Overview of 2004
Pre tax profits of £17.1 million in 2004
? 18% growth from continuing operations
? 20% increase in pre-tax profits to £17.1 million
? Net income £13.1 million – up 26% in continuing business
? EBITDA £24.8 million – 17% of turnover
? EBIT £21 million -14% of turnover
? Working capital from operations £ 18.6 million
? Additional bonds issued for 6.5 billion ISK
? The Group acquired 20.4% holding in Geest PLC during the financial year
? In December the Group made an indicative offer for Geest PLC on the basis of which Bakkavör Group entered due diligence on Geest. Due diligence is expected to be complete in February
? New factory in London
? Financial offices in Copenhagen relocated to Iceland
Ágúst Gudmundsson Executive Chairman:
“The Group performed well during the year and continued its rapid organic growth. Our performance in 2004 gives a clear indication of the strong foothold the Group has gained with sales growing substantially to its major customers during the year. An indicative offer was made to Geest PLC. towards the end of the year and due diligence is now in progress. Operating prospects are good for 2005 and demand for chilled convenience food is expected to continue to grow during the year.”
Overview of 4 Quarter
? 19% growth from operations
? 28% increase in pre-tax profits to £5.5 million
? Net income £4.4 million – up 42%
? EBITDA £7.4 million – 17% of turnover
? EBIT £6.4 million - 15% of turnover
? Working capital from operations £5.4 million
? An indicative offer was made for Geest PLC on the basis of which Bakkavör Group entered due diligence on Geest. Due diligence is expected to be complete in February
Profit increased by 42% in the quarter year on year
Operations in the fourth quarter were good with sales increasing by 18.6% compared to the same quarter last year, amounting to £43.0 million.
The Group’s pre-tax profit was £5.5 million in the quarter and increased by 28.2% year on year. The EBITDA amounted to £7.4 million compared to £6.4 million last year and the EBITDA ratio was 17.1% compared to 17.6% last year. Operating profit (EBIT) amounted to £6.4 million reflecting an increase of 18.3 % year on year. Net income for the period amounted to £4.4 million compared with £3.1 million last year which is an 41.9% increase in profit.
Full year income statement for 2004
Operating income amounted to £149.6 million and increased of 8.5% compared to 2003. Growth in continuing operations increased by 18%. Operating expenses were £128.6 million and increased by 7.6% compared to last year.
The Group’s pre-tax profit was £17.1 million for the year and increased by 19.6%. EBITDA amounted to £24.8 million compared with £22.4 million last year and increased by 10.5% year on year. Operating profit (EBIT) amounted to £21.0 million compared with £18.3 million last year and increased by 14.6%. Net income from ordinary activities amounted to £13.1 million compared with £10.4 million last year which represents an 26.1% increase in profit.
With the Group’s investment in Geest PLC in June 2004, the company is now accounted for as an associate company of Bakkavör Group as previously reported. As a result the Group now incorporates a proportional part of Geest’s estimated income into its accounts in accordance with the equity method of accounting. Income from the associate amounted to £3.2 million from the 16th of June but financial expenses increased due to the investment.
Balance sheet
During the year, Bakkavör Group’s balance sheet changed considerably. The Group issued new bonds in the bond category BAKK 03 1 amounting to £57.7 million (ISK 6.5 billion) and the bond category is now £106.1 million (ISK 11.5 billion). The purpose of the increase was to raise capital for further development of activities within Bakkavör Group’s core markets and thereby support the profitable growth of the company.
Total assets have increased from £214.8 million since last year to £272.4 million and equity increased from £72.1 million to £88.2 million during the year. The equity ratio is now 37.1% including the subordinated loan. Earnings per share were 1.23 during the year. Current ratio is 2.85 but was 2.77 at year end 2003.
At year end the Group held cash available amounting to £24.5 million and has unused committed credit lines in excess of £7.6 million.
Cash flow, main figures
The Group’s cash flow remained strong and working capital from operations increased from £14.9 million to £18.6 million taking into account the sale of the seafood operations in 2003 and increased by 22% year on year. Cash flow from operating activities decreased from £19.8 million to £16.5 million in the year with the sale of the seafood business resulting in lower working capital. Capital expenditure amounted to £3.5 million compared with £5.7 million last year which represents a 38% decrease.
The Group’s cash position remains strong and amounted to £24.5 million at the end of the period.
Bond offering
The Group issued an additional ISK 6.5 million bonds in bond category BAKK 03 1. The bonds were sold in a private placement. BAKK 03 1 is a previously issued category of indexed bullet bonds maturing on the 15th May 2009. The nominal value of the category before the increase was ISK 5 billion and is ISK 11.5 billion after the increase. The bonds are listed on the Iceland Stock Exchange. The purpose of the private placement was, as previously mentioned, to raise capital for the further development of activities within Bakkavör Group’s core markets and thereby encourage the profitable growth of the company.
Employees
At year end the Group had 2,288 employees compared with 2,109 employees at year end 2003.
The effects of the Tsunami disaster were felt by Group employees in London, many of whom originate from the disaster areas and either lost relatives or have relatives who were affected by the disaster in other ways. Following the disaster, employees initiated a fundraising and along with their contribution, Bakkavör Group contributed in total
£76,000 to the relief work in Asia.
New product development
New product development activities have been strong during the year and numerous new and improved products have been launched in co-operation with the Group’s customers. Over 290 new products were launched during the year. The Group continues to focus on providing its customers with products of the highest standard with regards to convenience, choice and quality.
Income from product categories during 2004 was as follows:
Ready meals 33%
Meal Accompaniments 24%
Ethnic snacks 23%
Dips and dressings 20%
Growth has been strong in all product categories, particularly in meal accompaniments and ready meals. Sales of ready meals grew by 19%, meal accompaniments by 41%, ethnic snacks by 9% and dips, dressings and sauces by 9%.
Customers and trading environment
Although the Group witnessed increased competition in the sector during the year the business continued to grow with sales increasing to all of the Group’s main customers during the year as the Group continued to focus on delivering premium chilled products where retailers compete on choice and quality rather than price.
Negotiations with Geest PLC.
On the 21st of December 2004, the Group announced that it had reached an agreement with Geest PLC to proceed with due diligence based on an indicative offer price of 655 pence per share plus a special dividend of 7 pence per share. Due diligence is in progress and is expected to be completed in February. Bakkavör Group reserves the right not to make an offer once due diligence is completed and also, under the rules of the UK Takover Panel and and with the consent of the Board of Geest to make an offer at a lower price than the indicative price. The Group will inform its shareholders of the progress in relation to Geest PLC as soon as possible.
Bakkavör Asia
The board of Bakkavör Group decided towards the end of last year to establish a company, Bakkavör Asia. The purpose is to explore possible opportunities for the Group to expand its operations into the Asian market. With the Asian market being the largest consumer market in the world and its rapid development the Group considers there are many opportunites worth exploring within this region.
Shareholders
Shareholders in Bakkavör Group were 3,482 at year end 2004. A total of 45% of the shares in the Group are now held by directors and key employees, including the 27% held by Ágúst Gudmundsson Executive Chairman and Lýdur Gudmundsson CEO. Approximately 40% of shares are held by institutional investors and 18% are held by investors outside of Iceland. The Group’s share price increased considerably during the year or by 38.2%. Earnings per share were 1.23 GBP compared to 1.02 GBP in 2003.
Dividends
The Board of Directors will recommend at the Group’s Annual General Meeting on the 25th of February that no dividends be paid out for the year 2004. This decision is based on the fact that along with substantial investments made in recent years, we are currently pursuing an ambitious expansion strategy which will challenge us to utilise our resources wisely. However, this does not change our long-term goal of paying out dividends to our shareholders in the future.
Annual Report
The Group’s Annual Report will be published on the 15th of February 2005 where shareholders will be able to access the report at the Group’s website www.bakkavor.com The Annual Report will also be sent to shareholders as in previous years.
Annual General Meeting and announcement of interim results in 2005
The Group’s Annual General Meeting will be held on the 25th February 2005. A more detailed announcement regarding the AGM will be issued at a later date.
The 2005 quarterly results will be published on:
1Q 29th April
2Q 29th July
3Q 28th October
4Q 27th January 2006
The Group’s Annual General Meeting in 2006 is planned on the 3rd March 2006.
Future prospects
Sales in January have been strong and operating prospects for the Group are good for the year. Demand for chilled convenience food is expected to continue to grow and Bakkavör Group remains focused on achieving profitable organic and acquisitive growth.
Results approved
The Board of Directors of Bakkavör Group hf. approved the results of the Group for the year 2004 at a Board Meeting on the 27th January 2005. The Annual Statements have been audited by the Group’s accountants and signed without comment. The same accounting principles have been applied this year as last year.
Presentation of annual results
A meeting for shareholders and market participants will be held on the 28th January at the Radisson SAS Hotel Saga, Arsal at 8:15am to present the Group’s annual results. The presentation will be published on the Group’s website as soon as the meeting is finished. Agust Gudmundsson Executive Chairman and Lydur Gudmundsson CEO will present the Group’s results and answer questions.
For further information please contact:
Ágúst Gudmundsson Executive chairman
Tel: +44 7900 901 384
Lýdur Gudmundsson Chief executive officer
Tel: +44 7900 901 385
The Annual Results can be viewed at Bakkavör Group’s office at Sudurlandsbraut 4 and on the Group’s website www.bakkavor.com
To view full press release please click here.
To view annual statement click here.
