Interim Results 2002

Kerry Group PLC 3 September 2002 KERRY GROUP PLC Tuesday 3 September 2002 Interim Report Half Year Ended 30 June 2002 Kerry, the global ingredients, flavours, and consumer foods group, reports interim results for the half year ended 30 June 2002. Financial Highlights - Sales increased by 34.3% to EUR1.8 billion - Like-for-like sales growth of 5% - Operating profit* increased by 18.7% to EUR128m - Restructuring cost of EUR25.5m - Adjusted profit after tax* up 23.4% to EUR77.4m - Adjusted earnings per share increased by 14.8% to 41.8 cent - FRS3 earnings per share reduced from 31.8 cent to 20.2 cent - Interim dividend per share up 12.3% to 3.65 cent * before goodwill and exceptionals Commenting on the half-year 2002 performance, Kerry Group Managing Director, Hugh Friel said; 'The first half of 2002 has again highlighted the strength and broad geographic base of the Group. Turnover was up 34% with like-for-like sales growth of 5%. Despite difficulties arising from international market developments in some sectors, the Group achieved a 14.8% increase in adjusted earnings per share. Our food ingredients, flavours, consumer foods and foodservice operations continue to grow and develop in line with Group projections and we expect a good outturn for the full year'. For further information please contact: Frank Hayes Director of Corporate Affairs Tel no +353 66 7182304 Fax no +353 66 7182972 Kerry Web Site: www.kerrygroup.com Kerry Group plc Chairman's Statement For the half year ended 30 June 2002 Results _______ Kerry delivered a good performance in the first half of 2002, demonstrating again the strength of the Group's broad technology, customer and geographic base. Despite difficulties arising from international market developments in some sectors, operating profit before goodwill amortisation and exceptionals increased by 18.7% to EUR128m. This reflects strong business development in all Group operations and good progress in the integration of 2001 acquisitions. Turnover increased by 34.3% to EUR1.8 billion, with like-for-like sales showing a 5% increase compared to the first half of 2001 when account is taken of acquisitions, divestitures and foreign exchange fluctuations. As signalled at year-end, due to the business profile of Group acquisitions in 2001 - in particular Golden Vale, and the on-going restructuring and integration programme connected with the respective business units, the Group operating margin decreased from 8.1% in the first half of 2001 to 7.1% in the period under review. Adjusted profit after tax and exceptional items increased by 23.4% to EUR77.4m which, allowing for the increased number of shares in issue, contributed a 14.8% increase in earnings per share to 41.8 cent. Equivalently, pre-application of the new FRS19 reporting standard on deferred tax, this result would have increased earnings per share by 13.4%. Basic FRS3 earnings per share decreased by 36.5% to 20.2 cent. Assisted by on-going strong cash generating capability, the Group continued to invest significant resources in existing businesses and in strategic bolt-on investments. In particular good progress was achieved in advancing the Group's convenience foods, culinary, nutrition, foodservice and global flavour business development objectives. Operations Reviews __________________ Ireland and Rest of Europe Sales originating from Irish based operations almost doubled to EUR627.1m, boosted primarily by the acquisition of Golden Vale which was concluded at the end of September 2001. Operating profit increased from EUR18.9m to EUR26.9m. European operations (excluding Ireland) increased sales by 10.5% to EUR628.3m while operating profits increased by 8.7% to EUR43.9m. Kerry Foods again achieved good growth in its branded categories. In Ireland a strong performance was achieved in pre-packed sliced meats, rashers, cheese and cheese-snacks. The division's dedicated foodservice business unit also made excellent progress since its launch in 2001. Integration of businesses connected with the Golden Vale acquisition has progressed satisfactorily and will be substantially completed by year-end. The sale of the Bailieboro and Artigarvan based dairy processing operations was completed during the period under review. However margins in the dairy sector were impacted by difficulties in international dairy markets - with changes in input pricing lagging reduced output prices. In the UK, Wall's and Richmond brands again grew market share. Good progress was also made through prepared meals and microwaveable convenient offerings. Kerry Foods Direct to Store had an excellent first half - having further extended its market positioning through the acquisition of the Pork Farms Bowyers Van Sales operation. In European ingredients markets excellent progress was achieved due to the on-going expansion of the prepared foods industry. Development in coatings was constrained due to the difficulties experienced by fish processors and to a lesser extent the poultry industry - in particular in the UK and France. However on-going development of the division's foodservice business in the quick-serve restaurant sector proved satisfactory. The Voyager Foods (UK) and Aromont (France) acquisitions performed well, successfully extending Kerry's position as a pan-European provider of culinary systems and ready-to-use ingredient solutions. The European snack sector continued to grow and Kerry recorded good progress especially in Eastern Europe. Americas Sales in American markets increased by 22% to EUR473.5m. While the 2001 acquisition programme contributed to this strong performance, organic growth in Kerry's core businesses again proved satisfactory. Operating profits increased by 18.1% to EUR52.8m. In the USA, subsequent to the high level of food industry consolidation in 2000 and 2001, food companies that have successfully progressed integration of acquired businesses are again engaging in significant new product developments. This momentum has already provided new opportunities in key Kerry growth sectors, including ready-to-eat breakfast cereals, nutritional products, health and energy bars, where Kerry divisions have a strong focus and a range of technologies. Such sectors are exhibiting growth rates in excess of 20% year-on-year. Kerry is also realising good progress through its focus on the natural food and organic sectors which are also dynamic growth categories. Kerry's U.S. specialty ingredients division performed in line with expectations. Growth in the seasonings sector was impacted by processor consolidation which resulted in a number of delayed market development initiatives. The US$3m expansion and upgrade of the Sturtevant seasonings facility was completed. The new Calhoun Georgia US$22m coatings facility is also on target for full commissioning in the second half of 2002. Higher cereal raw material costs led to lower margins in coatings and foodservice applications. However the dynamics of foodservice markets remain positive. With the continued growth of hand-held foods, the commercialisation of Kerry's FlavorCoreTM patented sauce filling cold forming extrusion technology has attracted industry wide interest for appetiser, hand-held and centre-of-plate applications. Kerry's sweet ingredients division again benefited from the growth in the nutritional and energy sectors. The NutriantTM division, combining the Solnuts and Iowa Soy businesses, was successfully launched and has made good progress through its range of nutritional ingredients ranging from nut replacements, nutritional additives, vegetarian products, specialist soy systems and organic lines. Kerry Canada continued to achieve good growth, particularly in the speciality ingredients sector. In Mexico progress in snack and convenience sectors was very encouraging. In Brazil, integration of the Siber and Nutrir businesses acquired in 2001 is well advanced. Good progress was achieved through sweet inclusions and flavours in the ice-cream and dairy product sectors and through seasonings in the meat industry. Market development in Peru and Equador is also progressing well through export of added value products from Brazil. Asia Pacific Growth and development in Asia Pacific markets proved satisfactory with sales increased by 9.9% to EUR70.9m and operating profits increased by 13.4% to EUR4.4m. Australia showed a good recovery with encouraging business development across seasonings for meat and poultry applications and Pinnacle branded bakery ingredients. Progress continued in the quick-serve-restaurant sectors in Australia and New Zealand. Asian markets remain difficult due to prevailing economic conditions in major markets. However Kerry's core business performed well. Market development opportunities in the Philippines, China, Vietnam and Thailand continue to be progressed. Development ___________ In the first half of 2002 the Group further progressed its development strategy by adding a range of new technologies and product offerings. Reflecting the Group's focus on becoming the premier flavour supplier dedicated to food and beverage markets, and its worldwide service and flavour development capabilities, 'Mastertaste' - the Group's new global flavour division, was launched at the Institute of Food Technology (IFT) Annual Meeting and Expo in Anaheim, California in June. Mastertaste, now headquartered in Rosemont, Chicago, USA, with flavour development facilities located in; New Jersey, Los Angeles, Madison (WI), Greenville Missouri, Brentwood and Crossville Tennessee, USA; Cam, UK; Turin and Druento, Italy; Rodgau, Germany; and Sydney, Australia; brings together under a common identity, focus and strategy the following flavour businesses acquired by Kerry, Mastertaste (UK), the former Burns Philp flavours business (Australia), San Giorgio Flavors (Italy), The Geneva Group (USA) and Hickory Specialties Inc. (USA). Mastertaste has realigned the constituent businesses within their primary sweet and savoury sectors and the division is now focused on further global expansion and technical development within these sectors. Since year-end 2001 the Group has also concluded the following acquisitions at a total cost of EUR125m. (a) Ingredients Businesses. - Industrial Deshidratadora, S.A. de C.V. (IDSA) In Mexico the acquisition of IDSA significantly expands the Group's ingredients offering to convenience segments of the food manufacturing, foodservice and retail sectors. IDSA is the largest producer of convenience blends in Mexico and is also a leading supplier of tomato powders. The acquired business expands Kerry's product offering to include spray-dried fruit preparations for instant beverages, dairy applications, ready-to-eat cereals, cereal bars and mueslis. In addition IDSA has also developed a strong retail branded franchise, including Benedik Coffee and Lautrec coffee creamer. Operating from two manufacturing facilities in San Juan del Rio and Mexico City, the acquisition complements Kerry's business from its existing Irapuato facilities. - Ringger Foods Ringger Foods (USA) is a leader in the development and manufacture of speciality extruded food ingredients, which provide nutritional fortification, texture and flavour, including rice crisps used in granola, cereal and candy applications; cookie pieces for confectionery, granola bars and cereals; and soy crisps containing high protein soya. The acquired business operating from two facilities located in Gridley, Illinois, extends Kerry's market leadership in North American extruded ingredients markets, complementing the Group's acquisition of SPI Foods Inc., acquired in 2001. - Roskam Cereal & Agglomerates In a further development of Kerry's sweet ingredients business in the U.S. market, the Group also concluded the acquisition of the Roskam cereal agglomerates business based in Grand Rapids, Michigan. The business, which is being integrated with the Group's existing sweet ingredients facilities in New Century, Kansas, broadens Kerry's capabilities in cereal and snack growth sectors. - Stearns & Lehman Inc. The acquisition of Stearns & Lehman, a leading manufacturer of coffeehouse chain, foodservice, and branded Italian-style flavoured syrups, beverage flavourings and toppings for the speciality coffee and beverage industries, was also concluded since year-end. The acquired business, which is one of the largest flavouring syrup manufacturers in the world and the leading private label manufacturer of Italian-style syrups in the U.S., Canada, Europe and the Pacific Rim, operates from manufacturing facilities in Mansfield, Ohio; Kent, Washington; and Richmond (B.C.), Canada. (b) Consumer Foods. - Deli Products In Ireland, the acquisition of Deli Products represents a further development in terms of Kerry Foods' targeted servicing of the snack and convenience requirements of the fast-growing foodservice sector including sandwich bars and the hot & cold serve-over counter trade. - Northern Foods (Van Sales Service) Kerry Foods Direct to Store - the leading distributor of chilled snacks to independent retail and convenience stores in the UK, further extended its market positioning through the acquisition of the Pork Farms Bowyers van sales operation from Northern Foods plc. Through this transaction Pork Farms will be the exclusive brand for pastry and fried products to be distributed through the enlarged van sales business. The acquisition further strengthens Kerry Foods' branded leadership in the UK sausage sector through the addition of the Porkinsons brand and the use of the Bowyers brand under licence. Finance _______ Net cash flow from operating activities more than doubled to EUR76.1m, notwithstanding the seasonal increase in working capital. Group borrowings amounted to EUR897.6m compared to EUR658.6m at the end of the first half of 2001 and EUR818.9m at year-end. Accordingly the ratio of debt to EBITDA was similar to the year-end 2001 level at a comfortable 2.5 times, while the level of debt expressed as a percentage of market capitalisation stood at 32% compared to 28% at the end of the first six months of 2001. Interest charges increased to EUR26.7m compared to EUR22.0m for the same period last year, with EBITDA to net interest covered 6.9 times (H1 2001: 6.8 times). Financial Reporting Standard 19 - 'Deferred Tax' (FRS 19) is applicable to the Group for the first time in the period under review. FRS 19 requires deferred tax to be accounted for on a full provision basis on all timing differences that have originated but not reversed by the balance sheet date, except as otherwise required by the standard. Accordingly, results for prior periods have been restated in line with the new standard. In summary, the current taxation charge in each of the three periods under review was approximately 25% of normal trading profits. The FRS19 restatement has had the effect of adding a further 5% charge against profits, but has no cash impact. As announced at year-end, the Board approved an integration and rationalisation plan at a cost of EUR52m for businesses connected with the 2001 acquisitions. This programme is well advanced at a cost in the period of EUR25.5m, of which EUR13.6m relates to cash spent - including redundancy and contract compensation, plant closure and relocation expenses. The programme, which will be substantially completed by year-end, will deliver significant efficiencies with a positive impact on earnings. The basic weighted average number of ordinary shares in issue for the period was 185,184,512 (half year ended 30 June 2001: 172,426,880; year-ended 31 December 2001: 175,674,473). The diluted weighted average number of ordinary shares in issue for the period was 186,439,440 (half year ended 30 June 2001: 173,577,567; year-ended 31 December 2001: 176,870,079). Dividend ________ The Board has declared an interim dividend of 3.65 cent per share, an increase of 12.3% on the 2001 interim dividend of 3.25 cent per share. The interim dividend will be paid on 29 November 2002 to shareholders on the record date 1 November 2002. Current Trading and Outlook ___________________________ Building on the first half performance, the Group is confident of a good outturn for the full year with overall performance in line with market expectations and Group projections. Re-organisation and integration of businesses connected with 2001 acquisitions is progressing very well, with encouraging prospects for new business development. Kerry's focus on sectoral growth opportunities in prepared foods, snack and convenient products, culinary systems, food and beverage flavours, nutritional products and foodservice markets, combined with its broad technology, geographical and customer base, augurs well for the sustained profitable growth of the Group. Kerry Group plc Consolidated Profit and Loss Account for the half year ended 30 June 2002 Half Half Half Half Year Year Year Year Year Ended Ended Ended Ended Ended 30 June 30 June 30 June 30 June 31 Dec. 2002 2002 2002 2001 2001 Unaudited Unaudited Unaudited Unaudited Audited Pre Exceptional Total Restated Restated Exceptional items items EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Turnover Continuing operations 1,799,838 - 1,799,838 1,339,670 3,002,781 _________ _________ _________ _________ _________ Operating profit - continuing operations Before goodwill amortisation and exceptional items 127,963 - 127,963 107,848 260,445 Goodwill amortisation 20,202 - 20,202 8,775 23,367 Exceptional restructuring costs - 25,524 25,524 - 8,097 _______ ________ ______ ______ _______ Operating profit 107,761 (25,524) 82,237 99,073 228,981 Profit on sale of businesses - 1,789 1,789 - 6,205 (Loss) / profit on sale of fixed assets - (31) (31) 876 2,187 Interest payable and similar charges 26,652 - 26,652 21,968 47,644 ______ ________ _______ ______ _______ Profit before taxation 81,109 (23,766) 57,343 77,981 189,729 Taxation - current 19,965 (2,146) 17,819 19,229 47,204 - deferred 3,936 (1,730) 2,206 3,917 9,391 ______ ________ _______ _______ ______ Profit after taxation and attributable to ordinary shareholders 57,208 (19,890) 37,318 54,835 133,134 Dividends 6,802 - 6,802 5,604 18,491 _______ ________ _______ _______ _______ Retained profit for the period 50,406 (19,890) 30,516 49,231 114,643 ======= ======== ======= ======= ======= Earnings per ordinary share (cent) - note 2 - basic before goodwill amortisation and exceptional items 41.8 36.4 87.9 - basic after goodwill amortisation and exceptional items 20.2 31.8 75.8 - fully diluted after goodwill amortisation and exceptional items 20.0 31.6 75.3 Kerry Group plc Consolidated Balance Sheet as at 30 June 2002 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited Restated Restated EUR'000 EUR'000 EUR'000 Fixed assets Tangible assets 844,418 721,248 885,773 Intangible assets 690,074 345,319 685,941 _________ _________ _________ 1,534,492 1,066,567 1,571,714 Current assets Stocks 406,769 329,040 362,173 Debtors 570,101 402,764 515,063 Cash at bank and in hand 30,521 24,802 19,794 _________ _______ _______ 1,007,391 756,606 897,030 Creditors: Amounts falling due within one year (883,191) (740,354) (775,579) _________ _________ _________ Net current assets 124,200 16,252 121,451 ________ _________ _________ Total assets less current liabilities 1,658,692 1,082,819 1,693,165 Creditors: Amounts falling due after more than one year (815,102) (494,560) (857,674) Provisions for liabilities and charges (46,562) (33,665) (41,143) _________ _________ _________ 797,028 554,594 794,348 ========= ========= ========= Capital and reserves Called-up equity share capital 23,180 21,554 23,125 Capital conversion reserve fund 340 340 340 Share premium account 361,333 193,690 357,873 Profit and loss account 378,804 315,709 376,208 _______ _______ _______ 763,657 531,293 757,546 Deferred income 33,371 23,301 36,802 _______ _______ _______ 797,028 554,594 794,348 ======= ======= ======= Kerry Group plc Consolidated Cash Flow Statement for the half year ended 30 June 2002 Half Year Half Year Year Ended Ended Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited EUR'000 EUR'000 EUR'000 Operating profit before goodwill amortisation and exceptional items 127,963 107,848 260,445 Depreciation (net) 45,040 34,699 70,438 Change in working capital (93,399) (114,321) (34,473) Exchange translation adjustment (3,538) 2,115 453 ________ ________ ________ Net cash inflow from operating activities 76,066 30,341 296,863 Return on investments and servicing of finance (25,438) (21,141) (45,732) Taxation (15,941) (17,927) (44,298) Capital expenditure Purchase of tangible fixed assets (48,673) (49,446) (95,647) Proceeds on the sale of fixed assets 69 3,135 5,641 Development grants received 264 - 993 Acquisitions and disposals Purchase of subsidiary undertakings (124,985) (70,264) (599,422) Proceeds on the sale of businesses 34,034 - 22,049 Deferred creditors paid (2,754) (16) (30) Exceptional restructuring costs (13,591) - (8,097) Consideration adjustment on previous acquisitions - - 475 Equity dividends paid (12,513) (10,570) (16,574) ________ ________ ________ Cash outflow before the use of liquid resources and financing (133,462) (135,888) (483,779) Financing Issue of share capital 3,515 40 165,794 Increase in debt due within one year 112,025 177,343 36,590 Increase / (decrease) in debt due after one year 28,649 (44,688) 273,194 _______ _________ ________ Increase / (decrease) in cash in the period 10,727 (3,193) (8,201) ======= ========= ========= Kerry Group plc Reconciliation of Net Cash Flow to Movement in Net Debt for the half year ended 30 June 2002 Half Year Half Year Year Ended Ended Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited EUR'000 EUR'000 EUR'000 Increase / (decrease) in cash in the period 10,727 (3,193) (8,201) Cash flow from debt financing (140,674) (132,655) (309,784) _________ _________ _________ Change in net debt resulting from cash flows (129,947) (135,848) (317,985) Exchange translation adjustment 51,275 (44,386) (22,592) _________ _________ _________ Movement in net debt in the period (78,672) (180,234) (340,577) Net debt at beginning of period (818,924) (478,347) (478,347) _________ _________ _________ Net debt at end of period (897,596) (658,581) (818,924) ========= ========= ========= Kerry Group plc Statement of Total Recognised Gains and Losses for the half year ended 30 June 2002 Half Year Half Year Year Ended Ended Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited Restated Restated EUR'000 EUR'000 EUR'000 Profit attributable to ordinary shareholders 37,318 54,835 133,134 Exchange translation adjustment on foreign currency net investments (27,920) 1,604 (3,309) ________ _______ ________ Total recognised gains and losses relating to the period 9,398 56,439 129,825 ======= ======== Prior year adjustment - deferred tax (36,063) ________ Total gains and losses recognised since last annual report (26,665) ========= Kerry Group plc Reconciliation of Movements in Share Capital and Reserves for the half year ended 30 June 2002 Share Capital Capital Conversion Profit & and Reserve Loss Premium Fund Account Total Restated Restated EUR'000 EUR'000 EUR'000 EUR'000 At beginning of period 380,998 340 412,271 793,609 Prior year adjustment - deferred tax - - (36,063) (36,063) _______ _________ ________ _______ Adjusted opening balance 380,998 340 376,208 757,546 Retained profit - - 30,516 30,516 Share issue 3,515 - - 3,515 Exchange translation adjustment - - (27,920) (27,920) ________ ________ ________ ________ At end of period 384,513 340 378,804 763,657 ======= ======== ======== ======== The Profit & Loss Account figures comprise the following: Intangible Profit & Assets Retained Loss Written Off Profits Account Restated Restated EUR'000 EUR'000 EUR'000 At beginning of period (438,298) 850,569 412,271 Prior year adjustment -deferred tax - (36,063) (36,063) _________ _________ ________ Adjusted opening balance (438,298) 814,506 376,208 Retained profit (20,202) 50,718 30,516 Exchange translation adjustment - (27,920) (27,920) _________ ________ ________ At end of period (458,500) 837,304 378,804 ========= ======== ======== The exchange translation adjustment arises on the retranslation of the Group's opening net investment in its overseas subsidiaries. Kerry Group plc Notes to the Interim Report for the half year ended 30 June 2002 1. Analysis of results by region _____________________________ Half Year Ended Half Year Ended Year Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited Operating Operating Operating Turnover Profit Turnover Profit Turnover Profit EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 By geographical market of origin: Ireland 627,115 26,887 318,525 18,870 883,267 45,075 Rest of Europe 628,318 43,900 568,500 40,396 1,183,774 98,524 Americas 473,514 52,769 388,127 44,697 801,728 105,324 Asia Pacific 70,891 4,407 64,518 3,885 134,012 11,522 _________ _______ __________ _______ _________ _______ 1,799,838 127,963 1,339,670 107,848 3,002,781 260,445 Goodwill amortisation - (20,202) - (8,775) - (23,367) Exceptional restructuring costs - (25,524) - - - (8,097) _________ _______ _________ _______ _________ _______ 1,799,838 82,237 1,339,670 99,073 3,002,781 228,981 ========= ======= ========= ======= ========= ======= Turnover Turnover Turnover EUR'000 EUR'000 EUR'000 By destination: Ireland 322,400 221,655 520,707 Rest of Europe 868,939 634,665 1,422,996 Americas 503,961 402,924 873,436 Asia Pacific 104,538 80,426 185,642 _________ _________ _________ 1,799,838 1,339,670 3,002,781 ========= ========= ========= Turnover and operating profit as presented above, are stated net of intra Group transactions. 2. Earnings per share __________________ Half Year Half Year Year Ended Ended Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited Restated Restated EPS EPS EPS cent EUR'000 cent EUR'000 cent EUR'000 Adjusted earnings before FRS19 * 43.9 81,346 38.7 66,651 94.6 166,260 Deferred tax - FRS19 2.1 3,936 2.3 3,917 6.7 11,789 ____ ______ ____ ______ ____ ______ Adjusted earnings ** 41.8 77,410 36.4 62,734 87.9 154,471 Goodwill amortisation 10.9 20,202 5.1 8,775 13.3 23,367 Exceptional items - (net of tax) 10.7 19,890 (0.5) (876) (1.2) (2,030) ____ ______ _____ ______ _____ _______ Profit after tax, goodwill amortisation and exceptional items 20.2 37,318 31.8 54,835 75.8 133,134 Share option dilution 0.2 - 0.2 - 0.5 - ____ ______ ____ ______ ____ _______ 20.0 37,318 31.6 54,835 75.3 133,134 ==== ====== ==== ====== ==== ======= The basic weighted average number of ordinary shares in issue for the period was 185,184,512 (half year ended 30 June 2001:172,426,880; year ended 31 December 2001: 175,674,473). The diluted weighted average number of ordinary shares in issue for the period was 186,439,440 (half year ended 30 June 2001: 173,577,567; year ended 31 December 2001: 176,870,079). The dilution arises in respect of executive share options outstanding. In addition to the basic and diluted earnings per share two additional earnings per share calculations are provided as they more accurately reflect the Group's underlying trading performance. These are described below: ** Adjusted earnings per share is calculated as profit after tax, before goodwill amortisation and exceptional items divided by the weighted average number of ordinary shares. * Adjusted earnings per share before FRS19 is adjusted earnings as defined above before the adoption of FRS19 (i.e. as previously reported). This measure is given to show the impact of adopting the new deferred tax standard. 3. Exceptional items _________________ Half Year Half Year Year Ended Ended Ended 30 June 2002 30 June 2001 31 Dec. 2001 Unaudited Unaudited Audited Restated EUR'000 EUR'000 EUR'000 Exceptional restructuring costs (25,524) - (8,097) Profit on sale of businesses 1,789 - 6,205 (Loss) / profit on sale of fixed assets (31) 876 2,187 ________ _____ ______ (23,766) 876 295 Taxation effect of exceptional items: - current 2,146 - 275 - deferred 1,730 - 1,460 ________ _____ _______ (19,890) 876 2,030 ======== ===== ======= The exceptional restructuring costs relate to the integration of the Golden Vale Group and the other acquisitions completed by the Group during 2001. These costs can be analysed as follows: EUR'000 Redundancies and contract compensation 14,452 Plant closure / relocation expenses 3,999 Plant and other assets written off 5,901 Other 1,172 ______ 25,524 ====== During the six months ended 30 June 2002 the Group disposed of a number of businesses in Ireland and the UK. These included the Bailieboro and Artigarvan milk processing businesses, which were acquired in 2001 as part of the Golden Vale Group, and the UK Fried Products business based in Poole, UK. 4. Businesses acquired ___________________ The Group completed a number of acquisitions during the period at a total cost of EUR125m. The acquisition of Industrial Deshidratadora S.A. de C.V. (IDSA), which is based in Mexico, was completed in May 2002. The company employs in excess of 250 people and is Mexico's largest producer of convenience blends with a product range including tomato powders, spray-dried fruit preparations for instant beverages and dairy applications. Ringger Foods, a speciality extruded ingredients manufacturer operating from two facilities in Gridley, Illinois was acquired in February 2002. Its principal market is the US and its product range includes rice crisps, cookie pieces and soy crisps. Acquired in April 2002, Roskam, a cereal and agglomerates business based in Grand Rapids, Michigan and employing in excess of 80 people, broadens Kerry's capabilities in cereal and snack growth sectors. Stearns & Lehman Inc., a speciality ingredients company with manufacturing facilities in the US and Canada was acquired in March 2002. The company produces and markets more than 140 syrups, dressings, specialty sugars and toppings and is the leading private label manufacturer of Italian-style syrups in the US, Canada, Europe and the Pacific Rim. Deli Products, a manufacturer and distributor of chilled convenience 'food-to-go' was acquired in January 2002. Based in Dublin, the business services the fast-growing foodservice sector. Northern Foods Van Sales business, which was acquired in March 2002, further strengthens Kerry Foods' branded leadership in the UK convenient foods sector. 5. Accounting policies ___________________ These accounts have been prepared using the same accounting policies detailed in the 2001 annual financial statements with the exception of Financial Reporting Standard 19 - 'Deferred Tax' (FRS19) which is applicable to the Group for the first time in the half year ended 30 June 2002 (see note 6). In adopting FRS19 the Group has chosen to discount deferred tax assets and liabilities. 6. Deferred tax ____________ These accounts reflect the adoption of FRS19 which requires deferred tax to be accounted for on a full provision basis on all timing differences that have originated but not reversed by the balance sheet date, except as otherwise required by the standard. Prior year results have been restated in line with the new standard and the effect on the Group is as follows: Profit after tax for the periods ended 30 June 2001 and 31 December 2001 decreased by EUR3.9m to EUR54.8m and EUR10.3m to EUR133.1m respectively. Net assets for the same periods decreased by EUR30.8m to EUR554.6m and EUR36.1m to EUR794.3m. The restated deferred tax charge in the Profit and Loss Account for the year ended 31 December 2001 is comprised as follows: Year Ended 31 Dec. 2001 Audited Restated EUR'000 EUR'000 As previously reported (938) Prior year adjustment FRS19: - on ordinary activities 11,789 - on exceptional items (1,460) 10,329 _______ ______ 9,391 ====== 7. Interim accounts ________________ These accounts are not full accounts and except where indicated are unaudited. Full accounts to 31 December 2001, which received an unqualified audit report, have been filed with the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange KBEBBQ

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