Netherlands: Royal Grolsch N.V. announced on January 8 that it will recognise non-recurring exceptional income in 2003 of €8 million, in respect of higher residual values of assets decommissioned at the old breweries. Grolsch stands by the forecast it gave on 3 September of an increase to some extent in net profit in 2003 compared with 2002.

The non-recurring exceptional income, which amounted to €12 million before tax, will be included in the operating profit in the 2003 accounts. This income has arisen because some of the tangible fixed assets at the Groenlo and Enschede-North breweries which were written down in 1997 have proved to have a longer economic life and/or a higher residual value than assumed at that time. After tax, this non-recurring exceptional income will increase the net profit by €8 million.

Grolsch is standing by the forecast it gave on 3 September of an increase to some extent in net profit in 2003 compared with the 2002 figure of €30.1 million. Since this forecast does not take account of the non-recurring exceptional income, the total net profit for 2003 will show a substantial increase.

Grolsch envisages no change in its customary dividend pay-out ratio 40–45% of net profit. Given the non-operational nature of the exceptional income, the dividend pay-out will be based on the net profit excluding this item, as was the case when the exceptional write-downs were made in 1997.

The total investment in the new brewery, and hence the depreciation base, will be approximately €277 million, compared with the earlier projection of €250 million. The higher figure reflects inflation, cost increases and substantial investments, which are mainly in filling lines to enable us to respond flexibly to changing packaging trends, on which decisions have recently been taken. A large proportion of the additional investment will be financed with the exceptional income referred to above and existing tax facilities. As stated earlier, the investment in the new brewery will result in increased depreciation and interest costs in the next years.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .