 

 

 

 

5.0

-

Disposal of businesses

 

 

 

 

 

 

(2.0)

115.7

Payments relating to previous acquisitions

 

 

 

(0.1)

(0.8)

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(236.2)

(1,002.6)

 

 

 

 

 

 

 

 

_______

_______

Financing activities

 

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

 

5

 

(91.2)

(81.8)

Issue of share capital

 

 

 

 

 

 

 

-

-

Repayment of borrowings

 

 

 

 

 

 

(25.6)

(1,273.8)

Increase in other borrowings

 

 

 

 

 

-

1,589.5

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

Net cash movement due to financing activities

 

 

 

(116.8)

233.9

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

330.0

(47.4)

Cash and cash equivalents at beginning of the financial year

 

 

231.2

278.1

Exchange translation adjustment on cash and cash equivalents

 

 

(0.1)

0.5

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

Cash and cash equivalents at end of the financial year

 

 

561.1

231.2

 

 

 

 

 

 

 

 

_______

_______

Reconciliation of Net Cash Flow to Movement in Net Debt

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

330.0

(47.4)

Cash inflow/(outflow) from debt financing

 

 

 

25.6

(315.7)

 

 

 

 

 

 

 

 

_______

_______

Changes in net debt resulting from cash flows

 

 

 

355.6

(363.1)

Fair value movement on interest rate swaps (net of adjustment to borrowings)

 

(5.4)

0.2

Exchange translation adjustment on net debt

 

 

 

(23.8)

(91.9)

 

 

 

 

 

 

 

 

_______

_______

Movement in net debt in the financial year

 

 

 

326.4

(454.8)

Net debt at beginning of the financial year

 

 

 

(1,650.1)

(1,195.3)

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

Net debt at end of the financial year

 

 

 

(1,323.7)

(1,650.1)

 

 

 

 

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

Notes to the Financial Statements

for the financial year ended 31 December 2016

 

1. Accounting policies

 

The financial information included within this statement has been extracted from the audited financial statements of Kerry Group plc for the financial year ended 31 December 2016. The auditors' report was unqualified. The financial information set out in this document does not constitute full statutory financial statements for the financial years ended 31 December 2016 or 2015 but is derived from same. The consolidated financial statements of Kerry Group plc have been prepared in accordance with International Financial Reporting Standards ('IFRS'), International Financial Reporting Interpretations Committee ('IFRIC') interpretations and those parts of the Companies Act 2014 applicable to companies reporting under IFRS. The financial statements comprise of the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity and the notes to the financial statements. The Group's financial statements have also been prepared in accordance with IFRSs adopted by the European Union ('EU') which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'). The Group's financial statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the EU differs in certain respects from IFRS issued by the IASB. References to IFRS hereafter refer to IFRS adopted by the EU.

 

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) and financial asset investments which are held at fair value. Assets classified as held for sale are stated at the lower of carrying value and fair value less costs to sell. The investment in associates are accounted for using the equity method.

 

The Group's accounting policies will be included in the 2016 Annual Report & Accounts, which will be published at the start of April and are consistent with those described in the 2015 Annual Report & Accounts. The 2015 consolidated balance sheet represents the measurement period adjustments relating to acquisitions made in 2015 in accordance with IFRS 3 'Business Combinations'. The measurement period adjustments are disclosed in note 6.

 

New standards and interpretations

Certain new and revised accounting standards and new International Financial Reporting Interpretations Committee ('IFRIC') interpretations have been issued and the Group's assessment of the impact of these new standards and interpretations is set out below:

 

Standards and Interpretations effective for Kerry Group in 2016 but not material to the results and financial position of the Group: 

 

Effective Date

-

IFRS 5 (amendment)

Non-current Assets Held for Sale and Discontinued Operations

1 January 2016

-

IFRS 7 (amendment)

Financial Instruments: Disclosures

1 January 2016

-

IFRS 10 (amendments)

Consolidated Financial Statements

1 January 2016

-

IFRS 11 (amendment)

Joint Arrangements

1 January 2016

-

IFRS 12 (amendment)

Disclosure of Interests in Other Entities

1 January 2016

-

IFRS 14

Regulatory Deferral Accounts

1 January 2016

-

IAS 1 (amendment)

Presentation of Financial Statements

1 January 2016

-

IAS 16 (amendments)

Property, Plant and Equipment

1 January 2016

-

IAS 19 (amendment)

Employee Benefits

1 January 2016

-

IAS 27 (amendment)

Separate Financial Statements

1 January 2016

-

IAS 28 (amendments)

Investments in Associates and Joint Ventures

1 January 2016

-

IAS 34 (amendment)

Interim Financial Reporting

1 January 2016

-

IAS 38 (amendment)

Intangible Assets

1 January 2016

-

IAS 41 (amendment)

Agriculture

1 January 2016

 

Standards and Interpretations which are not yet effective for Kerry Group and are not expected to have a material effect on the results or the financial position of the Group: 

 

Effective Date

-

IFRS 2 (amendment)

Classification and Measurement of Share-Based Payment Transactions

1 January 2018

-

IFRS 4 (amendment)

Insurance Contracts

1 January 2018

-

IAS 7 (amendments)

Statement of Cash Flows

1 January 2017

-

IAS 12 (amendments)

Income Taxes

1 January 2017

-

IAS 40 (amendment)

Investment Property

1 July 2018

-

IFRIC 22

Foreign Currency Transactions and Advance Consideration

1 January 2018

 

The following revised standards are not yet effective and the impact on Kerry Group is currently under review:

 

Effective Date

-

IFRS 9

Financial Instruments

1 January 2018

 

 

IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 'Financial Instruments: Recognition and Measurement'. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9. Our initial review of IFRS 9 has indicated that the impact of this new standard on the Groups' results is unlikely to be material.

 

 

 

 

 

-

IFRS 15

Revenue from Contracts with Customers

1 January 2018

 

 

IFRS 15 was issued to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 15. Findings from our initial review of IFRS 15 are that the impact of this new standard on the Groups' results is unlikely to be material.

 

 

 

 

 

-

IFRS 16

Leases

1 January 2019

 

 

IFRS 16, published in January 2016, replaces the existing guidance in IAS 17 'Leases'. IFRS 16 eliminates the classification of leases as either operating leases or finance leases. It introduces a single lessee accounting model, which requires a lessee to recognise: assets and liabilities for all leases with a term of more than 12 months and depreciation of lease assets separately from interest on lease liabilities in the income statement. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 16. Early indications from our initial review of IFRS 16 is that this will result in an increase in finance leased assets of approximately €58.0m, and a corresponding increase in financial liabilities of the same amount, on the consolidated balance sheet of the Group's financial statements.

 

 

2. Analysis of results

 

The Group has determined it has two reportable segments: Taste & Nutrition and Consumer Foods. The Taste & Nutrition segment manufactures and distributes an innovative portfolio of taste & nutrition solutions and functional ingredients & actives for the global food, beverage and pharmaceutical industries. The Consumer Foods segment manufactures and supplies added value branded and consumer branded chilled food products to the Irish, UK and selected international markets.

 

 

 

 

Taste & Nutrition 2016

 

 

 

Consumer

Foods

2016

 

Group

Eliminations

and

Unallocated

2016

 

 

 

 

Total

2016

 

 

 

Taste & Nutrition

2015

 

 

 

Consumer

Foods

2015

 

Group

Eliminations

and

Unallocated

2015

 

 

 

 

Total

2015

 

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

 

 

 

 

 

 

 

 

 

External revenue

4,800.1

1,330.5

-

6,130.6

4,637.5

1,467.4

-

6,104.9

Inter-segment revenue

79.4

2.0

(81.4)

-

78.4

8.3

(86.7)

-

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Revenue

4,879.5

1,332.5

(81.4)

6,130.6

4,715.9

1,475.7

(86.7)

6,104.9

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Trading profit

716.4

117.3

(84.1)

749.6

662.9

125.7

(88.5)

700.1

 

_______

_______

_______

 

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

Intangible asset amortisation

 

 

(46.4)

 

 

 

(37.4)

Non-trading items

 

 

(21.0)

 

 

 

9.4

 

 

 

 

_______

 

 

 

_______

 

 

 

 

 

 

 

 

 

Operating profit

 

 

682.2

 

 

 

672.1

 

 

 

 

 

 

 

 

 

Finance income

 

 

1.1

 

 

 

1.8

Finance costs

 

 

(71.5)

 

 

 

(71.1)

 

 

 

 

_______

 

 

 

_______

 

 

 

 

 

 

 

 

Profit before taxation

 

 

611.8

 

 

 

602.8

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(78.7)

 

 

 

(77.4)

 

 

 

 

_______

 

 

 

_______

 

 

 

 

 

 

Profit after taxation and attributable to owners of the parent

533.1

 

 

 

525.4

 

 

 

 

_______

 

 

 

_______

Segment assets and liabilities

 

 

 

 

 

 

 

 

 

Segment assets

4,441.5

928.3

2,052.1

7,421.9

4,376.9

984.1

1,654.8

7,015.8

Segment liabilities

(1,156.9)

(428.1)

(2,742.9)

(4,327.9)

(1,052.0)

(436.0)

(2,737.7)

(4,225.7)

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Net assets

3,284.6

500.2

(690.8)

3,094.0

3,324.9

548.1

(1,082.9)

2,790.1

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Other segmental information

 

 

 

 

 

 

 

 

 

Property, plant and equipment additions

160.7

36.8

2.1

199.6

176.0

36.7

3.7

216.4

 

 

 

 

 

 

 

 

 

Depreciation (net)

109.2

16.2

3.8

129.2

104.0

17.7

4.3

126.0

 

 

 

 

 

 

 

 

 

Intangible asset additions

0.9

0.9

14.7

16.5

1.0

0.6

30.0

31.6

 

 

 

 

 

 

 

 

 

Intangible asset amortisation

19.6

6.1

20.7

46.4

14.0

6.0

17.4

37.4

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Information about geographical areas

 

 

 

 

 

 

 

 

EMEA

2016

 

Americas

2016

Asia

Pacific

2016

 

Total

2016

 

EMEA

2015

 

Americas

2015

Asia

Pacific

2015

 

Total

2015

 

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

 

 

 

 

 

 

 

 

 

Revenue by location of external customers

2,777.0

2,588.5

765.1

6,130.6

3,013.3

2,307.9

783.7

6,104.9

 

 

 

 

 

 

 

 

 

Segment assets by location

4,510.4

2,373.5

538.0

7,421.9

4,282.1

2,237.7

496.0

7,015.8

 

 

 

 

 

 

 

 

 

Property, plant and equipment additions

83.3

76.9

39.4

199.6

109.1

66.7

40.6

216.4

 

 

 

 

 

 

 

 

 

Intangible asset additions

16.2

0.3

-

16.5

30.9

0.6

0.1

31.6

 

_______

_______

_______

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

Kerry Group plc is domiciled in the Republic of Ireland and the revenues from external customers in the Republic of Ireland were €429.4m (2015: €455.0m). The non-current assets located in the Republic of Ireland are €936.8m (2015: €931.9m).

 

Revenues from external customers include €1,534.8m (2015: €1,710.5m) in the UK and €2,053.1m (2015: €1,789.2m) in the USA. The non-current assets in the UK are €673.3m (2015: €786.7m) and in the USA are €1,385.7m (2015: €1,327.4m).

 

There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8 'Operating Segments'. The accounting policies of the reportable segments are the same as the Group's accounting policies as outlined in the Statement of Accounting Policies.

 

3. Non-trading items

 

 

 

 

 

 

 

 

 

2016

2015

 

Notes

 

 

€'m

€'m

(Loss)/profit on disposal of businesses and assets

(i)

 

 

(1.3)

22.5

Acquisition integration and restructuring costs

(ii)

 

 

(19.6)

(7.8)

Impairment of assets held for sale

(iii)

 

 

(0.1)

(5.3)

 

 

 

 

_______

_______

 

 

 

 

(21.0)

9.4

           

Tax

 

 

 

8.0

3.7

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

(13.0)

13.1

 

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

Total

(i) Loss on disposal of businesses and assets

 

 

 

 

2016

 

 

 

 

 

€'m

Businesses and assets

 

 

 

 

 

Property, plant and equipment

 

 

 

 

(3.8)

Assets classified as held for sale

 

 

 

(7.6)

 

 

 

 

 

________

Net businesses and assets disposed

 

 

 

 

(11.4)

 

 

 

 

 

 

Consideration

 

 

 

 

 

Cash received

 

 

 

 

12.7

Disposal related costs

 

 

 

 

(2.6)

 

 

 

 

 

________

Total consideration received

 

 

 

 

10.1

 

 

 

 

 

 

Cumulative exchange difference on translation recycled on disposal

 

 

 

 

-

 

 

 

 

 

________

 

 

 

 

 

Loss on disposal of businesses and assets

 

 

 

(1.3)

 

 

 

 

 

________

Net cash inflow on disposal:

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

2016

 

 

 

 

 

€'m

Cash

 

 

 

 

12.7

Less: cash at bank and in hand balance disposed of

 

 

 

-

Less: disposal related costs

 

 

 

 

(2.6)

 

 

 

 

 

________

 

 

 

 

 

 

 

 

 

 

 

10.1

 

 

 

 

 

________

 

 

 

 

 

 

During the year the Group disposed of property, plant and equipment and assets classified as held for sale primarily in Ireland and the UK and a small business in the Taste & Nutrition segment.

 

 

 

 

 

 

In 2015, the Group disposed of the Pinnacle lifestyle bakery business in Australia from the Taste & Nutrition segment and two businesses in the Consumer Foods segment in the UK. The Consumer Foods businesses were classified as held for sale in 2014. Additionally, the Group disposed of property, plant and equipment and assets classified as held for sale, primarily in the USA and Ireland.

 

 

 

 

 

 

A net tax credit of €1.0m (2015: €1.7m) arose on the disposal of businesses and assets.

 

 

 

 

 

 

(ii) Acquisition integration and restructuring costs

 

 

 

 

 

 

 

 

 

 

During the year, acquisition integration and restructuring costs of €19.6m (2015: €7.8m) related to costs of integrating acquisitions into the Group's operations, primarily Island Oasis and Red Arrow, which were acquired in late 2015. Acquisition integration costs represent additional investment by the Group in the recently acquired businesses, in order to realise their full value and achieve expected synergies. These costs reflect restructuring of operations, integration of R&D and administration functions, redundancies, relocation of resources and transaction expenses in order to integrate the businesses into the existing Kerry operating model.

 

 

 

 

 

 

In the year ended 31 December 2016, a tax credit of €7.0m (2015: €2.0m) arose due to tax deductions available on acquisition integration and restructuring costs.

 

 

 

 

 

 

(iii) Impairment of assets held for sale

 

 

 

 

 

 

 

 

 

In 2016, assets classified as held for sale were impaired to their fair value less costs to sell by €3.7m (2015: €5.3m). In addition in 2016 it was determined that the value of the Group's remaining businesses held for sale, would no longer be recovered principally through a sale. As a result, the assets were reclassified from 'Assets classified as held for sale'. A remeasurement gain of €3.6m was recorded in 'Non-trading items' to recognise the assets at their recoverable amount, which was determined using a value in use calculation.

 

4. Earnings per A ordinary share

 

 

 

EPS

2016

EPS

2015

 

cent

€'m

cent

€'m

Basic earnings per share

 

 

 

 

Profit after taxation and attributable to owners of the parent

302.9

533.1

298.7

525.4

Brand related intangible asset amortisation

13.1

23.0

10.6

18.7

Non-trading items (net of related tax)

7.4

13.0

(7.4)

(13.1)

 

_______

_______

_______

_______

 

 

 

 

 

Adjusted earnings

323.4

569.1

301.9

531.0

 

_______

_______

_______

_______

 

Diluted earnings per share

 

 

 

 

Profit after taxation and attributable to owners of the parent

302.0

533.1

298.4

525.4

Adjusted earnings

322.4

569.1

301.5

531.0

 

_______

_______

_______

_______

 

 

 

 

 

               

In addition to the basic and diluted earnings per share, an adjusted earnings per share is also provided as it is considered more reflective of the Group's underlying trading performance. Adjusted earnings is profit after taxation and attributable to owners of the parent before brand related intangible asset amortisation and non-trading items (net of related tax). These items are excluded in order to assist in the understanding of underlying earnings.

 

 

2016

2015

 

m's

m's

Number of Shares

 

 

 

 

 

Basic weighted average number of shares

176.0

175.9

Impact of share options outstanding

0.5

0.2

 

_______

_______

 

 

 

Diluted weighted average number of shares

176.5

176.1

 

_______

_______

 

 

 

Actual number of shares in issue as at 31 December

176.0

175.9

 

_______

_______

 

5. Dividends

 

2016

2015

 

€'m

€'m

Amounts recognised as distributions to equity shareholders in the financial year

 

 

Final 2015 dividend of 35.00 cent per A ordinary share paid 13 May 2016

(Final 2014 dividend of 31.50 cent per A ordinary share paid 15 May 2015)

61.6

55.4

 

 

 

Interim 2016 dividend of 16.80 cent per A ordinary share paid 18 November 2016

(Interim 2015 dividend of 15.00 cent per A ordinary share paid 13 November 2015)

29.6

26.4

 

_______

_______

 

 

 

 

91.2

81.8

 

_______

_______

 

 

 

Since the financial year end the Board has proposed a final 2016 dividend of 39.20 cent per A ordinary share which amounts to €69.0m. The payment date for the final dividend will be 19 May 2017 to shareholders registered on the record date as at 28 April 2017. The consolidated financial statements do not reflect this dividend.

 

6. Business combinations

 

During 2016, the Group completed a total of two bolt-on acquisitions, all of which are 100% owned by the Group. In March 2016, the Group acquired Jungjin Food Co. Ltd., a manufacturer and supplier of seasonings, savoury powders and flavours based in South Korea. In June 2016, the Group acquired Vendin S.L., a Spanish based manufacturer of dry beverages powders for use in vending machines and in the foodservice industry.

 

The total consideration for these acquisitions was €22.4m. Transaction expenses related to these acquisitions of €1.0m were charged in the Group's Consolidated Income Statement during the financial year.

 

The provisional net assets acquired before combination were €13.9m and the Group recognised goodwill on these acquisitions of €8.5m. The goodwill is attributable to the expected profitability, revenue growth, future market development and assembled workforce of the acquired businesses and the synergies expected to arise within the Group after the acquisition. No goodwill recognised is expected to be deductible for income tax purposes.

 

The acquisition method of accounting has been used to consolidate the businesses acquired in the Group's financial statements. The valuation of the fair value of assets and liabilities will be completed within the measurement period. This valuation has yet to be finalised.

 

The revenue and trading results of the acquisitions in the period since acquisition and the impact on the Group's results had the acquisitions taken place at the beginning of the financial year, are not considered material to the Group (combined less than €1.0m profit after tax). The identifiable net assets acquired as part of the Jungjin Food Co. Ltd. and Vendin S.L. acquisitions were not material to the Group, therefore were not disclosed separately in this note. The fair value of the financial assets includes trade and other receivables with a fair value of €5.1m and a gross contractual value of €5.2m.

 

During 2015, the Group completed a total of ten acquisitions, all of which are 100% owned by the Group. The initial assessment of fair values to identifiable net assets acquired was performed on a provisional basis in respect of certain acquisitions. As part of the finalisation of the fair value exercise in respect of certain 2015 acquisitions, the Group considered the overall level of goodwill arising on the acquisitions and the valuations applied to intangible and tangible assets acquired, reducing the overall level of goodwill arising on acquisitions by €93.9m. The amendments to these fair values were made to the comparative figures during the subsequent reporting window within the measurement period imposed by IFRS 3.

 

7. Events after the balance sheet date

 

Since the financial year end, the Group has:

-   reached agreement to acquire Tianning Flavour & Fragrance Co. Ltd based in Shanghai, China and Taste Master based in Adelaide, Australia for a combined consideration of €83.0m; and

-   proposed a final dividend of 39.20 cent per A ordinary share (note 5).

 

There have been no other significant events, outside the ordinary course of business, affecting the Group since 31 December 2016.

 

8. General information

 

The statutory financial statements of Kerry Group plc for the financial year ended 31 December 2016 were approved by the Board of Directors and authorised for issue on the 20 February 2017 and will be filed with the Registrar of Companies following the annual general meeting. The statutory financial statements of Kerry Group plc for the financial year ended 31 December 2015, to which an unqualified audit opinion was received, were annexed to the annual return and filed with the Registrar of Companies.

SUPPLEMENTARY INFORMATION

FINANCIAL DEFINITIONS

1.   Revenue

Volume growth

This represents the sales volume growth year-on-year from ongoing business, excluding volumes from acquisitions net of disposals.

 

Volume growth is an important metric as it is seen as the key driver of top-line business improvement. This is used as the key revenue metric, as Kerry operates a pass-through pricing model with its customers to cater for raw material price fluctuations. A full reconciliation to reported revenue growth is detailed in the revenue reconciliation below.

 

Revenue Reconciliation

 

 

Volume

growth

 

Price

Transaction currency

Translation currency

Acquisitions/

Disposals

Reported

revenue

growth

Taste & Nutrition

4.0%

(2.1%)

(0.1%)

(3.2%)

4.9%

3.5%

Consumer Foods

2.1%

(2.0%)

(1.1%)

(6.6%)

(2.1%)

(9.7%)

Group

3.6%

(2.1%)

(0.3%)

(4.1%)

3.3%

0.4%

 

2.   EBITDA

EBITDA represents profit after taxation and attributable to owners of the parent before finance income and costs, income taxes, depreciation (net), intangible asset amortisation and non-trading items.

 

 

2016

2015

 

€'m

€'m

 

 

 

Profit after taxation and attributable to owners of the parent

533.1

525.4

Finance income

(1.1)

(1.8)

Finance costs

71.5

71.1

Income taxes

78.7

77.4

Non-trading items

21.0

(9.4)

Intangible asset amortisation

46.4

37.4

Depreciation (including impairment)

132.8

128.4

 

_______

_______

EBITDA

882.4

828.5

 

_______

_______

 

 

 

3.   Trading Profit

Trading Profit refers to the operating profit generated by the businesses before intangible asset amortisation and gains or losses generated from non-trading items. Trading Profit represents operating profit before specific items that are not reflective of underlying trading performance and therefore hinder comparison of the trading performance of the Group's businesses, either year-on-year or with other businesses.

 

4.   Trading Margin

Trading Margin represents trading profit, expressed as a percentage of revenue.

 

5.   Non-trading Items

Non-trading items refers to gains or losses on the disposal of businesses, disposal of assets (non-current assets and assets classified as held for sale), costs in preparation of disposal of assets, material acquisition transaction costs and material acquisition integration and restructuring costs.

 

6.   Operating profit

Operating profit is profit before income taxes, finance income and finance costs.

 

7.   Other external charges

Other external charges primarily refers to selling, general and administrative expenses.

 

8.   Other operating charges

Other operating charges primarily refers to manufacturing and warehousing costs.

 

9.   Adjusted Earnings Per Share

In addition to the basic and diluted earnings per share, an adjusted earnings per share is also provided as it is considered more reflective of the Group's underlying trading performance. Adjusted earnings is profit after taxation and attributable to owners of the parent before brand related intangible asset amortisation and non-trading items (net of related tax). These items are excluded in order to assist in the understanding of underlying earnings. A full reconciliation of adjusted earnings per share is provided in note 4.

 

 

2016

2015

 

EPS

EPS

 

cent

cent

Basic earnings per share

302.9

298.7

Brand related intangible asset amortisation

13.1

10.6

Non-trading items (net of related tax)

7.4

(7.4)

 

_______

_______

Adjusted earnings per share

323.4

301.9

 

_______

_______

 

10.  Free Cash Flow

Free Cash Flow is trading profit plus depreciation, movement in average working capital, capital expenditure, pension costs less pension expense, finance costs paid (net) and income taxes paid.

 

Free Cash Flow is seen as an important indicator of the strength and quality of the business and of the availability to the Group of funds for reinvestment or for return to shareholders. Movement in average working capital is used when calculating free cash flow as management believes this provides a more accurate measure of the increase or decrease in working capital needed to support the business over the course of the year rather than at two distinct points in time. Movement in average working capital measures more accurately fluctuations caused by seasonality and other timing factors. Below is a reconciliation of free cash flow to the nearest IFRS measure, which is "Net cash from operating activities".

 

 

2016

2015

 

€'m

€'m

Net cash from operating activities

683.0

721.3

Difference between movement in average working capital and movement in the financial year end working capital

76.0

(66.4)

Expenditure on acquisition integration and restructuring costs

21.2

26.4

Purchase of assets

(223.8)

(252.2)

Proceeds from the sale of property, plant and equipment

12.1

12.7

Capital grants received

1.5

10.1

Exchange translation adjustment

(0.1)

0.7

 

_______

_______

Free cash flow

569.9

452.6

 

_______

_______

 

11.  Financial Ratios

The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated in accordance with lender's facility agreements using an adjusted EBITDA, adjusted finance costs (net of finance income) and an adjusted net debt value to adjust for the impact of non-trading items, acquisitions net of disposals and deferred payments in relation to acquisitions. As outlined above, these ratios are calculated in accordance with lender's facility agreements and these agreements specifically require these adjustments in the calculation.

 

12.  Return on Average Equity (ROAE)

This measure is defined as profit after tax and attributable to owners of the parent before non-trading items (net of related tax) and brand related intangible asset amortisation expressed as a percentage of average equity. Average equity is calculated by taking the average shareholders' funds over a 12 month period plus an additional €528m relating to goodwill written off to reserves pre conversion to IFRS.

 

13.  Return on Average Capital Employed (ROACE)

This measure is defined as profit after tax and attributable to owners of the parent before non-trading items (net of related tax), brand related intangible asset amortisation and finance income and costs expressed as a percentage of average capital employed. Average Capital Employed is calculated by taking the average shareholder's funds and net debt over a 12 month period plus an additional €528m relating to goodwill written off to reserves pre conversion to IFRS.

 

14.  Cash Flow Return on Investment (CFROI)

CFROI is calculated as free cash flow before finance costs (net) expressed as a percentage of average capital employed. Average capital employed for the CFROI calculation is the same as that used for ROACE. 

 

15.  Total Shareholder Return (TSR)

Total shareholder return (TSR) represents the change in the capital value of Kerry Group plc shares plus dividends reinvested in the year.

 

16.  Market Capitalisation

Market Capitalisation is calculated as the share price times the number of shares issued.

 

17.  Enterprise Value

Enterprise Value is calculated as per external market sources. It is market capitalisation plus reported borrowings less total cash and cash equivalents.

 

18.  Constant currency

Constant currency reporting eliminates the translational effect of changes in foreign exchange rates on the Group's results. Constant currency year on year change is calculated by retranslating prior year results at current year average exchange rates and comparing the outcome to the current year reported number.

 

 


This information is provided by RNS
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