Hibernia Foods plc
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Special Report: Hibernia Foods plc (Nasdaq: HIBNY)
Hibernia Foods plc
Symbol: (Nasdaq: HIBNY)
52-Week High/Low: $8 ¼ - $ 4 11/16
Recent Price: $6 1/8
Shares Outstanding: 19,500,000
Float: 9,500,000
Corporate Headquarters
Hibernia Foods plc
68 Merrion Square,
Dublin 2, Ireland
Tel: +353 1 6611030
Fax: +353 1 6611029
Web: www.hiberniafoods.ie
Investor Relations:
Strategic Growth International, Inc.
Stan Altschuler
(516) 829-7111
Introduction & Company Background
Hibernia Foods plc is an Irish public limited company based in Dublin, Ireland. Organized in 1991, its principal operations are conducted in the United Kingdom through its wholly owned subsidiaries Hibernia Foods Limited and Hibernia Brands Limited. Hibernia manufactures and sells frozen desserts, fresh sweet baked goods, and frozen ready-meals including frozen meatball products. Hibernia has six operational manufacturing facilities in the U.K. representing capacity of over 450,000 square feet.
Hibernia was the third largest producer of all frozen desserts in the United Kingdom with an 18% share of the total U.K. frozen dessert market in fiscal 1999. Six of the largest retail chains in the U.K. share 76% of that market, and Hibernia supplies each of those retail chains with frozen dessert products. In addition, Hibernia was the largest producer of private label frozen desserts in the U.K. and had a 25% share of that market in fiscal 1999.
Hibernia acquired both the Entenmann's fresh sweet baked goods business and the Mr. Brain's business in September 1998 - both expanding markets in the last several years. Hibernia is the exclusive European license holder for the Entenmann's brand of fresh baked cakes. The license covers an area encompassing 51 countries and in excess of 700 million people. Currently Entenmann's has only been launched by Hibernia in the UK and the Republic of Ireland. It can easily be appreciated, therefore, that once the brand has been introduced throughout the entire licensed area the derived income will be substantial. The products manufactured under the Entenmann's brand include carrot cakes, chocolate fudge brownies, fudge cakes, New England loaves, stollen, Danish and doughnut products, as well as a recently launched range of New York-Style chilled cheesecakes.
Its frozen desserts accounted for approximately 74% of its revenues in fiscal 1999 and consist of a wide range of cakes, including gateaux, layer cakes and meringue-based desserts, and donuts. Its frozen ready-meals and frozen meatball products accounted for a total of approximately 18% of revenues in fiscal 1999 and consist of a range of savory packaged hot parcels as well as pork meatball products marketed under the brand name Mr. Brain's.
Mr. Brain's brand meatball products have been produced in the U.K. for over 100 years and dominate the U.K. frozen meatball sector. It had a market share of 91% in fiscal 1999. The Entenmann's brand name is well known in the United States and, since its introduction in the U.K., has been one of the fastest growing brands in the U.K. convenience food sector.
Another of Hibernia Foods' prominent brands is Napolina. Following the opening of Hibernia's new state-of-the-art factory in Hartlepool, the company launched the Napolina product line of frozen, ready made meals including lasagna, Italian meatball and a variety of pasta dishes.
Hibernia owns a number of smaller brand names also and these relate in particular to the Frozen Desserts business and the Savoury Ready Meals business. These branded products are supplied to a wide range of customers in the UK and Ireland.
Expansion Strategy
Hibernia has grown through acquisition and plans to continue its successful strategy in order to further expand operations. In July 1997, Hibernia acquired Majestic Food Group Limited, which was engaged in the frozen desserts and frozen ready-meals business in the U.K. In September 1998 Hibernia purchased the Entenmann's fresh sweet baked goods business and the Mr. Brain's savory meatballs business, owned by Bestfoods U.K. Limited ("Bestfoods"), including licenses to use the Entenmann's brand name and recipes. In September 1998, Hibernia also purchased assets related to the frozen dessert business of Freshbake Foods Limited, a subsidiary of Vlasic Foods International Inc. These assets, consisting of the Peterlee manufacturing facility in northeastern England and its equipment, are principally used in connection with Hibernia's production of frozen donuts, hot puddings and fruit cobblers.
According to Oliver Murphy, chairman and chief executive efficer: "Our target is to significantly increase turnover within the next 12 months, and whilst our rate of organic growth is impressive, we are keen to maintain momentum behind our aggressive acquisition programme."
In the United States the Entenmann's products are well established and, since their introduction into the UK, have been one of the fastest growing brands in the convenience food sector. Hibernia's strategy is to invest a substantial part of the Hibernia marketing budget and energy into maximizing the advances that can be made in the UK market. As a parallel objective it is highly likely that the company's planned expansion into continental Europe will be spearheaded by the Entenmann's brand.
One of the most interesting aspects of the Hibernia Foods involvement in the food manufacturing and distribution chain is that the entire industry is undergoing a period of radical change, which is undoubtedly working in favor of the company and its expansive policies. Most of the major manufacturing groups in the industry are re-organizing their assets in an attempt to reduce their exposure to the low margin or non-growth sectors and to correspondingly increase their investment in potentially more advantageous opportunities.
As a clearly identified purchaser of food manufacturing businesses Hibernia is in constant contact with all of the interested parties, as Oliver Murphy confirms: "It's probably true to say that not a week goes by without an interesting proposition being offered to us and we do have potential purchases under observation both in the UK and a number of other European countries. However, whilst our acquisition programme has been quickly implemented, all of our targets have been clearly identified as key to our future growth plan. None of our acquisitions have been opportunistic, although all of them have proven to be more advantageous than we had previously calculated."
The corporate strategy will play a major part in three sectors of the food business: frozen desserts, frozen ready meals and fresh sweet baked goods, representing the Entenmann's brand of ambient and chilled cakes. The acquisition program was carefully devised in the classic mold of creating an entity whose sum of it parts represents greater shareholder value than that of the previously individual components.
Support From the Financial Community
Hibernia has gained the confidence of major banking institutions in both Europe and in the United States. Daniel Myers, regional head of acquisition finance at Fortis Bank, commented: "We are delighted to have assisted Hibernia Foods at this crucial stage of their development. The company is now well placed, with an innovative product range and first class manufacturing processes, to achieve greater UK and European success. We look forward to assisting management in fulfilling their strategy." Headquartered in Belgium, Fortis Bank was established in June 1999 as the result of the merger between Generale Bank and ASLK-CGER in Belgium and Generale Bank Nederland, VSB Bank and MeesPierson in the Netherlands. Fortis Bank has a presence in 60 countries, 40,000 employees and a market capitalization that makes it one of the leading European banks. Endorsements from such leading financial institutions as Fortis Bank has obviously added strength to the financial capacity of Hibernia Foods to expand its areas of influence in the global food industry.
The American financial community has also taken a substantial involvement in Hibernia Foods. The investment banks and institutions became heavily involved in the company's funding prior to the initiation of its "acquisition programme" expansion strategy. Colm Delves, group finance director comments: "The American institutional investors were a key source of the funding that we required, primarily through the private placement of both debt and equity based instruments. "We spent a long time making our presentations and generally convincing them of the strength of our business plan. The chairman and myself spend about four days per month in the United States talking to our shareholders and potential investors. Our future plans will certainly involve another acquisition and, therefore, our communications with the funding agencies and investment bankers will continue to be a part of our business activity. Furthermore, our recent transaction with the Pan European Food Fund indicates the willingness of parties outside the United States to invest in Hibernia Foods."
On December 1, 2000, the Company announced that the gross proceeds from the exercise of warrants in the current fiscal year reached $12,954,000.
Directors and Officers of Registrant
Oliver Murphy, Age 52, Chairman, Chief Executive Officer and Director - Mr. Murphy founded Hibernia in 1991 and has served Hibernia as Chairman and Chief Executive Officer since that time. Mr. Murphy was active in the international beef business for over 25 years. Prior to his founding Hibernia, in 1977 he founded and served as Chief Executive Officer of Hibernia Meats Limited (not affiliated with Hibernia), a processing and slaughtering company in Ireland, which was engaged in the export of beef to the United Kingdom, Western Europe, the Middle East, Northern Africa and Japan. He sold that company to his associates in the business. Mr. Murphy has served as Chairman of the Irish Livestock and Meat Board, a government agency. Mr. Murphy graduated from University College, Dublin.
Nigel Broadhurst, Age 40, Chief Executive Officer of Hibernia Foods Holdings (U.K.) Limited(1) and Director - Mr. Broadhurst has served as a director of Hibernia since October 1998. At that time he joined Hibernia as the Chief Executive Officer of Hibernia Foods Holdings (U.K.) Limited. Prior thereto, he served as Director - Group Buying of Iceland Frozen Foods plc. He graduated from Stockport College of Further Education.
Colm Delves, Age 33, Chief Financial Officer and Director - Mr. Delves joined Hibernia in May 1992 as Financial Controller. He has served as a director of Hibernia since September 1993 and is Chief Financial Officer. Mr. Delves is a Chartered Accountant and was employed by KPMG, Chartered Accountants, prior to 1992. He graduated from Dublin City University.
Gerard Fanning, Age 44, Secretary and Director - Mr. Fanning has served as a director of Hibernia since March 12, 1997. Since January 1999, Mr. Fanning has been employed by Hibernia as Corporate Secretary and Director of Corporate Affairs. Prior to that date, Mr. Fanning, a solicitor at law, practiced with the firm of Matheson Ormsby Prentice in Dublin since June 1996 and before that, at the firm of Rory O'Donnell & Co. in Dublin. He graduated from University College, Dublin.
Paul Connolly, Age 39, Director - Mr. Connolly has served as Secretary and a director of Hibernia since its incorporation. Mr. Connolly has been an independent financial consultant since March 1991. Prior thereto he served as the Financial Controller of Hibernia Meats International Limited (not affiliated with Hibernia), a company engaged in international sales of beef. Mr. Connolly also serves as a director of ESAT Telecom Group plc, an Irish telecommunications company. He is a Chartered Accountant and graduated from University College, Dublin.
John Donlon, Age 52, Director - Mr. Donlon has served as a director of Hibernia since May 1992. Since March 1991, Mr. Donlon has been an independent consultant and a director of National Irish Bank. Since November 1995, Mr. Donlon has also served as Chief Executive Officer of World Equestrian Games (Ireland) Ltd. Mr. Donlon was the Secretary of the Department of Industry and Commerce for the Republic of Ireland from March 1984 until March 1991. His responsibilities and activities while serving as Secretary included promotion of trade and industrial development in Ireland, oversight of the Industrial Development Authority and Irish Export Board, representation of Ireland at various EU councils and committees relating to industry and trade, and representation of Ireland at GATT negotiations. He attended St. Mels College, Longford, and the Institute of Public Administration in Dublin.
Walter L. Downey, Age 61, Director - Mr. Downey has served as a director of Hibernia since December 1998. Since November 1978, Mr. Downey was employed by Fidelity Investments Institutional Services Company, Inc., a mutual fund management company, and served as President of Fidelity International Investment Advisors (U.S.), Inc. until his retirement in April 1998. He is now a private investor. Mr. Downey graduated from Northeastern University in Massachusetts.
Thomas W. Keaveney, Age 53, Director - Mr. Keaveney has served as a director of Hibernia since December 1998. Mr. Keaveney has been employed by Credit Suisse First Boston Corp., an investment bank, since 1976 and has served as a Managing Director and Senior Advisor since 1986. Mr. Keaveney also serves as a director of ESAT Telecom Group plc, an Irish telecommunications company. He graduated from Fordham University in New York.
Patrick Murphy, Age 43, Director - Mr. Murphy has served as a director of Hibernia since its incorporation. Mr. Murphy has been employed since 1973 as the General Manager of Murphy Machinery (Littleton), Ltd, a family-owned company in Ireland, which imports and distributes farm equipment. He graduated from St. Kierans College, Kilkenny.
Oliver Murphy and Patrick Murphy are brothers.
Annual Report
Click the link below to view Hibernia's Annual Report:
hiberniafoods.ie
Press
Friday, December 1, 2000 06:02 AM ET
Hibernia Foods PLC Announces Record Second Quarter Results for Fiscal Year 2000/2001
Friday, December 1, 2000 06:01 AM ET
Hibernia Foods plc Announces $13 Million Equity Injection From Warrant Exercise
Conclusion
As you will see from reviewing Hibernia's Annual Report and the above press releases, the Company is growing sales at a very high rate as its expansion strategy has definitely reaped its rewards. Commenting on Hibernia's operating results, Chairman and CEO Oliver Murphy said, ``I am pleased to report that we again achieved record revenues during the second quarter, reflecting strong internal growth, as well as the benefits of our investment in the ready-meals facility in our prior fiscal year. I am particularly pleased with the performance of the Entenmann's division, which in the UK, is now the fastest growing brand in its sector, with 84% like for like revenue growth… This growth is largely attributable to the sale of new products to major UK retailers from the 59,000 square foot ready-meals facility we opened in October 1999 and we expect to achieve additional revenues from this facility in the current fiscal year. Furthermore, the continued improvement in gross margin is encouraging as we enter the third quarter of our fiscal year, which, in revenue and margin terms, represents our most significant quarter in our fiscal year.''
Considering these comments regarding the significance of the 3rd quarter, Hibernia could be announcing its best results ever. Quarterly results are expected to be released in the near term and Hibernia's excellent management team appears confident that its model will continue to bode well for investors.
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