TIDMKYGA
RNS Number : 9860G
Kerry Group PLC
30 July 2021
Date: 30 July 2021
LEI: 635400TLVVBNXLFHWC59
KERRY GROUP
INTERIM MANAGEMENT REPORT 2021
Strong Growth and Strategic Portfolio Development
Kerry reports business performance for the half year ended 30 June 2021.
OVERVIEW
==================================================================================================================
* Group revenue of EUR3.6 billion reflecting 9.0%
volume growth
- Taste & Nutrition volumes +9.8% (Q2: +18.1%)
- Consumer Foods volumes +4.6% (Q2: +8.5%)
* Pricing of +0.5%
* Group trading margin +70bps
- Taste & Nutrition +80bps
- Consumer Foods +20bps
* Adjusted EPS of 152.0 cent - up 24.1% on a constant
currency basis
* Basic EPS of 128.2 cent (H1 2020: 120.4 cent)
* Free cash flow of EUR222m reflecting 83% cash
conversion
* Interim dividend per share of 28.5 cent (H1 2020:
25.9 cent)
* Guidance updated to reflect business performance and
portfolio development
==================================================================================================================
Edmond Scanlon, Chief Executive Officer
"We are pleased with overall performance in the period, reflecting continued strong growth
in our retail channel, with good progression and momentum in foodservice while lapping lower
prior year levels. The Americas had good overall volume growth, Europe delivered an excellent
relative performance, while growth in APMEA remained strong despite challenging conditions
in some local markets. A number of our end use markets had strong category development in the
period, with Beverage in particular achieving excellent growth.
We had some notable strategic developments this year as we continued to evolve our portfolio.
We announced the acquisition of Niacet, which enhances our leadership position in the fast
growing food protection and preservation market, while we also reached agreement for the sale
of our Consumer Foods' Meats and Meals business. These transactions will further enhance Kerry's
position as a market-leading taste & nutrition company.
Our performance through the period gives us continued confidence in our full year outlook,
while recognising the inherent uncertainty that will remain in many regions through the remainder
of the year. Our earnings guidance range has been updated as a result, and we have also reflected
the expected impact from portfolio developments."
Markets and Performance
Overall conditions improved in many developed markets, with increased economic activity, reopening
levels and consumer confidence, while developing markets saw a lot more variability through
the period. At-home consumption remains elevated as work practices and consumers' daily routines
continue to evolve, with the foodservice channel continuing its trajectory of gradual overall
recovery.
Our markets remain highly dynamic, as customers seek to address heightened consumer demands
for increased health and wellness benefits, plant protein options, digital engagement, and
products addressing a number of sustainability measures.
Group reported revenue in the period increased by 4.9% to EUR3.6 billion, reflecting a volume
increase of 9.0%, increased pricing of 0.5%, an adverse transaction currency impact of 0.1%,
an adverse translation currency impact of 5.4%, and contribution from acquisitions of 0.9%.
Group reported trading profit increased by 13.0% to EUR357 million in the period. Group trading
profit margin increased by 70bps to 10.0% primarily due to the recovery of operating leverage
given the impact of COVID-19 in the prior year.
Constant currency adjusted earnings per share increased by 24.1% to 152.0 cent (H1 2020: -19.8%).
Basic earnings per share increased to 128.2 cent (H1 2020: 120.4 cent).
The interim dividend of 28.5 cent per share reflects an increase of 10.0% from the prior year
interim dividend. The Group achieved free cash flow of EUR222m (H1 2020: EUR107m) representing
cash conversion of 83% in the period.
Strategic Portfolio Developments
The Group announced a number of important strategic developments in the period, with acquisitions
aligned to the key strategic growth areas of food protection and preservation as well as proactive
health.
As previously announced, we reached agreement to acquire Niacet, which is a global market leader
in technologies for food protection and preservation. It brings a complementary product portfolio
and enhances Kerry's leadership position in this fast growing market. It is expected to complete
at the end of the third quarter for a consideration of EUR853m(1) subject to customary closing
conditions. The bolt-on acquisition of National Vinegar Co. was completed in the period for
a consideration of EUR25m, adding further capacity and supporting the Group's growth strategy
in natural preservation.
We announced the acquisition of Biosearch, S.A., which is a leading biotechnology company based
in Spain. The company provides innovative solutions to the global pharmaceutical, nutraceutical
and functional food sectors, with an extensive range of probiotics, scientifically backed innovative
botanical extracts and omega-3 oils. The acquisition completed in July for a total consideration
of EUR127m. Supporting the Group's proactive health strategy, agreement was also reached for
the acquisition of Natreon, Inc. with facilities in the USA and India for a consideration of
EUR42m(2). This brings leading capability in Ayurvedic and botanical extracts, with a portfolio
of clinically backed branded ingredients for stress and sleep under the need state of cognition
as well as heart and joint health under healthy ageing.
As previously announced, the Group reached agreement for the disposal of its Consumer Foods'
Meats and Meals business to Pilgrim's Pride Corporation. Cash consideration for the transaction
is EUR819m(3) and the disposal is expected to close in the final quarter subject to customary
closing conditions and regulatory approvals.
(1) As previously announced EUR853m is based on a cash consideration of $1,015m at an exchange
rate on 21 June of $1.19: EUR1 (2) EUR42m is based on a cash consideration of $50m at an exchange
rate of $1.18: EUR1 and is subject to routine closing conditions (3) EUR819m is based on a
cash consideration of GBP704m at an exchange rate on 17 June of GBP0.86: EUR1
Business Reviews
Taste & Nutrition
Strong growth in retail channel, with good progression and activity across the foodservice
channel
H1 2021 Growth
Revenue EUR2,939m +9.8%(1)
Trading margin 12.4% +80bps
============================================================= ========== =======================================
(1) volume growth
* Exceptional volume growth in Q2 of 18.1% reflected
lower prior year comparatives and good underlying
growth
* Foodservice volume growth of 25.2% with significantly
improved channel dynamics
* Retail volume growth of 5.4% led by Beverage and Food
EUMs (particularly Snacks and Dairy)
* Pricing of 0.5% reflecting increases in input costs
* Trading margin increase driven principally by
significant operating leverage recovery
Taste & Nutrition continued its positive momentum through the period. The foodservice channel
saw improved market conditions with further reopening of operations in many regions and increased
customer innovation activity particularly in the second quarter. The retail channel continued
to deliver strong growth, supported by an increased level of local innovation, with a number
of launches incorporating our proactive nutrition portfolio and Radicle(TM) plant-based range,
while supporting customers to deliver on their sustainability initiatives. Business volumes
in developing markets increased by 15.3% with strong growth across all regions.
Americas Region
* Overall volume performance of 8.1% with strong growth
in Q2
* Retail channel delivered strong growth led by
Beverage, Snacks and Bakery
* Foodservice channel continued to achieve good
momentum and innovation activity
Revenue in the region was EUR1,542m reflecting business volume growth, positive pricing and
contribution from acquisitions, more than offset by adverse foreign currency translation, resulting
in an overall reported revenue decrease of 0.3%.
The North American retail channel achieved excellent growth in the Beverage EUM with increased
demand for proactive nutrition, new innovations with taste systems and natural extracts, and
a number of launches in plant-based beverages. Within the Food EUM, Snacks performed very well
supported by new launches in healthier snacking. Within Meat, Kerry's food protection and preservation
solutions performed well and there was strong business development in plant-based alternatives.
Performance in Cereals was impacted by product repositioning in the category, while Bakery
delivered good growth through taste systems and cleaner label solutions.
Performance in the foodservice channel reflected the impact of lower prior year comparatives,
the easing of restrictions and increased innovation activity. The reopening of operations within
the foodservice channel resulted in increased activity across quick service restaurants, fast
casual and casual dining as we moved through the period. Labour shortages and wage inflation
pressures led to a heightened focus on customer innovations to reduce complexity in back of
house operations. While we have continued to make progress, we experienced delays in the commissioning
of our new manufacturing facility in Rome, Georgia primarily as a result of equipment delays
caused by global supply chain disruption.
In LATAM, Brazil achieved strong growth driven by performance in Beverage and ice cream. Mexico
delivered good growth led by Snack applications while performance in CACAR improved later in
the period. A new Taste facility was opened in Irapuato, Mexico to enhance the Group's capabilities
in servicing local markets.
The global Pharma EUM delivered solid growth led by the performance of cell nutrition and Kerry's
Wellmune(R) immunity enhancing technology.
Europe Region
* Overall volume growth of 10.7%, with a particularly
strong performance in Q2
* Retail channel delivered very good growth led by Meat,
Dairy and Snacks
* Foodservice channel performance improved
significantly with the easing of restrictions through
the second quarter
Revenue in the region was EUR722m reflecting business volume growth and positive pricing, partially
offset by an adverse impact from transaction and translation currency, resulting in a reported
revenue increase of 9.9%.
Overall performance in the retail channel was particularly strong in the second quarter, with
very good growth across a number of end use markets. Within the Food EUM, Meat achieved excellent
growth through a number of plant-based meat alternative innovations, launches with natural
preservation and increased demand for healthier coating systems. Dairy delivered strong growth
through taste solutions into new launches in premium and dairy-free ice cream ranges, while
international dairy markets were impacted by increased demand versus supply dynamics. Snacks
also performed well with good growth in savoury taste solutions. Within the Beverage EUM, there
was very good growth with low/non-alcoholic beverages incorporating Kerry's botanicals, natural
extracts and sugar reduction technologies.
The foodservice channel saw improved performance with the easing of restrictions in many regions
through the second quarter, most notably in the UK, Southern and Eastern Europe. The exceptionally
strong volume growth in foodservice in the second quarter reflected significantly lower prior
year comparatives, when the region was most impacted by lockdowns and restrictions on movement.
Russia and Eastern Europe continued to deliver excellent growth across both retail and foodservice
channels, led by Snacks and Meat.
APMEA Region
* Overall volume growth of 14.0% across the period
* Retail channel delivered strong growth led by
Beverage, Dairy and Meat
* Foodservice channel performance improved
significantly led by growth in China, the Middle East
and Australia
Revenue in the region was EUR646m reflecting business volume growth, positive pricing and contribution
from acquisitions, partially offset by an adverse impact from transaction and translation currency,
resulting in a reported revenue increase of 14.0%.
Market conditions varied during the period with localised restrictions in place in many jurisdictions.
Within the region there were some notable performances, with China delivering excellent growth
across both channels, the Middle East and Australia performing particularly well in the foodservice
channel, while South East Asia and Japan continued to be impacted by restrictions on mobility.
In the retail channel, excellent growth was achieved within the Beverage EUM across tea, coffee
and refreshing beverage. Within the Food EUM, Dairy delivered strong growth through a number
of launches with regional leaders, while Meat performed very well with increased demand for
local authentic taste offerings. Overall growth in the foodservice channel was broad-based
across the region following the lower prior year comparatives and primarily led by Beverage
and Meals.
The Group made good progress in the development of its new Taste facility in Durban in the
period. The construction of a new Taste manufacturing facility in Indonesia was also announced,
catering for a wide range of technologies. This facility will include a new RD&A centre and
is expected to be operational by the end of 2022.
Consumer Foods
Strong volume growth particularly in the second quarter
H1 2021 Growth
Revenue EUR674m +4.6%(1)
Trading margin 7.2% +20bps
(1) volume growth
* Volume growth of 4.6% - led by snacking, meat-free
ranges and chilled ready meals
* Pricing of 0.4% reflecting increases in input costs
and market pricing
* Trading margin +20bps primarily due to operating
leverage
Revenue in the division was EUR674m reflecting business volume growth and positive pricing,
partially offset by an adverse impact from transaction and translation currency, resulting
in a reported revenue increase of 4.3%.
The Richmond sausage range delivered very good growth in the period, with meat-free offerings
continuing to drive further market share gains supported by strong innovation and new launch
activity. The Denny brand performed well, while reduced retailer deli counter operations impacted
sales of sliced cooked meats. Performance of Dairygold and spreadable butter was lower reflecting
the lapping of strong prior year comparatives.
Chilled meals achieved strong growth, while frozen meals sales improved through the period
after being initially impacted by increased customer stocking at the end of the previous year.
The snacking range delivered strong growth primarily through Fridge Raiders, while the Strings
& Things range, led by Cheestrings achieved very good growth with the reopening of schools
at the end of the first quarter. The Oakhouse Foods home delivery business continued to perform
very well across the period.
Financial Review
H1 2021 H1 2020
Growth EUR'm EUR'm
Revenue +4.9% 3,582.1 3,414.0
Trading profit +13.0% 357.1 315.9
Trading margin 10.0% 9.3%
Computer software amortisation (16.8) (13.1)
Finance costs (net) (34.2) (37.3)
---------------------------------------------------------------------------- --------- ------------ -----------
Adjusted earnings before taxation 306.1 265.5
Income taxes (excluding non-trading items) (36.9) (31.8)
---------------------------------------------------------------------------- --------- ------------ -----------
Adjusted earnings after taxation +15.2% 269.2 233.7
Brand related intangible asset amortisation (22.4) (20.6)
Non-trading items (net of related tax) (19.8) -
---------------------------------------------------------------------------- --------- ------------ -----------
Profit after taxation 227.0 213.1
---------------------------------------------------------------------------- --------- ------------ -----------
EPS EPS
cent cent
Basic EPS +6.5% 128.2 120.4
Brand related intangible asset amortisation 12.6 11.7
Non-trading items (net of related tax) 11.2 -
---------------------------------------------------------------------------- --------- ------------ -----------
Adjusted* EPS +15.1% 152.0 132.1
Impact of exchange rate translation +9.0%
---------------------------------------------------------------------------- --------- ------------ -----------
Adjusted* EPS growth in constant currency +24.1% (19.8%)
---------------------------------------------------------------------------- --------- ------------ -----------
*Before brand related intangible asset amortisation and non-trading items (net of related tax).
See Financial Definitions section for definitions, calculations and reconciliations of Alternative
Performance Measures.
Revenue
On a reported basis, Group revenue increased by 4.9% to EUR3.6 billion (H1 2020: EUR3.4 billion),
including a volume increase of 9.0% against lower year comparatives due to the impact of COVID-19,
positive pricing of 0.5%, adverse transaction and translation currency impacts of 0.1% and
5.4% respectively, and contribution from business acquisitions of 0.9%.
H1 2020: Group reported revenue (4.3%), volume (6.0%), pricing +0.4%, translation currency
+0.1%, acquisitions +1.2%.
In Taste & Nutrition, reported revenue increased by 5.0% to EUR2.9 billion (H1 2020: EUR2.8
billion), including a volume increase of 9.8% , positive pricing of 0.5% , adverse transaction
and translation currency impacts of 0.1% and 6.3% respectively, and contribution from business
acquisitions of 1.1% .
H1 2020: Taste & Nutrition reported revenue (4.0%), volume (5.6%), pricing +0.1%, translation
currency +0.1%, acquisitions +1.4%.
In Consumer Foods, reported revenue increased by 4.3% to EUR674m (H1 2020: EUR647m), including
a volume increase of 4.6%, positive pricing of 0.4%, and adverse transaction and translation
currency impacts of 0.2% and 0.5% respectively.
H1 2020: Consumer Foods reported revenue (6.2%), volume (7.8%), pricing +1.7%, transaction
currency (0.1%).
Trading Profit & Margin
Group trading profit increased by 13.0% to EUR357.1m (H1 2020: EUR315.9m).
Group trading profit margin increased by 70bps to 10.0% in the period, reflecting significant
operating leverage given the impact of COVID-19 in the prior year, partially offset by translation
currency headwinds and net KerryExcel investments.
Trading profit margin in Taste & Nutrition increased by 80bps to 12.4% and in Consumer Foods
by 20bps to 7.2%, both driven primarily by operating leverage.
Finance Costs (net)
Finance costs (net) for the period decreased to EUR34.2m (H1 2020: EUR37.3m) primarily due
to lower interest rates.
Taxation
The tax charge for the period before non-trading items was EUR36.9m (H1 2020: EUR31.8m) which
represents an effective tax rate of 13.0% (H1 2020: 13.0%).
Acquisitions
During the period, the Group completed the acquisition of National Vinegar Co. by way of an
asset purchase agreement for a consideration of EUR24.6m .
Non-Trading Items
The Group incurred a non-trading item charge of EUR19.8m (H1 2020: EURnil) net of tax in the
period. This primarily related to the previously announced expansion of Kerry's Global Business
Services model.
Adjusted EPS in Constant Currency
Adjusted EPS in constant currency increased by 24.1% in the period reflecting good underlying
performance against lower prior year comparatives and before a significant foreign currency
translation headwind (H1 2020: -19.8%).
Basic EPS
Basic EPS increased by 6.5% to 128.2 cent in the period (H1 2020: 120.4 cent).
Free Cash Flow
The Group achieved free cash flow of EUR222.3m (H1 2020: EUR107.0m), reflecting 83% cash conversion
in the period. Cash flow and conversion were impacted in the prior period due to COVID-19.
H1 2021 H1 2020
Free Cash Flow EUR'm EUR'm
Trading profit 357.1 315.9
Depreciation (net) 100.8 101.2
Movement in average working capital (27.5) (116.4)
Pension contributions paid less pension expense (6.0) (3.8)
Cash flow from operations 424.4 296.9
Finance costs paid (net) (21.5) (25.1)
Income taxes paid (32.1) (35.7)
Purchase of non-current assets (148.5) (129.1)
Free cash flow 222.3 107.0
Cash conversion(1) 83% 46%
(1) Cash conversion is free cash flow expressed as a percentage
of adjusted earnings after taxation.
Balance Sheet
A summary balance sheet as at 30 June 2021 is provided below:
H1 2021 H1 2020 FY 2020
EUR'm EUR'm EUR'm
Property, plant and equipment 1,918.8 2,017.2 1,990.6
Intangible assets 4,443.8 4,564.1 4,687.1
Other non-current assets 213.7 202.2 170.6
Current assets 3,227.0 2,991.7 2,594.8
Total assets 9,803.3 9,775.2 9,443.1
Current liabilities 1,918.7 1,812.5 1,696.3
Non-current liabilities 2,921.5 3,454.2 3,091.3
Total liabilities 4,840.2 5,266.7 4,787.6
Net assets 4,963.1 4,508.5 4,655.5
Shareholders' equity 4,963.1 4,508.5 4,655.5
Property, Plant and Equipment
Property, plant and equipment decreased by EUR71.8m to EUR1,918.8m (Dec 2020: EUR1,990.6m,
H1 2020: EUR2,017.2m) due to the depreciation charge and reclassification of assets to held
for sale, partially offset by foreign exchange translation and additions.
Intangible Assets
Intangible assets decreased by EUR243.3m to EUR4,443.8m (Dec 2020: EUR4,687.1m, H1 2020: EUR4,564.1m)
predominantly due to the reclassification of assets to held for sale and the amortisation
charge, partially offset by the impact of foreign exchange translation and the acquisition
in the period.
Current Assets
Current assets increased by EUR632.2m to EUR3,227.0m (Dec 2020: EUR2,594.8m, H1 2020: EUR2,991.7m),
primarily due to assets classified as held for sale of EUR523.4m (Dec 2020: EURnil, H1 2020:
EURnil) and the impact of foreign exchange translation on these assets.
Included in assets held for sale is Kerry's Consumer Foods Meats & Meals business, which the
Group reached agreement to sell to Pilgrim's Pride Corporation on 17 June 2021.
Retirement Benefits
At the balance sheet date, the net surplus for all defined benefit schemes (after deferred
tax) was EUR43.2m (Dec 2020: EUR43.6m net deficit, H1 2020: EUR78.8m net deficit), see note
8 for details. The improvement in the funding position was driven predominantly by both an
increase in scheme assets and favourable movements in actuarial assumptions. The main drivers
behind the net surplus are an increase in assets driven largely by equity returns and a reduction
in liabilities driven by higher discount rates, which has been partially offset by higher
inflation.
Total Net Debt
At 30 June 2021, total net debt was EUR1,980.6m . This increase of EUR35.5m relative to December
2020 total net debt of EUR1,945.1m reflected acquisition investment and dividends, partially
offset by cash generated in the period.
Return on Average Capital Employed (ROACE)
The Group achieved ROACE of 10.0% (Dec 2020: 9.8%, H1 2020: 10.5%) reflective of the increase
in profits in the period and the movement in average capital employed.
Liquidity Analysis
The Group's balance sheet is in a strong position. With a Net debt to EBITDA* ratio of 1.9
times, the Group has sufficient headroom to support future growth plans. During the period
the Group repaid US$200m of outstanding private placement notes. Following this repayment,
the Group now has no financial arrangements that carry financial covenants.
H1 2021 H1 2020 FY 2020
Times Times Times
Net debt: EBITDA* 1.9 2.0 1.9
EBITDA: Net interest* 14.6 12.8 13.8
*Calculated on a pro-forma basis as outlined in Financial
Definitions section.
Related Party Transactions
There were no changes in related party transactions from the 2020 Annual Report that could
have a material effect on the financial position or performance of the Group in the first
half of the year.
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 period end.
Average Rates Closing Rates
H1 2021 H1 2020 H1 2021 H1 2020 FY 2020
Australian Dollar 1.56 1.68 1.58 1.63 1.59
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Brazilian Real 6.51 5.15 5.91 5.92 6.38
--------------------------------------- ------------- ------------- ------------- ------------- -------------
British Pound Sterling 0.87 0.87 0.86 0.90 0.90
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Chinese Yu an Renminbi 7.85 7.74 7.72 7.93 8.03
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Malaysian Ringgit 4.94 4.65 4.97 4.80 4.92
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Mexican Peso 24.31 23.49 24.17 25.40 24.46
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Russian Ruble 90.16 74.82 86.71 77.76 90.68
--------------------------------------- ------------- ------------- ------------- ------------- -------------
South African Rand 17.60 17.98 16.98 19.58 18.02
--------------------------------------- ------------- ------------- ------------- ------------- -------------
US Dollar 1.21 1.10 1.19 1.12 1.23
--------------------------------------- ------------- ------------- ------------- ------------- -------------
Principal Risks and Uncertainties
Details of the principal risks and uncertainties facing the Group can be found in the 2020
Annual Report on pages 76 to 82 and continue to be the principal risks and uncertainties facing
the Group for the remaining six months of the financial year. These risks include but are
not limited to; portfolio management, geopolitical/developing markets, business acquisition
and divestiture, sustainability/environmental, talent management, food safety, quality & regulations,
health & safety, margin management, information security & cybercrime, operational and supply
chain continuity, taxation, intellectual property management, and treasury. The Group continues
to manage the heightened interdependency on these risks as a result of the continuance of
the COVID-19 pandemic. Global supply chains have been challenged as a result of COVID-19,
Brexit, and other significant global disruptions. The Group actively manages all risks through
its control and risk management process.
Dividend
In line with our dividend strategy, the Board has proposed an interim dividend of 28.5 cent
per share, compared to the prior year interim dividend of 25.9 cent, payable on 12 November
2021 to shareholders registered on the record date 15 October 2021.
Future Prospects
Within Taste & Nutrition, we see strong growth prospects in the retail channel, with continued
recovery in foodservice, underpinned by a very good innovation pipeline and strong customer
engagement. Our Consumer Foods business has a good growth outlook supported by innovation
and the strength of our brands.
We will continue to invest for growth and the enablement of our business model, while pursuing
M&A opportunities aligned to our strategic growth priorities.
While recognising the inherent uncertainty that will remain in many regions through the remainder
of the year, the Group expects to deliver strong volume growth and we have updated our earnings
guidance to reflect our continued confidence and the effect from the strategic portfolio developments
as shown in the table below.
FY 2021 Guidance Range
Constant Currency Adjusted EPS guidance - before estimated impact of transactions +12% to 15%
Estimated contribution from Niacet acquisition(1) c. +1%
Estimated dilution from Consumer Foods Meats & Meals disposal(2) c. -3%
Constant Currency Adjusted EPS guidance - post estimated impact of transactions +10% to 13%
(1) Assuming transaction completes as anticipated at the end of Q3 2021
(2) Assuming transaction completes as anticipated at the beginning of Q4
2021
Note: The effect of translation currency at prevailing rates is expected
to be a 2-3% headwind in FY2021
Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report in accordance
with the Transparency (Directive 2004/109/EC) Regulations 2007 of Ireland (S.I. No. 277 of
2007) ('the Regulations'), the Transparency Rules of the Central Bank of Ireland and with
IAS 34 'Interim Financial Reporting' as adopted by the European Union.
The Directors confirm that to the best of their knowledge:
* the Group Condensed Consolidated Interim Financial
Statements for the half year ended 30 June 2021 have
been prepared in accordance with the international
accounting standard applicable to interim financial
reporting adopted pursuant to the procedure provided
for under Article 6 of the Regulation (EC) No.
1606/2002 of the European Parliament and of the
Council of 19 July 2002;
* the Interim Management Report includes a fair review
of the important events that have occurred during the
first six months of the financial year, and their
impact on the Group Condensed Consolidated Interim
Financial Statements for the half year ended 30 June
2021, and a description of the principal risks and
uncertainties for the remaining six months; and
* the Interim Management Report includes a fair review
of the related party transactions that have occurred
during the first six months of the current financial
year and that have materially affected the financial
position or the performance of the Group during that
period, and any changes in the related parties'
transactions described in the last Annual Report that
could have a material effect on the financial
position or performance of the Group in the first six
months of the current financial year.
On behalf of the Board
Edmond Scanlon Marguerite Larkin
Chief Executive Officer Chief Financial
Officer
29 July 2021
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.
CONTACT INFORMATION
=============================================
Investor Relations
Marguerite Larkin , Chief Financial
Officer
+353 66 7182292 | investorrelations@kerry.ie
William Lynch , Head of Investor
Relations
+353 66 7182292 | investorrelations@kerry.ie
Media
Catherine Keogh , Chief Corporate
Affairs & Brand Officer
+353 45 930188 | corpaffairs@kerry.com
Website
www.kerrygroup.com
RESULTS FOR THE HALF YEARED 30 JUNE 2021
Kerry Group plc
Condensed Consolidated Income Statement
for the half year ended 30 June 2021
Before
Non-Trading Non-Trading Half year Half year Year
Items Items ended ended ended
30 June 30 June 30 June 2021 30 June 31 Dec.
2021 2021 Unaudited 2020 2020
Notes Unaudited Unaudited EUR'm Unaudited Audited
EUR'm EUR'm EUR'm EUR'm
Continuing operations
Revenue 2 3,582.1 - 3,582.1 3,414.0 6,953.4
Trading profit 2 357.1 - 357.1 315.9 797.2
Intangible asset
amortisation (39.2) - (39.2) (33.7) (70.1)
Non-trading items 3 - (20.8) (20.8) - (19.4)
Operating profit 317.9 (20.8) 297.1 282.2 707.7
Finance income 4 0.1 - 0.1 0.1 0.2
Finance costs 4 (34.3) - (34.3) (37.4) (72.6)
Profit before taxation 283.7 (20.8) 262.9 244.9 635.3
Income taxes (36.9) 1.0 (35.9) (31.8) (81.2)
Profit after taxation attributable
to owners of
the parent 246.8 (19.8) 227.0 213.1 554.1
Earnings per A Cent Cent Cent
ordinary
share
- basic 5 128.2 120.4 313.0
- diluted 5 128.0 120.3 312.5
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2021
Half year Half year Year
ended ended ended
30 June 2021 30 June 31 Dec.
Unaudited 2020 2020
EUR'm Unaudited Audited
EUR'm EUR'm
Profit after taxation attributable to owners of
the parent 227.0 213.1 554.1
Other comprehensive income:
Items that are or may be reclassified
subsequently to profit
or loss:
Fair value movements on cash flow hedges (0.7) 18.1 7.9
Cash flow hedges - reclassified to profit or loss
from
equity (1.1) (5.2) 2.9
Net change in cost of hedging 0.3 0.1 (0.9)
Deferred tax effect of fair value movements on
cash flow
hedges - (1.7) (2.0)
Exchange difference on translation of foreign
operations 98.7 (116.4) (282.3)
Fair value movement on revaluation of financial
assets
held at fair value through other comprehensive
income - (1.3) (1.3)
Disposal of financial assets fair value movement
reclassified
to profit or loss - - 0.7
Items that will not be reclassified subsequently
to profit
or loss:
Re-measurement on retirement benefits 101.6 (87.9) (67.0)
Deferred tax effect of re-measurement on
retirement benefits (19.1) 17.3 11.8
Net income/(expense) recognised directly in total
other
comprehensive income 179.7 (177.0) (330.2)
Total comprehensive income 406.7 36.1 223.9
Condensed Consolidated Balance Sheet
as at 30 June 2021
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Non-current assets
Property, plant and equipment 1,918.8 2,017.2 1,990.6
Intangible assets 4,443.8 4,564.1 4,687.1
Financial asset investments 45.9 39.8 37.0
Investment in joint ventures 18.6 16.9 17.8
Other non-current financial instruments 37.6 105.9 82.0
Deferred tax assets 35.8 39.6 33.8
Retirement benefit assets 8 75.8 - -
6,576.3 6,783.5 6,848.3
Current assets
Inventories 1,117.6 1,093.4 975.6
Trade and other receivables 1,182.8 1,140.5 1,042.0
Cash at bank and in hand 9 395.0 736.1 563.1
Other current financial instruments 8.2 21.7 14.1
Assets classified as held for sale 7 523.4 - -
3,227.0 2,991.7 2,594.8
Total assets 9,803.3 9,775.2 9,443.1
Current liabilities
Trade and other payables 1,731.9 1,640.8 1,543.3
Borrowings and overdrafts 9 3.3 4.6 2.8
Other current financial instruments 17.8 9.5 10.0
Tax liabilities 133.6 128.7 132.6
Provisions 7.7 26.5 5.2
Deferred income 2.2 2.4 2.4
Liabilities directly associated with assets classified
as held for sale 7 22.2 - -
1,918.7 1,812.5 1,696.3
Non-current liabilities
Borrowings 9 2,342.3 2,833.8 2,505.8
Other non-current financial instruments - - 0.5
Retirement benefit obligations 8 24.5 98.3 54.4
Other non-current liabilities 128.4 147.0 144.9
Deferred tax liabilities 360.6 322.8 330.2
Provisions 47.0 32.6 36.1
Deferred income 18.7 19.7 19.4
2,921.5 3,454.2 3,091.3
Total liabilities 4,840.2 5,266.7 4,787.6
Net assets 4,963.1 4,508.5 4,655.5
Issued capital and reserves attributable to owners of
the parent
Share capital 11 22.1 22.1 22.1
Share premium 398.7 398.7 398.7
Other reserves (274.3) (216.2) (379.5)
Retained earnings 4,816.6 4,303.9 4,614.2
Shareholders' equity 4,963.1 4,508.5 4,655.5
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2021
Share Share Other Retained
Capital Premium Reserves Earnings Total
Note EUR'm EUR'm EUR'm EUR'm EUR'm
At 1 January 2020 22.1 398.7 (119.0) 4,260.4 4,562.2
Profit after taxation attributable to owners
of the parent - - - 213.1 213.1
Other comprehensive expense - - (104.7) (72.3) (177.0)
Total comprehensive (expense)/income - - (104.7) 140.8 36.1
Dividends paid 6 - - - (97.3) (97.3)
Share-based payment expense - - 7.5 - 7.5
At 30 June 2020 - unaudited 22.1 398.7 (216.2) 4,303.9 4,508.5
Profit after taxation attributable to owners
of the parent - - - 341.0 341.0
Other comprehensive (expense)/income - - (168.3) 15.1 (153.2)
Total comprehensive (expense)/income - - (168.3) 356.1 187.8
Dividends paid 6 - - - (45.8) (45.8)
Share-based payment expense - - 5.0 - 5.0
At 31 December 2020 - audited 22.1 398.7 (379.5) 4,614.2 4,655.5
Profit after taxation attributable to owners
of the parent - - - 227.0 227.0
Other comprehensive income - - 97.2 82.5 179.7
Total comprehensive income - - 97.2 309.5 406.7
Dividends paid 6 - - - (107.1) (107.1)
Share-based payment expense - - 8.0 - 8.0
At 30 June 2021 - unaudited 22.1 398.7 (274.3) 4,816.6 4,963.1
Other Reserves
comprise
the following:
Share- Cost
Capital Other Based of
FVOCI Redemption Undenominated Payment Translation Hedging Hedging
Reserve Reserve Capital Reserve Reserve Reserve Reserve Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
At 1 January 2020 0.6 1.7 0.3 77.7 (189.7) (8.2) (1.4) (119.0)
Other
comprehensive
(expense)/income (1.3) - - - (116.4) 12.9 0.1 (104.7)
Share-based
payment expense - - - 7.5 - - - 7.5
At 30 June 2020 -
unaudited (0.7) 1.7 0.3 85.2 (306.1) 4.7 (1.3) (216.2)
Other
comprehensive
income/(expense) 0.7 - - - (165.9) (2.1) (1.0) (168.3)
Share-based
payment expense - - - 5.0 - - - 5.0
At 31 December
2020 - audited - 1.7 0.3 90.2 (472.0) 2.6 (2.3) (379.5)
Other
comprehensive
income/(expense) - - - - 98.7 (1.8) 0.3 97.2
Share-based
payment expense - - - 8.0 - - - 8.0
At 30 June 2021 -
unaudited - 1.7 0.3 98.2 (373.3) 0.8 (2.0) (274.3)
Condensed Consolidated Statement of Cash Flows
for the half year ended 30 June 2021
Half year Year
Half year ended ended
ended 30 June 31 Dec.
30 June 2021 2020 2020
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Operating activities
Trading profit 357.1 315.9 797.2
Adjustments for:
Depreciation (net) 100.8 101.2 200.7
Change in working capital (143.6) (197.9) (108.7)
Pension contributions paid less pension expense (6.0) (3.8) (23.4)
Payments on non-trading items (7.2) (25.3) (39.7)
Exchange translation adjustment 0.4 2.2 (4.6)
Cash generated from operations 301.5 192.3 821.5
Income taxes paid (32.1) (35.7) (74.7)
Finance income received 0.1 0.1 0.2
Finance costs paid (21.6) (25.2) (74.8)
Net cash from operating activities 247.9 131.5 672.2
Investing activities
Purchase of assets (net) (136.3) (111.4) (276.2)
Proceeds from the sale of assets 3.6 - 7.7
Capital grants received - - 0.1
Purchase of businesses (net of cash acquired) 10 (24.6) (30.8) (251.1)
Purchase of investments (4.2) - -
Payments relating to previous acquisitions (10.8) (3.8) (7.5)
Income received from joint ventures - 0.7 -
Net cash used in investing activities (172.3) (145.3) (527.0)
Financing activities
Dividends paid 6 (107.1) (97.3) (143.1)
Payment of lease liabilities (15.8) (17.7) (37.0)
Issue of share capital 11 - - -
Repayment of borrowings (net of swaps) (134.4) (141.2) (391.1)
Increase in borrowings - 463.6 462.9
Net cash movement due to financing activities (257.3) 207.4 (108.3)
Net (decrease)/increase in cash and cash
equivalents (181.7) 193.6 36.9
Cash and cash equivalents at beginning of the
period 560.3 549.7 549.7
Exchange translation adjustment on cash and cash
equivalents 13.1 (11.8) (26.3)
Cash and cash equivalents at end of the period 9 391.7 731.5 560.3
Reconciliation of Net Cash Flow to Movement in Net
Debt
Net (decrease)/increase in cash and cash
equivalents (181.7) 193.6 36.9
Cash flow from debt financing 134.4 (322.4) (71.8)
Changes in net debt resulting from cash flows (47.3) (128.8) (34.9)
Fair value movement on interest rate swaps (net of
adjustment
to borrowings) 0.9 8.2 7.6
Exchange translation adjustment on net debt (3.0) (13.0) 26.5
Movement in net debt in the period (49.4) (133.6) (0.8)
Net debt at beginning of the period (1,863.6) (1,862.8) (1,862.8)
Net debt at end of the period - pre lease
liabilities (1,913.0) (1,996.4) (1,863.6)
Lease liabilities (67.6) (88.6) (81.5)
Total net debt* at end of the period 9 (1,980.6) (2,085.0) (1,945.1)
* Prior period, 30 June 2020, has been
re-presented
to include lease liabilities in total net debt.
Notes to the Condensed Consolidated Interim
Financial
Statements
for the half year ended 30 June 2021
1. Accounting policies
These Condensed Consolidated Interim Financial Statements for the half year ended 30 June 2021
have been prepared in accordance with the requirements of IAS 34 'Interim Financial Reporting'
and using accounting policies consistent with International Financial Reporting Standards as
adopted by the European Union. The accounting policies applied by the Group in these Condensed
Consolidated Interim Financial Statements are the same as those detailed in the 2020 Annual
Report except for a new accounting policy in respect of 'Assets classified as held for sale'
for the half year ended 30 June 2021 outlined below.
Assets classified as held for sale
Assets are classified as held for sale if their carrying value will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met if, at the
financial period end, the sale is highly probable, the asset is available for immediate sale
in its present condition, management is committed to the sale and the sale is expected to be
completed within one year from the date of classification.
Assets classified as held for sale are measured at the lower of carrying value and fair value
less costs to sell.
Critical accounting estimates and judgements
The preparation of the Group Condensed Consolidated Interim Financial Statements requires management
to make certain estimations, assumptions and judgements that affect the reported profits, assets
and liabilities. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes
in accounting estimates may be necessary if there are changes in the circumstances on which
the estimate was based or as a result of new information or more experience. Such changes are
recognised in the period in which the estimate is revised.
In preparing the Group Condensed Consolidated Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those applied to the Consolidated Financial Statements
for the year ended 31 December 2020 except for the new judgement in respect of 'Assets classified
as held for sale' for the half year ended 30 June 2021 outlined below.
Assets classified as held for sale
On 17 June 2021, the Group reached an agreement to sell its Consumer Foods' Meats and Meals
business in the UK and Ireland to Pilgrim's Pride Corporation. This transaction has been approved
by the Competition and Markets Authority in the UK in July 2021, and subject to the Competition
Authority of Ireland approval, the Group expects that the sale will be completed in the fourth
quarter of 2021. In addition, the Group also reached agreement to sell non-core assets located
in the UK and Poland. Therefore, in line with the requirements of IFRS 5 'Non-current Assets
Held for Sale and Discontinued Operations', where the carrying value of an asset will be recovered
principally through a sale transaction rather than through continuing use, the associated assets
and liabilities have been classified as held for sale on the Condensed Consolidated Balance
Sheet. This treatment is in compliance with the requirement for any assets and liabilities classified
as held for sale to be immediately available for sale, the sale should be highly probable and
expected to be completed within the next 12 months.
Going concern
The Group Condensed Consolidated Interim Financial Statements have been prepared on the going
concern basis of accounting. The Directors have considered the Group's business activities and
how it generates value, together with the main trends and factors likely to affect future development,
business performance and position of the Group including the impact of the current COVID-19
pandemic. Due to the uncertainty of the ongoing duration and impact of the pandemic on mobility
restrictions in different countries around the world, additional stressed scenarios, reflecting
different levels and timing of recovery, have been considered. In these scenarios, the Group
has sufficient resources and liquidity headroom. There are no material uncertainties that cast
a significant doubt on the Group's ability to continue as a going concern over a period of at
least 12 months from the date of these financial statements.
The Directors report that they have satisfied themselves that the Group is a going concern,
having adequate resources to continue in operational existence for the foreseeable future. In
forming this view, the Directors have reviewed the Group's forecast for a period not less than
12 months, the medium term plans as set out in the rolling five year plan, and have taken into
account the cash flow implications of the plans, including proposed capital expenditure, and
compared these with the Group's committed borrowing facilities and projected gearing ratios.
The following Standards and Interpretations are effective for the Group from 1 January Effective
2021 but do not have a material effect on the results or financial Date
position of the Group:
- IFRS 9, IAS 39, IFRS 7, IFRS 4 & Interest Rate Benchmark Reform - Phase 2 1 January
IFRS 16 (Amendments) 2021
The following Standards and Interpretations are not yet effective for the Group Effective
and are not expected to have a material effect on the results or financial Date
position of the Group:
- IFRS 16 (Amendments) COVID-19-related Rent Concessions beyond 30 1 April 2021
June 2021
- IFRS 17 Insurance Contracts 1 January
2023
2. Analysis of results
The Group has determined it has two reportable segments: Taste & Nutrition and Consumer Foods.
The Taste & Nutrition segment is the global leader in taste and nutrition, serving the food,
beverage and pharmaceutical industries across Ireland, Europe, Americas and APMEA. Our broad
technology foundation, customer-centric business model, and industry-leading integrated solutions
capability make Kerry the co-creation partner of choice. The Consumer Foods segment is a leader
in our consumer foods categories in the chilled cabinet primarily in Ireland and in the UK.
Half year ended 30 June 2021 - Unaudited Half year ended 30 June 2020 - Unaudited Year ended 31 December 2020 - Audited
Group Group Group
Eliminations Eliminations Eliminations
Taste & Consumer and Taste & Consumer and Taste & Consumer and
Nutrition Foods Unallocated Total Nutrition Foods Unallocated Total Nutrition Foods Unallocated Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
External
revenue 2,910.0 672.1 - 3,582.1 2,770.1 643.9 - 3,414.0 5,678.4 1,275.0 - 6,953.4
Inter-segment
revenue 28.6 2.1 (30.7) - 28.5 2.7 (31.2) - 74.8 3.6 (78.4) -
Revenue 2,938.6 674.2 (30.7) 3,582.1 2,798.6 646.6 (31.2) 3,414.0 5,753.2 1,278.6 (78.4) 6,953.4
Trading profit 364.4 48.6 (55.9) 357.1 324.8 45.1 (54.0) 315.9 814.2 99.2 (116.2) 797.2
Intangible asset
amortisation (39.2) (33.7) (70.1)
Non-trading items (20.8) - (19.4)
Operating
profit 297.1 282.2 707.7
Finance income 0.1 0.1 0.2
Finance costs (34.3) (37.4) (72.6)
Profit before taxation 262.9 244.9 635.3
Income taxes (35.9) (31.8) (81.2)
Profit after taxation attributable to owners of the
parent 227.0 213.1 554.1
Revenue analysis
Disaggregation of revenue from external customers is analysed by End Use Market (EUM), which
is the primary market in which Kerry's products are consumed and primary geographic market.
An EUM is defined as the market in which the end consumer or customer of Kerry's product operates.
The economic factors within the EUMs of Food, Beverage and Pharma and within the primary geographic
markets which affect the nature, amount, timing and uncertainty of revenue and cash flows
are similar.
Analysis by EUM
Half year ended 30 June 2021 - Half year ended 30 June 2020 - Year ended 31 December 2020 -
Unaudited Unaudited Audited
Taste & Consumer Taste & Consumer Taste & Consumer
Nutrition Foods Total Nutrition Foods Total Nutrition Foods Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
Food 2,008.7 672.1 2,680.8 1,944.0 643.9 2,587.9 3,974.6 1,275.0 5,249.6
Beverage 757.1 - 757.1 680.1 - 680.1 1,407.1 - 1,407.1
Pharma 144.2 - 144.2 146.0 - 146.0 296.7 - 296.7
External
revenue 2,910.0 672.1 3,582.1 2,770.1 643.9 3,414.0 5,678.4 1,275.0 6,953.4
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:
Half year ended 30 June 2021 - Half year ended 30 June 2020 - Year ended 31 December 2020 -
Unaudited Unaudited Audited
Taste & Consumer Taste & Consumer Taste & Consumer
Nutrition Foods Total Nutrition Foods Total Nutrition Foods Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
Republic
of
Ireland 93.3 150.5 243.8 79.5 142.5 222.0 171.1 262.2 433.3
Rest of
Europe 628.8 521.6 1,150.4 577.7 501.4 1,079.1 1,204.0 1,012.8 2,216.8
Americas 1,542.0 - 1,542.0 1,546.5 - 1,546.5 3,085.4 - 3,085.4
APMEA 645.9 - 645.9 566.4 - 566.4 1,217.9 - 1,217.9
External
revenue 2,910.0 672.1 3,582.1 2,770.1 643.9 3,414.0 5,678.4 1,275.0 6,953.4
The accounting policies of the reportable segments are the same as those detailed in the Statement
of accounting policies in the 2020 Annual Report. Under IFRS 15 'Revenue from Contracts with
Customers' revenue is primarily recognised at a point in time. Revenue recorded over time
during the period was not material to the Group.
3. Non-trading items
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
Notes EUR'm EUR'm EUR'm
Acquisition related and other costs (i) (5.5) - (13.1)
Global Business Services (ii) (13.0) - (4.4)
Loss on disposal of businesses and
assets (iii) (2.3) - (1.9)
(20.8) - (19.4)
Tax on above 1.0 - 3.9
Non-trading items (net of tax) (19.8) - (15.5)
(i) Acquisition related and other costs
These costs reflect the relocation of resources, the restructuring of operations in order
to integrate the acquired businesses into the existing Kerry operating model and external
costs associated with deal preparation, integration planning and due diligence.
A tax credit of EUR0.1m (30 June 2020: EURnil; 31 December 2020: EUR3.0m) arose due to tax
deductions available on acquisition related and other costs.
(ii) Global Business Services
In 2020, the Group commenced a programme to evolve, migrate and expand its Global Business
Services model to better enable the business and support further growth. For the period ended
30 June 2021, these costs reflect consultancy fees, redundancies, relocation of resources
and the streamlining of operations. The associated tax credit was EUR0.4m (30 June 2020: EURnil;
31 December 2020: EUR0.5m).
(iii) Loss on disposal of businesses and assets
During the period, the Group disposed of property, plant and equipment primarily in North
America and Europe for a consideration of EUR3.6m resulting in a loss of EUR2.3m for the period
ended 30 June 2021. During 2020, the Group disposed of property, plant and equipment primarily
in North America, Europe and APMEA for a consideration of EUR2.4m resulting in a loss of EUR1.9m.
A tax credit of EUR0.5m (30 June 2020: EURnil; 31 December 2020: a tax credit of EUR0.4m)
arose on the disposal of businesses and assets.
There were no impairments of assets held for sale recorded in the period.
4. Finance income and costs
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Finance income:
Interest income on deposits 0.1 0.1 0.2
Finance costs:
Interest payable (35.2) (36.9) (73.5)
Interest rate derivative 1.3 (0.5) 0.9
(33.9) (37.4) (72.6)
Net interest cost on retirement benefit (0.4) - -
obligations
Finance costs (34.3) (37.4) (72.6)
5. Earnings per A ordinary share
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
EPS EPS EPS
Cent EUR'm Cent EUR'm Cent EUR'm
Basic earnings per share
Profit after taxation attributable to owners of the parent 128.2 227.0 120.4 213.1 313.0 554.1
Diluted earnings per share
Profit after taxation attributable to owners of the parent 128.0 227.0 120.3 213.1 312.5 554.1
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
Number of Shares m's m's m's
Basic weighted average number of shares 177.1 176.9 177.0
Impact of share options outstanding 0.3 0.2 0.3
Diluted weighted average number of shares 177.4 177.1 177.3
6. Dividends
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Amounts recognised as distributions to equity shareholders in the period
Final 2020 dividend of 60.60 cent per A ordinary share paid 14 May 2021
(Final 2019 dividend of 55.10 cent per A ordinary share paid 15 May
2020) 107.1 97.3 97.3
Interim 2020 dividend of 25.90 cent per A ordinary share paid 13 November
2020 - - 45.8
107.1 97.3 143.1
Since the end of the period, the Board has proposed an interim dividend of 28.50 cent per
A ordinary share which amounts to EUR50.4m. The payment date for the interim dividend will
be 12 November 2021 to shareholders registered on the record date as at 15 October 2021. These
Condensed Consolidated Interim Financial Statements do not reflect this dividend.
7. Assets classified as held for sale
On 17 June 2021, the Group reached an agreement to sell its Consumer Foods' Meats and Meals
business in the UK and Ireland to Pilgrim's Pride Corporation for a cash consideration of
approximately EUR819m. This transaction has been approved by the Competition and Markets Authority
in the UK in July 2021, and subject to the Competition Authority of Ireland approval, the
Group expects that the sale will be completed in the fourth quarter of 2021. The proceeds
from the sale will be used for the proposed acquisition of Niacet for approximately EUR853m
(see notes 9 and 10). During the period to 30 June 2021, the Group also reached agreement
to sell non-core assets located in the UK and Poland. The associated assets and liabilities
for these transactions have consequently been presented separately as assets held for sale
in the financial statements for the period to 30 June 2021.
The disposal proceeds are expected to substantially exceed the carrying amount of the related
net assets and accordingly no impairment losses have been recognised on the classification
of these businesses and assets as held for sale.
The major classes of assets and liabilities comprising the operations classified as held for
sale are outlined in the table below. The Group did not have any assets classified as held
for sale in 2020.
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Unaudited
EUR'm EUR'm EUR'm
Property, plant and equipment 127.2 - -
Intangible assets 312.6 - -
Inventories 46.4 - -
Trade and other receivables 37.2 - -
Total assets classified as held for sale 523.4 - -
Trade and other payables (22.2) - -
Total liabilities directly associated with assets classified as held for
sale (22.2) - -
Net assets classified as held for sale* 501.2 - -
*The analysis in the table above excludes any transaction and other
attributable costs.
8. Retirement benefits
The net surplus/(deficit) recognised in the Condensed Consolidated Balance Sheet for the Group's
defined benefit post-retirement schemes was as follows:
Schemes Schemes
in Surplus in Deficit Total
Half year Half year Half year Half year Year
ended ended ended ended ended
30 June 2021 Unaudited 30 June 2021 Unaudited 30 June 2021 30 June 2020 31 Dec. 2020
EUR'm EUR'm Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Net recognised
surplus/(deficit) in
plans before deferred
tax 75.8 (24.5) 51.3 (98.3) (54.4)
Net related deferred
tax (liability)/asset (13.0) 4.9 (8.1) 19.5 10.8
Net recognised
surplus/(deficit) in
plans after deferred
tax 62.8 (19.6) 43.2 (78.8) (43.6)
At 30 June 2021, the net surplus/(deficit) before deferred tax for defined benefit post-retirement
schemes was EUR51.3m (30 June 2020: (EUR98.3m); 31 December 2020: (EUR54.4m)). This was calculated
by rolling forward the defined benefit post-retirement schemes' liabilities at 31 December
2020 to reflect material movements in underlying assumptions over the period while the defined
benefit post-retirement schemes' assets at 30 June 2021 are measured at market value. The
improvement in the funding position before deferred tax of EUR105.7m was driven by both an
increase in scheme assets and favourable movements in actuarial assumptions. The main drivers
behind the net surplus are an increase in assets driven largely by equity returns and a reduction
in liabilities driven by higher discount rates, which has been partially offset by higher
inflation.
9. Financial instruments
i) The following table outlines the financial assets and liabilities in relation to net debt
held by the Group at the balance sheet date:
Liabilities Derivatives
Financial at Fair Value Designated as Assets/
Assets/(Liabilities) through Profit Hedging (Liabilities) at
at Amortised Cost or Loss Instruments FVOCI Total
EUR'm EUR'm EUR'm EUR'm EUR'm
Assets:
Interest rate swaps - - 37.6 - 37.6
Cash at bank and in hand 395.0 - - - 395.0
395.0 - 37.6 - 432.6
Liabilities:
Bank overdrafts (3.3) - - - (3.3)
Bank loans - - - - -
Senior notes (2,326.5) (15.8) - - (2,342.3)
Borrowings and overdrafts (2,329.8) (15.8) - - (2,345.6)
Net debt - pre lease
liabilities (1,934.8) (15.8) 37.6 - (1,913.0)
Lease liabilities (67.6) - - - (67.6)
Total net debt at 30 June 2021
- unaudited (2,002.4) (15.8) 37.6 - (1,980.6)
Assets:
Interest rate swaps - - 105.9 - 105.9
Cash at bank and in hand 736.1 - - - 736.1
736.1 - 105.9 - 842.0
Liabilities:
Bank overdrafts (4.6) - - - (4.6)
Bank loans (250.0) - - - (250.0)
Senior notes (2,544.6) (39.2) - - (2,583.8)
Borrowings and overdrafts (2,799.2) (39.2) - - (2,838.4)
Net debt - pre lease
liabilities (2,063.1) (39.2) 105.9 - (1,996.4)
Lease liabilities (88.6) - - - (88.6)
Total net debt at 30 June 2020
- unaudited* (2,151.7) (39.2) 105.9 - (2,085.0)
Assets:
Interest rate swaps - - 81.9 - 81.9
Cash at bank and in hand 563.1 - - - 563.1
563.1 - 81.9 - 645.0
Liabilities:
Bank overdrafts (2.8) - - - (2.8)
Bank loans - - - - -
Senior notes (2,472.1) (33.7) - - (2,505.8)
Borrowings and overdrafts (2,474.9) (33.7) - - (2,508.6)
Net debt - pre lease
liabilities (1,911.8) (33.7) 81.9 - (1,863.6)
Lease liabilities (81.5) - - - (81.5)
Total net debt at 31 December
2020 - audited (1,993.3) (33.7) 81.9 - (1,945.1)
*Prior period, 30 June 2020, has been re-presented to include lease liabilities in total net
debt.
All Group borrowings and overdrafts and interest rate swaps are guaranteed by Kerry Group
plc. No assets of the Group have been pledged to secure these items.
As at 30 June 2021, part of the Group's debt portfolio includes US$750m of senior notes issued
in 2013, maturing in 2023 (the 2023 senior notes). At the time of issuance, US$250m of the
2023 senior notes were swapped, using cross currency swaps, to euro. The remaining senior
notes issued in 2010 (private placement notes) were repaid in full in June 2021 and the related
swaps also matured on those dates. In addition, the Group holds EUR750m of senior notes issued
in 2015 (the 2025 senior notes), of which EUR175m were swapped, using cross currency swaps,
to US dollar. No interest rate derivatives were entered into for the September 2019 EUR750m
senior notes issuance (the 2029 senior notes) or for the EUR200m of senior notes issued in
2020 as a tap onto the 2025 senior notes.
The adjustment to senior notes classified under liabilities at fair value through profit or
loss of EUR15.8m (30 June 2020: EUR39.2m; 31 December 2020: EUR33.7m) represents the part
adjustment to the carrying value of debt from applying fair value hedge accounting for interest
rate risk. This amount is primarily offset by the fair value adjustment on the corresponding
hedge items being the underlying cross currency interest rate swaps.
ii) The Group's exposure to interest rates on financial assets and liabilities are detailed
in the table below including the impact of cross currency swaps (CCS) on the currency profile
of net debt (including lease liabilities):
Total Pre CCS Impact of CCS Total after CCS
Half year ended Half year ended Half year ended Half year ended Year ended
30 June 2021 30 June 2021 30 June 2021 30 June 2020* 31 Dec. 2020
Unaudited Unaudited Unaudited Unaudited Audited
EUR'm EUR'm EUR'm EUR'm EUR'm
Euro (1,648.5) (34.5) (1,683.0) (1,663.2) (1,717.8)
Sterling 109.3 - 109.3 54.7 78.2
US Dollar (500.7) 34.5 (466.2) (520.2) (387.5)
Other 59.3 - 59.3 43.7 82.0
(1,980.6) - (1,980.6) (2,085.0) (1,945.1)
* Prior period, 30 June 2020, has been re-presented to include lease liabilities, which are
included under floating rate debt.
iii) The following table details the maturity profile of the Group's net debt:
On demand & Up to
up to 1 year 2 years 2 - 5 years > 5 years Total
EUR'm EUR'm EUR'm EUR'm EUR'm
Cash at bank and in hand 395.0 - - - 395.0
Interest rate swaps - 19.8 17.8 - 37.6
Bank overdrafts (3.3) - - - (3.3)
Bank loans - - - - -
Senior notes - (634.7) (967.1) (740.5) (2,342.3)
Net debt - pre lease liabilities 391.7 (614.9) (949.3) (740.5) (1,913.0)
Lease liabilities (discounted) (28.9) (14.8) (18.5) (5.4) (67.6)
At 30 June 2021 - unaudited 362.8 (629.7) (967.8) (745.9) (1,980.6)
Cash at bank and in hand 736.1 - - - 736.1
Interest rate swaps - 33.2 63.2 9.5 105.9
Bank overdrafts (4.6) - - - (4.6)
Bank loans - - (250.0) - (250.0)
Senior notes - (117.9) (758.5) (1,707.4) (2,583.8)
Net debt - pre lease liabilities 731.5 (84.7) (945.3) (1,697.9) (1,996.4)
Lease liabilities (discounted) (17.2) (26.7) (36.9) (7.8) (88.6)
At 30 June 2020 - unaudited* 714.3 (111.4) (982.2) (1,705.7) (2,085.0)
Cash at bank and in hand 563.1 - - - 563.1
Interest rate swaps - 21.9 60.0 - 81.9
Bank overdrafts (2.8) - - - (2.8)
Bank loans - - - - -
Senior notes - (106.2) (1,659.7) (739.9) (2,505.8)
Net debt - pre lease liabilities 560.3 (84.3) (1,599.7) (739.9) (1,863.6)
Lease liabilities (discounted) (27.0) (20.6) (26.6) (7.3) (81.5)
At 31 December 2020 - audited 533.3 (104.9) (1,626.3) (747.2) (1,945.1)
*Prior period, 30 June 2020, has been re-presented to include lease liabilities in total net
debt.
During the period under review the Group undertook three notable financing events, all of
which were completed in June:
* The Group repaid US$200m of outstanding private
placement notes, being Tranche C US$125m and Tranche
D US$75m of the 2010 Senior notes. As noted in the
Kerry Group Annual Report 2020, the US$200m of
private placement notes were swapped at the time of
issuance from US dollar fixed rate to euro floating
rate using cross currency interest rate swaps and
were closed out at the time of the repayment. The net
cash outflow was funded from existing cash resources
of the Group. Following repayment of the private
placement notes, the Group has no borrowings that
carry financial covenants.
* The Group entered into a dedicated bridge facility
for US$1,000m for the proposed acquisition of Niacet
(approximately EUR853m). This facility will be drawn
on the expected closure of the acquisition in Q3 2021
and will be repaid predominantly out of the proceeds
from the sale of the Consumer Foods Meats and Meals
business announced on 17 June 2021, for approximately
EUR819m, which is expected to complete in Q4 2021.
* The Group exercised the second of the two 'plus one'
extension options on its EUR1,100m revolving credit
facility to extend the maturity date of this facility
for the full EUR1,100m to June 2026. As part of this
process the Group amended and restated the facility
agreement to allow for IBOR replacement language.
This amendment to immediately adopt SONIA for GBP
loans and to allow for switch language for US Dollars
at a future date has no commercial impact on the
Group.
At 30 June 2021, the Group had cash on hand of EUR395m. At the period end, the Group had undrawn
committed bank facilities of EUR1,940m comprising the EUR1,100m revolving credit facility
and the US$1,000m (EUR840m) bridge facility noted above.
iv) Fair value of financial instruments
a) Fair value of financial instruments carried at fair value
Financial instruments recognised at fair value are analysed between those based on:
- quoted prices in active markets for identical assets or liabilities (Level 1);
- those involving inputs other than quoted prices included in Level 1 that are observable for
- the assets or liabilities, either directly (as prices) or indirectly (derived from prices)
(Level 2); and
those involving inputs for the assets or liabilities that are not based on observable market
data (unobservable inputs) (Level 3).
The following table sets out the fair value of financial instruments carried at fair value:
30 June 2021 30 June 2020 31 Dec. 2020
Fair Value Unaudited Unaudited Audited
Hierarchy EUR'm EUR'm EUR'm
Financial assets
Interest rate
swaps: Non-current Level 2 37.6 105.9 81.9
Current Level 2 - - -
Forward foreign
exchange
contracts: Non-current Level 2 - - 0.1
Current Level 2 8.2 21.7 14.1
Financial asset Fair value through
investments: profit or loss Level 1 41.7 36.8 37.0
Fair value through
other
comprehensive
income Level 3 4.2 3.0 -
Financial
liabilities
Forward foreign
exchange
contracts: Non-current Level 2 - - (0.5)
Current Level 2 (17.8) (9.5) (10.0)
There have been no transfers between levels during the current or prior financial period.
b) Fair value of financial instruments carried at amortised cost
Except as defined in the following table, it is considered that the carrying amounts of financial
assets and financial liabilities recognised at amortised cost in the Condensed Consolidated
Interim Financial Statements approximate their fair values.
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
30 June 30 June 30 June 30 June 31 Dec. 2020 31 Dec.
Fair Value 2021 2021 2020 2020 Audited 2020
Hierarchy Unaudited Unaudited Unaudited Unaudited EUR'm Audited
EUR'm EUR'm EUR'm EUR'm EUR'm
Financial
Liabilities
Senior notes
- Public Level 2 (2,326.5) (2,431.9) (2,366.1) (2,464.4) (2,309.1) (2,466.9)
Senior notes
- Private Level 2 - - (178.5) (195.1) (163.0) (177.3)
(2,326.5) (2,431.9) (2,544.6) (2,659.5) (2,472.1) (2,644.2)
c) Valuation principles
The fair value of financial assets and
liabilities are determined as follows:
* assets and liabilities with standard terms and
conditions which are traded on active liquid markets
are determined with reference to quoted market
prices. This includes equity investments;
* other financial assets and liabilities (excluding
derivatives) are determined in accordance with
generally accepted pricing models based on discounted
cash flow analysis using prices from observable
current market transactions and dealer quotes for
similar instruments. This includes interest rate
swaps and forward foreign exchange contracts which
are determined by discounting the estimated future
cash flows;
* the fair values of financial instruments that are not
based on observable market data (unobservable inputs)
requires entity specific valuation techniques; and
* derivative financial instruments are calculated using
quoted prices. Where such prices are not available, a
discounted cash flow analysis is performed using the
applicable yield curve for the duration of the
instruments. Forward foreign exchange contracts are
measured using quoted forward exchange rates and
yield curves derived from quoted interest rates
adjusted for counterparty credit risk, which is
calculated based on credit default swaps of the
respective counterparties. Interest rate swaps are
measured at the present value of future cash flows
estimated and discounted based on the applicable
yield curves derived from quoted interest rates
adjusted for counterparty credit risk, which is
calculated based on credit default swaps of the
respective counterparties.
Net debt reconciliation
Cash at Interest Overdrafts Borrowings Borrowings Net Debt Total
bank and Rate due within due within due after - pre lease Lease Net
in hand Swaps 1 year* 1 year* 1 year* liabilities liabilities* Debt**
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
At 31
December
2019 -
audited 554.9 128.4 (5.2) (185.6) (2,355.3) (1,862.8) (109.4) (1,972.2)
Cash flows 193.1 (45.4) 0.5 185.3 (462.3) (128.8) 17.7 (111.1)
Foreign
exchange
adjustments (11.9) - 0.1 - (1.2) (13.0) 2.8 (10.2)
Other
non-cash
movements - 22.9 - 0.3 (15.0) 8.2 0.3 8.5
At 30 June
2020 -
unaudited 736.1 105.9 (4.6) - (2,833.8) (1,996.4) (88.6) (2,085.0)
Cash flows (158.3) (0.1) 1.6 - 250.7 93.9 19.3 113.2
Foreign
exchange
adjustments (14.7) (20.1) 0.2 - 74.1 39.5 5.0 44.5
Other
non-cash
movements - (3.8) - - 3.2 (0.6) (17.2) (17.8)
At 31
December
2020 -
audited 563.1 81.9 (2.8) - (2,505.8) (1,863.6) (81.5) (1,945.1)
Cash flows (181.2) (39.3) (0.5) - 173.7 (47.3) 15.8 (31.5)
Foreign
exchange
adjustments 13.1 3.4 - - (19.5) (3.0) (2.4) (5.4)
Other
non-cash
movements - (8.4) - - 9.3 0.9 0.5 1.4
At 30 June
2021 -
unaudited 395.0 37.6 (3.3) - (2,342.3) (1,913.0) (67.6) (1,980.6)
*Liabilities from financing activities.
**Prior period, 30 June 2020, has been re-presented to include lease liabilities in total
net debt.
10. Business combinations
During the period to 30 June 2021, the Group completed one acquisition (which is 100% owned
by the Group) and executed three others as outlined in the table below.
Acquisition Type Status Principal activity Strategic rationale
National Vinegar Asset Completed A producer of speciality ingredients Further supports the
Co. in based in the USA. Group's growth initiatives
May 2021 in food protection and
natural preservation.
Biosearch, S.A. Equity Completed A leading biotechnology company Brings leading clinical
in based in Spain with an extensive research capabilities
July 2021 range of probiotics, botanical and functional food
extracts and omega-3 oils. technologies across
the pharmaceutical,
nutraceutical and functional
food sectors.
Hare Topco, Inc. Equity Signed - A global market leader in technologies Brings a complementary
(trading as expected for preservation. It has clear product portfolio and
Niacet Corp.) to leadership positions in Bakery, enhances the Group's
close Q3 Pharma, and cost-effective low-sodium leadership position
2021 preservation systems for Meat in this fast growing
and plant based food, across market of food protection
both conventional and clean label and preservatives, led
solutions. Niacet is differentiated by the industry drive
by its proprietary drying and to reduce food waste.
granulation process technologies,
with key manufacturing sites
in the USA and the Netherlands,
with customers in over 75 countries.
Natreon, Inc. Equity Signed - Leading capability in Ayurvedic Brings a portfolio of
expected and botanical extracts, with clinically backed branded
to facilities in the USA and India. ingredients across the
close Q3 need states of cognition
2021 and healthy ageing.
In the period, the total consideration for National Vinegar Co. was EUR24.6m, and as no cash
was acquired, the cash outflow was EUR24.6m. There was no deferred element recognised. Transaction
expenses related to this acquisition were charged against non-trading items in the Group's
Condensed Consolidated Income Statement during the period and represented less than one percent
of the total consideration.
The provisional fair value of net assets acquired before combination were EUR18.1m and the
Group recognised goodwill on this acquisition of EUR6.5m . Given that the valuation of the
fair value of assets and liabilities recently acquired is still in progress, these values are
determined provisionally. The goodwill is attributable to the expected profitability, revenue
growth, future market development and assembled workforce of the acquired business and the
synergies expected to arise within the Group after the acquisition. The goodwill recognised
of EUR6.5m is expected to be deductible for income tax purposes.
The acquisition method of accounting has been used to consolidate the business acquired in
the Group's Condensed Consolidated Interim Financial Statements. Due to the fact that this
acquisition was recently completed, the revenue and results included in the Group's reported
figures are not material. For the acquisitions completed in 2020, to date, there have been
no material revisions of the provisional fair value adjustments since the initial values were
established.
On 8 July 2021, the Group completed the previously announced acquisition of Biosearch, S.A.
('Biosearch Life') by way of public tender offer for total consideration of EUR126.9m . An
initial assessment of fair values to identifiable net assets acquired has not been completed
given the timing of the closure of this transaction.
The Group performs quantitative and qualitative assessments of each acquisition in order to
determine whether it is material for the purposes of separate disclosure under IFRS 3 'Business
Combinations'. As a result, the acquisitions completed during the period were not considered
material to warrant detailed separate disclosure in line with IFRS 3 requirements.
11. Share capital
Half year Half year Year
ended ended ended
30 June 2021 30 June 2020 31 Dec. 2020
Unaudited Unaudited Audited
EUR'm EUR'm EUR'm
Authorised
280,000,000 A ordinary shares of 12.50 cent each 35.0 35.0 35.0
Allotted, called-up and fully paid (A ordinary shares of
12.50 cent each)
At beginning of the financial period 22.1 22.1 22.1
Shares issued during the financial period - - -
At end of the financial period 22.1 22.1 22.1
Kerry Group plc has one class of ordinary share which carries no right to fixed income.
Shares issued during the period
During the period a total of 117,292 A ordinary shares, each with a nominal value of 12.50
cent, were issued at nominal value per share under the Long-Term and Short-Term Incentive Plans.
The total number of shares in issue at 30 June 2021 was 176,817,328 (30 June 2020: 176,681,437;
31 December 2020: 176,700,036).
12. Events after the balance sheet date
Since the period end, the Group has:
- completed the previously announced acquisition of Biosearch, S.A. ('Biosearch Life'), based
in Spain, on 8 July 2021 by way of public tender offer for total consideration of EUR126.9m.
- Biosearch Life is a leading biotechnology company focused on providing innovative solutions
for the pharmaceutical, nutraceutical and functional food sectors; and
proposed an interim dividend of 28.50 cent per A ordinary share (see note 6).
There have been no other significant events, outside of the ordinary course of business, affecting
the Group since 30 June 2021.
13. General information
These unaudited Condensed Consolidated Interim Financial Statements for the half year ended
30 June 2021 are not full financial statements and were not reviewed or audited by the Group's
auditors, PricewaterhouseCoopers (PwC). These Condensed Consolidated Interim Financial Statements
were approved by the Board of Directors and authorised for issue on 29 July 2021. The figures
disclosed relating to 31 December 2020 have been derived from the consolidated financial statements
which were audited, received an unqualified audit report and have been filed with the Registrar
of Companies. This report should be read in conjunction with the 2020 Annual Report which was
prepared in accordance with International Financial Reporting Standards ('IFRS') and the International
Financial Reporting Interpretations Committee ('IFRIC') and those parts of the Companies Act,
2014 applicable to companies reporting under IFRS. The Group financial statements have also
been prepared in accordance with IFRS adopted by the European Union ('EU') which comprise standards
and interpretations approved by the International Accounting Standards Board ('IASB'). The
Group 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 refer to
IFRS adopted by the EU.
These unaudited Condensed Consolidated Interim Financial Statements have been prepared on the
going concern basis of accounting as set out in note 1. The Directors report that they have
satisfied themselves that the Group is a going concern, having adequate resources to continue
in operational existence for the foreseeable future. In forming this view, the Directors have
reviewed the Group's budget for a period not less than 12 months, the medium term plans as
set out in the rolling five year plan, and have taken into account the cash flow implications
of the plans, including proposed capital expenditure, and compared these with the Group's committed
borrowing facilities and projected gearing ratios.
In relation to seasonality, trading profit is lower in the first half of the year due to the
nature of the food business and stronger trading in the fourth quarter. While revenue is relatively
evenly spread, margin has traditionally been higher in the second half of the year due to product
mix and the timing of promotional activity. There is also a material change to the levels of
working capital between December and June mainly due to the seasonal nature of the dairy and
crop-based businesses.
As permitted by the Transparency (Directive 2004/109/EC) Regulations 2007 this Interim Report
is available on www.kerrygroup.com. However, if a physical copy is required, please contact
the Corporate Affairs department.
FINANCIAL DEFINITIONS
1. Revenue
Volume performance
This represents the sales performance period-on-period, excluding pass-through pricing on
raw material costs, currency impacts, acquisitions (net of disposals) and rationalisation
volumes.
Volume performance 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. Pricing therefore impacts
like-for-like revenue performance positively or negatively depending on whether raw material
prices move up or down. A full reconciliation to reported revenue performance is detailed
in the revenue reconciliation below.
Revenue Reconciliation
Reported
Volume Transaction Acquisitions/ Translation revenue
H1 2021 performance Price currency Disposals currency performance
Taste & Nutrition 9.8% 0.5% (0.1%) 1.1% (6.3%) 5.0%
Consumer Foods 4.6% 0.4% (0.2%) - (0.5%) 4.3%
Group 9.0% 0.5% (0.1%) 0.9% (5.4%) 4.9%
H1 2020
Taste & Nutrition (5.6%) 0.1% - 1.4% 0.1% (4.0%)
Consumer Foods (7.8%) 1.7% (0.1%) - - (6.2%)
Group (6.0%) 0.4% - 1.2% 0.1% (4.3%)
2. EBITDA
EBITDA represents profit before finance income and costs, income taxes, depreciation (net
of capital grant amortisation), intangible asset amortisation and non-trading items.
H1 2021 H1 2020
EUR'm EUR'm
Profit after taxation attributable to owners of the
parent 227.0 213.1
Finance income (0.1) (0.1)
Finance costs 34.3 37.4
Income taxes 35.9 31.8
Non-trading items 20.8 -
Intangible asset amortisation 39.2 33.7
Depreciation (net of capital grant amortisation) 100.8 101.2
EBITDA 457.9 417.1
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
period-on-period or with other businesses.
H1 2021 H1 2020
EUR'm EUR'm
Operating profit 297.1 282.2
Intangible asset amortisation 39.2 33.7
Non-trading items 20.8 -
Trading profit 357.1 315.9
4. Trading Margin
Trading margin represents trading profit, expressed as a percentage of revenue.
H1 2021 H1 2020
EUR'm EUR'm
Trading profit 357.1 315.9
Revenue 3,582.1 3,414.0
Trading margin 10.0% 9.3%
5. Operating Profit
Operating profit is profit before income taxes, finance income and finance costs.
H1 2021 H1 2020
EUR'm EUR'm
Profit before taxation 262.9 244.9
Finance income (0.1) (0.1)
Finance costs 34.3 37.4
Operating profit 297.1 282.2
6. Adjusted Earnings Per Share and Growth in Adjusted Earnings Per Share on a Constant Currency
Basis
The growth in adjusted earnings per share on a constant currency basis is provided as it is
considered more reflective of the Group's underlying trading performance. Adjusted earnings
is profit after taxation 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 to basic earnings is provided below. Constant currency eliminates the translational
effect that arises from changes in foreign currency period-on-period. The growth in adjusted
earnings per share on a constant currency basis is calculated by comparing current period
adjusted earnings per share to the prior period adjusted earnings per share and includes the
impact of retranslating the prior period at current period average exchange rates.
H1 2021 H1 2020
EPS Growth EPS Growth
cent % cent %
Basic earnings per share 128.2 6.5% 120.4 (11.1%)
Brand related intangible asset amortisation 12.6 - 11.7 -
Non-trading items (net of related tax) 11.2 - - -
Adjusted earnings per share 152.0 15.1% 132.1 (19.5%)
Impact of retranslating prior period adjusted earnings per share at
current period average
exchange rates* 9.0% (0.3%)
Growth in adjusted earnings per share on a constant currency basis 24.1% (19.8%)
*Impact of H1 2021 translation was 11.9/132.1 cent = 9.0% (H1 2020:
(0.3%)).
7. Free Cash Flow
Free cash flow is trading profit plus depreciation, movement in average working capital, capital
expenditure, payment of lease liabilities, 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 period rather than at two distinct points
in time and more accurately reflects fluctuations caused by seasonality and other timing factors.
Average working capital is the sum of each month's working capital over 12 months. Below is
a reconciliation of free cash flow to the nearest IFRS measure, which is 'Net cash from operating
activities'.
H1 2021 H1 2020
EUR'm EUR'm
Net cash from operating activities 247.9 131.5
Difference between movement in monthly average working capital and movement in the period
end working capital 116.1 81.5
Payments on non-trading items 7.2 25.3
Purchase of assets (136.3) (111.4)
Payment of lease liabilities (15.8) (17.7)
Proceeds from the sale of property, plant and equipment 3.6 -
Capital grants received - -
Exchange translation adjustment (0.4) (2.2)
Free cash flow 222.3 107.0
8. Cash Conversion
Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings
after taxation.
H1 2021 H1 2020
EUR'm EUR'm
Free cash flow 222.3 107.0
Profit after taxation attributable to owners of the parent 227.0 213.1
Brand related intangible asset amortisation 22.4 20.6
Non-trading items (net of related tax) 19.8 -
Adjusted earnings after taxation 269.2 233.7
Cash conversion 83% 46%
9. Liquidity Analysis
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated 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.
H1 2021 H1 2020
Times Times
Net debt: EBITDA 1.9 2.0
EBITDA: Net interest 14.6 12.8
10. Total Net Debt
Total net debt comprises borrowings and overdrafts, interest rate derivative financial instruments,
lease liabilities and cash at bank and in hand. See full reconciliation of total net debt
in note 9 of these Condensed Consolidated Interim Financial Statements.
11. Average Capital Employed
Average capital employed is calculated by taking an average of the shareholders' equity and
net debt - pre lease liabilities over the last three reported balance sheets plus an additional
EUR527.8m relating to goodwill written off to reserves pre conversion to IFRS.
H1 2021 2020 H1 2020 2019 H1 2019
EUR'm EUR'm EUR'm EUR'm EUR'm
Shareholders' equity 4,963.1 4,655.5 4,508.5 4,562.2 4,186.5
Goodwill amortised (pre conversion to IFRS) 527.8 527.8 527.8 527.8 527.8
Adjusted equity 5,490.9 5,183.3 5,036.3 5,090.0 4,714.3
Net debt - pre lease liabilities 1,913.0 1,863.6 1,996.4 1,862.8 1,918.2
Total 7,403.9 7,046.9 7,032.7 6,952.8 6,632.5
Average capital employed 7,161.2 7,010.8 6,872.7
12. Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to owners of the parent before
non-trading items (net of related tax), brand related intangible asset amortisation and net
finance costs expressed as a percentage of average capital employed.
12 months to 12 months to
H1 2021 H1 2020 FY 2020
EUR'm EUR'm EUR'm
Profit after taxation attributable to owners of the parent 568.0 540.2 554.1
Non-trading items (net of related tax) 35.3 57.5 15.5
Brand related intangible asset amortisation 43.5 42.0 41.7
Net finance costs 69.3 80.0 72.4
Adjusted profit 716.1 719.7 683.7
Average capital employed 7,161.2 6,872.7 7,010.8
Return on average capital employed 10.0% 10.5% 9.8%
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