Earnings Release • Sep 23, 2012
Earnings Release
Open in ViewerOpens in native device viewer
Zurich/Switzerland, 24 September 2012 – ARYZTA AG announces financial results for the financial year ended 31 July 2012
Commenting on the results, ARYZTA AG Chief Executive Officer Owen Killian said:
"ARYZTA's performance in FY 2012 was satisfactory given the challenging macro environment. Weak consumer spending affected our customers and the impact of government austerity measures was particularly noticeable in Europe. The business performance reflects the benefits of good progress on implementing internal transformation measures designed to better support our customers. This will continue throughout FY 2013.
Resurgent food inflation adds additional challenges for ARYZTA and its customers. We remain focused on working closely with our customers to manage inflationary pressures in order to maintain affordability without compromising quality or service.
We have no great expectation of any recovery in consumer behaviour during FY 2013 to support revenue growth and therefore expect underlying fully diluted EPS growth to broadly mirror FY 2012 with an increase of 5%–10%."
ARYZTA AG ('ARYZTA') is a global food business with a leadership position in speciality bakery. ARYZTA is based in Zurich, Switzerland, with operations in North America, South America, Europe, Asia, Australia and New Zealand. ARYZTA has a primary listing on the SIX Swiss Exchange and a secondary listing on the ISE Irish Exchange (SIX: ARYN, ISE: YZA).
ARYZTA is the majority shareholder (68.8%) in Origin Enterprises plc, which has a listing on the AIM in London and the ESM in Dublin (AIM: OGN, ESM: OIZ).
Paul Meade Communications Officer ARYZTA AG Tel: +41 (0) 44 583 42 00 [email protected]
An analyst call will take place today at 09:00 CET (08:00 GMT).
Dial in numbers are: Switzerland: 0565 800 007, Ireland 01 506 0153, UK 0844 493 3800, USA 1 631 510 7498, International +44 (0) 1452 555 566. Please provide the following code: 25679718 to access the call.
Printable pdf version of slides will be available to download from the ARYZTA website www.aryzta.com 15 minutes before the call.
A conference call webcast replay will be available from the ARYZTA website www.aryzta.com
| in Euro `000 | July 2012 | July 2011 | % Change |
|---|---|---|---|
| Group revenue | 4,207,667 | 3,876,923 | 8.5% |
| EBITA2 | 444,050 | 393,326 | 12.9% |
| EBITA margin | 10.6% | 10.1% | – |
| Associates and JVs, net | 14,200 | 19,479 | – |
| EBITA incl. associates and JVs | 458,250 | 412,805 | 11.0% |
| Finance cost, net | (65,311) | (67,916) | – |
| Hybrid instrument accrued dividend | (16,642) | (11,801) | – |
| Pre-tax profits | 376,297 | 333,088 | – |
| Income tax | (63,776) | (52,295) | – |
| Non-controlling interests | (21,476) | (20,753) | – |
| Underlying fully diluted net profit | 291,045 | 260,040 | 11.9% |
| Underlying fully diluted EPS (cent) | 337.5c1 | 310.1c1 | 8.8% |
1 The July 2012 weighted average number of ordinary shares used to calculate diluted earnings per share is 86,228,153 (2011: 83,868,319). The increase in the weighted average number of ordinary shares used to determine diluted earnings per share is due primarily to the weighted average increase of 2,300,392 shares, as a result of the issuance of 4,252,239 shares during January 2012. The remaining increase relates to the continued vesting of management share based incentives.
2 See glossary in section 20 for definitions of financial terms and references used in this document.
| in Euro million | Food Europe | Food North America |
Food Rest of World |
Total Food Group |
Origin Total Group | |
|---|---|---|---|---|---|---|
| Group revenue | 1,273.7 | 1,372.4 | 221.5 | 2,867.6 | 1,340.0 | 4,207.6 |
| Underlying growth | (1.0)% | 7.0% | 13.0% | 3.8% | 7.1% | 4.9% |
| Acquisitions and disposals | 7.0% | 2.1% | 7.0% | 4.7% | (4.5)% | 1.6% |
| Currency | 1.5% | 4.1% | 3.0% | 2.8% | 0.5% | 2.0% |
| Revenue growth | 7.5% | 13.2% | 23.0% | 11.3% | 3.1% | 8.5% |
| in Euro `000 | July 2012 | July 2011 | % Change |
|---|---|---|---|
| Food Group | |||
| Food Europe | 169,495 | 149,038 | 13.7% |
| Food North America | 176,291 | 148,673 | 18.6% |
| Food Rest of World | 29,040 | 24,601 | 18.0% |
| Total Food Group | 374,826 | 322,312 | 16.3% |
| Origin1 | 69,224 | 71,014 | (2.5)% |
| Total Group EBITA | 444,050 | 393,326 | 12.9% |
| Associates & JVs, net | |||
| Food JVs | 1,062 | 4,622 | (77.0)% |
| Origin associates & JVs | 13,138 | 14,857 | (11.6)% |
| Total associates & JVs, net | 14,200 | 19,479 | (27.1)% |
| Total EBITA incl. associates and JVs | 458,250 | 412,805 | 11.0% |
1 For Origin reporting purposes ERP amortisation is adjusted below reported operating profit; however, for ARYZTA presentation purposes, all ERP amortisation has been included within EBITA.
| in Euro `000 | July 2012 | July 2011 | % Change |
|---|---|---|---|
| Group revenue | 2,867,644 | 2,577,420 | 11.3% |
| EBITA | 374,826 | 322,312 | 16.3% |
| EBITA margin | 13.1% | 12.5% | – |
| JVs, net | 1,062 | 4,622 | – |
| EBITA incl. JVs | 375,888 | 326,934 | 15.0% |
| Finance cost, net | (58,717) | (57,406) | – |
| Hybrid instrument accrued dividend | (16,642) | (11,801) | – |
| Pre-tax profits | 300,529 | 257,727 | – |
| Income tax | (50,559) | (36,999) | – |
| Non-controlling interests | (3,367) | (2,666) | – |
| Underlying net profit | 246,603 | 218,062 | 13.1% |
ARYZTA's Food Group business is primarily focused on speciality baking, a niche segment of the overall bakery market. Speciality bakery consists of freshly prepared offerings giving the best value, variety, taste and convenience to consumers at the point of sale. ARYZTA's customer channels consist of a mix of convenience and independent retail, large retail, limited serve restaurants ('LSR') and other foodservice categories.
Total Food Group revenue grew by 11.3% to €2.9bn. ARYZTA's underlying Food business performed well, posting underlying revenue growth of 3.8% in what was a very a challenging trading environment, particularly in the Food Europe segment.
Food EBITA increased by 16.3%, while EBITA margins expanded by 60bps to 13.1%, reflecting the improved efficiencies being derived through ARYZTA's Transformation Initiative ('ATI'). This translated into a 13.1% increase in underlying net profit within the Food Group.
Food Europe has leading market positions in the European speciality bakery market. It has a diversified customer base including convenience retail, gas stations, multiple retail, restaurants, catering and hotels, leisure and LSR.
Food Europe revenue grew by 7.5% to €1.3bn, with currency modestly boosting reported revenue by 1.5%. The contribution from acquisitions of 7.0% was somewhat offset by a decline in underlying revenues of 1.0%, reflecting weak consumer spending and the growing impact of government austerity measures across the region. These macroeconomic factors reinforced the continuing trend of consumers switching channels from independent convenience towards large retail and LSR.
The growth in Food Europe was primarily acquisition-driven reflecting the acquisition of Honeytop in the UK in August 2011. Honeytop primarily manufactures flat breads and supplies both large retail and LSR customers.
During the year, further investment in expanding and upgrading facilities in Poland commenced, which is aimed at meeting increased demand from European LSR customers.
EBITA increased by 13.7% to €169.5m due to the benefit of ATI measures and changes in the food offering. This also led to EBITA margins expanding by 70bps, versus FY 2011, to 13.3%.
Throughout the year, macro-economic conditions remained challenging. This was not confined solely to Ireland and the UK, as the Euro financial crisis continued to impact government spending and consumer sentiment across the European continent. In this context, the relative performance of the Food Europe segment remained robust.
Food North America is a leading player in the US speciality bakery market. It has a diversified customer base, including multiple retail, restaurants, catering and hotels, leisure, hospitals, military, fundraising and LSRs. ARYZTA is the leader in high value artisan bakery via La Brea Bakery, which focuses on the premium bakery segment. ARYZTA's well established partnerships with key global LSR customers, which dominate the North American convenience food landscape, position the Group to grow market share in tandem with customer growth.
Food North America revenue grew by 13.2% to €1.4bn, with acquisition contribution of 2.1% and underlying revenue growth of 7.0%. Favourable currency movements benefited the reported performance in the year by 4.1%.The underlying organic growth in North America was very strong, reflective of progress on deepening customer relationships and increased availability of a broader range of products to North American customers. The performance also benefited from stronger consumer spending trends in North America compared to Europe.
EBITA grew by 18.6% to €176.3m due to positive underlying revenue growth and good margin expansion. Margins expanded by 50bps to 12.8% during the year, benefiting from progress on the recovery of raw material costs, ongoing efficiencies and revenue growth arising from the ATI programme.
Food North America is well advanced in terms of operating on a single ERP platform. Further work will take place during FY 2013 to leverage this investment and increase returns. During the year, new executive management and refocused sales teams have been appointed. The objectives driving these changes remains delivering improved customer centric metrics and leveraging growth opportunities in the region through increased sales penetration levels.
ARYZTA operates in Brazil, Australia, New Zealand, Malaysia and Japan. During the year, businesses in Singapore and Taiwan were also added. These acquisitions performed satisfactorily and to expectation.
Food Rest of World revenues grew by 23.0% to €221.5m, with acquisition contribution of 7.0% and underlying revenue growth of 13.0%. Favourable currency benefited reported growth by 3.0%.
EBITA grew by 18.0% to €29.0m while, EBITA margins declined by 60bps to 13.1%. This was largely due to the impact of transportation costs to Brazil during the year, to meet
demand while additional capacity was being commissioned. As the new facility became fully operational in Q4, this should assist margin progress, as these FY 2012 transport costs will not re-occur in 2013. Additional investment also commenced in Malaysia during the year and is expected to be operational during FY 2013.
The key driver of revenue growth and capacity expansion in this region remains ARYZTA's partnership with global LSR groups, which should underpin the Group's future growth prospects in this region.
Non-recurring costs were incurred during the year, as a result of ATI initiatives aimed at improving focus on the customer and on more efficient manufacturing. These non-recurring costs amounted to €83.5m during the year ending July 2012, as follows:
| in Euro `000 | Non-cash | Cash | Total |
|---|---|---|---|
| Net gain on acquisition, disposals and dilution | 1,417 | – | 1,417 |
| Transaction related costs | – | (1,804) | (1,804) |
| Asset write-downs and fair value adjustments | (7,750) | – | (7,750) |
| Severance and other staff related costs | – | (50,639) | (50,639) |
| Other costs arising on integration | – | (24,701) | (24,701) |
| Total income statement impact | (6,333) | (77,144) | (83,477) |
The bulk of the non-recurring costs were incurred in the second half of FY 2012 –82% in H2 versus 18% in H1. The non-cash costs of €6.3m related to the closure of sites during the financial year. The €77.1m cash costs incurred during the year related to severance and site decommissioning costs, as well as contractual obligations and advisory costs, with 66% related to severance and decommissioning and 22% to contractual and advisory.
Following on from the phased implementation of Enterprise Resource Planning ('ERP') throughout the business during FY 2010 and FY 2011, the ARYZTA Transformation journey will continue to advance in 2013 with additional investment planned, especially in Europe. By the end of FY 2012, SAP was operating live in Food North America, with further work ongoing to leverage its full potential and return on investment. Rolling out SAP in Food Europe remains a key focus for FY 2013.
ARYZTA is continuing with its ongoing €400m investment strategy in its existing businesses. This is aimed at supply chain optimisation, SAP implementation throughout the Food business and upgrading its manufacturing footprint to fewer, larger, more efficient multi-product bakeries. The benefits of this investment remain a key driver of ARYZTA's goal to improve its ROI to 15%+, from FY 2011 underlying food assets, by FY 2015. Further capacity reorganisation and investment will continue to occur during the coming financial year.
During the year, new executive management teams in Europe and North America were appointed to drive the ATI initiative. Alongside this, the Food Group has seen a refocus of its sales team to meet the unique channel requirements in which ARYZTA operates, and to enhance a culture of innovation. This has translated into increased customer marketing capability, especially in North America, as ARYZTA becomes more customer centric focused on offering its full food portfolio to all customers. ARYZTA views ATI as key to improving competitiveness as Food North America and Food Europe move to a single instance ERP operational platform.
A key feature and risk management task for ARYZTA during FY 2012 was to manage volatile raw material prices. During FY 2012, especially in H1, agricultural raw material inflation triggered the need for price increases. While inflationary pressures abated somewhat in Q3, they resurfaced in Q4 as drought hit hard in key grain producing regions of the world, causing prices to spike. ARYZTA uses a range of tools to deal with this key business risk. In this regard ARYZTA continues to work closely with customers to mitigate the impact of pricing on the consumer through product innovation, selection and service model efficiencies. The outlook for food raw materials continues to be volatile and is expected to remain so for the foreseeable future.
ARYZTA's 68.8% subsidiary and separately listed company, Origin, has separate funding structures, which are financed without recourse to ARYZTA. Origin's net debt amounted to €67.8m at 31 July 2012.
The consolidated net debt of the Group, excluding Origin's non-recourse debt, amounts to €976.3m. The Food Group net debt: EBITDA ratio is 2.05x (excluding hybrid instrument as debt) and interest cover of 8.10x (excluding hybrid interest). The weighted average maturity of the Food Group gross term debt is circa 5.94 years. ARYZTA intends to maintain an investment grade position in the range of 2x–3x net debt to EBITDA.
In November 2011, ARYZTA agreed an amendment to its existing revolving credit facility, which increased the facility from CHF 600m to CHF 970m and extended the maturity of the facility by two years to December 2016 with unchanged interest rate margins and financial covenants. This also added new credit providers to complement recent geographic expansion of the ARYZTA business.
In January 2012, ARYZTA offered an equity share placement (5% of the pre-existing shares issued). This issuance raised €140.9m, net of costs, and has substantially strengthened the balance sheet, leaving the Group well positioned for growth. ARYZTA's financing facilities and key financial covenants (excluding Origin, which has separate ring-fenced financing without recourse to ARYZTA) are as follows:
| Debt Funding | Principal1 | Maturity |
|---|---|---|
| Nov 2011 – Syndicated Bank Loan | CHF 970m | Dec 2016 |
| May 2010 – US Private Placement | USD 420m / EUR 25m | May 2013 – May 2022 |
| Dec 2009 – US Private Placement | USD 200m | Dec 2021 –Dec 2029 |
| Nov 2009 – Swiss Bond | CHF 200m | Mar 2015 |
| Jun 2007 – US Private Placement | USD 450m | Jun 2014 – Jun 2019 |
1 Weighted average interest cost of Food Group debt financing facilities (including overdrafts) as at 31 July 2012
of c. 4.68%.
CHF 400m Hybrid instrument with 5% coupon funded in October 2010 After first call date (October 2014) coupon equates to 905bps plus 3 month CHF LIBOR Traded on SIX Swiss exchange
Treated as 100% equity for bank covenant purposes
Treated as 25% equity for US PP covenant purposes
| at 31 July 2012 | Ratio | |
|---|---|---|
| Net Debt: EBITDA1 (hybrid as equity) | 2.05x | |
| Net Debt: EBITDA1 (hybrid as debt) | 2.75x |
1 Calculated based on the Food Group EBITDA for the year ended 31 July 2012 of €465.2m, which is then adjusted by the dividend received from Origin of €10.5m and for the pro forma full-year contribution of Food Group acquisitions.
| Food Group cash generation | ||
|---|---|---|
| in Euro `000 | July 2012 | July 2011 |
| EBIT | 275,043 | 235,780 |
| Amortisation | 99,783 | 86,532 |
| EBITA | 374,826 | 322,312 |
| Depreciation | 90,342 | 86,479 |
| EBITDA | 465,168 | 408,791 |
| Working capital movement | (19,280) | (12,970) |
| Dividends received1 | 11,183 | 13,138 |
| Maintenance capital expenditure | (46,248) | (39,272) |
| Interest and tax | (97,721) | (101,927) |
| Other non-cash charges / (income) | 1,796 | 4,187 |
| Cash flow generated from activities | 314,898 | 271,947 |
| Investment capital expenditure2 | (89,401) | (51,589) |
| Cash flows generated from activities after | ||
| capital expenditure | 225,497 | 220,358 |
| Underlying net profit | 246,603 | 218,062 |
| in Euro `000 | FY 2012 | FY 2011 |
|---|---|---|
| Food Group opening net debt as at 1 August | (955,468) | (1,115,623) |
| Cash flows generated from activities | 314,898 | 271,947 |
| Hybrid instrument proceeds | – | 285,004 |
| Net debt cost of acquisitions | (100,959) | (317,674) |
| Share placement | 140,854 | – |
| Transaction and restructuring related cash flows | (88,570) | (31,847) |
| Investment capital expenditure2 | (89,401) | (51,589) |
| Proceeds from disposal of joint venture | 4,675 | – |
| Deferred consideration | (7,247) | (12,900) |
| Dividends paid | (43,745) | (32,908) |
| Hybrid dividend | (16,305) | – |
| Foreign exchange movement3 | (139,216) | 51,106 |
| Other4 | 4,201 | (984) |
| Food Group closing net debt as at 31 July | (976,283) | (955,468) |
1 Includes dividends from Origin of €10,450,000 (July 2011: €8,550,000).
2 Includes expenditure on intangible assets.
3 Foreign exchange movement for the year ended 31 July 2012 attributable primarily to the fluctuation in the US Dollar to Euro rate between July 2011 (1.4323) and July 2012 (1.2370).
4 Other comprises primarily proceeds on disposal of fixed assets and amortisation of financing costs.
| Food | Food North |
Food Rest of |
Total Food |
|||
|---|---|---|---|---|---|---|
| in Euro million | Europe | America | World | Group | Origin | Total |
| 2012 | ||||||
| Group share net assets1 | 1,447 | 1,835 | 290 | 3,572 | 4603 | 4,032 |
| EBITA & associates/JVs cont.2 | 170 | 177 | 29 | 376 | 82 | 458 |
| ROI | 11.7% | 9.6% | 10.1% | 10.5% | 17.9% | 11.4% |
| 2011 | ||||||
| Group share net assets1 | 1,368 | 1,635 | 253 | 3,256 | 4343 | 3,690 |
| EBITA & associates/JVs cont.2 | 149 | 157 | 26 | 332 | 86 | 418 |
| ROI | 10.9% | 9.6% | 10.1% | 10.2% | 19.8% | 11.3% |
1 Net assets exclude all bank debt, cash and cash equivalents and tax-related balances.
2 ROI is calculated using pro forma trailing twelve months segmental EBITA ('TTM EBITA') reflecting the full twelve months contribution from acquisitions. EBITA is before interest, tax, non-ERP amortisation and before the impact of non-recurring items. The contribution from associates and JVs is net profit (i.e. presented after interest and tax).
3 Origin net assets adjusted for the fluctuation in its average quarterly working capital by €119,073,000 (2011: €95,544,000).
4 The Food Group WACC on a pre-tax basis is currently 8.0% (2011: 8.0%).
| Group Balance Sheet in Euro `000 |
Total Group 2012 |
Total Group 2011 |
|---|---|---|
| Property, plant and equipment | 1,022,587 | 939,949 |
| Investment properties | 29,268 | 32,180 |
| Goodwill and intangible assets | 2,871,982 | 2,650,956 |
| Associates and joint ventures | 127,384 | 124,057 |
| Other financial assets | 37,223 | 35,013 |
| Working capital | (106,857) | (128,185) |
| Other segmental liabilities | (68,542) | (59,379) |
| Segmental net assets | 3,913,045 | 3,594,591 |
| Net debt | (1,044,091) | (1,047,588) |
| Deferred tax, net | (326,657) | (309,425) |
| Income tax | (27,440) | (38,248) |
| Derivative financial instruments | (5,502) | (2,824) |
| Net assets | 2,509,355 | 2,196,506 |
| Food Group Balance Sheet in Euro `000 |
Food Group 2012 |
Food Group 2011 |
|---|---|---|
| Property, plant and equipment | 931,439 | 845,693 |
| Investment properties | 15,960 | 16,178 |
| Goodwill and intangible assets | 2,729,340 | 2,520,450 |
| Joint ventures | 2,545 | 4,976 |
| Investment in Origin | 51,045 | 51,045 |
| Working capital | (57,048) | (90,372) |
| Other segmental liabilities | (49,799) | (39,567) |
| Segmental net assets | 3,623,482 | 3,308,403 |
| Net debt | (976,283) | (955,468) |
| Deferred tax, net | (310,674) | (292,985) |
| Income tax | (16,976) | (28,299) |
| Derivative financial instruments | (1,739) | (1,918) |
| Net assets | 2,317,810 | 2,029,733 |
The Board recommends a final dividend of CHF 0.61251 to be paid on 1 February 2013, if approved by shareholders at the General Meeting to be held on 11 December 2012.
Origin is the leading agri-services group focused on integrated agronomy and agri-inputs in the UK, Ireland and Poland. ARYZTA has a holding of 95m shares in Origin (68.8% holding).
Origin reported financial and operating results in line with expectations for the year. The Board of Origin has proposed a dividend per ordinary share of 15.0 cent for the year ended 31 July 2012.
Origin's separately published results, which were released on 19 September 2012, are available at www.originenterprises.com.
The economic outlook for developed markets remains extremely challenging, particularly in Europe where financial market difficulties and government austerity measures continue to subdue consumer sentiment. Food inflation pressures have re-emerged as a business issue and ARYZTA will work closely with its customers to manage the impact of these inflationary pressures on affordability, without compromising quality or service levels.
ARYZTA's strategy to deal with this challenging market environment is through its ATI programme. ARYZTA will leverage key customer relationships to grow revenue, by focusing on product development around consumer insights and to identify cost efficiencies across the organisation.
ARYZTA has delivered an EPS compound annual growth of 13.7% since 2008, largely due to repositioning acquisitions. While this is lower than the 15% targeted in 2008, this target assumed 50% of the growth would be generated organically, which has not materialised due to weaker economic growth and consumer spending since 2009.
The current year, FY 2013, will be a further year of reorganisation and transformation. The Group expects to report year-on-year fully diluted EPS growth of 5-10% in line with FY 2012. The ATI programme is targeting a 15% return from underlying food assets by 2015.
The Board and senior management have invested significant time and resources in identifying specific risks across the Group, and in developing a culture of balanced risk minimisation. The principal risks and uncertainties of the Group, as identified by the Board, are set out on page 15.
1 Based on €0.5063 per share converted at the foreign exchange rate of one Euro to CHF 1.2098 on 20 September 2012, the date of the approval of the ARYZTA financial statements.
This report contains forward looking statements which reflect management's current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.
'EBITA' – presented before non-recurring items and related tax credits. ERP intangible asset amortisation is treated as depreciation.
'Associates and JVs, net' – presented as profit from associates and JVs, net of taxes and interest.
'EBITDA' – presented as earnings before interest, taxation, depreciation and amortisation reported for the year and before non-recurring items and related deferred tax credits.
'Non-controlling interests' – always presented after the dilutive impact of related subsidiaries' management incentives.
'Hybrid instrument' – presented as Perpetual Callable Subordinated Instrument in the Financial Statements.
'ERP' – enterprise resource planning intangible assets include the Food Group SAP and Origin Microsoft Dynamics AX software systems.
for the financial year ended 31 July 2012
| Food Group | Origin | Total Group | Total Group | |
|---|---|---|---|---|
| in Euro `000 | 2012 | 2012 | 2012 | 2011 |
| Group revenue | 2,867,644 | 1,340,023 | 4,207,667 | 3,876,923 |
| EBITA | 374,826 | 69,2244 | 444,050 | 393,326 |
| Associates and JVs, net | 1,062 | 13,138 | 14,200 | 19,479 |
| EBITA incl. associates and JVs | 375,888 | 82,362 | 458,250 | 412,805 |
| Finance cost, net | (58,717) | (6,594) | (65,311) | (67,916) |
| Hybrid instrument accrued dividend | (16,642) | – | (16,642) | (11,801) |
| Pre-tax profits | 300,529 | 75,768 | 376,297 | 333,088 |
| Income tax | (50,559) | (13,217) | (63,776) | (52,295) |
| Non-controlling interests | (3,367) | – | (21,476) | (20,753) |
| Underlying fully diluted net profit | 246,603 | 62,551 | 291,045 | 260,040 |
| Underlying fully diluted EPS (cent) | – | 45.16c1 | 337.5c2 | 310.1c2 |
| Food Group | Origin | Total Group | Total Group | |
|---|---|---|---|---|
| in Euro `000 | 2012 | 2012 | 2012 | 2011 |
| Reported net profit3 | 116,278 | 42,909 | 146,264 | 212,657 |
| Intangible amortisation | 99,783 | 6,401 | 106,184 | 90,827 |
| Tax on amortisation | (28,066) | (2,288) | (30,354) | (18,691) |
| Hybrid instrument accrued dividend | (16,642) | – | (16,642) | (11,801) |
| Net acquisition, disposal and restructuring related costs and fair value adjustments |
83,477 | 16,152 | 99,629 | 10,036 |
| Tax on asset write-down and costs arising on integration | (8,227) | (623) | (8,850) | (17,990) |
| Non-controlling interest portion of acquisition, disposal and restructuring related costs and fair value adjustments |
– | – | (4,490) | (3,325) |
| Underlying net profit | 246,603 | 62,551 | 291,741 | 261,713 |
| Dilutive impact of Origin management incentives | – | – | (696) | (1,673) |
| Underlying fully diluted net profit | 246,603 | 62,551 | 291,045 | 260,040 |
Underlying fully diluted EPS (cent) – 45.16c1 337.5c2 310.1c2
1 Origin FY 2012 underlying fully diluted EPS is calculated using the weighted average number of shares in issue of 138,499,154 (FY 2011: 138,416,254).
2 The July 2012 weighted average number of ordinary shares used to calculate diluted earnings per share is 86,228,153 (2011: 83,868,319). The increase in the weighted average number of ordinary shares used to determine diluted earnings per share is due primarily to the weighted average increase of 2,300,392 shares, as a result of the issuance of 4,252,239 shares during January 2012. The remaining increase relates to the continued vesting of management share based incentives.
3 Food Group reported net profit excludes dividend income of €10,450,000 (2011: €8,550,000) from Origin.
4 For Origin reporting purposes ERP amortisation is adjusted below reported operating profit; however, for ARYZTA presentation purposes, all ERP amortisation has been included within EBITA.
The Board and senior management continue to invest significant time and resources in identifying specific risks across the Group, and in developing a culture of balanced risk minimisation. The Group has formal risk assessment processes in place through which risks and mitigating controls are evaluated. These processes are driven by local management, who are best placed to identify the significant ongoing and emerging risks facing the business. The outputs of these risk assessment processes are subject to various levels of review by Group management and Internal Audit, and a consolidated Risk Map denoting potential frequency, severity and velocity of identified risks, is reviewed by the ARYZTA Board of Directors on an annual basis. Risks identified and associated mitigating controls are also subject to audit as part of operational, financial and health and safety audit programmes.
The directors are responsible for preparing the Annual Report and the Group consolidated and Company financial statements, in accordance with applicable law and regulations.
Company law requires the directors to prepare Group consolidated and Company financial statements for each financial year. Under that law, the directors are required to prepare the Group consolidated financial statements in accordance with International Financial Reporting Standards ('IFRS') and the requirements of Swiss law and to prepare the Company financial statements in accordance with Swiss law and the Company's Articles of Association.
This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of the Group consolidated and Company financial statements that are free from material misstatement, whether due to fraud or error.
In preparing each of the Group consolidated and Company financial statements, the directors are required to:
The directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with IFRS and the requirements of Swiss law and the Company's Articles of Association.
They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website.
On behalf of the Board
Denis Lucey Owen Killian Chairman, Board of Directors CEO, Member of the Board
of Directors
20 September 2012
for the year ended 31 July 2012
| in Euro `000 | Notes | 2012 | 2011 |
|---|---|---|---|
| Revenue | 2 | 4,207,667 | 3,876,923 |
| Cost of sales | (3,023,420) | (2,774,960) | |
| Gross profit | 1,184,247 | 1,101,963 | |
| Distribution expenses | (553,385) | (510,401) | |
| Administration expenses | (292,996) | (289,063) | |
| Operating profit before net acquisition, disposal and restructuring related costs and fair value adjustments |
337,866 | 302,499 | |
| Net acquisition, disposal and restructuring related costs and fair value adjustments | 3 | (99,629) | (10,036) |
| Operating profit | 238,237 | 292,463 | |
| Share of profit after tax of associates and joint ventures | 14,200 | 19,479 | |
| Profit before financing income, financing costs and income tax expense | 252,437 | 311,942 | |
| Financing income | 14,561 | 12,065 | |
| Financing costs | (79,872) | (79,981) | |
| Profit before income tax | 187,126 | 244,026 | |
| Income tax expense | (24,572) | (15,614) | |
| Profit for the year | 162,554 | 228,412 | |
| Attributable as follows: | |||
| Equity shareholders | 146,264 | 212,657 | |
| Non-controlling interests | 16,290 | 15,755 | |
| Profit for the year | 162,554 | 228,412 | |
| Earnings per share for the year | Note | 2012 Euro cent |
2011 Euro cent |
| Basic earnings per share | 4 | 150.8 | 242.6 |
| Diluted earnings per share | 4 | 149.7 | 238.0 |
| in Euro `000 | Notes | 2012 | 2011 |
|---|---|---|---|
| Profit for the year | 162,554 | 228,412 | |
| Other comprehensive income | |||
| Foreign exchange translation effects | |||
| – Foreign currency net investments | 246,802 | (18,822) | |
| – Foreign currency borrowings | 6 | (156,513) | 57,600 |
| – Recycle of foreign exchange gain on settlement of quasi-equity loans | (668) | (1,398) | |
| – Recycle on disposal of subsidiary undertakings | – | 379 | |
| – Taxation effect of foreign exchange translation movements | 6,863 | (2,876) | |
| – Share of joint ventures and associates' foreign exchange translation adjustment | 1,639 | 1,170 | |
| Cash flow hedges | |||
| – Effective portion of changes in fair value of cash flow hedges | (3,522) | (2,345) | |
| – Fair value of cash flow hedges transferred to income statement | 720 | 6,897 | |
| – Deferred tax effect of cash flow hedges | 259 | (286) | |
| – Share of joint ventures and associates' loss on cash flow hedges, net of deferred tax | (1,275) | (607) | |
| Defined benefit plans | |||
| – Actuarial loss on Group defined benefit pension plans | (10,710) | (1,881) | |
| – Deferred tax effect of actuarial loss | 2,002 | 67 | |
| – Share of associates' actuarial loss on defined benefit plans, net of deferred tax | (4,379) | (490) | |
| Deferred tax effect of change in tax rates | (858) | – | |
| Total other comprehensive income | 80,360 | 37,408 | |
| Total comprehensive income for the year | 242,914 | 265,820 | |
| Attributable as follows: | |||
| Equity shareholders of the Company | 228,663 | 247,738 | |
| Non-controlling interests | 14,251 | 18,082 | |
| Total comprehensive income for the year | 242,914 | 265,820 |
as at 31 July 2012
| in Euro `000 | Note | 2012 | 2011 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 1,022,587 | 939,949 | |
| Investment properties | 29,268 | 32,180 | |
| Goodwill and intangible assets | 2,871,982 | 2,650,956 | |
| Investments in associates and joint ventures | 127,384 | 124,057 | |
| Other receivables | 37,223 | 35,013 | |
| Deferred income tax assets | 85,465 | 79,073 | |
| Total non-current assets | 4,173,909 | 3,861,228 | |
| Current assets | |||
| Inventory | 281,917 | 251,416 | |
| Trade and other receivables | 553,566 | 477,959 | |
| Derivative financial instruments | 422 | 608 | |
| Cash and cash equivalents | 6 | 547,474 | 482,229 |
| Total current assets | 1,383,379 | 1,212,212 | |
| Total assets | 5,557,288 | 5,073,440 |
| in Euro `000 | Note | 2012 | 2011 |
|---|---|---|---|
| Equity | |||
| Called up share capital | 1,172 | 1,061 | |
| Share premium | 773,735 | 632,951 | |
| Retained earnings and other reserves | 1,648,223 | 1,490,084 | |
| Total equity attributable to equity shareholders of the Company | 2,423,130 | 2,124,096 | |
| Non-controlling interests | 86,225 | 72,410 | |
| Total equity | 2,509,355 | 2,196,506 | |
| Liabilities | |||
| Non-current liabilities | |||
| Interest-bearing loans and borrowings | 6 | 1,330,446 | 1,363,893 |
| Employee benefits | 23,710 | 16,026 | |
| Deferred income from government grants | 10,210 | 11,246 | |
| Other payables | 24,580 | 10,749 | |
| Deferred income tax liabilities | 412,122 | 388,498 | |
| Derivative financial instruments | 2,008 | 299 | |
| Deferred consideration | – | 9,209 | |
| Total non-current liabilities | 1,803,076 | 1,799,920 | |
| Current liabilities | |||
| Interest-bearing loans and borrowings | 6 | 261,119 | 165,924 |
| Trade and other payables | 942,340 | 857,560 | |
| Income tax payable | 27,440 | 38,248 | |
| Derivative financial instruments | 3,916 | 3,133 | |
| Deferred consideration | 10,042 | 12,149 | |
| Total current liabilities | 1,244,857 | 1,077,014 | |
| Total liabilities | 3,047,933 | 2,876,934 | |
| Total equity and liabilities | 5,557,288 | 5,073,440 |
| 31 July 2012 in Euro `000 |
Share capital |
Share premium |
Treasury shares |
Other equity reserve |
Cash flow hedge reserve |
Revalua tion reserve |
Share based payment reserve |
Foreign currency trans lation reserve |
Retained earnings |
Total share holders equity |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At 1 August 2011 | 1,061 632,951 | (30) 285,004 | 260 | 17,148 | 24,989 | 44,0541,118,659 2,124,096 | 72,4102,196,506 | |||||
| Profit for the year | – | – | – | – | – | – | – | – | 146,264 | 146,264 | 16,290 | 162,554 |
| Other comprehensive income |
– | – | – | – | (2,721) | – | – | 95,910 | (10,790) | 82,399 | (2,039) | 80,360 |
| Total comprehensive income |
– | – | – | – | (2,721) | – | – | 95,910 135,474 | 228,663 | 14,251 242,914 | ||
| Issue of treasury shares | 41 | – | (41) | – | – | – | – | – | – | – | – | – |
| Issue of shares, net of costs |
70 | 140,784 | – | – | – | – | – | – | – | 140,854 | – | 140,854 |
| Transfer of share-based payments reserve to retained earnings |
– | – | – | – | – | – | (21,682) | – | 21,682 | – | – | – |
| Release of treasury shares due to exercise of LTIP |
– | – | 14 | – | – | – | – | – | – | 14 | – | 14 |
| Share-based payments | – | – | – | – | – | – | 6,872 | – | – | 6,872 | 193 | 7,065 |
| Equity dividends | – | – | – | – | – | – | – | – | (41,490) | (41,490) | – | (41,490) |
| Dividends to non-controlling interests |
– | – | – | – | – | – | – | – | – | – | (6,437) | (6,437) |
| Transfer of revaluation reserve to retained earnings |
– | – | – | – | – | (1,361) | – | – | 1,361 | – | – | – |
| Dividend accrued on perpetual callable subordinated |
||||||||||||
| instrument | – | – | – | – | – | – | – | – | (16,642) | (16,642) | – | (16,642) |
| Total contributions by and distributions to owners |
111 140,784 | (27) | – | – | (1,361) (14,810) | – (35,089) | 89,608 | (6,244) | 83,364 | |||
| Dilution due to vesting of Origin management equity entitlements |
– | – | – | – | 80 | (384) | (31) | 334 | (5,807) | (5,808) | 5,808 | – |
| Non-controlling interest forward contract |
– | – | – | – | – | – | – | – | (13,429) | (13,429) | – | (13,429) |
| Total transactions with ow ners recognised directly |
||||||||||||
| in equity | 111 140,784 | (27) | – | 80 | (1,745) (14,841) | 334 (54,325) | 70,371 | (436) | 69,935 | |||
| At 31 July 2012 | 1,172 773,735 | (57) 285,004 | (2,381) | 15,403 | 10,148 140,2981,199,808 2,423,130 | 86,2252,509,355 |
| 31 July 2011 in Euro `000 |
Share capital |
Share premium |
Treasury shares |
Other equity reserve |
Cash flow hedge reserve |
Revalua tion reserve |
Share based payment reserve |
Foreign currency trans lation reserve |
Retained earnings |
Total share holders equity |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At 1 August 2010 | 1,061 632,951 | (30) | – | (2,603) | 35,108 | 6,188 | 9,697 931,830 1,614,202 | 59,6481,673,850 | ||||
| Profit for the year | – | – | – | – | – | – | – | – | 212,657 | 212,657 | 15,755 | 228,412 |
| Other comprehensive income |
– | – | – | – | 2,863 | – | – | 34,357 | (2,139) | 35,081 | 2,327 | 37,408 |
| Total comprehensive income |
– | – | – | – | 2,863 | – | – | 34,357 210,518 | 247,738 | 18,082 265,820 | ||
| Share-based payments | – | – | – | – | – | – | 18,801 | – | – | 18,801 | 262 | 19,063 |
| Equity dividends | – | – | – | – | – | – | – | – | (30,768) | (30,768) | – | (30,768) |
| Dividends to non-controlling interests |
– | – | – | – | – | – | – | – | – | – | (5,582) | (5,582) |
| Transfer of revaluation reserve to retained earnings |
– | – | – | – | – | (17,960) | – | – | 17,960 | – | – | – |
| Issue of perpetual callable subordinated instrument |
– | – | – | 285,004 | – | – | – | – | – | 285,004 | – | 285,004 |
| Dividend accrued on perpetual callable subordinated instrument |
– | – | – | – | – | – | – | – | (11,801) | (11,801) | – | (11,801) |
| Income tax effect of perpetual callable subordinated instrument dividend |
– | – | – | – | – | – | – | – | 920 | 920 | – | 920 |
| Total contributions by and distributions to owners |
– | – | – 285,004 | – (17,960) | 18,801 | – (23,689) | 262,156 | (5,320) 256,836 | ||||
| At 31 July 2011 | 1,061 632,951 | (30) 285,004 | 260 | 17,148 | 24,989 | 44,0541,118,659 2,124,096 | 72,4102,196,506 |
| in Euro `000 | Note | 2012 | 2011 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit for the year | 162,554 | 228,412 | |
| Income tax | 24,572 | 15,614 | |
| Financing income | (14,561) | (12,065) | |
| Financing costs | 79,872 | 79,981 | |
| Share of profit after tax of associates and joint ventures | (14,200) | (19,479) | |
| Net gain on acquisitions, disposals and dilution | 3 | (3,722) | (112,520) |
| Asset write-downs and fair value adjustments | 3 | 20,221 | 43,039 |
| Other restructuring related payments (in excess)/under current-year costs | (7,201) | 42,253 | |
| Depreciation of property, plant and equipment | 90,679 | 88,354 | |
| Amortisation of intangible assets | 111,491 | 94,228 | |
| Recognition of deferred income from government grants | (1,581) | (3,036) | |
| Share-based payments | 6,068 | 14,294 | |
| Other | (272) | (791) | |
| Cash flows from operating activities before changes in working capital | 453,920 | 458,284 | |
| (Increase)/decrease in inventory | (5,347) | (49,327) | |
| (Increase)/decrease in trade and other receivables | (22,913) | (60,109) | |
| Increase/(decrease) in trade and other payables | 20,402 | 82,289 | |
| Cash generated from operating activities | 446,062 | 431,137 | |
| Interest paid | (70,118) | (76,547) | |
| Interest received | 2,625 | 4,438 | |
| Income tax paid | (49,219) | (55,090) | |
| Net cash flows from operating activities | 329,350 | 303,938 |
| in Euro `000 | Note | 2012 | 2011 |
|---|---|---|---|
| Cash flows from investing activities | |||
| Proceeds from sale of property, plant and equipment | 6,852 | 2,937 | |
| Proceeds from sale of investment property | 485 | – | |
| Purchase of property, plant and equipment | |||
| – maintenance capital expenditure | (51,832) | (45,896) | |
| – investment capital expenditure | (60,136) | (30,855) | |
| Grants received | – | 25 | |
| Acquisitions of subsidiaries and businesses, net of cash acquired | 5 | (92,310) | (394,863) |
| Sale of subsidiaries and businesses, net of cash surrendered | – | 72,562 | |
| Disposal of joint venture | 4,675 | – | |
| Purchase of intangible assets | (35,932) | (23,735) | |
| Dividends received | 11,073 | 11,590 | |
| Investments in associates and joint ventures | (7,731) | (1,128) | |
| Deferred consideration paid | (13,346) | (12,900) | |
| Net cash flows from investing activities | (238,202) | (422,263) | |
| Cash flows from financing activities | |||
| Net proceeds from issue of shares | 140,854 | – | |
| Net proceeds from issue of perpetual callable subordinated instrument | – | 285,004 | |
| Gross drawdown of loan capital | – | 192,258 | |
| Gross repayment of loan capital | 6 | (142,255) | (347,356) |
| Capital element of finance lease liabilities | 6 | (2,708) | (748) |
| Dividend paid on perpetual callable subordinated instrument | (16,305) | – | |
| Dividends paid to non-controlling interests | (6,437) | (5,582) | |
| Dividends paid to equity shareholders | (41,490) | (30,768) | |
| Net cash flows from financing activities | (68,341) | 92,808 | |
| Net increase/(decrease) in cash and cash equivalents | 22,807 | (25,517) | |
| Translation adjustment | 4,646 | (5,196) | |
| Net cash and cash equivalents at start of year | 317,636 | 348,349 | |
| Net cash and cash equivalents at end of year | 6 | 345,089 | 317,636 |
1 Basis of preparation The financial information included on pages 17 to 34 of this News Release has been extracted from the ARYZTA Group financial statements for the year ended 31 July 2012 on which the auditor has issued an unqualified audit opinion.
The financial information has been prepared in accordance with the accounting policies set out in the Group's financial statements for the year ended 31 July 2011 which were prepared in accordance with International Financial Reporting Standards (IFRS), and have been updated for changes in IFRS applicable to the financial year 2012, as outlined in the Group accounting policies note to the interim financial statements for the period ended 31 January 2012.
The consolidated financial information is presented in Euro, rounded to the nearest thousand, unless otherwise stated.
| I) Segment revenue and result |
Food Europe |
Food North America |
Food Rest of World |
Total Food Group |
Origin | Total Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in Euro `000 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Segment revenue1 | 1,273,707 1,184,928 1,372,411 1,212,463 | 221,526 | 180,029 2,867,644 2,577,420 1,340,023 1,299,503 4,207,667 3,876,923 | |||||||||
| Operating profit before net acquisition, disposal and restructuring related costs and fair value adjustments 2 |
124,750 | 112,665 | 128,597 | 108,155 | 21,696 | 14,960 | 275,043 | 235,780 | 62,823 | 66,719 | 337,866 | 302,499 |
| Net acquisition, disposal and restructuring related costs and fair value adjustments (note 3) |
(40,700) | (62,127) | (44,044) | 64,105 | 1,267 | (1,004) | (83,477) | 974 | (16,152) | (11,010) | (99,629) | (10,036) |
| Operating profit | 84,050 | 50,538 | 84,553 | 172,260 | 22,963 | 13,956 | 191,566 | 236,754 | 46,671 | 55,709 | 238,237 | 292,463 |
| Share of profit after tax of associates and joint |
||||||||||||
| ventures | 39 | 7 | 430 | 3,706 | 593 | 909 | 1,062 | 4,622 | 13,138 | 14,857 | 14,200 | 19,479 |
| Profit before financing income, financing cost |
||||||||||||
| and income tax expense | 84,089 | 50,545 | 84,983 | 175,966 | 23,556 | 14,865 | 192,628 | 241,376 | 59,809 | 70,566 | 252,437 | 311,942 |
| Financing income3 | 7,276 | 5,959 | 7,285 | 6,106 | 14,561 | 12,065 | ||||||
| Financing costs3 | (65,993) | (63,365) | (13,879) | (16,616) | (79,872) | (79,981) | ||||||
| Profit before income tax expense as reported in Group Consolidated |
||||||||||||
| Income Statement | 133,911 | 183,970 | 53,215 | 60,056 | 187,126 | 244,026 |
(2011: €2,235,000) intra-group revenue between the Food Group and Origin segments of the Group.
2 Certain central executive and support costs have been allocated against the operating profits of each business segment.
3 Finance income/(costs) and income tax expense are managed on a centralised basis and therefore these items are not allocated between business segments for the purposes of presenting information to the Chief Operating Decision Maker.
| II) Segment assets | Food | Food | Food | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Europe | North America | Rest of World | Food Group | Origin | Total Group | |||||||
| in Euro `000 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Segment assets excluding investments in associ ates and joint ventures |
1,760,828 1,670,110 2,042,006 1,837,126 | 329,833 | 280,751 4,132,667 3,787,987 | 626,653 | 564,473 4,759,320 4,352,460 | |||||||
| Investments in associates and joint ventures and |
||||||||||||
| other financial assets | 530 | 495 | 2,015 | 1,420 | – | 3,061 | 2,545 | 4,976 | 162,062 | 154,094 | 164,607 | 159,070 |
| Segment assets | 1,761,358 1,670,605 2,044,021 1,838,546 | 329,833 | 283,812 4,135,212 3,792,963 | 788,715 | 718,567 4,923,927 4,511,530 | |||||||
| Reconciliation to total assets as reported in the Group Consolidated Balance Sheet Derivative financial |
||||||||||||
| instruments | 327 | 297 | 95 | 311 | 422 | 608 | ||||||
| Cash and cash equivalents | 452,175 | 426,733 | 95,299 | 55,496 | 547,474 | 482,229 | ||||||
| Deferred income tax assets |
80,745 | 74,261 | 4,720 | 4,812 | 85,465 | 79,073 | ||||||
| Total assets as reported in Group Consolidated |
||||||||||||
| Balance Sheet | 4,668,459 4,294,254 | 888,829 | 779,186 5,557,288 5,073,440 | |||||||||
| III) Segment liabilities | Food Europe |
Food North America |
Food Rest of World |
Total Food Group |
Origin | Total Group | ||||||
| in Euro `000 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Segment liabilities | 314,553 | 302,294 | 208,659 | 203,522 | 40,297 | 30,993 | 563,509 | 536,809 | 447,373 | 380,130 1,010,882 | 916,939 | |
| Reconciliation to total liabilities as reported in Group Consolidated Balance Sheet Interest-bearing loans and |
||||||||||||
| borrowings | 1,428,458 1,382,201 | 163,107 | 147,616 1,591,565 1,529,817 | |||||||||
| Derivative financial instruments |
2,066 | 2,215 | 3,858 | 1,217 | 5,924 | 3,432 | ||||||
| Current and deferred income tax liabilities |
408,395 | 395,545 | 31,167 | 31,201 | 439,562 | 426,746 | ||||||
| Total liabilities as reported in Group Consolidated Balance Sheet |
2,402,428 2,316,770 | 645,505 | 560,164 3,047,933 2,876,934 |
| IV) Other segment infor mation |
Food Europe |
Food North America |
Food Rest of World |
Total Food Group |
Origin | Total Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in Euro `000 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Depreciation | 43,204 | 46,916 | 35,676 | 30,785 | 6,610 | 5,377 | 85,490 | 83,078 | 5,189 | 5,276 | 90,679 | 88,354 |
| ERP-related amortisation | 778 | – | 4,074 | 3,401 | – | – | 4,852 | 3,401 | 455 | – | 5,307 | 3,401 |
| Amortisation of other intangible assets |
44,745 | 36,373 | 47,694 | 40,518 | 7,344 | 9,641 | 99,783 | 86,532 | 6,401 | 4,295 | 106,184 | 90,827 |
| Capital expenditure | ||||||||||||
| – Property, plant and equipment |
37,318 | 25,228 | 45,723 | 24,813 | 28,272 | 21,816 | 111,313 | 71,857 | 5,768 | 6,425 | 117,081 | 78,282 |
| – Computer-related intangibles |
14,244 | 9,513 | 9,637 | 14,879 | 7,492 | 955 | 31,373 | 25,347 | 5,987 | 3,001 | 37,360 | 28,348 |
| – Other intangibles | – | – | – | – | – | – | – | – | 575 | – | 575 | – |
| Total capital expenditure | 51,562 | 34,741 | 55,360 | 39,692 | 35,764 | 22,771 | 142,686 | 97,204 | 12,330 | 9,426 | 155,016 | 106,630 |
| Europe | North America | Rest of World | Total Group | |||||
|---|---|---|---|---|---|---|---|---|
| in Euro `000 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Segment revenue1 | 2,613,730 | 2,484,431 | 1,372,411 | 1,212,463 | 221,526 | 180,029 | 4,207,667 | 3,876,923 |
| Segment assets | 2,550,073 | 2,389,172 | 2,044,021 | 1,838,546 | 329,833 | 283,812 | 4,923,927 | 4,511,530 |
| IFRS 8 non-current assets2 | 1,954,207 | 1,877,077 | 1,845,060 | 1,654,252 | 289,177 | 250,826 | 4,088,444 | 3,782,155 |
1 Revenues from external customers attributed to the Group's country of domicile, Switzerland, are 5.3% (2011: 5.4%) of total Group revenues. Revenues from external customers attributed to material foreign countries are United States 29.2% (2011: 28.3%), the United Kingdom 29.8% (2011: 24.1%) and Ireland 7.1% (2011: 13.6%). For the purposes of this analysis, customer revenues are allocated based on geographic location of vendor. As is common in this industry, the Group has a large number of customers, and there is no single customer with a share of revenue greater than 10% of total Group revenue.
2 Non-current assets as reported under IFRS 8, Operating Segments, include all non-current assets as presented in the Group Consolidated Balance Sheet, with the exception of deferred taxes. Non-current assets attributed to the Group's country of domicile, Switzerland, are 9.4% of total Group non-current assets (2011: 11.3%). Noncurrent assets attributed to material foreign countries are: United States 31.3% (2011: 29.5%), United Kingdom 10.9% (2011: 8.0%) and Ireland 10.0% (2011: 12.2%).
| Food Europe |
Food North America |
Food Rest of World |
Total Food Group |
Origin | Total Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in Euro `000 | Notes | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| Gain / (loss) on acquisition, disposals and dilution |
|||||||||||||
| Gain on disposal of interest in joint venture |
3.1 | – | – | – | – | 1,417 | – | 1,417 | – | – | – | 1,417 | – |
| Fair value gain on acqui sition of 50% share in Maidstone Bakeries |
3.2 | – | – | – 121,391 | – | – | – 121,391 | – | – | – 121,391 | |||
| Loss on disposal of Origin Food business |
– | – | – | – | – | – | – | – | – | (7,301) | – | (7,301) | |
| Gain on disposal of Origin Feed business |
– | – | – | – | – | – | – | – | – | 3,168 | – | 3,168 | |
| Gain/(loss) on dilution of associate interests |
3.3 | – | – | – | – | – | – | – | - | 2,305 | (4,738) | 2,305 | (4,738) |
| Net gain on acquisition, disposals and dilution |
– | – | – 121,391 | 1,417 | – | 1,417 121,391 | 2,305 | (8,871) | 3,722 112,520 | ||||
| Transaction-related costs | 3.4 | (1,654) | – | – | (9,994) | (150) | (692) | (1,804) (10,686) | (1,451) | (2,139) | (3,255) (12,825) | ||
| Restructuring-related costs and fair value adjustments |
3.5 | ||||||||||||
| Asset write-downs | (3,744) (34,999) | (4,006) | (8,040) | – | – | (7,750) (43,039) | (2,806) | – | (10,556) (43,039) | ||||
| Fair value adjustments of investment properties |
– | – | – | – | – | – | – | – | (9,665) | – | (9,665) | – | |
| Severance and other staff related costs |
(25,758) (17,878) (24,881) (29,085) | – | – | (50,639) (46,963) | (4,535) | – | (55,174) (46,963) | ||||||
| Grant-related costs | (713) | (2,338) | – | – | – | – | (713) | (2,338) | – | – | (713) | (2,338) | |
| Contractual obligations | (2,175) | (3,969) | (837) | – | – | – | (3,012) | (3,969) | – | – | (3,012) | (3,969) | |
| Advisory and other costs | (6,656) | (2,943) (14,320) (10,167) | – | (312) | (20,976) (13,422) | – | – | (20,976) (13,422) | |||||
| Total restructuring-related costs and fair value |
|||||||||||||
| adjustments | (39,046) (62,127) (44,044) (47,292) | – | (312) | (83,090) (109,731) (17,006) | – (100,096) (109,731) | ||||||||
| Total acquisition, disposal and restructuring related costs and fair value adjustments |
(40,700) (62,127) (44,044) | 64,105 | 1,267 | (1,004) | (83,477) | 974 (16,152) (11,010) | (99,629) (10,036) |
During April 2012, the Group completed the disposal of its interest in a joint venture, previously held as part of the Food Rest of World segment. Consideration received on disposal was €4,675,000, which was in excess of the investment carrying value of €3,258,000 at the time, resulting in a gain of €1,417,000.
On 29 October 2010, ARYZTA closed the acquisition of all outstanding shares of the previously 50% owned Maidstone Bakeries ('Maidstone') joint venture for total deemed consideration of €502,808,000 for 100% of the business. The consideration was based on a discounted cash flow enterprise value and was in line with market valuation multiples on comparable industry transactions. Maidstone is no longer treated as a joint venture for accounting purposes and is now fully consolidated in the Food North America segment. A non-cash gain of €121,391,000 on the previously owned 50% of Maidstone was recorded within operating profit for the year ended 31 July 2011. This is a requirement under IFRS 3 (Revised), Business Combinations, which was implemented by the Group as required for the financial years ended after 1 August 2009.
During the year, Origin's investment in Valeo was reduced from 44.1% to 32.0% as a result of Valeo raising additional funding from investors. As a result of this transaction, the Group recorded a gain of €2,305,000 on the dilution of the holding, which is recorded in the Group Consolidated Income Statement for the year ended 31 July 2012.
Transaction-related costs of €3,255,000 incurred during the year ended 31 July 2012 relate primarily to Origin's share of Valeo transaction and rationalisation costs, as well as costs associated with the Food Group acquisitions during the year. Transaction-related costs of €12,825,000 incurred during the year ended 31 July 2011 related primarily to the acquisition of the outstanding 50% of Maidstone. These costs include share purchase tax, due diligence and other professional service fees. Since the adoption of IFRS 3 (Revised), Business Combinations, these costs no longer form part of the acquisition consideration and are expensed within operating profit through the income statement. Details relating to these acquisitions are set out in note 5.
During the year ended 31 July 2011, the Group commenced two separate integration and rationalisation programmes in each of its Food Europe and Food North America segments. These programmes allow the development of two principal operating platforms in Food Europe and Food North America to optimise the Group's manufacturing and business support platforms.
As a result of decisions made through these projects, the Group has recognised costs, including providing for amounts as required by IAS 37, Provisions, Contingent Liabilities and Contingent Assets in the Group Consolidated Income Statement as follows:
The Group incurred €10,556,000 (2011: €43,039,000) of asset write downs during the year. These amounts relate primarily to the write-down of certain manufacturing, distribution and administration assets, due to the closure and/or reduction in activity at a number of sites as part of the implementation of the Group's integration and rationalisation programs.
Additionally, during the year a fair value adjustment of €9,665,000 (2011: Nil) was recorded to the carrying value of investment properties within Origin. This was the result of the continuing decline in the Irish property market, a lack of transactions, restricted bank financing for property-related deals, a generally difficult economic environment, and in particular the indication that the value of development land in regional areas is converging to that of agricultural land. Therefore, Origin's directors determined that an adjustment to the fair value of Origin's investment properties was necessary.
The Group has incurred and provided for €55,174,000 (2011: €46,963,000) in severance and other staff-related costs during the year, a majority of which relates to employees whose services were discontinued following the actual or announced closure and rationalisation of certain Group operational sites.
The termination of certain activities caused by the Group's integration and rationalisation programs have resulted in the triggering of related grant repayment conditions. This resulted in the reversal of €713,000 (2011: €2,338,000) in grants previously amortised through the Group's Consolidated Income Statement.
The operational decisions made through the Group's integration and rationalisation programs triggered early termination and/or resulted in certain operational contracts becoming onerous. The Group incurred total costs of €3,012,000 (2011: €3,969,000) during the year to either exit or provide for such contracts.
During the year the Group incurred €20,976,000 (2011: €13,422,000) in other costs related directly to the implementation of its integration and rationalisation programs. These costs are composed principally of restructuring-related advisory costs, operational site decommissioning costs, and other directly attributable incremental costs.
| 2012 | 2011 | |
|---|---|---|
| Basic earnings per share | in Euro '000 | in Euro '000 |
| Profit attributable to equity shareholders | 146,264 | 212,657 |
| Perpetual callable subordinated instrument accrued dividend | (16,642) | (11,801) |
| Profit used to determine basic earnings per share | 129,622 | 200,856 |
| Weighted average number of ordinary shares | '000 | '000 |
| Ordinary shares outstanding at 1 August1 | 82,810 | 82,810 |
| Effect of vesting of equity instruments during the year2 | 827 | – |
| Effect of shares issued during the year | 2,300 | – |
| Weighted average number of ordinary shares used to determine basic earnings per share |
85,937 | 82,810 |
| Basic earnings per share | 150.8 cent | 242.6 cent |
| 2012 | 2011 | |
| Diluted earnings per share | in Euro '000 | in Euro '000 |
| Profit used to determine basic earnings per share | 129,622 | 200,856 |
| Effect on non-controlling interests share of reported profits, due to dilutive impact of Origin management equity entitlements3 |
(557) | (1,276) |
| Profit used to determine diluted earnings per share | 129,065 | 199,580 |
| Weighted average number of ordinary shares (diluted) | '000 | '000 |
| Weighted average number of ordinary shares used to determine basic earnings per share |
85,937 | 82,810 |
| Effect of equity-based incentives with a dilutive impact2 | 291 | 1,058 |
| Weighted average number of ordinary shares used to determine diluted earnings per share4 |
86,228 | 83,868 |
| Diluted earnings per share | 149.7 cent | 238.0 cent |
1 Issued share capital excludes treasury shares.
2 The change in the equity-based incentives with a dilutive impact is due to continued vesting of management share based incentives, offset by the impact of incentives exercised during the year, which are now included in the weighted average number of ordinary shares used to determine basic earnings per share.
3 Reflects the dilutive impact of equity entitlements granted to Origin senior management under the Origin Plan. These equity entitlements dilute the Group's share of Origin profits available as part of its diluted earnings per share calculation.
4 The July 2012 weighted average number of ordinary shares used to calculate diluted earnings per share is 86,228,153 (2011: 83,868,319). The increase in the weighted average number of ordinary shares used to determine diluted earnings per share is due primarily to the weighted average increase of 2,300,392 shares, as a result of the issuance of 4,252,239 shares during January 2012. The remaining increase relates to the continued vesting of management share-based incentives.
In addition to the basic and diluted earnings per share measure calculated above, as required by IAS 33, Earnings per Share, the Group also presents the following underlying earnings per share measure in accordance with IAS 33 paragraph 73, as it is the Group's policy to declare dividends based on underlying fully diluted earnings per share of the Group.
Underlying fully diluted net profit adjusts reported net profit by the following items and their related tax impacts:
| 2012 | 2011 | |
|---|---|---|
| Underlying fully diluted earnings per share | in Euro '000 | in Euro '000 |
| Profit used to determine basic earnings per share | 129,622 | 200,856 |
| Amortisation of non-ERP intangible assets (note 2) | 106,184 | 90,827 |
| Tax on amortisation of non-ERP intangible assets | (30,354) | (18,691) |
| Net acquisition, disposal and restructuring related costs and fair value adjustments (note 3) |
99,629 | 10,036 |
| Tax on net acquisition, disposal and restructuring related costs and fair value adjustments |
(8,850) | (17,990) |
| Non-controlling interest portion of acquisition, disposal and restructuring related costs and fair value adjustments |
(4,490) | (3,325) |
| Effect on non-controlling interests share of adjusted profits due to dilutive impact of Origin management equity entitlements |
(696) | (1,673) |
| Underlying fully diluted net profit | 291,045 | 260,040 |
| Weighted average number of ordinary shares used to determine basic earnings per share |
85,937 | 82,810 |
| Underlying basic earnings per share | 338.7 cent | 314.0 cent |
| Weighted average number of ordinary shares used to determine diluted earnings per share |
86,228 | 83,868 |
| Underlying fully diluted earnings per share | 337.5 cent | 310.1 cent |
During the year the Group completed multiple acquisitions by acquiring all outstanding shares of those individual entities. The details of the combined net assets acquired and goodwill arising from these various business combinations are set out below. The goodwill arising on these business combinations is attributable to the skills and talent of the in-place work-force and the synergies expected to be achieved from integrating the acquired operations into the Group's existing businesses.
| in Euro `000 | Provisional fair values |
|---|---|
| Provisional fair value of net assets acquired: | |
| Property, plant and equipment | 19,040 |
| Intangible assets | 45,785 |
| Inventory | 2,637 |
| Trade and other receivables | 11,766 |
| Trade and other payables | (15,329) |
| Debt acquired | (5,957) |
| Finance leases | (2,971) |
| Deferred tax | (12,466) |
| Deferred income from government grants | (842) |
| Corporation tax payable | (721) |
| Net assets acquired | 40,942 |
| Goodwill arising on acquisitions | 51,613 |
| Consideration | 92,555 |
| Satisfied by: | |
| Cash consideration | 96,105 |
| Cash acquired | (3,795) |
| Net cash consideration | 92,310 |
| Deferred consideration | 245 |
| Total consideration | 92,555 |
The net cash outflow on these acquisitions during the year was disclosed in the Group Consolidated Cash Flow Statement as follows:
| in Euro `000 | Total |
|---|---|
| Cash flows from investing activities | |
| Cash consideration | 96,105 |
| Cash acquired | (3,795) |
| 92,310 | |
| Cash flows from financing activities | |
| Debt acquired, including finance leases | 8,928 |
| Cost of acquisitions (including net debt acquired) | 101,238 |
Costs of €3,255,000 related to the transactions were charged to the net acquisition, disposal, and restructuring related costs and fair value adjustments in the Group Consolidated Income Statement during the year ended 31 July 2012.
The impact of these business combinations during the year on the Group Consolidated Income Statement is set out in the following table:
| in Euro '000 | Total |
|---|---|
| Revenue | 99,481 |
| Profit for the year | 13,142 |
As these acquisitions occurred near the beginning of the year, no material difference exists between the reported consolidated revenue and profit for the year and the amounts that would have been reported. In making this determination, management has assumed that the fair value adjustments that arose on the date of the acquisition would have been the same if the acquisition had occurred on 1 August 2011.
For the identification and estimation of the fair value of the intangibles acquired as part of these acquisitions, ARYZTA was assisted by a non-audit independent appraisal firm. The identified intangibles acquired include customer relationships and unpatented technology, which were valued using the income approach method.
The fair values presented in this note are based on provisional valuations due to the complexity of the transactions during the year.
| Analysis of net debt in Euro `000 |
1 August 2011 |
Cash flows | Arising on business combination |
Non-cash movements |
Translation adjustment |
31 July 2012 |
|---|---|---|---|---|---|---|
| Cash | 482,229 | 48,058 | – | – | 17,187 | 547,474 |
| Overdrafts | (164,593) | (25,251) | – | – | (12,541) | (202,385) |
| Cash and cash equivalents | 317,636 | 22,807 | – | – | 4,646 | 345,089 |
| Loans | (1,362,261) | 142,255 | (5,957) | (3,012) | (156,513) | (1,385,488) |
| Finance leases | (2,963) | 2,708 | (2,971) | – | (466) | (3,692) |
| Net debt | (1,047,588) | 167,770 | (8,928) | (3,012) | (152,333) | (1,044,091) |
| Split of net debt in Euro `000 |
1 August 2011 |
Cash flows | Arising on business combination |
Non-cash movements |
Translation adjustment |
31 July 2012 |
|---|---|---|---|---|---|---|
| Food Group net debt | (955,468) | 129,551 | (8,928) | (2,222) | (139,216) | (976,283) |
| Origin net debt | (92,120) | 38,219 | – | (790) | (13,117) | (67,808) |
| Net debt | (1,047,588) | 167,770 | (8,928) | (3,012) | (152,333) | (1,044,091) |
At the General Meeting on 11 December 2012, shareholders will be invited to approve a proposed dividend of CHF 0.6125 (€0.5063) per share, to be paid to shareholders after the balance sheet date. A dividend of CHF 0.5679 was paid during the year (2011: CHF 0.4802).
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.