€40m profit for Goodman

Irish Food Processors Ltd, the Larry Goodman owned meat processing business, generated pre-tax profits of €41.54 million in the year to the end of March 2002.

That's up by €7.95 million, or nearly 24% on the restated accounts for the previous twelve months. The 2001 pre-tax result was depressed due to an exceptional cost of €15.36 million, which related to stocks held by the company at the time of the BSE crisis in 2000.

At operating level before exceptionals, profit was down by 6.1% to €38.9 million. This was mainly due to a lower turnover of €874.11 million, down by €40.5 million on the previous year. The operating margin dropped slightly from 4.53% to 4.45%. This is still at the upper end of meat company performances. The adjoining table shows how the company, which is now 100% owned by Larry Goodman, has improved its operating margin over the last four years. Sales to higher-priced UK and European markets continue to grow and account for a larger proportion of total sales. Over the last seven years, IFP has invested a total of €82 million in its consumer products division to target higher-margin outlets. This ongoing investment has assisted the company in meeting the requirments of the UK multiples.

The support schemes operated in Ireland during the first six months of 2001 would have overlapped with a three-month period of these accounts.

Another feature of the results is the tight cost control. Distribution costs and administrative expenses amounted to €75.2 million, which is 8.6% of turnover. The company employs a total of 2,818 people, mostly here in Ireland and in the UK where it is the largest meat processor. That number of employees is down by 231 that helped to decrease payroll costs slightly.

The sale of fixed assets generated €1.14 million, while in the previous financial year the sale of surplus property yielded €6.7 million.

The cost of financing continues to decrease, down €3.92 million in this latest set of accounts. This reflects the lower level of borrowings in the company. During the year, long-term creditors dropped from €46 million down to €30 million due to another repayment of the US loan notes.

The most recent balance sheet shows that cash in the bank and on hand increased from €118 million to €144 million. This reflects the strong cash flow generated by the company last year.

Total shareholders' funds have increased by €11.4 million to €193.4 million, leaving the company in a financially secure position. A dividend of €19 million was proposed.

The company has made a provision for legal and contractual obligations of €10.86 million. Most of this has already been provided for but a figure of €3.67 million is included in the latest profit and loss account. A high court case between Mr Goodman and Pascal Phelan ended in February of last year.

During the year, the group's financial controller, John O' Donnell, took up a new job with BWG. This position in IFP has been filled by John McLaughlin.

Pritchitts' shortlist excludes United?

Five bidders have been "short listed" for the purchase of the Pritchitt Foods business based at Newtownards, Co Down and Bromley in Kent. This from nine "indicative offers" earlier.

No indication is being given of the names of companies in the shortlist but Journal enquiries suggest that the United Dairy Farmers Group may have been excluded at this stage. That means that the separate sale of the Pritchitts milk pool to Glanbia would be less likely. The possibility of such a deal with Glanbia had been mooted if United acquired Pritchitts.

Lakeland Dairies is believed to be in the shortlist of possible buyers of the business. Kerry may also be in there and possibly Donegal. Also Glanbia could remain interested in the milk pool, with the new Baileys Cream factory in Belfast due to come into production later this year and Glanbia well into the second phase of around Stg£10m investment in the mozzarella factory at Magheralin.

Pritchitts principal shareholder Bobby Lawes says that all five have agreed to accept a single "due diligence" exercise being carried out by accountants BDO Stoy Hayward over the next four weeks.

Subject to a satisfactory report, this means that bids to be submitted in early March won't have to be conditional on "due diligence" to be carried out by the bidder. Other Journal sources indicate that Pritchitts anticipates a profit of Stg £0.8m for the year to the end of February 2003. This incorporates losses in the last six months after an estimated profit of Stg £1.4m in the first half of the year.