Company Announcements

Kerry Group Interim Management Report 2022

Source: RNS
RNS Number : 1687U
Kerry Group PLC
29 July 2022
 

LEI: 635400TLVVBNXLFHWC59

 

Date: 29 July 2022

 

KERRY GROUP

INTERIM MANAGEMENT REPORT 2022

Strong growth across a dynamic marketplace

 

OVERVIEW


>    Group revenue of €4.1bn representing 15.2%* organic growth

>    Group volumes +6.8% (Q2: +8.0%)

- Taste & Nutrition +8.6% (Q2: +10.3%)

- Dairy Ireland +1.2% (Q2: +1.9%)

>    Group pricing +8.3% (Q2: +10.4%)

>    Group EBITDA of €518m with margin % maintained

>    Adjusted EPS of 176.4 cent; +9.0% on a constant currency basis (16.1% reported currency growth)

>    Basic EPS of 128.4 cent (H1 2021: 128.2 cent)

>    Free cash flow of €226m reflecting 72% cash conversion

>    Interim dividend per share of 31.4 cent (H1 2021: 28.5 cent)

>    Divestment of Russian subsidiary completed post the period end

>    Full year EPS guidance reaffirmed

* Comprises volume growth of 6.8%, positive pricing of 8.3% and a favourable transaction currency impact of 0.1%.


Edmond Scanlon, Chief Executive Officer

"We are pleased with our overall performance and business momentum across the first half of the year despite inflationary challenges and geopolitical volatility in places, in what remains a highly dynamic marketplace.

Volume growth was very strong in both retail and foodservice channels, driven by an increased level of innovation activity. This growth was broad-based across our regions, led by excellent performances in Beverage, Meat and Bakery end use markets in particular.

We continued to make good progress in actively managing the unprecedented inflationary environment in conjunction with our customers, as we support them in developing their offerings to meet the rapidly evolving marketplace. We also made good strategic progress by expanding our footprint and completing a number of strategic acquisitions in the period.

While recognising the marketplace is facing into a period of heightened uncertainty and volatility, this also presents significant opportunities. We remain confident in our outlook and are reaffirming our full year earnings guidance."

 

Performance

Group reported revenue in the period increased by 13.3% to €4.1 billion, reflecting a volume increase of 6.8%, increased pricing of 8.3%, a favourable transaction currency impact of 0.1%, a favourable translation currency impact of 5.8% and contribution from acquisitions of 4.7%, partially offset by the dilutive impact of the disposal of the Consumer Foods Meats and Meals business of 12.4%.

 

Group EBITDA increased by 13.1% to €518 million with EBITDA margin maintained at 12.8%, primarily driven by the benefits from operating leverage, mix, efficiencies and portfolio development, offset by the impact of passing through raw material cost inflation.

 

Constant currency adjusted earnings per share increased by 9.0% to 176.4 cent (H1 2021: +24.1%), which represented an increase of 16.1% in reported currency (H1 2021: +15.1%). Basic earnings per share of 128.4 cent (H1 2021: 128.2 cent) reflects the growth in the period offset by the impairment of the Group's Russia and Belarus assets and the charges related to the previously announced Accelerate Operational Excellence programme.

 

Free cash flow was €226m (H1 2021: €222m) representing cash conversion of 72%, with an increased investment in working capital in the period partially offset by lower net capital expenditure due to the timing of projects.

 

The interim dividend of 31.4 cent per share reflects an increase of 10.2% from the prior year interim dividend.

 

Markets 

The overall demand environment was positive through the period. As preferences continue to evolve with heightened demand for new food and beverage experiences, the importance of value options has increased for consumers, while sustainability remains an important consideration.

 

The resilience of supply chains remains a key focus across the industry due to geopolitical volatility and inflationary pressures. Despite these challenges, the level of customer innovation remains strong, and the level of innovation support needs continues to expand, with customers continuing to evaluate the relevance and uniqueness of their product ranges, and their readiness to adapt to further changes in the consumer landscape.


Business Reviews

Taste & Nutrition

Strong business volume growth across regions, channels and end use markets


H1 2022

Performance1







Revenue

€3,445m

+8.6%2

EBITDA

€515m

+24.9%

EBITDA margin

15.0%

-30bps

1 performance of re-presented segmental structure | 2 volume growth

>    Overall volume growth of 8.6% with an excellent Q2 performance of 10.3%

>    Growth was led by Beverage and Food EUMs of Meat and Bakery

>    Retail channel achieved excellent growth with continued strong double-digit growth in foodservice

>    Pricing of 5.9% reflective of raw material cost inflation

>    Margin development from operating leverage, mix, efficiencies and portfolio evolution more than offset by the impact of passing through raw material cost inflation

Taste & Nutrition reported revenue increased by 27.5% to €3,445m in the period driven by volume growth, positive pricing, favourable foreign currency impacts and a positive contribution from acquisitions net of disposals.

Strong business volume development was achieved through the period, with growth led by the Beverage, Meat and Bakery markets in particular. The retail channel achieved excellent growth due to customers' increased requirements for innovation support. The foodservice channel delivered strong double-digit growth across all regions, supported by increased seasonal menu offerings, innovations to reduce operational complexity and solutions designed to improve their overall sustainability impact.

Overall growth across the Group's key growth platforms was strong, led by increased demand for Kerry's range of food waste solutions, with good growth across authentic taste and plant-based, while health and bio-pharma performed in line with expectations. The recently acquired Niacet³ business continued to deliver strong growth and business development.

Business volumes in emerging markets increased by 10.7% in the period, as very strong growth in the Middle East, Southeast Asia and LATAM were partially offset by challenging conditions in China due to localised restrictions in place, and in Russia and Eastern Europe due to the ongoing war in the region.

Since the end of the period, the divestment of 100% of the share capital of Kerry's subsidiary in Russia to local management was completed and agreement has been reached for the sale of Kerry's subsidiary in Belarus to a third party.


Americas Region

 

>    Volume growth of 9.1% with Q2 performance of 11.4%

>    Growth was led by Beverage, Meat and Bakery EUMs

>    Excellent growth achieved across both retail and foodservice channels

>    LATAM delivered strong growth led by Brazil and Mexico

Reported revenue in the Americas region increased by 29.1% to €1,934m in the period driven by volume growth, positive pricing, favourable foreign currency impacts and contribution from acquisitions.

Growth in North America continued its strong momentum through the period, with high levels of activity across both the retail and foodservice channels. This was led by the Beverage EUM, which delivered particularly strong growth through innovations across refreshing beverages, functional beverages and the tea and coffee categories incorporating Kerry's authentic natural taste, Tastesense™ sugar reduction and proactive nutrition technologies. Performance in Meat and Meat Alternatives was strong across food preservation, culinary taste and texture coating systems, supported by the Group's expanded manufacturing facility in Rome, Georgia. Bakery delivered strong growth with customer launches in food protection and preservation and through increased LTO activity within the foodservice channel.

Within LATAM, Brazil and Mexico delivered strong growth. Volume growth in Brazil was driven by performance in Meals and Meat, while volumes in Mexico were led by growth in Beverage and Snacks with regional leaders.

Within the global Pharma EUM, good volume growth was achieved driven by strong performance in cell nutrition.

 

Europe Region

 

>    Volume growth of 7.1% with Q2 performance of 5.9%

>    Growth driven by foodservice which saw increased consumption and innovation activity

>    Beverage, Dairy and Snacks markets delivered strongest growth

Reported revenue in the Europe region increased by 27.5% to €729m in the period driven by volume growth, positive pricing, favourable foreign currency impacts and a positive contribution from acquisitions net of disposals.

Europe achieved strong overall growth in the foodservice channel through the period. This was driven by strong menu development activity, an increased level of seasonal products and softer prior year comparatives. 

Growth in Beverage was led by refreshing beverage, tea and coffee, and low/no alcohol with launches featuring Kerry's natural extracts, Tastesense™ sugar reduction technologies and enzymes. Dairy delivered strong growth with new innovations across dairy alternatives, ice cream and desserts within the foodservice channel. Good growth was achieved in Snacks driven by increased customer focus on enhancing their products' nutritional profiles in light of the evolving regulatory requirements within the region. This resulted in a number of launches incorporating Kerry's Tastesense™ salt reduction, taste modulation and bio-processing technologies.

Growth in the Europe region was led by Central and Southern Europe driven by a particularly strong performance in the foodservice channel, while performance in Russia and Eastern Europe was impacted by the ongoing war in the region.

In the period, the Group completed the acquisition of c-LEcta³, which is a leading biotechnology innovation company based in Leipzig, Germany.

 

APMEA Region

 

>    Volume growth of 9.1% with Q2 performance of 12.1%

>    Growth was led by Meat, Snacks and Bakery EUMs

>    Foodservice achieved strong overall growth and retail performed very well

Reported revenue in the APMEA region increased by 26.1% to €768m in the period driven by volume growth, positive pricing, favourable foreign currency impacts and contribution from acquisitions.

Growth in the region was primarily driven by excellent performances in the Middle East and across Southeast Asia, partially offset by challenges resulting from the localised restrictions in China. The strong growth achieved in the second quarter reflected good business development across both the foodservice and retail channels.

Growth in Meat and Meat Alternatives was driven by increased demand across global, regional and local leaders for Kerry's range of local authentic taste and texture systems. Snacks achieved excellent growth in savoury applications across the Middle East and Southeast Asia in particular, while Bakery delivered a strong performance through new launch activity and increased demand for functional systems across the region.

The Group continued to enhance its local presence in APMEA through the acquisition of Almer³, and its continued footprint expansion in the Middle East, which has become an important contributor to growth in the region.

3In September 2021 Kerry acquired 100% of the issued share capital of Hare Topco, Inc. (trading as Niacet Corp.) - 'Niacet'.

  In March 2022 Kerry acquired 93% of the issued share capital of the company c-LEcta GmbH - 'c-LEcta'.

  In March 2022 Kerry acquired 100% of the issued share capital of the company Almer Malaysia Sdn. Bhd. - 'Almer'.

 

Dairy Ireland

Solid growth as business saw significant price inflation across the period





H1 2022

Pro-forma4

Reported







Revenue

€695m

+2.2%5

+1.2%5

EBITDA

€38m

+4.6%6

-52.0%

EBITDA margin

5.5%

-140bps

-280bps


>    Overall volume growth of 2.2%⁴ with Q2 performance of 3.3%⁴

>    Growth driven by the Dairy Ingredients business

>    Pricing of 27.8%⁴ reflected significant increases across dairy prices and other raw material costs

>    Margin reduction driven by the impact of passing through raw material cost inflation

Dairy Ireland delivered solid overall volume growth through the period, while managing the heightened inflationary cost environment, which resulted in significant price increases across the business.

Within Dairy Consumer Products, most categories saw significant price increases, which led to overall volumes being more challenged. Within the spreads category, good performance was achieved across our customer-branded ranges. Volumes in the period in cheese snacking were impacted by reduced promotional activity and operational issues, while a new plant-based range of Dairygold products was launched at the end of the period.

Dairy Ingredients achieved good volume growth, while prices were significantly higher as a result of constrained global supply dynamics.

⁴ Performance of re-presented segmental structure on a pro-forma basis excluding the Consumer Foods Meat and Meals business disposal.

⁵ Volume growth.

⁶ Comparable H1 2021 pro-forma EBITDA was €36.7m.

 

Financial Review






 

Growth %

H1 2022

€'m

H1 2021

€'m





Revenue

+13.3%

4,057.8

3,582.1









EBITDA

+13.1%

517.7

457.9





EBITDA margin

 

12.8%

12.8%









Trading profit


409.6

357.1

Computer software amortisation


(18.9)

(16.8)

Finance costs (net)


(34.1)

(34.2)

Share of joint ventures profit after taxation

1.1

-





Adjusted earnings before taxation

+16.9%

357.7

306.1

Income taxes (excluding non-trading items)

(44.9)

(36.9)





Adjusted earnings after taxation


312.8

269.2

Brand related intangible asset amortisation


(23.1)

(22.4)

Non-trading items (net of related tax)


(62.1)

(19.8)





Profit after taxation


227.6

227.0







EPS

cent

EPS

cent









Basic EPS

+0.2%

128.4

128.2

Brand related intangible asset amortisation

13.0

12.6

Non-trading items (net of related tax)


35.0

11.2





Adjusted* EPS

+16.1%

176.4

152.0

Impact of exchange rate translation

(7.1%)







Adjusted* EPS growth in constant currency

+9.0%


+24.1%





*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

The table below provides the revenue growth components for the updated business segments effective 1 January 2022, reflecting the new Dairy Ireland business post the disposal of the Consumer Foods Meats and Meals business. The H1 2021 table is also provided for comparable purposes.

Revenue Growth Components

Volume

Price

Transaction

currency

Translation

currency

Acquisitions /

Disposals

Reported

Growth

H1 2022

Taste & Nutrition

8.6%

5.9%

0.2%

7.0%

5.8%

27.5%

€3.4bn

Dairy Ireland1

2.2%

27.8%

0.2%

1.0%

-

31.2%

€0.7bn

Group1

7.8%

9.3%

0.2%

6.1%

5.3%

28.7%

 

Meats and Meals business2

-

-

-

-

(46.1%)

(46.1%)

 

Group (Reported)

6.8%

8.3%

0.1%

5.8%

(7.7%)

13.3%

€4.1bn

¹ Pro-forma growth excludes the sale of the Consumer Foods Meats and Meals business.

² The disposal of Kerry's Consumer Foods Meats and Meals business was completed in September 2021.

 

 

 

Revenue Growth Components

Volume

Price

Transaction

currency

Translation

currency

Acquisitions /

Disposals

Reported

Growth

H1 2021

Taste & Nutrition

10.7%

0.3%

(0.1%)

(6.9%)

1.2%

5.2%

€2.7bn

Dairy Ireland1

1.0%

1.6%

-

(0.4%)

-

2.2%

€0.5bn

Group1

8.9%

0.6%

-

(6.0%)

1.0%

4.5%


Meats and Meals business2

9.4%

(0.3%)

(0.2%)

(0.8%)

-

8.1%

€0.4bn

Group (Reported)

9.0%

0.5%

(0.1%)

(5.4%)

0.9%

4.9%

€3.6bn









EBITDA & Margin

Group EBITDA increased by 13.1% to €517.7m (H1 2021: €457.9m). EBITDA margin percentage was maintained at 12.8%, primarily driven by the benefits from operating leverage, mix, efficiencies and portfolio development, offset by the impact of passing through raw material cost inflation. The EBITDA margin by business segment was 15.0% in Taste & Nutrition and 5.5% in Dairy Ireland in the period.

 

Finance Costs (net)

Finance costs (net) were €34.1m similar to the prior period (H1 2021: €34.2m).

 

Taxation

The tax charge for the period before non-trading items was €44.9m (H1 2021: €36.9m) which represents an effective tax rate of 13.4% (H1 2021: 13.0%).

 

Acquisitions

During the period, the Group completed the acquisition of Almer Malaysia Sdn. Bhd., c-LEcta GmbH and Natreon, Inc. for a total consideration of €267.4m.

Non-Trading Items

The Group incurred a non-trading item charge of €62.1m (H1 2021: €19.8m) net of tax in the period. This primarily related to the impairment of the Group's Russia and Belarus assets and the previously announced Accelerate Operational Excellence programme.

Adjusted EPS in Constant Currency

Adjusted EPS in constant currency increased by 9.0% to 176.4 cent in the period (H1 2021: 24.1%), which represented an increase of 16.1% in reported currency (H1 2021: +15.1%).

Basic EPS

Basic EPS increased by 0.2% to 128.4 cent in the period (H1 2021: 128.2 cent) and reflects the growth in the period offset by the impairment of the Group's Russia and Belarus assets and the charges related to the operational excellence programme. 

 

Free Cash Flow

Group free cash flow was €226.0m in the period (H1 2021: €222.3m) reflecting 72% cash conversion, with an increased investment in working capital in the period partially offset by lower net capital expenditure due to the timing of projects.          

 

 

 


 

Free Cash Flow

H1 2022

€'m

H1 2021

€'m

 

 


EBITDA

517.7

457.9

Movement in average working capital

(164.2)

(27.5)

Pension contributions paid less pension expense

(7.0)

(6.0)

Finance costs paid (net)

(14.6)

(21.5)

Income taxes paid

(31.9)

(32.1)

Purchase of non-current assets

(74.0)

(148.5)

 

 


Free cash flow

226.0

222.3

Cash conversion1

72%

83%


 


1Cash conversion represents free cash flow expressed as a percentage of adjusted earnings after taxation.

 

Balance Sheet

A summary balance sheet as at 30 June 2022 is provided below:

 

 



 

H1 2022

€'m

H1 2021

€'m

FY 2021

€'m

 

 



Property, plant and equipment

2,161.1

1,918.8

2,091.3

Intangible assets

5,968.9

4,443.8

5,580.7

Other non-current assets

372.4

213.7

264.5

Current assets

3,855.7

3,227.0

3,458.9


 




 



Total assets

12,358.1

9,803.3

11,395.4

 

 



 

 



Current liabilities

3,049.1

1,918.7

1,995.4

Non-current liabilities

3,218.6

2,921.5

3,798.8

 

 



 

 



Total liabilities

6,267.7

4,840.2

5,794.2

 

 



 

 



Net assets

6,090.4

4,963.1

5,601.2

 

 



 

 



Total equity

6,090.4

4,963.1

5,601.2

 

 



 

Property, Plant and Equipment

Property, plant and equipment increased since year end by €69.8m to €2,161.1m (Dec 2021: €2,091.3m, H1 2021: €1,918.8m) predominantly due to depreciation charge partially offset by foreign exchange translation and additions.

 

Intangible Assets

Intangible assets increased by €388.2m since year end to €5,968.9m (Dec 2021: €5,580.7m, H1 2021: €4,443.8m) predominantly due to acquisitions and the impact of foreign exchange translation, partially offset by the amortisation and impairment charges.

 

Current Assets

Current assets increased by €396.8m since year end to €3,855.7m (Dec 2021: €3,458.9m, H1 2021: €3,227.0m) primarily due to the impact of foreign exchange translation on the assets, acquisitions and working capital investment.

 

Retirement Benefits

At the balance sheet date, the net surplus for all defined benefit schemes (after deferred tax) was €164.1m (Dec 2021: €56.3m net surplus, H1 2021: €43.2m net surplus), see note 8 for details. The improvement in the funding position before deferred tax of €135.6m was driven predominantly by favourable movements in actuarial assumptions, primarily higher discount rates, which were partially offset by reduced asset values.

 

Net Debt

At 30 June 2022, net debt was €2,456.3m. This increase of €332.2m relative to the December 2021 net debt of €2,124.1m reflected acquisition investment and dividends, partially offset by net cash generated in the period.

 

Return on Average Capital Employed (ROACE)

Group ROACE at period end was 10.2% (Dec 2021: 10.5%, H1 2021: 10.7%) reflective of recent portfolio developments.

Liquidity Analysis

The Group's balance sheet is in a healthy position. With a Net debt to EBITDA* ratio of 2.1 times, the organisation has sufficient headroom to support future growth plans. The Group has no financial arrangements that carry financial covenants.

 

 

 

 

H1 2022

Times

H1 2021

Times

FY 2021

Times

 

 

 

 

 



 

Net debt: EBITDA*



2.1

1.9

2.0

 

EBITDA: Net interest*


 

16.0

14.6

14.9

 



 

 



 

*Calculated on a pro-forma basis as outlined in the Financial Definitions section.

 

Related Party Transactions

There were no changes in related party transactions from the 2021 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 yearonyear 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 the period end.

 

 

Average Rates

Closing Rates

 

H1 2022

H1 2021

H1 2022

H1 2021

FY 2021

Australian Dollar

1.52

1.56

1.52

1.58

1.56

Brazilian Real

5.55

6.51

5.41

5.91

6.32

British Pound Sterling

0.84

0.87

0.86

0.86

0.84

Chinese Yuan Renminbi

7.11

7.85

7.06

7.72

7.22

Malaysian Ringgit

4.69

4.94

4.64

4.97

4.73

Mexican Peso

22.30

24.31

21.09

24.17

23.30

South African Rand

16.89

17.60

16.85

16.98

18.06

US Dollar

1.10

1.21

1.05

1.19

1.13

Principal Risks and Uncertainties

Details of the principal risks and uncertainties facing the Group can be found in the 2021 Annual Report on pages 78 to 84 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/emerging markets, business acquisition and divestiture, climate change and environmental, people, business ethics and social responsibility, food safety, quality and regulatory, health & safety, margin management, information systems and cybersecurity, operational and supply chain continuity, intellectual property, taxation and treasury. The Group continues to manage the interdependency of these risks, some of which has been heightened by the war in Ukraine, global supply chain challenges and the continued inflationary environment. The Group actively manages all risks through its control and risk management process.   

Dividend

In line with our dividend strategy, the Board has declared an interim dividend of 31.4 cent per share, compared to the prior year interim dividend of 28.5 cent, payable on 11 November 2022 to shareholders registered on the record date 14 October 2022.

Future Prospects

Kerry remains strongly positioned for growth in a highly dynamic marketplace with a good innovation pipeline. The Group is confident in its ability to continue to manage through the current inflationary cycle with its well-established pricing model and cost initiatives. Kerry will continue to strategically evolve its portfolio and invest capital aligned to its strategic priorities and key growth platforms. While overall market conditions remain uncertain, the Group expects to achieve adjusted earnings per share growth* in 2022 of 5% to 9% on a constant currency basis.

*Earnings guidance includes estimated net dilution from portfolio changes of c. 2.5% in the full year comprising the previously announced portfolio changes of c. 1.5% and the impact of the divestiture of the Russia and Belarus businesses of c. 1%.

Note: Based on prevailing exchange rates, foreign currency is expected to be a tailwind of 8% to adjusted earnings per share.

 

Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 as amended ('the Regulations'), the Central Bank (Investment Market Conduct) Rules 2019, the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority 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 2022 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 2022, 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





28 July 2022

 


 




 

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.kerry.com

 




 

RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2022

 

 

Kerry Group plc

 

 

 

 

 

 

Condensed Consolidated Income Statement

 

 

 

for the half year ended 30 June 2022

 

 

 



 

 

 





Before

 

 


Year



Non-Trading

Non-Trading

Half year

Half year

ended



Items

Items

ended

ended

31 Dec.



30 June 2022

30 June 2022

30 June 2022

30 June 2021

2021



Unaudited

Unaudited

Unaudited

Unaudited

Audited


Notes

€'m

€'m

€'m

€'m

€'m



 

 

 





 

 

 



Continuing operations







Revenue

2

4,057.8

-

4,057.8

3,582.1

7,350.6



 


 





 


 



Earnings before interest, tax, depreciation and amortisation

2

517.7

-

517.7

457.9

1,077.0





 



Depreciation and intangible asset amortisation

2

(150.1)

-

(150.1)

(140.0)

(282.3)

Non-trading items

3

-

(69.5)

(69.5)

(20.8)

91.5


 

 


 




 

 


 



Operating profit

 

367.6

(69.5)

298.1

297.1

886.2

 

 

 

 

 



Finance income

4

0.8

-

0.8

0.1

0.3

Finance costs

4

(34.9)

-

(34.9)

(34.3)

(70.2)

Share of joint ventures profit after taxation


1.1

-

1.1

-

-

 

 

 


 



 

 

 


 



Profit before taxation

 

334.6

(69.5)

265.1

262.9

816.3

 

 

 

 

 



Income taxes

 

(44.9)

7.4

(37.5)

(35.9)

(53.3)


 

 


 




 

 


 



Profit after taxation

289.7

(62.1)

227.6

227.0

763.0

 

 

 


 



 

 

 


 



 

 

 


 



Attributable to:

 

 


 



Equity holders of the parent

 

 


227.6

227.0

763.0

Non-controlling interests

 

 


-

-

-


 

 

 


 



 

 

 


227.6

227.0

763.0

 

 

 


 



 

 

 


 



 

 

 


 



Earnings per A ordinary share

 

 


Cent

Cent

Cent

- basic

5

 


128.4

128.2

430.6

- diluted

5

 


128.2

128.0

429.9



 

 

 





 

 

 



Condensed Consolidated Statement of Comprehensive Income

 

for the half year ended 30 June 2022

 

 

 

 



 



 



Half year

Half year

Year

 



ended

ended

ended

 



30 June 2022

30 June 2021

31 Dec. 2021

 



Unaudited

Unaudited

Audited

 



€'m

€'m

€'m

 



 



 



 



 

Profit after taxation


227.6

227.0

763.0

 



 



 



 



 

Other comprehensive income:


 



 

 


 



 

 


 



 

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


 



 

Fair value movements on cash flow hedges


(0.3)

(0.7)

(0.3)

 

Cash flow hedges - reclassified to profit or loss from equity


(1.4)

(1.1)

(0.9)

 

Net change in cost of hedging


0.2

0.3

-

 

Deferred tax effect of fair value movements on cash flow hedges


-

-

0.1

 

Exchange difference on translation of foreign operations


265.3

98.7

217.7

 

Cumulative exchange difference on translation recycled on disposal


-

-

16.2

 



 



 

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


 



 

Re-measurement on retirement benefits obligation


130.3

101.6

110.2

 

Deferred tax effect of re-measurement on retirement benefits obligation


(27.7)

(19.1)

(20.0)

 



 



 



 



 

Net income recognised directly in total other comprehensive income


366.4

179.7

323.0

 



 



 



 



 

Total comprehensive income


594.0

406.7

1,086.0

 

 


 



 

 


 



 

Attributable to:


 



 

Equity holders of the parent


594.0

406.7

1,086.0

 

Non-controlling interests


-

-

-

 



 



 

 


 


 

 

 


594.0

406.7

1,086.0

 

 


 


 

 


Condensed Consolidated Balance Sheet

 

 



as at 30 June 2022

 

 

 





 





30 June 2022

30 June 2021

31 Dec. 2021



Unaudited

Unaudited

Audited


Notes

€'m

€'m

€'m



 





 



Non-current assets


 



Property, plant and equipment


2,161.1

1,918.8

2,091.3

Intangible assets


5,968.9

4,443.8

5,580.7

Financial asset investments


53.1

45.9

49.9

Investment in joint ventures


22.9

18.6

21.7

Other non-current financial instruments


2.7

37.6

34.8

Retirement benefits asset

8

221.6

75.8

90.3

Deferred tax assets


72.1

35.8

67.8



 





 





8,502.4

6,576.3

7,936.5



 





 



Current assets


 



Inventories


1,496.1

1,117.6

1,204.2

Trade and other receivables


1,471.7

1,182.8

1,181.7

Cash at bank and in hand

9

757.2

395.0

1,039.1

Other current financial instruments


108.3

8.2

15.2

Assets classified as held for sale

7

22.4

523.4

18.7



 





 





3,855.7

3,227.0

3,458.9



 





 



Total assets


12,358.1

9,803.3

11,395.4



 





 



Current liabilities


 



Trade and other payables


2,047.9

1,731.9

1,791.5

Borrowings and overdrafts

9

724.2

3.3

5.6

Other current financial instruments


108.6

17.8

40.1

Tax liabilities


148.5

133.6

141.6

Provisions


16.6

7.7

13.6

Deferred income


3.3

2.2

3.0

Liabilities directly associated with assets classified as held for sale

7

-

22.2

-



 





 





3,049.1

1,918.7

1,995.4



 





 



Non-current liabilities


 



Borrowings

9

2,441.7

2,342.3

3,118.0

Other non-current financial instruments


16.8

-

0.5

Retirement benefits obligation

8

19.8

24.5

24.1

Other non-current liabilities


148.3

128.4

153.9

Deferred tax liabilities


533.1

360.6

447.3

Provisions


42.2

47.0

37.1

Deferred income


16.7

18.7

17.9

 


 



 


 



 


3,218.6

2,921.5

3,798.8

 


 



 


 



Total liabilities

 

6,267.7

4,840.2

5,794.2

 

 

 



 

 

 



Net assets

 

6,090.4

4,963.1

5,601.2

 

 

 



 

 

 



Equity

 

 



Share capital

11

22.1

22.1

22.1

Share premium

 

398.7

398.7

398.7

Other reserves

 

145.7

(274.3)

(129.6)

Retained earnings

 

5,522.2

4,816.6

5,310.0

Equity attributable to equity holders of the parent

 

6,088.7

4,963.1

5,601.2

Non-controlling interests

 

1.7

-

-


 

 




 

 



Total equity

 

6,090.4

4,963.1

5,601.2


 

 




 





 




Condensed Consolidated Statement of Changes in Equity

for the half year ended 30 June 2022



 

 

 

 

 



Attributable to equity holders of the parent

 

 



 


 

 

 

Non-

 



Share

Share

Other

Retained

 

controlling

Total



Capital

Premium

Reserves

Earnings

Total

interests

equity


Note

€'m

€'m

€'m

€'m

€'m

€'m

€'m





 

 

 

 

 










At 1 January 2021


22.1

398.7

(379.5)

4,614.2

4,655.5

-

4,655.5










Profit after taxation


-

-

-

227.0

227.0

-

227.0

Other comprehensive income


-

-

97.2

82.5

179.7

-

179.7



















Total comprehensive income


-

-

97.2

309.5

406.7

-

406.7










Dividends paid

6

-

-

-

(107.1)

(107.1)

-

(107.1)

Share-based payment expense


-

-

8.0

-

8.0

-

8.0



















At 30 June 2021 - unaudited


22.1

398.7

(274.3)

4,816.6

4,963.1

-

4,963.1










Profit after taxation


-

-

-

536.0

536.0

-

536.0

Other comprehensive income


-

-

135.5

7.8

143.3

-

143.3



















Total comprehensive income


-

-

135.5

543.8

679.3

-

679.3










Dividends paid

6

-

-

-

(50.4)

(50.4)

-

(50.4)

Share-based payment expense


-

-

9.2

-

9.2

-

9.2



















At 31 December 2021 - audited


22.1

398.7

(129.6)

5,310.0

5,601.2

-

5,601.2










Profit after taxation


-

-

-

227.6

227.6

-

227.6

Other comprehensive income


-

-

263.8

102.6

366.4

-

366.4



 

 

 

 

 

 

 



 

 

 

 

 

 

 

Total comprehensive income


-

-

263.8

330.2

594.0

-

594.0



 

 

 

 

 

 

 

Dividends paid

6

-

-

-

(118.0)

(118.0)

-

(118.0)

Share-based payment expense


-

-

11.5

-

11.5

-

11.5

Non-controlling interests arising on acquisition


-

-

-

-

-

1.7

1.7



 

 

 

 

 

 

 



 

 

 

 

 

 

 

At 30 June 2022 - unaudited

 

22.1

398.7

145.7

5,522.2

6,088.7

1.7

6,090.4



 

 

 

 

 



 

 

 

 

 



 

 

 

 

 



 

 

 

 

 

Other Reserves comprise the following:

 

 

 

 

 

 

 

 

 

 

 

Capital

Other

Share-Based

 

 

Cost of

 

 

 

Redemption

Undenominated

Payment

Translation

Hedging

Hedging

 

 

 

Reserve

Capital

Reserve

Reserve

Reserve

Reserve

Total

 

 

€'m

€'m

€'m

€'m

€'m

€'m

€'m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2021


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)

 









Other comprehensive income/(expense)

-

-

-

135.2

0.6

(0.3)

135.5

Share-based payment expense


-

-

9.2

-

-

-

9.2

 









 









At 31 December 2021 - audited


1.7

0.3

107.4

(238.1)

1.4

(2.3)

(129.6)

 









Other comprehensive income/(expense)

-

-

-

265.3

(1.7)

0.2

263.8

Share-based payment expense


-

-

11.5

-

-

-

11.5

 


 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

At 30 June 2022 - unaudited


1.7

0.3

118.9

27.2

(0.3)

(2.1)

145.7

 

 

 

 

 

 

 

 

 


Condensed Consolidated Statement of Cash Flows

 

 

 

 

for the half year ended 30 June 2022

 

 





 





Half year

Half year

Year



ended

ended

ended



30 June 2022

30 June 2021

31 Dec. 2021



Unaudited

Unaudited

Audited


Notes

€'m

€'m

€'m



 





 



Cash flows from operating activities

 

 



Profit before taxation

 

265.1

262.9

816.3

Adjustments for:

 

 



Depreciation (net)

 

108.1

100.8

201.5

Intangible asset amortisation

 

42.0

39.2

80.8

Share of profit from joint ventures

 

(1.1)

(0.7)

(3.9)

Non-trading items income statement charge/(income)

3

69.5

20.8

(91.5)

Finance costs (net)

4

34.1

34.2

69.9

Change in working capital

 

(278.0)

(142.9)

(184.3)

Pension contributions paid less pension expense

 

(7.0)

(6.0)

(14.7)

Payments on non-trading items


(36.1)

(7.2)

(76.1)

Exchange translation adjustment


(17.9)

0.4

(0.7)

 

 

 



 

 

 



Cash generated from operations

 

178.7

301.5

797.3

Income taxes paid

 

(31.9)

(32.1)

(72.0)

Finance income received

 

0.8

0.1

0.4

Finance costs paid

 

(15.4)

(21.6)

(71.7)


 

 




 

 



Net cash from operating activities

 

132.2

247.9

654.0


 

 




 

 



Investing activities

 

 



Purchase of assets (net)

 

(61.3)

(136.3)

(300.4)

Proceeds from the sale of assets (net of disposal expenses)

 

3.2

3.6

4.0

Capital grants received

 

-

-

0.7

Purchase of businesses (net of cash acquired)

10

(244.6)

(24.6)

(1,084.9)

Receipts/(payments) relating to previous acquisitions


1.7

(10.8)

(18.9)

Purchase of investments


(4.8)

(4.2)

(4.4)

Disposal of businesses (net of disposal expenses)

 

-

-

775.2


 

 




 

 



Net cash used in investing activities

 

(305.8)

(172.3)

(628.7)


 

 




 

 



Financing activities

 

 



Dividends paid

6

(118.0)

(107.1)

(157.5)

Payment of lease liabilities


(15.9)

(15.8)

(34.9)

Issue of share capital

11

-

-

-

Repayment of borrowings (net of swaps)


-

(134.4)

(1,093.3)

Increase in borrowings


 0.1

 -

1,705.0


 

 




 

 



Net cash movement due to financing activities

 

(133.8)

(257.3)

419.3

 

 

 




 

 



Net (decrease)/increase in cash and cash equivalents

 

(307.4)

(181.7)

444.6

Cash and cash equivalents at beginning of the period

 

1,033.8

560.3

560.3

Exchange translation adjustment on cash and cash equivalents


17.8

13.1

28.9



 





 



Cash and cash equivalents at end of the period

9

744.2

391.7

1,033.8

 


 




 

 



Reconciliation of Net Cash Flow to Movement in Net Debt

 



Net (decrease)/increase in cash and cash equivalents

 

(307.4)

(181.7)

444.6

Cash flow from debt financing

 

(0.1)

134.4

(611.7)


 





 

 



Changes in net debt resulting from cash flows

 

(307.5)

(47.3)

(167.1)

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

(2.3)

0.9

(0.1)

Exchange translation adjustment on net debt

(28.4)

(3.0)

(19.1)



 





 



Movement in the period

 

(338.2)

(49.4)

(186.3)

At beginning of the period

 

(2,049.9)

(1,863.6)

(1,863.6)











Net debt at end of the period - pre lease liabilities


(2,388.1)

(1,913.0)

(2,049.9)

Lease liabilities

 

(68.2)

(67.6)

(74.2)

 

 

 



 

 

 



Net debt at end of the period

9

(2,456.3)

(1,980.6)

(2,124.1)

 

 

 



Prior period, 30 June 2021, has been re-presented to align with current presentation.

 

 

 



 

 

 



Notes to the Condensed Consolidated Interim Financial Statements

for the half year ended 30 June 2022

 

 



 

 

 



1. Accounting policies 

These Condensed Consolidated Interim Financial Statements for the half year ended 30 June 2022 have been prepared in accordance with International Financial Reporting Standards ('IFRS'), the International Financial Reporting Interpretations Committee ('IFRIC') and in accordance with IAS 34 'Interim Financial Reporting'. 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. The accounting policies applied by the Group in these Condensed Consolidated Interim Financial Statements are the same as those detailed in the 2021 Annual Report except for changes in accounting policies in respect of a new non-controlling interests policy and an updated segmental analysis policy as outlined below for the half year ended 30 June 2022.

 

From 1 January 2022, the Group has moved from trading profit to earnings before interest, tax, depreciation and amortisation (EBITDA) as the key measure utilised in assessing the performance of the Group. This has been reflected in the presentation of the Group's Condensed Consolidated Income Statement and note 2 'Analysis of results', as permitted under IAS 1 'Presentation of Financial Statements'. In these Condensed Consolidated Interim Financial Statements for the half year ended 30 June 2022, the Group has re-presented corresponding 2021 balances to align with current year presentation in the Condensed Consolidated Income Statement, Condensed Consolidated Statement of Cash Flows, note 2 'Analysis of results' and note 4 'Finance income and costs'.  

 

Non-controlling interests

Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the Parent Company and are presented separately in the Condensed Consolidated Income Statement and within equity in the Condensed Consolidated Balance Sheet, distinguished from Parent Company shareholders' equity. Where not all of the equity of a subsidiary is acquired the non-controlling interests are recognised at the non-controlling interest's share of the acquiree's net identifiable assets.

 

Segmental analysis

Operating segments are reported in a manner consistent with the internal management structure of the Group and the internal financial information provided to the Group's Chief Operating Decision Maker (the Executive Directors) who is responsible for making strategic decisions, allocating resources, monitoring and assessing the performance of each segment. EBITDA as reported internally by segment is the key measure utilised in assessing the performance of operating segments within the Group. Other Corporate activities, such as the cost of corporate stewardship, are reported along with the elimination of inter-group activities under the heading 'Group Eliminations and Unallocated'. Depreciation, intangible asset amortisation, non-trading items, net finance costs, share of joint ventures profit after taxation and income taxes are managed on a centralised basis and therefore, these items are not allocated between operating segments and are not reported per segment in note 2.

 

The Group has determined it has two reportable segments: Taste & Nutrition and Dairy Ireland. The Taste & Nutrition segment is a world leading taste and nutrition partner for the food, beverage and pharmaceutical markets. Kerry innovates with its customers to create great tasting products, with improved nutrition and functionality, whilst ensuring better impact for the planet. The Taste & Nutrition segment supplies industries across Ireland, Europe, Americas and APMEA (Asia Pacific, Middle East and Africa). The Dairy Ireland segment is a leading Irish provider of value-add dairy ingredients and consumer products. 

 

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 2021 except for the new judgement in respect of 'Russian and associated markets costs' for the half year ended 30 June 2022 outlined below.

 

Russian and associated markets costs

As previously announced on 4 April 2022, the Group is sspending its operations in Russia and Belarus. This suspension is being managed in an orderly manner, during which the Group is continuing to pay employees and fulfil our legal obligations and a decision has been made to classify these businesses as held for sale. The assets of these businesses have been impaired to their fair value less costs to sell resulting in a charge of €37.9m to the Condensed Consolidated Income Statement (see notes 3 and 7 to the Condensed Consolidated Interim Financial Statements). On 7 July 2022, the Group reached agreement to sell 100% of the share capital of Unitary Manufacturing Enterprise "Vitella", a Taste & Nutrition entity based in Belarus. On 22 July 2022, the Group reached agreement to divest 100% of the share capital of Kerry Limited Liability Company, its subsidiary in Russia, to local management.

 

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 regarding Russian and associated markets divestment. The Group performed an impairment assessment of the impacted businesses regarding the Russian and associated markets which has led to the assets of the businesses in Russia, Belarus and Ukraine being impaired to their fair value less costs to sell resulting in a charge of €41.2m being recognised in the Condensed Consolidated Income Statement during the period. The viability of the Group was also assessed by considering the potential impact of climate related risks on profitability and liquidity, accelerating inflationary cost pressures, disruption of global supply chains and the challenges presented in China with localised restrictions during the period. Following these assessments the Directors have concluded 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 plan and its cashflow implications have been taken into account 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 2022 but do not have a material effect on the results or financial position of the Group:

Effective Date

 



- IAS 16 (Amendments)

Property, Plant and Equipment

1 January 2022




- IAS 37 (Amendments)

Provisions, Contingent Liabilities and Contingent Assets

1 January 2022




- IFRS 9 (Amendments)

Financial Instruments

1 January 2022




- IFRS 3 (Amendments)

Business Combinations

1 January 2022




- IAS 41 (Amendments)

Agriculture

1 January 2022




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

Effective Date




- IAS 1 (Amendments)

Presentation of Financial Statements

1 January 2023




- IFRS 17

Insurance Contracts

1 January 2023




- IAS 8 (Amendments)

Accounting Policies, Changes in Accounting Estimates and Errors

1 January 2023




- IAS 12 (Amendments)

Income Taxes

1 January 2023




2. Analysis of results

The Group has determined it has two reportable segments: Taste & Nutrition and Dairy Ireland. The Taste & Nutrition segment is a world leading taste and nutrition partner for the food, beverage and pharmaceutical markets. Kerry innovates with its customers to create great tasting products, with improved nutrition and functionality, whilst ensuring better impact for the planet. The Taste & Nutrition segment supplies industries across Ireland, Europe, Americas and APMEA (Asia Pacific, Middle East and Africa). The Dairy Ireland segment is a leading Irish provider of value-add dairy ingredients and consumer products.

 

 



 

 



 

Half year ended 30 June 2022 - Unaudited

Half year ended 30 June 2021 - Unaudited

Year ended 31 December 2021 - Audited

 

 

 

Group

 



Group




Group


 

 

 

Eliminations

 



Eliminations




Eliminations


 

Taste &

Dairy

and

 

Taste &

Dairy

and


Taste &

Dairy

and


 

Nutrition

Ireland

Unallocated

Total

Nutrition

Ireland

Unallocated

Total

Nutrition

Ireland

Unallocated

Total

 

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

€'m

 

 

 

 

 









 

 

 

 

 









External revenue

3,431.2

626.6

-

4,057.8

2,679.0

903.1

-

3,582.1

5,689.3

1,661.3

-

7,350.6

Inter-segment revenue

13.7

68.8

(82.5)

-

23.4

56.7

(80.1)

-

40.1

116.3

(156.4)

-





 









 

 

 

 

 









Revenue

 

3,444.9

695.4

(82.5)

4,057.8

2,702.4

959.8

(80.1)

3,582.1

5,729.4

1,777.6

(156.4)

7,350.6

 

 

 

 

 









 

 

 

 

 









EBITDA*

515.4

38.4

(36.1)

517.7

412.7

80.1

(34.9)

457.9

1,013.5

136.0

(72.5)

1,077.0


 

 

 

 










 

 

 

 









Depreciation

(108.1)




(100.8)




(201.5)

Intangible asset amortisation

(42.0)




(39.2)




(80.8)

Non-trading items

(69.5)




(20.8)




91.5

 

 

 

 

 









 

 

 

 

 









Operating profit

298.1




297.1




886.2

 

 

 

 

 









Finance income

0.8




0.1




0.3

Finance costs

(34.9)




(34.3)




(70.2)

Share of joint ventures profit after taxation

1.1




-




-

 

 

 

 

 









 

 

 

 

 









Profit before taxation

265.1




262.9




816.3

Income taxes

(37.5)




(35.9)




(53.3)

 

 

 

 

 









 

 

 

 

 









Profit after taxation

227.6




227.0




763.0

 

 










 









Attributable to:

 









Equity holders of the parent

227.6




227.0




763.0

Non-controlling interests

-




-




-


 










 










227.6




227.0




763.0

 

 

 

 

 






















*EBITDA represents profit before finance income and costs, income taxes, depreciation (net of capital grant amortisation), intangible asset amortisation, non-trading items and share of joint ventures profit after taxation.

 

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 2022

- Unaudited

Half year ended 30 June 2021

- Unaudited

Year ended 31 December 2021

- Audited


 

Taste &

Dairy

 


Taste &

Dairy



Taste &

Dairy



 

Nutrition

Ireland

Total


Nutrition

Ireland

Total


Nutrition

Ireland

Total


 

€'m

€'m

€'m


€'m

€'m

€'m


€'m

€'m

€'m


 

 

 

 













 









Food

 

2,271.0

578.0

2,849.0


1,814.7

866.1

2,680.8


3,837.5

1,587.4

5,424.9

Beverage

 

920.5

48.6

969.1


720.1

37.0

757.1


1,515.2

73.9

1,589.1

Pharma

 

239.7

-

239.7


144.2

-

144.2


336.6

-

336.6

 

 

 

 

 









 

 

 

 

 









External revenue

3,431.2

626.6

4,057.8


2,679.0

903.1

3,582.1


5,689.3

1,661.3

7,350.6


 

 

 

 









 

Analysis by primary geographic market

 

Disaggregation of revenue from external customers is analysed by geographical split:

 

 

 



 

Half year ended 30 June 2022

- Unaudited

Half year ended 30 June 2021

- Unaudited

Year ended 31 December 2021

- Audited


 

Taste &

Dairy

 


Taste &

Dairy



Taste &

Dairy



 

Nutrition

Ireland

Total


Nutrition

Ireland

Total


Nutrition

Ireland

Total


 

€'m

€'m

€'m


€'m

€'m

€'m


€'m

€'m

€'m


 

 

 

 













 









Republic of Ireland

40.6

241.6

282.2


31.2

212.6

243.8


64.1

394.6

458.7

Rest of Europe

688.6

303.3

991.9


540.9

609.5

1,150.4


1,168.7

1,089.6

2,258.3

Americas

1,933.8

46.8

1,980.6


1,497.5

44.5

1,542.0


3,137.5

97.7

3,235.2

APMEA

768.2

34.9

803.1


609.4

36.5

645.9


1,319.0

79.4

1,398.4

 

 

 

 









 

 

 

 









External revenue

3,431.2

626.6

4,057.8


2,679.0

903.1

3,582.1


5,689.3

1,661.3

7,350.6


 

 

 

 









 

 

 

 

 









The accounting policies of the reportable segments are the same as those detailed in the Statement of accounting policies in the 2021 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.

 

Prior periods 30 June 2021 and 31 December 2021 have been re-presented to reflect the changes in our reporting segments as at 1 January 2022. Within Taste & Nutrition, the dairy processing activities in Ireland have been realigned with the dairy activities in the Consumer Foods business, comprising the new Group reporting segment of Dairy Ireland. Included within the Dairy Ireland 30 June 2021 and 31 December 2021 comparatives are the results of the Consumer Foods Meats and Meals business which was disposed by the Group on 27 September 2021.

 

3. Non-trading items

 

 

 






 

 

 

 

Half year

Half year

Year

 


 

 

 

 

ended

ended

ended

 


 

 

 

 

30 June 2022

30 June 2021

31 Dec. 2021

 


 

 

 

 

Unaudited

Unaudited

Audited

 


 

 

 

Notes

€'m

€'m

€'m

 


 

 

 


 



 









 

Acquisition integration costs

(i)

(1.7)

(5.5)

(54.9)

 

Global Business Services expansion

(ii)

(7.3)

(13.0)

(33.3)

 

(Loss)/profit on disposal of businesses and assets

(iii)

(1.7)

(2.3)

179.7

 

Accelerate Operational Excellence

(iv)


(17.6)

-

-

 

Russian and associated markets costs

(v)


(41.2)

-

-

 




 



 

 

 

 

 

 


 



 


 

 

 

 


(69.5)

(20.8)

91.5

 

Tax on above

 


7.4

1.0

26.3

 

Tax on inter-group transfer

(vi)


-

-

16.6

 




 



 


 

 

 

 


 



 

Non-trading items (net of tax)

 


(62.1)

(19.8)

134.4

 

 

 


 



 

 (i) Acquisition integration 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 €nil (30 June 2021: €0.1m; 31 December 2021: €12.4m) arose due to tax deductions available on acquisition related costs.

 

 

 

(ii) Global Business Services expansion

 

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 2022, these costs reflect relocation of resources, advisory fees, redundancies and the streamlining of operations. The associated tax credit was €1.4m (30 June 2021: €0.4m; 31 December 2021: €1.2m).

 

 

 

(iii) (Loss)/profit 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 €3.2m resulting in a loss of €1.7m for the period ended 30 June 2022. During 2021, the Group disposed of its Meats and Meals business operating in Ireland and the UK from the Consumer Foods (now Dairy Ireland) division and during the year also disposed of a small operation in Taste & Nutrition Europe for a consideration of €813.6m resulting in a gain of €230.9m. In addition, the Group disposed of property, plant and equipment and computer software in North America, Europe and APMEA for a combined consideration of €19.4m resulting in a loss of €2.6m for the year ended 31 December 2021. A tax credit of €0.1m (30 June 2021: €0.5m; 31 December 2021: €0.5m) arose on the disposal of businesses and assets. In 2021, assets classified as held for sale of property, plant and equipment based in the USA and Europe were impaired to their value less costs to sell by €48.6m, the related tax credit was €12.2m.

 

 

 

(iv) Accelerate Operational Excellence

 

These one-off costs predominantly reflect consultancy fees and project management costs incurred in the period relating to our Accelerate Operational Excellence programme. A tax credit of €4.9m (30 June 2021: €nil; 31 December 2021: €nil) arose due to tax deductions available on accelerated operational excellence costs.

 

 

(v) Russian and associated markets costs

 

As previously announced on 4 April 2022, the Group is suspending its operations in Russia and Belarus. This suspension is being managed in an orderly manner, during which the Group is continuing to pay employees and fulfil our legal obligations and a decision has been made to classify these businesses as held for sale (see note 7). The assets of these businesses have been impaired to their fair value less costs to sell resulting in a charge of €37.9m (30 June 2021: €nil; 31 December 2021: €nil) to the Condensed Consolidated Income Statement for the impairment of goodwill, brand-related intangibles, fixed assets, right-of-use assets and working capital. The fair value of these assets less costs to sell were based on management estimates of the fair value of these businesses, the residual fair value of these assets is €nil. The associated non-cash cumulative foreign exchange losses on expected disposal of these businesses is currently estimated at €13.5m. On 7 July 2022, the Group reached agreement to sell 100% of the share capital of Unitary Manufacturing Enterprise "Vitella", a Taste & Nutrition entity based in Belarus. On 22 July 2022, the Group reached agreement to divest 100% of the share capital of Kerry Limited Liability Company, its subsidiary in Russia, to local management.

 

During the period, the Group also impaired business assets held in Ukraine amounting to €3.3m, which included property, plant and equipment, right-of-use assets and working capital. These impairments have been recorded in the Condensed Consolidated Income Statement as part of non-trading items.

 

A tax credit €1.0m (30 June 2021: €nil; 31 December 2021: €nil) arose due to tax deductions available on the impairment of assets held for sale.

 

(vi) Tax on inter-group transfer

 

During 2021, a net tax credit of €16.6m arose as a result of the transfer of intangible assets between two wholly owned subsidiaries based in two different tax jurisdictions.

 

 

4. Finance income and costs

 




 




Half year

Half year

Year


ended

ended

ended


30 June 2022

30 June 2021

31 Dec. 2021


Unaudited

Unaudited

Audited


€'m

€'m

€'m


 



 




Finance income:




Interest income on deposits

0.8

0.1

0.3


 




 



Finance costs:

 



Interest payable

(33.7)

(32.8)

(66.7)

Interest on lease liabilities

(1.9)

(2.4)

(4.4)

Interest rate derivative

0.1

1.3

1.6


 




 




(35.5)

(33.9)

(69.5)


 



Net interest income/(cost) on retirement benefits obligation

0.6

(0.4)

(0.7)


 




 



Finance costs

(34.9)

(34.3)

(70.2)


 



 

5. Earnings per A ordinary share


 



 


 



 


Half year

Half year

Year

 


ended

ended

ended

 


30 June 2022

30 June 2021

31 Dec. 2021

 


Unaudited

Unaudited

Audited



EPS

cent

 

€'m

EPS

cent

 

€'m

EPS

cent

 

€'m



 

 







 

 





Basic earnings per share

 

 






Profit after taxation attributable to equity holders of the parent


128.4

227.6

128.2

227.0

430.6

763.0



 

 







 

 





Diluted earnings per share


 

 





Profit after taxation attributable to equity holders of the parent


128.2

227.6

128.0

227.0

429.9

763.0



 

 





 

 

 


 

 







 

 







30 June 2022

30 June 2021

31 Dec. 2021



Unaudited

Unaudited

Audited

Number of Shares


m's

m's


m's



 

 







 

 





Basic weighted average number of shares


 

177.3


177.1


177.2

Impact of share options outstanding


 

0.2


0.3


0.3



 

 







 

 





Diluted weighted average number of shares


 

177.5


177.4


177.5



 

 







 

 





 

6. Dividends


 



 


 




Half year

Half year

Year


ended

ended

ended


30 June 2022

30 June 2021

31 Dec. 2021


Unaudited

€'m

Unaudited

€'m

Audited

€'m


 




 



Amounts recognised as distributions to equity shareholders in the period




Final 2021 dividend of 66.70 cent per A ordinary share paid 6 May 2022

 

118.0

107.1

107.1

(Final 2020 dividend of 60.60 cent per A ordinary share paid 14 May 2021)

 




 



Interim 2021 dividend of 28.50 cent per A ordinary share paid 12 November 2021

-

-

50.4


 




 




118.0

-

157.5


 



 

 

Since the end of the period, the Board has declared an interim dividend of 31.40 cent per A ordinary share which amounts to €55.6m. The payment date for the interim dividend will be 11 November 2022 to shareholders registered on the record date as at 14 October 2022. These Condensed Consolidated Interim Financial Statements do not reflect this dividend.

 


7. Assets classified as held for sale

 

 





 

At 30 June 2022 and 31 December 2021, the Group held certain property, plant and equipment classified as held for sale in the Taste & Nutrition segment in Europe and North America. In addition, the Group classified the Taste & Nutrition businesses located in Russia and Belarus as assets held for sale during the period, the residual fair value of these assets on the Condensed Consolidated Balance Sheet is €nil.

 

At 30 June 2021, the Group had net assets classified as held for sale of €501.2m. On 27 September 2021, the Group disposed of its Meats and Meals business operating in Ireland and the UK from the Consumer Foods (now Dairy Ireland) division and during 2021 also disposed of a small operation in Taste & Nutrition Europe for a consideration of €813.6m resulting in a gain of €230.9m. The consideration of €813.6m comprises of the €819.0m as previously announced for the sale of the Meats and Meals business net of working capital and debt adjustments and €2.9m for a small operation disposed of in Taste & Nutrition Europe. These businesses were not deemed to be discontinued operations and goodwill was allocated to these disposed businesses using an appropriate allocation methodology aligned with IAS 36 'Impairment of Assets'.

 

The major classes of assets and liabilities comprising the operations classified as held for sale are outlined in the table below: 

 


 


 

 

 

 

Half year

Half year

Year


 

 

 

 

ended

ended

ended


 

 

 

 

30 June 2022

30 June 2021

31 Dec. 2021


 

 

 

 

Unaudited

Unaudited

Audited


 

 

 


€'m

€'m

€'m


 

 

 


 











Property, plant and equipment

 

22.4

127.2

18.7

Intangible assets

 

-

312.6

-

Inventories

 

-

46.4

-

Trade and other receivables

 


-

37.2

-




 



 

 

 

 

 


 



Total assets classified as held for sale


22.4

523.4

18.7

 


 



 


 



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*


22.4

501.2

18.7

 

 


 



 *The analysis in the table above excludes any transaction and other attributable costs.

 

8. Retirement benefits obligation

 



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


ended

ended

ended


30 June 2022

30 June 2022

30 June 2022


Unaudited

Unaudited

Unaudited


€'m

€'m

€'m


 



 




Net recognised surplus/(deficit) in plans before deferred tax

221.6

(19.8)

201.8

Net related deferred tax (liability)/asset

(42.8)

5.1

(37.7)


 

 

 


 

 

 

Net recognised surplus/(deficit) in plans after deferred tax

178.8

(14.7)

164.1


 




 



At 30 June 2022, the net surplus before deferred tax for defined benefit post-retirement schemes was €201.8m (30 June 2021: €51.3m; 31 December 2021: €66.2m). This was calculated by rolling forward the defined benefit post-retirement schemes' liabilities at 31 December 2021 to reflect material movements in underlying assumptions over the period while the defined benefit post-retirement schemes' assets at 30 June 2022 are measured at market value. The improvement in the funding position before deferred tax of €135.6m was driven by favourable movements in actuarial assumptions, primarily higher discount rates, which were partially offset by reduced asset values.

 

The surplus at 30 June 2022 relates to the Irish and UK schemes and has been recognised in accordance with IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction' as it has been determined that the Group has an unconditional right to a refund of the surplus.


 




Schemes

Schemes



in Surplus

in Deficit

Total


Half year

Half year

Half year


ended

ended

ended


30 June 2021

30 June 2021

30 June 2021


Unaudited

Unaudited

Unaudited


€'m

€'m

€'m









Net recognised surplus/(deficit) in plans before deferred tax

75.8

(24.5)

51.3

Net related deferred tax (liability)/asset

(13.0)

4.9

(8.1)









Net recognised surplus/(deficit) in plans after deferred tax

62.8

(19.6)

43.2


 




 




 








Schemes

Schemes



in Surplus

in Deficit

Total


 Year

Year

Year


ended

ended

ended


31 Dec. 2021

31 Dec. 2021

31 Dec. 2021


Audited

Audited

Audited


€'m

€'m

€'m









Net recognised surplus/(deficit) in plans before deferred tax

90.3

(24.1)

66.2

Net related deferred tax (liability)/asset

(14.8)

4.9

(9.9)









Net recognised surplus/(deficit) in plans after deferred tax

75.5

(19.2)

56.3


 




 



 

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

 

€'m

€'m

€'m

€'m

€'m

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

Interest rate swaps

-

-

38.0

-

38.0

Cash at bank and in hand

757.2

-

-

-

757.2

 

 

 

 

 

 

 

 

 

 

 

 

 

757.2

-

38.0

-

795.2

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Interest rate swaps

-

-

(17.4)

-

(17.4)


 

 

 

 

 

 

 

 

 

 

 

Bank overdrafts

(13.0)

-

-

-

(13.0)

Bank loans

(2.7)

-

-

-

(2.7)

Senior notes

(3,154.6)

4.4

-

-

(3,150.2)

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings and overdrafts

(3,170.3)

4.4

-

-

(3,165.9)

 

 

 

 

 

 

 

 

 

 

 

 

Net debt - pre lease liabilities

(2,413.1)

4.4

20.6

-

(2,388.1)

Lease liabilities

(68.2)

-

-

-

(68.2)


 

 

 

 

 

 

 

 

 

 

 

Net debt at 30 June 2022 - unaudited

(2,481.3)

4.4

20.6

-

(2,456.3)













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:






Interest rate swaps

-

-

-

-

-













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)













Net debt at 30 June 2021 - unaudited

(2,002.4)

(15.8)

37.6

-

(1,980.6)

 






 

 

 

 

 

 

Assets:






Interest rate swaps

-

-

34.6

-

34.6

Cash at bank and in hand

1,039.1

-

-

-

1,039.1














1,039.1

-

34.6

-

1,073.7













Liabilities:






Interest rate swaps

-

-

-

-

-













Bank overdrafts

(5.3)

-

-

-

(5.3)

Bank loans

(2.9)

-

-

-

(2.9)

Senior notes

(3,104.5)

(10.9)

-

-

(3,115.4)













Borrowings and overdrafts

(3,112.7)

(10.9)

-

-

(3,123.6)













Net debt - pre lease liabilities

(2,073.6)

(10.9)

34.6

-

(2,049.9)

Lease liabilities

(74.2)

-

-

-

(74.2)













Net debt at 31 December 2021 - audited

(2,147.8)

(10.9)

34.6

-

(2,124.1)

 







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 2022, the Group's debt portfolio included:

- US$750m of senior notes issued in 2013, maturing in 2023 (the 2023 senior notes). At the time of issuance, US$250m were swapped, using cross currency swaps, to euro;

- €750m of senior notes issued in 2015 and €200m issued in April 2020 as a tap onto the original issuance (the 2025 senior notes). €175m of the issuance in 2015 were swapped, using cross currency swaps, to US dollar;

- €750m of senior notes issued in 2019 (the 2029 senior notes); and

- €750m of euro sustainability-linked bond notes issued in 2021 (the 2031 SLB senior notes).

No interest rate derivatives were entered into for the 2029 senior notes and 2031 SLB senior notes issuances.

 

The adjustment to senior notes classified under liabilities at fair value through profit or loss of €4.4m debit (30 June 2021: €15.8m credit; 31 December 2021: €10.9m credit) 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:


Total pre CCS

Half year ended

30 June 2022

Unaudited

€'m

Impact of CCS

Half year ended

30 June 2022

Unaudited

€'m

Total after CCS

Half year ended

30 June 2022

Unaudited

€'m

Half year

ended

30 June 2021

Unaudited

€'m

Year

ended

31 Dec. 2021

Audited

€'m


 

 

 




 

 

 



Euro

(2,308.9)

(62.6)

(2,371.5)

(1,683.0)

(1,860.4)

Sterling

65.8

-

65.8

109.3

74.5

US Dollar

(316.7)

62.6

(254.1)

(466.2)

(460.5)

Other

103.5

-

103.5

59.3

122.3

 

 

 

 



 

 

 

 




(2,456.3)

-

(2,456.3)

(1,980.6)

(2,124.1)


 

 

 



iii) The following table details the maturity profile of the Group's net debt:


 

 

 

 

 


On demand &

up to 1 year

€'m

Up to

2 years

€'m

2 - 5

years

€'m

 

> 5 years

€'m

 

Total

€'m


 

 

 

 

 


 

 

 

 

 

Cash at bank and in hand

757.2

-

-

-

757.2

Interest rate swaps

36.3

-

(15.7)

-

20.6

Bank overdrafts

(13.0)

-

-

-

(13.0)

Bank loans

(0.1)

(2.6)

-

-

(2.7)

Senior notes

(711.1)

-

(952.8)

(1,486.3)

(3,150.2)


 

 

 

 

 


 

 

 

 

 

Net debt - pre lease liabilities

69.3

(2.6)

(968.5)

(1,486.3)

(2,388.1)

Lease liabilities (discounted)

(25.7)

(18.3)

(19.7)

(4.5)

(68.2)

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2022 - unaudited

43.6

(20.9)

(988.2)

(1,490.8)

(2,456.3)


 

 

 

 

 


 

 

 

 

 

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

1,039.1

-

-

-

1,039.1

Interest rate swaps

-

27.6

7.0

-

34.6

Bank overdrafts

(5.6)

-

-

-

(5.6)

Bank loans

-

-

-

-

-

Senior notes

-

(669.0)

(963.5)

(1,485.5)

(3,118.0)













Net debt - pre lease liabilities

1,033.5

(641.4)

(956.5)

(1,485.5)

(2,049.9)

Lease liabilities (discounted)

(28.0)

(19.7)

(20.9)

(5.6)

(74.2)













At 31 December 2021 - audited

1,005.5

(661.1)

(977.4)

(1,491.1)

(2,124.1)







At 30 June 2022, the Group had cash on hand of €757.2m. At the period end, the Group had undrawn committed Syndicate revolving credit facility of €1,100m. Cash at bank and in hand includes an amount of €199.8m held on short-term deposit of which €104.7m was held under a Sustainable Deposits programme. The amount of cash and cash equivalent balances that are not available for use by the Group is €0.3m due to the Russian and associated markets divestment. 

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:

 

 

 


 

 



 

 


Fair Value

30 June 2022

30 June 2021

31 Dec. 2021

 

 


Hierarchy

Unaudited

Unaudited

Audited

 

 


 

€'m

€'m

€'m

 

 


 

 



 

 


 

 



 

Financial assets





 

 

Interest rate swaps:

Non-current

Level 2

-

37.6

34.6

 


Current

Level 2

38.0

-

-

 

Forward foreign exchange contracts:

Non-current

Level 2

2.7

-

0.2

 


Current

Level 2

70.3

8.2

15.2

 

Financial asset investments:

Fair value through profit or loss

Level 1

43.1

41.7

45.5

 


Fair value through other comprehensive income

Level 3

9.3

4.2

4.4

 




 



 

Financial liabilities



 



 

Interest rate swaps:

Non-current

Level 2

(15.7)

-

-

 

 

Current

Level 2

(1.7)

 

-

-

 

Forward foreign exchange contracts:

Non-current

Level 2

(1.1)

-

(0.5)

 


Current

Level 2

(106.9)

(17.8)

(40.1)

 




 



 




 



 

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.

31 Dec.

 

 

Fair Value

2022

2022

2021

2021

2021

2021

 

 

Hierarchy

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Audited

 

 

 

€'m

€'m

€'m

€'m

€'m

€'m

 

 

 







 

 

 







Financial liabilities

 







Senior notes - Public

Level 2

(3,154.6)

(2,829.5)

(2,326.5)

(2,431.9)

(3,104.5)

(3,174.7)

 

 

 







 

 

 







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

bank and

in hand

€'m

Interest

Rate

Swaps

€'m

Overdrafts

due within

1 year*

€'m

Borrowings

due within

1 year*

€'m

Borrowings

due after

1 year*

€'m

Net Debt

- pre lease

liabilities

€'m

 

Lease

liabilities*

€'m

 

Net

Debt

€'m

 

 

 

 

 

 

 

 

 

 

 

 







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)



















Cash flows

628.2

-

(1.9)

(0.3)

(745.8)

(119.8)

19.1

(100.7)

Foreign exchange adjustments

15.9

4.4

(0.1)

-

(36.3)

(16.1)

(2.7)

(18.8)

Other non-cash movements

-

(7.4)

-

-

6.4

(1.0)

(23.0)

(24.0)

 









 









At 31 December 2021 - audited

1,039.1

34.6

(5.3)

(0.3)

(3,118.0)

(2,049.9)

(74.2)

(2,124.1)



















Cash flows

(300.0)

-

(7.4)

(0.1)

-

(307.5)

15.9

(291.6)

Foreign exchange adjustments

18.1

4.4

(0.3)

(50.2)

(0.4)

(28.4)

(4.1)

(32.5)

Other non-cash movements

-

(18.4)

-

(660.6)

676.7

(2.3)

(5.8)

(8.1)


 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

At 30 June 2022 - unaudited

757.2

20.6

(13.0)

(711.2)

(2,441.7)

(2,388.1)

(68.2)

(2,456.3)

 









*Liabilities from financing activities.


10. Business combinations

 

The following acquisitions were completed by the Group during the period to 30 June 2022: 

 

 

 

 

 

Acquisition

Type

Completion date

Percentage acquired

Segment

Principal activity

Strategic rationale

 

 

 

 

 

 

 

 

 

 

Almer Malaysia Sdn. Bhd.

Equity

March 2022

100% share acquisition

Taste &

Nutrition

A producer of quality spray dried ingredients servicing the Snacks and Dairy EUMs based in Malaysia.

 

Further supports the Group's growth initiatives in authentic taste and emerging markets.

 

c-LEcta GmbH*

Equity

March 2022

93% share acquisition

Taste &

Nutrition

A leading biotechnology innovation company based in Germany specialising in precision fermentation, optimised bio-processing and bio-transformation for the creation of high-value targeted enzymes and ingredients.

 

Brought leading innovation capabilities in enzyme engineering, fermentation and bio-processing to further enhance Kerry's key growth platform development.

 

Natreon, Inc.

Equity

March 2022

100% share acquisition

Taste &

Nutrition

A leader in Ayurvedic and botanical ingredients, with strong research capabilities and facilities in the USA and India.

Brings a portfolio of clinically backed branded ingredients across the need states of cognition and healthy ageing.






*The Group has a 93% equity shareholding in c-LEcta GmbH. It is consolidated in the Group financial statements as a 93% owned subsidiary on the basis of contractual arrangements with the remaining portion recognised as non-controlling interests.

The table below provides details of the identifiable net assets, including adjustments to provisional fair values, in respect of the acquisitions completed during the period to 30 June 2022:

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Half year

 

 

 

 

 

 

 

 

ended

30 June 2022

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

€'m

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 


 

Recognised amounts of identifiable assets acquired and liabilities assumed:

 

Non-current assets

 


 


Property, plant and equipment

 

17.5

 


Brand related intangibles

 

101.5

 

Current assets


 

 

 


Cash at bank and in hand

 

24.8

 


Inventories


 

13.3

 


Trade and other receivables

 

10.7

 

Current liabilities

 

 

 


Trade and other payables

 

(15.2)

 

Non-current liabilities

 

 

 


Deferred tax liabilities

 

(28.3)

 


Other non-current liabilities

 

(2.0)

 

 

 

 

 

Total identifiable assets

 

122.3

 



 

 

 

Non-controlling interests

 

(1.7)

 

Goodwill

 

146.8

 



 

 

 



 

 

 

Total consideration

267.4

 

 

 



 

 

 

Satisfied by:

 

 

 

Cash

 

267.4

 

Deferred payment

 

-

 



 

 

 



 

 

 



 

267.4

 



 

 

 



 


 

Net cash outflow on acquisition:

 


 




 

Half year

 




 

ended

 




 

30 June 2022

 




 

Unaudited

 




 

€'m

 




 


 




 


 

Cash

 

267.4

 

Less: cash and cash equivalents acquired

 

(24.8)

 

Plus: debt acquired (included in other non-current liabilities above)

 

2.0

 



 

 

 



 

 

 



 

244.6

 



 

 

 

 

The acquisition method of accounting has been used to consolidate the businesses acquired in the Group's Condensed Consolidated Interim Financial Statements. Given that the valuation of the fair value of assets and liabilities recently acquired is still in progress, some of the values in the previous table are determined provisionally. For the acquisitions completed in 2021, to date, there have been no material revisions of the provisional fair value adjustments since the initial values were established. 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.

 

The goodwill is attributable to the expected profitability, revenue growth, future market development and assembled workforce of the acquired businesses and the synergies expected to arise within the Group after the acquisition. None of the goodwill recognised is expected to be deductible for income tax purposes.

 

Transaction expenses related to these acquisitions of €1.7m were charged in the Group's Condensed Consolidated Income Statement during the financial period. The fair value of the financial assets includes trade and other receivables with a fair value of €10.7m and a gross contractual value of €10.8m.

 

Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the Parent Company and are presented separately in the Condensed Consolidated Income Statement and within equity in the Condensed Consolidated Balance Sheet, distinguished from Parent Company shareholders' equity. Where not all of the equity of a subsidiary is acquired the non-controlling interests are recognised at the non-controlling interest's share of the acquiree's net identifiable assets.

 

The revenue and profit after taxation attributable to owners of the parent to the Group contributed from date of acquisition for all business combinations effected during the period is as follows:

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Half year

 

 

 

 

 

 

 

 

ended

30 June 2022

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

€'m

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 


 

Revenue



 

26.5

 

Profit after taxation attributable to equity holders of the parent

 

2.5

 

 






 


 

 






 


 

 






 


 

The revenue and profit after taxation attributable to equity holders of the parent to the Group determined in accordance with IFRS as though the acquisition date for all business combinations effected during the period had been the beginning of that period would be as follows:

 

 

 





 


 

 





 

 

Kerry Group

Consolidated

 

 





 

 

excluding

Group

 

 





 

2022

2022

including

 

 





 

acquisitions

acquisitions

acquisitions

 

 





 

Unaudited

Unaudited

Unaudited

 

 





 

€'m

€'m

€'m

 

 






 


 

 






 


 

 






 


 

Revenue

41.0

4,031.3

4,072.3

 

Profit after taxation attributable to equity holders of the parent

3.7

225.1

228.8

 

 






 


 

 






 


 

 11. Share capital 

 

 

 



 

 

Half year

Half year

Year

 

 

ended

ended

ended

 

 

30 June 2022

30 June 2021

31 Dec. 2021

 

 

Unaudited

Unaudited

Audited

 

 

€'m

€'m

€'m