TIDMGLB
RNS Number : 3656H
Glanbia PLC
17 August 2016
Strong performance in first half driven by Glanbia Performance
Nutrition
Guidance reiterated of 8% to 10% constant currency adjusted
EPS growth in 2016
17 August 2016 - Glanbia plc ("Glanbia", the "Group", the
"plc"), the global nutrition group, announces its results for the
six months ended 02 July 2016.
Results highlights for the half year 2016
-- Adjusted earnings per share 44.87 cent, up 10.8% on prior
half year, constant currency (up 10.5% reported);
-- EBITA from wholly owned business EUR157.4 million, up 13.7%
on prior half year, constant currency (up 13.6% reported);
-- EBITA margins from wholly owned business 11.0%, up 130 bps on
prior half year, constant currency and reported;
-- Strong result from Glanbia Performance Nutrition with EBITA
of EUR81.7 million, a 35.0% increase on prior half year, constant
currency (up 34.6% reported);
-- Glanbia Nutritionals(1) delivered a satisfactory result with
EBITA of EUR58.0 million, a 4.0% decrease on prior half year,
constant currency (down 3.8% reported);
-- Dairy Ireland in line with expectations with EBITA of EUR17.7
million, a 1.1% increase on prior half year;
-- Joint Ventures & Associates EBITA declined 4.5%, constant
currency, (down 5.4% reported) in the first half ; and
-- Recommended interim dividend of 5.37 cent per share, an increase of 10% on prior year.
Commenting today Siobhán Talbot, Group Managing Director,
said:
"Glanbia delivered a strong performance in the first six months
of 2016 driven by Glanbia Performance Nutrition. Total Group
earnings before interest, tax and amortisation for the half year
grew by over 11%. Sales of performance nutrition brands and
value-added nutritional ingredients showed good growth in the first
half of 2016 delivering on our vision to be a leading nutrition
business. Global dairy markets remain weak and continue to be a
challenge for parts of the business, however the diversity of the
Glanbia portfolio has enabled us to navigate this and we reiterate
guidance for the full year of adjusted earnings per share growth of
8% to 10% on a constant currency basis."
2016 half year results Reported Constant Currency
EURm HY 2016 HY 2015 Change Change(2)
============================= ======== ========= ======== ==================
Wholly-owned business
Revenue 1,434.8 1,431.7 +0.2% +0.4%
EBITA(3) 157.4 138.5 +13.6% +13.7%
+ 130
EBITA margin 11.0% 9.7% bps +130 bps
Joint Ventures & Associates
Revenue 402.3 445.3 -9.7% -8.8%
EBITA 19.1 20.2 -5.4% -4.5%
EBITA margin 4.7% 4.5% +20bps +20bps
Total Group(4)
Revenue 1,837.1 1,877.0 -2.1% -1.7%
EBITA 176.5 158.7 +11.2% +11.4%
EBITA margin 9.6% 8.5% +110bps +110bps
Adjusted earnings per
share(5) 44.87c 40.60c +10.5% +10.8%
============================= ======== ========= ======== ==================
1. Global Ingredients has been rebranded Glanbia Nutritionals.
The operations of the segment are unchanged.
2. To arrive at the Constant Currency Change, the average FX
rate for the current period is applied to the relevant reported
result from the same period in the prior year. The average Euro US
Dollar FX rate for the first half of 2016 was EUR1 = $1.116 (HY
2015: EUR1 = $1.115).
3. EBITA is defined as earnings before interest, tax and
amortisation and is stated before exceptional items.
4. Total Group includes Glanbia's share of Joint Ventures & Associates.
5. Adjusted earnings per share is reconciled in Note 10 of the financial statements.
This release contains certain alternative performance measures.
A detailed glossary of the key performance indicators and non-IFRS
performance measures can be found at the end of this document.
2016 half year overview and outlook
Glanbia delivered a strong performance in the first half of
2016. Wholly owned revenue was EUR1,434.8 million, an increase of
0.4% constant currency (up 0.2% reported). Wholly owned EBITA was
EUR157.4 million, up 13.7% constant currency (up 13.6% reported).
Wholly owned EBITA margin was 11.0%, up 130 bps, constant currency
and reported. Total Group revenue for the period, including the
Group's share of Joint Ventures & Associates, was EUR1,837.1
million, a decrease of 1.7% constant currency (down 2.1% reported).
Total Group EBITA was EUR176.5 million, up 11.4% constant currency
(up 11.2% reported). Total Group EBITA margin was 9.6%, up 110 bps,
constant currency and reported. Adjusted earnings per share for the
half year were 44.87 cent, up 10.8%, constant currency (up 10.5%
reported).
Capital investment and corporate development
Glanbia's total investment in capital expenditure was EUR41.7
million in the first half of 2016, of which EUR27.8 million was
strategic investment reflecting the on-going focus on the organic
growth potential of the business. Key strategic projects undertaken
in the period were the investments in value-added ingredient
processing technologies at the Glanbia Nutritionals sites in Idaho
and California, USA.
Board changes
On 09 May 2016, Tom Grant, Brendan Hayes, Patrick Hogan and
Eamon Power retired from the plc Board as part of the agreement in
place with Glanbia Co-operative Society Limited to reduce its
director representation on the plc Board by four in 2016.
Glanbia Nutritionals
The Global Ingredients segment has been reshaped to improve its
positioning with customers and target growth opportunities. The
overall portfolio has been integrated into one global organisation
to deliver to customers the full suite of Glanbia's capabilities
across its cheese and nutritional ingredients platforms. This new
organisation is consumer insight driven, has regionally focused
sales teams, and is enabled by centres of excellence across areas
such as product supply, innovation and strategy. The segment
contains the prior operations of Global Ingredients and has been
rebranded "Glanbia Nutritionals". It will continue to report
revenue, EBITA and EBITA margin.
2016 outlook
Glanbia reiterates its guidance for 2016 of 8% to 10% growth in
adjusted earnings per share, constant currency. If the full year
2016 average Euro US dollar exchange rate remains at similar levels
to the first half of 2016, Glanbia expects the 2016 reported
adjusted earnings per share growth to be broadly in line with the
constant currency result.
Glanbia Performance Nutrition ('GPN') is expected to be the main
driver of 2016 earnings per share growth. GPN continues to focus on
like for like branded revenue progression and is currently
expecting full year growth in line with the first half. Favourable
input costs, mix improvement and operational leverage are expected
to drive margin improvement and earnings for 2016 versus prior
year. Glanbia Nutritionals expects to deliver modest EBITA
improvement versus prior year. This will be driven by increased
sales of value-added nutritional ingredients offset somewhat by
reduced performance from US Cheese as a result of weak markets.
Dairy Ireland and Joint Ventures & Associates are expected to
be broadly in line with prior year.
HY 2016 operations review
Segmental analysis (as reported)
HY 2016 HY 2015
EBITA EBITA
EURm Revenue EBITA % Revenue EBITA %
============================= ======== ======== ====== ======== ======== ======
Glanbia Performance
Nutrition 505.3 81.7 16.2% 453.5 60.7 13.4%
Glanbia Nutritionals 572.6 58.0 10.1% 609.3 60.3 9.9%
Dairy Ireland 356.9 17.7 5.0% 368.9 17.5 4.7%
============================= ======== ======== ====== ======== ======== ======
Total wholly-owned
businesses 1,434.8 157.4 11.0% 1,431.7 138.5 9.7%
Joint Ventures & Associates 402.3 19.1 4.7% 445.3 20.2 4.5%
============================= ======== ======== ====== ======== ======== ======
Total Group 1,837.1 176.5 9.6% 1,877.0 158.7 8.5%
============================= ======== ======== ====== ======== ======== ======
Glanbia Performance Nutrition
Reported Constant Currency
EURm HY 2016 HY 2015 Change Change
============== ======== ========= ======== ==================
Revenue 505.3 453.5 +11.4% +12.0%
EBITA 81.7 60.7 +34.6% +35.0%
EBITA margin 16.2% 13.4% +280bps +280bps
============== ======== ========= ======== ==================
Commentary is on a constant currency basis throughout
Glanbia Performance Nutrition ('GPN') delivered a strong
performance in the first half of 2016 against the same period in
2015. Revenues increased 12.0% to EUR505.3 million. Drivers of
revenue growth were an 8.0% improvement in volume and a 10.7%
revenue contribution from the thinkThin acquisition offset by a
6.7% decline in price, due to promotional investment.
Like for like branded revenue growth for H1 2016 was 4.4% as
good branded volume growth across all regions was somewhat offset
by promotional investment. The strong US Dollar remains a headwind
in certain non US markets. The thinkThin acquisition performed well
in the period maintaining its historically strong growth rate.
Innovation continues to be a focus and the recent launch of BSN
N.O.-XPLODE XE has performed well with a strong pipeline of new
product launches planned for H2 2016.
EBITA grew strongly by 35.0% in the period driven by revenue
growth and EBITA margin progression of 280 bps to 16.2%. The margin
increase was driven by a reduction in input cost, mix improvement
from increased branded sales relative to contract and continued
gains in operating leverage.
Glanbia Nutritionals
Reported Constant Currency
EURm HY 2016 HY 2015 Change Change
============== ======== ========= ======= ==================
Revenue 572.6 609.3 -6.0% -5.9%
EBITA 58.0 60.3 -3.8% -4.0%
EBITA margin 10.1% 9.9% +20bps +20bps
============== ======== ========= ======= ==================
Commentary is on a constant currency basis throughout
Glanbia Nutritionals ('GN') performance was in line with
expectations in the first half of 2016 and delivered a satisfactory
result in the context of on-going challenging dairy markets.
Revenues decreased by 5.9% to EUR572.6 million as volume growth of
2.2% was more than offset by weaker dairy markets which reduced
pricing by 8.1%. Overall margins progressed to 10.1% driven by a
strong performance from the Nutritional Ingredients portfolio.
Nutritional Ingredients improved performance was driven by
volume growth of value-added dairy and non-dairy ingredients,
including bar systems and high-end whey ingredients following
investment in increased capacity in 2015.
US Cheese volumes were broadly in line in the first half of 2016
as plants operated close to full capacity. Cheese demand remains
solid across the US retail and foodservice markets although pricing
in the overall US market was weak. On-going challenging dairy
market dynamics led to a reduced performance in this part of the
business.
Dairy Ireland
Reported
EURm HY 2016 HY 2015 Change
============== ======== ========= =======
Revenue 356.9 368.9 -3.3%
EBITA 17.7 17.5 +1.1%
EBITA margin 5.0% 4.7% +30bps
============== ======== ========= =======
Dairy Ireland had a satisfactory performance in the first half
of 2016. Revenues decreased 3.3% reflecting a 1.1% increase in
volumes, a 4.9% decline in price and a 0.5% revenue contribution
from acquisitions. A 30 bps improvement in margin drove an increase
in EBITA of 1.1% versus the prior half year.
Consumer Products delivered an improved performance versus prior
year. This was driven by an improvement in sales of value-added
branded products and input cost reductions. Consumer Products
continues to focus on improving its cost base.
Agribusiness delivered a somewhat reduced performance in the
period. Increased animal feed sales volume was more than offset by
lower pricing across animal feed and fertiliser which led to a
decline in margin.
Joint Ventures & Associates (Glanbia Share)
Reported Constant Currency
EURm HY 2016 HY 2015 Change Change
============== ======== ========= ======= ==================
Revenue 402.3 445.3 -9.7% -8.8%
EBITA 19.1 20.2 -5.4% -4.5%
EBITA margin 4.7% 4.5% +20bps +20bps
============== ======== ========= ======= ==================
Commentary is on a constant currency basis throughout
Joint Ventures & Associates revenue reduced by 8.8% in the
period as a result of the challenging dairy environment. The key
driver of the revenue movement was a 12.8% decline in pricing
reflecting weaker global dairy markets which was partially offset
by a 6.6% increase in volumes. The disposal of Glanbia's interest
in Nutricima in April 2015 led to an additional 2.6% decline in
revenues compared to the prior half year. All Joint Ventures &
Associates grew volumes in the period with a focus on costs,
off-setting some of the price challenges which generated a 20 bps
improvement in margin.
Half year 2016 finance review
HY 2016 results summary
pre-exceptional Constant Currency
EURm HY 2016 HY 2015 Change Change
============================== ======== ======== ======== ==================
Revenue 1,434.8 1,431.7 +0.2% +0.4%
EBITA 157.4 138.5 +13.6% +13.7%
EBITA margin 11.0% 9.7% +130bps +130bps
- Amortisation of intangible
assets (19.4) (15.6)
- Net finance costs (11.6) (10.7)
- Share of results of
Joint Ventures Associates 12.3 13.3
- Income tax (21.7) (19.1)
============================== ======== ======== ======== ==================
Profit for the half year 117.0 106.4
============================== ======== ======== ======== ==================
Income statement
For the first half of 2016, wholly owned revenue increased 0.4%,
constant currency (up 0.2% reported) to EUR1,434.8 million (HY
2015: EUR1,431.7 million). EBITA grew by 13.7%, constant currency
(up 13.6% reported) to EUR157.4 million (HY 2015: EUR138.5
million). EBITA margin increased by 130 bps to 11.0%, both constant
currency and reported.
Net financing costs of EUR11.6 million increased versus prior
year (HY 2015: EUR10.7 million) due to an increase in average net
debt. The Group's average interest rate for the period was 3.6% (HY
2015: 3.9%). Glanbia operates a policy of fixing a significant
amount of its interest exposure, with 85% of projected 2016 debt
currently contracted at fixed rates for 2016.
The HY 2016 pre-exceptional tax charge increased by EUR2.6
million to EUR21.7 million (HY 2015: EUR19.1 million). This
represents an effective rate, excluding Joint Ventures &
Associates, of 17.1% (HY 2015: 17.0%).
The Group's share of results of Joint Ventures & Associates
decreased by EUR1.0 million to EUR12.3 million (HY 2015:
EUR13.3million). Share of results of Joint Ventures &
Associates is an after tax and interest amount.
Adjusted earnings per share
Constant Currency
HY 2016 HY 2015 Change Change
======================= ======== ======== ======= ==================
Adjusted earnings per
share(*) 44.87c 40.60c +10.5% +10.8%
======================= ======== ======== ======= ==================
* Adjusted earnings per share is reconciled in note 10 of the
financial statements. A full glossary of terms used throughout this
release can be found in the financial statements section at the end
of this document.
Total adjusted earnings per share grew 10.8% (up 10.5%
reported), driven by growth in EBITA. Adjusted earnings per share
is believed to be more reflective of the Group's underlying
performance than basic earnings per share and is calculated based
on the net profit attributable to equity holders of the parent
before exceptional items and amortisation of intangible assets, net
of related tax.
Dividend per share
The Board is recommending an interim dividend of 5.37 cent per
share (HY 2015: interim dividend 4.88 cent per share). This
represents an increase of 10% on the prior year interim dividend.
The dividend will be paid on 07 October 2016 to shareholders on the
register of members as at 26 August 2016. Irish withholding tax
will be deducted at the standard rate where appropriate.
Exceptional items
EUR m HY 2016 HY 2015
1. Organisation redesign costs (6.2) (3.1)
2. Acquisition integration costs (1.9) -
3. Rationalisation costs (0.8) (1.1)
4. Disposal of interest in Joint Venture - (3.6)
Exceptional (charge) pre-tax (8.9) (7.8)
Taxation credit 1.6 0.5
========================================== ======== ========
Total exceptional (charge) (7.3) (7.3)
========================================== ======== ========
Exceptional items incurred in the first half of 2016 resulted in
a post-tax exceptional charge of EUR7.3 million compared to an
equal charge of EUR7.3 million for the same period in 2015. Details
of the exceptional items incurred in the period are as follows:
1. The organisation redesign costs relate to the on-going
programme announced in 2015 in Glanbia Nutritionals to
fundamentally reorganise the business to leverage future market
opportunities. It is envisaged that this programme will continue
until H1 2017 and will involve a total cost of approximately EUR20
million across 2015, 2016 and 2017.
2. Acquisition integration costs comprise of costs relating to
the integration, restructuring and redesign of route to market
capabilities within acquired businesses in the Glanbia Performance
Nutrition segment.
3. Rationalisation costs primarily relate to the current
redundancy and rationalisation programme in the Dairy Ireland
segment.
4. Relates to the disposal in April 2015 of Glanbia's investment
in Milk Ventures (UK) Limited which is the parent company of
Nutricima Limited, a non-core Joint Venture business involved in
the supply and distribution of evaporated and powdered milk, based
in Nigeria.
Group financing and cash flow
Financing key performance indicators HY 2016 HY 2015 FY 2015
====================================== =========== =========== ===========
Net debt EURm 644 577 584
Net debt : adjusted EBITDA(1) 1.83 times 1.97 times 1.75 times
Adjusted EBIT(1) : net finance cost 11.4 times 9.8 times 10.8 times
====================================== =========== =========== ===========
1. Definition of net debt, adjusted EBITDA and adjusted EBIT are
as per financing agreements which include dividends from Joint
Ventures & Associates and the pro forma effect of acquisitions.
A detailed glossary of the key performance indicators and non-IFRS
performance measures can be found at the end of this document.
The Group's financial position continues to be strong. Net debt
at the end of HY 2016 was EUR644 million. This is an increase of
EUR67 million relative to the end of HY 2015. Net debt to adjusted
EBITDA was 1.83 times and interest cover was 11.4 times, both
metrics remaining well within financing covenants. Relative to the
year end of 2015, net debt has increased by EUR60 million. The key
drivers of the net debt increase from year end 2015 have been a
seasonal increase in working capital and capital expenditure.
Pension
On 02 July 2016, the Group's net pension liability under IAS 19
(revised) 'Employee Benefits', before deferred tax, increased by
EUR44.8 million to EUR132.1 million versus year end 2015 (FY 2015
pension liability EUR87.3 million). A significant driver of this
was the decrease in the discount rate driven by the decline in
interest rates on high quality corporate bonds. See note 17 for
further details on the retirement benefit obligation at the
reporting date.
Principal risks and uncertainties affecting the Group's
performance in 2016
The Board of Glanbia plc has the ultimate responsibility for the
Group's systems of risk management and internal control. The
Group's risk management framework outlines the key stakeholder risk
management responsibilities. It is designed to ensure that there is
input across all levels of the business to the management of risk
and to enable the Group to remain responsive to the ever changing
environment in which it operates. This framework, together with the
processes to identify, manage and mitigate potential material risks
to the achievement of the Group's strategic objectives are set out
in detail on pages 32-34 of the plc's 2015 Annual Report.
The Group's principal risks and uncertainties are summarised in
the risk profile table below, according to the strategic objective
to which they relate, together with an overview of the risk trend
identified for the year ended 02 January 2016, issued on 03 March
2016 which the plc Board believes to still remain applicable. There
may be other risks and uncertainties that are not yet considered
material or not yet known to the Group and this list will change if
these risks assume greater importance in the future.
Group strategic Maintain and Grow through Develop talent, Other risks
priorities grow Glanbia's organic investment culture and
global leadership programme and values in line
in performance acquisition/ with Glanbia's
nutrition and partner with growing global
nutritional complementary scale
and functional businesses
ingredients
================ =================== ==================== ================== =======================
Risks where Economic, industry IT and cyber
trend is and political security risks
increasing risk
================ =================== ==================== ================== =======================
Risks which Strategy risk Acquisition Talent management Site compliance
are stable Market risk risk risk risk and environment,
Customer health & safety
concentration regulation
risk risk
Supplier risk
Product safety
and compliance
risk
================ =================== ==================== ================== =======================
Key risk factors and uncertainties with the potential to impact
on the Group's financial performance in the second half of the year
include:
-- Economic, industry and political risk. Macroeconomic
uncertainty continues to increase, partly as a result of the United
Kingdom (UK) electorate voting to leave the European Union. While
the direct impacts of this decision are limited, currency
volatility, further movement in discount rates and other economic
uncertainties will require on-going monitoring by the Group;
-- The continued impact on the competitive landscape for Glanbia
Performance Nutrition, recognising the impact of a stronger US
dollar on the purchasing power of consumers in certain
international markets; and
-- The overall impact on margins of movements in dairy pricing particularly in whey markets.
The Group actively manages these and all other risks through its
risk management and internal control processes. Full details of the
principal risk exposures and the related mitigation actions are
outlined on pages 35-38 of the plc 2015 Annual Report.
Cautionary statement
This announcement contains forward-looking statements. These
statements have been made by the Directors in good faith based on
the information available to them up to the time of their approval
of this report. Due to the inherent uncertainties, including both
economic and business risk factors underlying such forward looking
information, actual results may differ materially from those
expressed or implied by these forward-looking statements. The
Directors undertake no obligation to update any forward-looking
statements contained in this announcement, whether as a result of
new information, future events, or otherwise.
Results webcast and dial-in details
There will be a webcast and presentation to accompany this
results announcement at 8.30 a.m. BST today. Please access the
webcast from the Glanbia website at
http://www.glanbia.com/investors/results-centre, where the
presentation can also be viewed or downloaded. In addition, a
dial-in facility is available using the following numbers:
Ireland: 01 2465605
UK / International: +44 20 3427 1925
USA: 646 254 3375
The access code for all participants is: 9767248
A replay of the call will be available for 30 days approximately
two hours after the call ends.
For further information contact
Glanbia plc +353 56 777 2200
Siobhán Talbot, Group Managing Director
Mark Garvey, Group Finance Director
Liam Hennigan, Head of Investor Relations +353 86 046 8375
Martha Kavanagh, Head of Media Relations +353 87 646 2006
Responsibility statement
The Directors are responsible for preparing the half yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 as amended, the related Transparency
Rules of the Central Bank of Ireland and with IAS 34 'Interim
Financial Reporting', as adopted by the European Union.
The Directors of Glanbia plc confirm that, to the best of their
knowledge:
-- The Group condensed interim financial statements for the half
year ended 02 July 2016 have been prepared in accordance with the
international accounting standard applicable to interim financial
reporting (IAS34) adopted pursuant to the procedure provided for
under Article 6 of the Regulation (EC) No. 1606/2002 of the
European Parliament and of the Council of 19 July 2002;
-- The half yearly financial report includes a fair review of
the development and performance of the business and the position of
the Group;
-- The half yearly financial report includes a fair review of
the important events that have occurred during the first six months
of the financial year, and their impact on the Group condensed
financial statements for the half year ended 02 July 2016, and a
description of the principal risks and uncertainties for the
remaining six months; and
-- The half yearly financial report includes a fair review of
related party transactions that have occurred during the first six
months of the current financial year that have materially affected
the financial position or the performance of the Group during that
period and any changes in the related party transactions described
in the last Annual Report that could have a material effect on the
financial position or the performance of the Group in the first six
months of the current financial year.
The Directors of Glanbia plc are as listed in the Glanbia plc
2015 Annual Report, with the exception of the following changes in
the period:
-- Tom Grant, Brendan Hayes, Patrick Hogan and Eamon Power
retired as Directors of Glanbia plc on 09 May 2016.
A list of current directors is maintained on the Glanbia plc
website: www.glanbia.com
On behalf of the Board
Siobhán Talbot Mark Garvey
Group Managing Director Group Finance Director
16 August 2016
Condensed income statement
for the half year ended 02 July 2016
Half year 2016 Half year 2015 Year 2015
Pre- Pre- Pre-
exceptional Exceptional Total exceptional Exceptional Total exceptional Exceptional Total
2016 2016 2016 2015 2015 2015 2015 2015 2015
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
(note (note (note
Notes 6) 6) 6)
---------------- ----- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Revenue 4 1,434,764 - 1,434,764 1,431,590 - 1,431,590 2,774,326 - 2,774,326
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Earnings before
interest, tax
and
amortisation
(EBITA) 157,389 (8,885) 148,504 138,473 (7,838) 130,635 271,003 (26,342) 244,661
Intangible asset
amortisation (19,424) - (19,424) (15,566) - (15,566) (31,125) - (31,125)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating profit 137,965 (8,885) 129,080 122,907 (7,838) 115,069 239,878 (26,342) 213,536
Finance income 7 1,160 - 1,160 885 - 885 1,706 - 1,706
Finance costs 7 (12,732) - (12,732) (11,588) - (11,588) (22,816) - (22,816)
Share of results
of Joint
Ventures
& Associates 12,328 - 12,328 13,267 - 13,267 26,270 - 26,270
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit before
taxation 138,721 (8,885) 129,836 125,471 (7,838) 117,633 245,038 (26,342) 218,696
Income taxes 8 (21,664) 1,629 (20,035) (19,075) 533 (18,542) (37,322) 2,543 (34,779)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit for the
period 117,057 (7,256) 109,801 106,396 (7,305) 99,091 207,716 (23,799) 183,917
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable
to:
Equity holders
of the Parent 109,364 98,674 183,271
Non-controlling
interests 437 417 646
--------- --------- ---------
109,801 99,091 183,917
--------- --------- ---------
Earnings per share attributable to the equity holders of the Parent
Basic earnings
per share
(cent) 10 37.06 33.43 62.08
--------- --------- ---------
Diluted earnings
per share
(cent) 10 36.92 33.18 61.87
--------- --------- ---------
Condensed statement of comprehensive income
for the half year ended 02 July 2016
Half year Half year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
------------------------------------------------- ----- --------- --------- -------
Profit for the period 109,801 99,091 183,917
Other comprehensive income
Items that are not reclassified subsequently
to the Group income statement:
Remeasurements - defined benefit schemes 17 (51,379) 18,178 20,856
Deferred tax credit/(charge) on remeasurements 4,866 (2,430) (2,334)
Share of remeasurements - Joint Ventures
& Associates 14 (10,480) 4,811 4,254
Deferred tax credit/(charge) on remeasurements
- Joint Ventures & Associates 1,310 (600) (612)
Items that may be reclassified subsequently
to the Group income statement:
Currency translation differences (33,036) 75,654 91,102
Net investment hedge 2,015 (6,980) (8,684)
Revaluation of available for sale financial
assets (617) 1,052 1,273
Fair value movements on cash flow hedges (506) 2,476 145
Recycle of currency reserve to the Group
income statement on disposal of Investment
in Joint Venture - 5,037 5,037
Deferred tax on cash flow hedges and revaluation
of available for sale financial assets 63 (444) (480)
--------- --------- -------
Other comprehensive (expense)/income for
the period, net of tax (87,764) 96,754 110,557
--------- --------- -------
Total comprehensive income for the period 22,037 195,845 294,474
--------- --------- -------
Total comprehensive income attributable
to:
Equity holders of the Parent 21,600 195,428 293,828
Non-controlling interests 437 417 646
--------- --------- -------
Total comprehensive income for the period 22,037 195,845 294,474
--------- --------- -------
Condensed balance sheet
As at 02 July 2016
Half year Half year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
----------------------------------------- ----- --------- --------- ----------
ASSETS
Non-current assets
Property, plant and equipment 579,258 551,860 586,190
Intangible assets 921,721 704,663 951,527
Investments in Associates 95,994 91,564 97,897
Investments in Joint Ventures 59,243 62,665 60,585
Trade and other receivables 14,654 1,850 1,850
Derivative financial instruments 15 - -
Deferred tax assets 42,711 26,152 36,474
Available for sale financial assets 10,105 10,522 10,754
1,723,701 1,449,276 1,745,277
--------- --------- ----------
Current assets
Inventories 331,435 350,819 344,353
Trade and other receivables 447,554 412,954 350,020
Derivative financial instruments 997 1,686 414
Cash and cash equivalents 13 94,909 94,400 210,889
--------- --------- ----------
874,895 859,859 905,676
--------- ---------
Total assets 2,598,596 2,309,135 2,650,953
--------- --------- ----------
EQUITY
Issued capital and reserves attributable
to equity holders of the Parent
Share capital and share premium 16 105,393 105,370 105,370
Other reserves 272,400 294,073 306,425
Retained earnings 673,900 572,965 642,763
--------- --------- ----------
1,051,693 972,408 1,054,558
Non-controlling interests 8,952 8,313 8,515
--------- --------- ----------
Total equity 1,060,645 980,721 1,063,073
--------- --------- ----------
LIABILITIES
Non-current liabilities
Borrowings 13 672,408 634,015 752,963
Derivative financial instruments - - 47
Deferred tax liabilities 201,860 135,153 201,646
Retirement benefit obligations 17 132,075 93,971 87,288
Provisions 15 16,578 19,816 18,984
Capital grants 2,697 2,121 2,787
--------- --------- ----------
1,025,618 885,076 1,063,715
--------- --------- ----------
Current liabilities
Trade and other payables 399,321 369,681 442,713
Current tax liabilities 24,183 21,350 18,969
Borrowings 13 66,841 37,448 42,169
Derivative financial instruments 3,896 408 902
Provisions 15 17,850 14,451 19,128
Capital grants 242 - 284
--------- --------- ----------
512,333 443,338 524,165
--------- --------- ----------
Total liabilities 1,537,951 1,328,414 1,587,880
--------- --------- ----------
Total equity and liabilities 2,598,596 2,309,135 2,650,953
--------- --------- ----------
Condensed statement of changes in equity
for the half year ended 02 July 2016
Attributable to equity holders
of the Parent
------------------------------
Share
capital
and share Other Retained Non -controlling
premium reserves earnings Total interests Total
Half year 2016 Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------- ----- ----------- --------- --------- --------- ---------------- ---------
Balance at 02 January 2016 105,370 306,425 642,763 1,054,558 8,515 1,063,073
Profit for the period - - 109,364 109,364 437 109,801
Other comprehensive
income/(expense)
Remeasurements - defined
benefit schemes 17 - - (51,379) (51,379) - (51,379)
Deferred tax on
remeasurements - - 4,866 4,866 - 4,866
Share of remeasurements
- Joint Ventures &
Associates
(net of deferred tax) - - (9,170) (9,170) - (9,170)
Fair value movements - (1,123) - (1,123) - (1,123)
Deferred tax on fair value
movements - 63 - 63 - 63
Currency translation
differences - (33,036) - (33,036) - (33,036)
Net investment hedge - 2,015 - 2,015 - 2,015
Total comprehensive income
for the period - (32,081) 53,681 21,600 437 22,037
Dividends paid during the
period 9 - - (21,374) (21,374) - (21,374)
Cost of share based
payments - 5,693 - 5,693 - 5,693
Transfer on exercise,
vesting
or expiry of share based
payments - 2,681 (2,681) - - -
Deferred tax on share
based
payments - - 1,511 1,511 - 1,511
Shares issued 16 1 - - 1 - 1
Premium on shares issued 16 22 - - 22 - 22
Purchase of own shares - (10,318) - (10,318) - (10,318)
----------- --------- --------- --------- ---------------- ---------
Balance at 02 July 2016 105,393 272,400 673,900 1,051,693 8,952 1,060,645
----------- --------- --------- --------- ---------------- ---------
Attributable to equity holders
of the Parent
------------------------------
Share
capital
and share Other Retained Non -controlling
premium reserves earnings Total interests Total
Half year 2015 Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------------------- ----- ----------- --------- --------- -------- ---------------- --------
Balance at 03 January 2015 104,728 218,581 473,573 796,882 7,896 804,778
Profit for the period - - 98,674 98,674 417 99,091
Other comprehensive
income/(expense)
Remeasurements - defined
benefit schemes 17 - - 18,178 18,178 - 18,178
Deferred tax on
remeasurements - - (2,430) (2,430) - (2,430)
Share of remeasurements
- Joint Ventures &
Associates (net of deferred
tax) - - 4,211 4,211 - 4,211
Fair value movements - 3,528 - 3,528 - 3,528
Deferred tax on fair value
movements - (444) - (444) - (444)
Currency translation
differences - 75,654 - 75,654 - 75,654
Recycle of currency reserve
to the Group income
statement
on disposal of Investment
in Joint Venture - 5,037 - 5,037 - 5,037
Net investment hedge - (6,980) - (6,980) - (6,980)
Total comprehensive income
for the period - 76,795 118,633 195,428 417 195,845
Dividends paid during the
period 9 - - (19,449) (19,449) - (19,449)
Cost of share based payments - 3,565 - 3,565 - 3,565
Transfer on exercise,
vesting
or expiry of share based
payments - (208) 208 - - -
Shares issued 16 9 - - 9 - 9
Premium on shares issued 16 633 - - 633 - 633
Purchase of own shares - (4,660) - (4,660) - (4,660)
Balance at 04 July 2015 105,370 294,073 572,965 972,408 8,313 980,721
----------- --------- --------- -------- ---------------- --------
Attributable to equity holders
of the Parent
------------------------------
Share
capital
and share Other Retained Non -controlling
premium reserves earnings Total interests Total
Year 2015 Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------- ----- ----------- --------- --------- --------- ---------------- ---------
Balance at 03 January 2015 104,728 218,581 473,573 796,882 7,896 804,778
Profit for the period - - 183,271 183,271 646 183,917
Other comprehensive
income/(expense)
Remeasurements - defined
benefit schemes 17 - - 20,856 20,856 - 20,856
Deferred tax on
remeasurements - - (2,334) (2,334) - (2,334)
Share of remeasurements - Joint
Ventures &
Associates (net of deferred
tax) - - 3,642 3,642 - 3,642
Fair value movements - 1,418 - 1,418 - 1,418
Deferred tax on fair value
movements - (480) - (480) - (480)
Currency translation
differences - 91,102 - 91,102 - 91,102
Recycle of currency
reserve
to the Group income
statement
on disposal of Investment
in Joint Venture - 5,037 - 5,037 - 5,037
Net investment hedge - (8,684) - (8,684) - (8,684)
Total comprehensive income
for the period - 88,393 205,435 293,828 646 294,474
Dividends paid during the
period 9 - - (33,895) (33,895) (427) (34,322)
Cost of share based
payments - 8,724 - 8,724 - 8,724
Transfer on exercise,
vesting
or expiry of share based
payments - 4,078 (4,078) - - -
Deferred tax on share
based
payments - - 1,728 1,728 - 1,728
Shares issued 16 9 - - 9 - 9
Premium on shares issued 16 633 - - 633 - 633
Purchase of own shares - (13,351) - (13,351) - (13,351)
Additions during the year - - - - 400 400
Balance at 02 January 2016 105,370 306,425 642,763 1,054,558 8,515 1,063,073
----------- --------- --------- --------- ---------------- ---------
Other reserves
for the half year ended 02 July 2016
Available
for sale Share
Capital financial based
and merger Currency Hedging asset payment
reserve reserve reserve reserve Own shares reserve Total
Half year 2016 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============================= =========== ======== ======== ========== ========== ======== ========
Balance at 02 January 2016 115,973 186,251 (660) 3,391 (13,238) 14,708 306,425
Currency translation
differences - (33,036) - - - - (33,036)
Net investment hedge - 2,015 - - - - 2,015
Revaluation of interest
rate swaps - gain in period - - 27 - - - 27
Foreign exchange contracts
- loss in period - - (657) - - - (657)
Transfers to income
statement:
Foreign exchange
contracts
- gain in period - - (307) - - - (307)
Forward commodity
contracts
- loss in period - - 360 - - - 360
Revaluation of forward
commodity
contracts
- gain in period - - 71 - - - 71
Revaluation of available
for sale financial assets
- loss in period - - - (617) - - (617)
Deferred tax on fair value
movements - - (141) 204 - - 63
Cost of share based payments - - - - - 5,693 5,693
Transfer on exercise, vesting
or expiry of share based
payments - - - - 8,166 (5,485) 2,681
Purchase of own shares - - - - (10,318) - (10,318)
=========== ======== ======== ========== ========== ======== ========
Balance at 02 July 2016 115,973 155,230 (1,307) 2,978 (15,390) 14,916 272,400
=========== ======== ======== ========== ========== ======== ========
Available
for sale Share
Capital financial based
and merger Currency Hedging asset payment
reserve reserve reserve reserve Own shares reserve Total
Half year 2015 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============================== =========== ======== ======== ========== ========== ======== =======
Balance at 03 January 2015 115,973 98,796 (745) 2,538 (7,965) 9,984 218,581
Currency translation
differences - 75,654 - - - - 75,654
Recycle of currency reserve
to the Group income statement
on disposal of Investment
in Joint Venture - 5,037 - - - - 5,037
Net investment hedge - (6,980) - - - - (6,980)
Revaluation of interest
rate swaps - gain in period - - 35 - - - 35
Foreign exchange contracts
- gain in period - - 2,955 - - - 2,955
Transfers to income statement:
Foreign exchange contracts
- gain in period - - (771) - - - (771)
Forward commodity
contracts
- loss in period - - 700 - - - 700
Revaluation of forward
commodity
contracts
- loss in period - - (443) - - - (443)
Revaluation of available
for sale financial assets
- gain in period - - - 1,052 - - 1,052
Deferred tax on fair value
movements - - (97) (347) - - (444)
Cost of share based payments - - - - - 3,565 3,565
Transfer on exercise, vesting
or expiry of share based
payments - - - - 486 (694) (208)
Purchase of own shares - - - - (4,660) - (4,660)
=========== ======== ======== ========== ========== ======== =======
Balance at 04 July 2015 115,973 172,507 1,634 3,243 (12,139) 12,855 294,073
=========== ======== ======== ========== ========== ======== =======
Available
for sale Share
Capital financial based
and merger Currency Hedging asset payment
reserve reserve reserve reserve Own shares reserve Total
Year 2015 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
============================= =========== ======== ======== ========== ========== ======== ========
Balance at 03 January 2015 115,973 98,796 (745) 2,538 (7,965) 9,984 218,581
Currency translation
differences - 91,102 - - - - 91,102
Recycle of currency reserve
to the Group income
statement
on disposal of Investment
in Joint Venture - 5,037 - - - - 5,037
Net investment hedge - (8,684) - - - - (8,684)
Revaluation of interest
rate swaps - gain in period - - 248 - - - 248
Foreign exchange contracts
- loss in period - - (294) - - - (294)
Transfers to income
statement:
Foreign exchange
contracts
- gain in period - - (149) - - - (149)
Forward commodity
contracts
- loss in period - - 701 - - - 701
Revaluation of forward
commodity
contracts
- loss in period - - (361) - - - (361)
Revaluation of available
for sale financial assets
- gain in period - - - 1,273 - - 1,273
Deferred tax on fair value
movements - - (60) (420) - - (480)
Cost of share based payments - - - - - 8,724 8,724
Transfer on exercise, vesting
or expiry of share based
payments - - - - 8,078 (4,000) 4,078
Purchase of own shares - - - - (13,351) - (13,351)
=========== ======== ======== ========== ========== ======== ========
Balance at 02 January 2016 115,973 186,251 (660) 3,391 (13,238) 14,708 306,425
=========== ======== ======== ========== ========== ======== ========
Condensed statement of cash flows
for the half year ended 02 July 2016
Half year Half year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
------------------------------------------------ ----- --------- --------- ---------
Cash flows from operating activities
Cash generated from operating activities 20 53,616 25,463 307,865
Interest received 615 417 1,773
Interest paid (11,710) (13,164) (22,939)
Tax (paid)/refunded (11,762) 1,360 (9,987)
Net cash inflow from operating activities 30,759 14,076 276,712
========= ========= =========
Cash flows from investing activities
Acquisition of subsidiaries - purchase
consideration 21 (8,724) (544) (195,579)
Net cash flow relating to previous acquisitions (6,942) - -
Acquisition of subsidiaries - liabilities
settled at completion - (802) (1,296)
Acquisition of subsidiaries - cash and
cash equivalents acquired - - 6,991
Disposal of Investment in Joint Venture - 28,511 28,516
Capital grants received - - 1,132
Purchase of property, plant and equipment 11 (34,471) (52,241) (103,792)
Purchase of intangible assets 11 (7,223) (6,523) (19,798)
Interest paid in relation to property,
plant and equipment (500) (1,250) (2,403)
Dividends received from Joint Ventures
& Associates 2,248 3,237 14,924
Loans advanced to Associate 18 (12,800) - -
Net redemption and additions in available
for sale financial assets 32 1,151 1,140
Proceeds from property, plant and equipment 98 132 428
Net cash outflow from investing activities (68,282) (28,329) (269,737)
========= ========= =========
Cash flows from financing activities
Proceeds from issue of ordinary shares 16 23 608 642
Net outflow from derivative financial
instruments (1,815) - -
Purchase of own shares (10,318) (4,660) (13,351)
(Decrease)/increase in borrowings (67,197) (21,471) 91,577
Finance lease payments (169) (203) (468)
Dividends paid to Company shareholders 9 (21,374) (19,449) (33,895)
Dividends paid to non-controlling interests - - (427)
Net cash (outflow)/inflow from financing
activities (100,850) (45,175) 44,078
========= ========= =========
Net (decrease)/increase in cash and cash
equivalents (138,373) (59,428) 51,053
Cash and cash equivalents at the beginning
of the period 169,125 110,370 110,370
Effects of exchange rate changes on cash
and cash equivalents (2,333) 6,418 7,702
========= ========= =========
Cash and cash equivalents at the end of
the period 13 28,419 57,360 169,125
========= ========= =========
Half year Half year Year
2016 2015 2015
Reconciliation of net cash flow to movement
in net debt EUR'000 EUR'000 EUR'000
------------------------------------------------ ----- --------- --------- ---------
Net (decrease)/increase in cash and cash
equivalents (138,373) (59,428) 51,053
Cash movements from debt financing 67,366 21,675 (91,109)
(71,007) (37,753) (40,056)
Exchange translation adjustment 10,910 (28,947) (33,824)
Movement in net debt in the period (60,097) (66,700) (73,880)
Net debt at the beginning of the period (584,243) (510,363) (510,363)
========= ========= =========
Net debt at the end of the period (644,340) (577,063) (584,243)
========= ========= =========
Net debt comprises:
Borrowings 13 (672,759) (634,423) (753,368)
Cash and cash equivalents 13 28,419 57,360 169,125
========= ========= =========
(644,340) (577,063) (584,243)
========= ========= =========
Notes to the condensed financial statements
for the half year ended 02 July 2016
1. General information
Glanbia plc (the "Company") and its subsidiaries (together the
"Group") is a leading global nutrition group with its main
operations in Europe, USA, Middle East, Asia Pacific and Latin
America.
The Company is a public limited company incorporated and
domiciled in Ireland. The address of its registered office is
Glanbia House, Kilkenny, Ireland. Glanbia Co-operative Society
Limited (the "Society"), together with its subsidiaries, holds
36.5% of the issued share capital of the Company. The Board of
Directors as at 02 July 2016 is comprised of 18 members, of which
up to 10 are nominated by the Society. In accordance with IFRS 10
'Consolidated Financial Statements', the Society controls the Group
and is the ultimate parent of the Group.
The Company's shares are quoted on the Irish and London Stock
Exchanges.
These condensed interim financial statements were approved for
issue by the Board of Directors on 16 August 2016.
2. Summary of significant accounting policies
a) Basis of preparation
The Group's condensed interim financial statements for the six
months ended 02 July 2016 have been prepared in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007 as amended,
the related Transparency Rules of the Central Bank of Ireland and
with IAS 34 'Interim Financial Reporting', as adopted by the
European Union. The condensed interim financial statements should
be read in conjunction with the financial statements for the year
ended 02 January 2016, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS").
The condensed interim financial statements for the six months
ended 02 July 2016 and for the six months ended 04 July 2015 have
not been audited or reviewed by the Group's auditors.
b) Statutory information
The condensed interim financial statements are considered
non-statutory financial statements for the purposes of the
Companies Act 2014 and in compliance with section 340(4) of that
Act we state that:
-- the condensed interim financial statements for the half year
to 02 July 2016 have been prepared to meet our obligation to do so
under the Transparency (Directive 2004/109/EC) Regulations 2007 as
amended (Statutory Instrument No. 277);
-- the condensed interim financial statements for the half year
to 02 July 2016 do not constitute the statutory financial
statements of the Group;
-- the statutory financial statements for the financial year
ended 02 January 2016 have been annexed to the annual return and
filed with the Companies Registration Office;
-- the statutory auditors of the Group have made a report under
section 391 in the form required by section 336 Companies Act 2014
in respect of the statutory financial statements of the Group;
and
-- the matters referred to in the statutory auditors' report
were unqualified, and did not include a reference to any matters to
which the statutory auditors drew attention by way of emphasis
without qualifying the report.
c) Going Concern
The Group meets its day-to-day working capital requirements
through its bank facilities. The Group's forecasts and projections,
taking account of changes in trading performance, show that the
Group expects to be able to operate within the level of its current
facilities. After making enquiries, the Directors have a reasonable
expectation that the Group has sufficient resources to continue in
operational existence for the foreseeable future. In forming this
view, the Directors have reviewed the Group's budget for 2016 and
the medium term plans as set out in the three year strategic plan,
and have taken into account the cash flow implications of the
plans, including proposed capital expenditure, and compared these
with the Group's committed borrowing facilities and Group financing
key performance indicators ("KPIs"). The Group therefore continues
to adopt the going concern basis in preparing its condensed interim
financial statements for the six months ended 02 July 2016.
d) Foreign currency translation
The Group's condensed interim financial statements are presented
in euro, which is the Group's presentation currency.
The principal exchange rates used for the translation of results
and balance sheets into euro are as follows:
Average Period
end
Half Half Half Half
year year Year year year Year
2016 2015 2015 2016 2015 2015
=============== ======= ======== ======= ======= ======= =======
euro 1 =
US dollar 1.1161 1.1150 1.1092 1.1135 1.1096 1.0887
Pound Sterling 0.7795 0.7316 0.7259 0.8383 0.7102 0.7340
Danish Kroner 7.4497 7.4567 7.4589 7.4380 7.4607 7.4626
======= ======== ======= ------- ------- -------
Following the result of the UK referendum on EU membership on 23
June 2016, the Group reviewed its methodology for determining the
average rates and concluded that due to the trading profile of the
Group, it remained appropriate to use an average rate as an
approximation of the actual Pound Sterling exchange rate when
translating income and expenses.
e) Changes in accounting policies
The methods of computation, presentation and accounting policies
adopted in the preparation of the Group's condensed interim
financial statements are consistent with those applied in the
Annual Report for the year ended 02 January 2016 ("2015 Annual
Report"). The Group's accounting policies are set out in the
financial statements in the 2015 Annual Report.
The following standards, issued by the International Accounting
Standards Board ("IASB") and the International Financial Reporting
Interpretations Committee ("IFRIC"), are effective for the Group
for the first time in the period ended 02 July 2016 and have been
adopted by the Group.
Amendments to IFRS 11 'Joint Arrangements' on acquisition of an
interest in a joint operation (effective on or after 01 January
2016).
Amendments to IAS 16 'Property, Plant and Equipment' and IAS 38,
'Intangible Assets', on depreciation and amortisation (effective on
or after 01 January 2016).
Amendments to IAS 27 'Consolidated and Separate Financial
Statements' on the equity method (effective on or after 01 January
2016).
Amendments to IFRS 10 'Consolidated Financial Statements' and
IAS 28, 'Investments in Associates and Joint Ventures' (effective
on or after 01 January 2016 - not yet endorsed).
Amendment to IAS 1 'Presentation of Financial Statements' on the
disclosure initiative (effective on or after 01 January 2016).
Annual Improvements 2012-2014 on IFRS 7 'Financial Instruments:
Disclosures', IAS 19 'Employee Benefits' and IAS 34 'Interim
Financial Reporting' (effective on or after 01 January 2016).
The above standards did not have a significant impact on the
results or the financial position of the Group during the six
months ended 02 July 2016.
The following standards, amendments and interpretations have
been published. The Group will apply the relevant standards from
their effective dates and is currently assessing their impact on
the Group's financial statements. The standards are mandatory for
future accounting periods but are not yet effective and have not
been early adopted by the Group.
IFRS 15 'Revenue from Contracts with Customers' (effective on or
after 01 January 2018 - not yet endorsed).
IFRS 15 is a converged standard from the IASB and the Financial
Accounting Standards Board ("FASB") on revenue recognition. The
standard will improve the financial reporting of revenue and
improve comparability of the top line in financial statements
globally.
IFRS 9 'Financial Instruments' (effective on or after 01 January
2018 - not yet endorsed).
This standard replaces the guidance in IAS 39 'Financial
Instruments: Recognition and Measurement'. It includes requirements
on the classification and measurement of financial assets and
liabilities; it also includes an expected credit losses model that
replaces the current incurred loss impairment model.
Amendments to IAS 12 'Income Taxes' on the recognition of
deferred tax assets for unrealised losses (effective on or after 01
January 2017 - not yet endorsed).
These amendments clarify the recognition of deferred tax assets
for unrealised losses on debt instruments.
Amendments to IAS 7 'Statement of Cash Flows' under its
disclosure initiative (effective on or after 01 January 2017 - not
yet endorsed).
These amendments are intended to improve the information
provided to users of financial statements about an entity's
financing activities.
IFRS 16 'Leases' (effective on or after 01 January 2019 - not
yet endorsed).
IFRS 16 supersedes IAS 17 'Leases'. The new standard provides a
single lessee accounting model, requiring lessees to recognise
assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value. Lessors
continue to classify leases as operating or finance, with IFRS 16's
approach to lessor accounting substantially unchanged from IAS
17.
3. Changes in critical accounting estimates and assumptions
Having considered the result of the UK referendum on EU
membership, the Group concluded that no indicator of impairment
existed at the reporting date with respect to intangible assets and
property, plant and equipment. In valuing the retirement benefit
obligation at the reporting date, the loss from changes in
financial assumptions was EUR64.7 million offset by the return on
plan assets of EUR13.3 million. A significant driver of the
movement in the discount rate (based on high quality corporate
bonds) was the result of the UK referendum on EU membership. See
note 17 for further details on the retirement benefit obligation at
the reporting date.
With the exception of those outlined above, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 02 January 2016.
4. Segment information
In accordance with IFRS 8 'Operating Segments', the Group has
four segments, as follows: Glanbia Performance Nutrition, Glanbia
Nutritionals (previously Global Ingredients), Dairy Ireland and
Joint Ventures & Associates. These segments align with the
Group's internal financial reporting system and the way in which
the Chief Operating Decision Maker assesses performance and
allocates the Group's resources. A segment manager is responsible
for each segment and is directly accountable for the performance of
that segment to the Glanbia Operating Executive which acts as the
Chief Operating Decision Maker for the Group. There has been no
change in the basis of segmentation or in the basis of measurement
of segment profit or loss in the period.
Each segment derives its revenues as follows: Glanbia
Performance Nutrition earns its revenue from performance nutrition
products; Glanbia Nutritionals earns its revenue from the
manufacture and sale of cheese, dairy and non dairy nutritional
ingredients; Dairy Ireland earns its revenue from the manufacture
and sale of a range of consumer products and farm inputs and Joint
Ventures & Associates revenue arises from the manufacture and
sale of cheese and dairy ingredients.
Each segment is reviewed in its totality by the Chief Operating
Decision Maker. The Glanbia Operating Executive assesses the
trading performance of operating segments based on a measure of
earnings before interest, tax, amortisation and exceptional
items.
Amounts stated for Joint Ventures & Associates represents
the Group's share.
4.1 The segment results for the period ended 02 July 2016 are as
follows:
Gross Total
segment Inter-segment Group
revenue revenue revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
=============================== ========= ============= ========= ========
Glanbia Performance Nutrition 505,370 (115) 505,255 81,675
Glanbia Nutritionals 586,413 (13,856) 572,557 57,984
Dairy Ireland 357,383 (431) 356,952 17,730
Joint Ventures & Associates 402,257 - 402,257 19,135
========= ============= ========= ========
Group including Joint Ventures
& Associates 1,851,423 (14,402) 1,837,021 176,524
Joint Ventures & Associates (402,257) (19,135)
========= ========
Reported Group 1,434,764 157,389
=========
Amortisation (19,424)
========
Operating profit 137,965
Exceptional items (8,885)
Share of results of Joint
Ventures & Associates 12,328
Finance income 1,160
Finance costs (12,732)
========
Reported profit before
taxation 129,836
Income taxes (20,035)
========
Reported profit for the
period 109,801
========
Included in external revenue are related party sales between
Dairy Ireland and Joint Ventures & Associates of EUR4.5 million
and related party sales between Glanbia Nutritionals and Joint
Ventures & Associates of EUR6.6 million. Inter-segment
transfers or transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Amortisation and exceptional items are not allocated to segments
as they are not reported by segment to the Glanbia Operating
Executive. Finance income, finance costs and income taxes are not
allocated to segments as this type of activity is driven by central
treasury and taxation functions which manage the cash and taxation
position of the Group.
Segment assets and liabilities:
Segment Segment
assets liabilities
EUR'000 EUR'000
Glanbia Performance Nutrition 1,128,231 247,784
Glanbia Nutritionals 803,838 198,333
Dairy Ireland 362,541 216,398
Joint Ventures & Associates 169,891 -
========= ============
Group including Joint Ventures & Associates 2,464,501 662,515
Unallocated 134,095 875,436
========= ============
Reported Group 2,598,596 1,537,951
========= ============
Unallocated assets primarily include taxation, cash and cash
equivalents, available for sale financial assets and derivatives.
Unallocated liabilities include taxation, borrowing and
derivatives.
4.2 The segment results for the period ended 04 July 2015 are as
follows:
Gross Total
segment Inter-segment Group
revenue revenue revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
=============================== ========= ============= ========= ========
Glanbia Performance Nutrition 453,818 (346) 453,472 60,686
Glanbia Nutritionals 626,732 (17,476) 609,256 60,342
Dairy Ireland 368,862 - 368,862 17,445
Joint Ventures & Associates 445,327 - 445,327 20,204
========= ============= ========= ========
Group including Joint Ventures
& Associates 1,894,739 (17,822) 1,876,917 158,677
Joint Ventures & Associates (445,327) (20,204)
========= ========
Reported Group 1,431,590 138,473
=========
Amortisation (15,566)
========
Operating profit 122,907
Exceptional items (7,838)
Share of results of Joint
Ventures & Associates 13,267
Finance income 885
Finance costs (11,588)
========
Reported profit before
taxation 117,633
Income taxes (18,542)
========
Reported profit for the
period 99,091
========
Included in external revenue are related party sales between
Dairy Ireland and Joint Ventures & Associates of EUR8.0 million
and related party sales between Glanbia Nutritionals and Joint
Ventures & Associates of EUR7.6 million. Inter-segment
transfers or transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Amortisation and exceptional items are not allocated to segments
as they are not reported by segment to the Glanbia Operating
Executive. Finance income, finance costs and income taxes are not
allocated to segments as this type of activity is driven by central
treasury and taxation functions which manage the cash and taxation
position of the Group.
Segment assets and liabilities:
Segment Segment
assets liabilities
EUR'000 EUR'000
Glanbia Performance Nutrition 867,221 153,560
Glanbia Nutritionals 816,024 219,648
Dairy Ireland 342,088 188,241
Joint Ventures & Associates 156,079 -
========= ============
Group including Joint Ventures & Associates 2,181,412 561,449
Unallocated 127,723 766,965
========= ============
Reported Group 2,309,135 1,328,414
========= ============
Unallocated assets primarily include taxation, cash and cash
equivalents, available for sale financial assets and derivatives.
Unallocated liabilities include taxation, borrowing and
derivatives.
4.3 The segment results for the year ended 02 January 2016 are
as follows:
Gross Total
segment Inter-segment Group
revenue revenue revenue EBITA
EUR'000 EUR'000 EUR'000 EUR'000
=============================== ========= ============= ========= ========
Glanbia Performance Nutrition 924,165 (1,050) 923,115 135,610
Glanbia Nutritionals 1,272,795 (54,814) 1,217,981 106,642
Dairy Ireland 633,787 (557) 633,230 28,751
Joint Ventures & Associates 893,089 - 893,089 39,690
========= ============= ========= ========
Group including Joint Ventures
& Associates 3,723,836 (56,421) 3,667,415 310,693
Joint Ventures & Associates (893,089) (39,690)
========= ========
Reported Group 2,774,326 271,003
=========
Amortisation (31,125)
========
Operating profit 239,878
Exceptional items (26,342)
Share of results of Joint
Ventures & Associates 26,270
Finance income 1,706
Finance costs (22,816)
========
Reported profit before
taxation 218,696
Income taxes (34,779)
========
Reported profit for the
year 183,917
========
Included in external revenue are related party sales between
Dairy Ireland and Joint Ventures & Associates of EUR17.0
million and related party sales between Glanbia Nutritionals and
Joint Ventures & Associates of EUR15.3 million. Inter-segment
transfers or transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Amortisation and exceptional items are not allocated to segments
as they are not reported by segment to the Glanbia Operating
Executive. Finance income, finance costs and income taxes are not
allocated to segments as this type of activity is driven by central
treasury and taxation functions which manage the cash and taxation
position of the Group.
Segment assets and liabilities:
Segment Segment
assets liabilities
EUR'000 EUR'000
Glanbia Performance Nutrition 1,150,637 257,148
Glanbia Nutritionals 794,155 237,853
Dairy Ireland 302,000 181,146
Joint Ventures & Associates 160,332 -
========= ============
Group including Joint Ventures & Associates 2,407,124 676,147
Unallocated 243,829 911,733
========= ============
Reported Group 2,650,953 1,587,880
========= ============
Unallocated assets primarily include taxation, cash and cash
equivalents, available for sale financial assets and derivatives.
Unallocated liabilities include taxation, borrowing and
derivatives.
5. Seasonality
Elements of the Dairy Ireland segment reflect the seasonal
nature of the Irish agricultural industry.
6. Exceptional items
Half year Half year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
======= ===================================== ========= ========= ========
Organisation redesign costs (a) (6,207) (3,099) (6,945)
Acquisition integration costs (b) (1,850) - (2,919)
Rationalisation costs (c) (828) (1,162) (7,841)
Irish defined benefit pension schemes (d) - - (5,006)
Disposal of Joint Venture (e) - (3,577) (3,631)
Total exceptional charge before tax (8,885) (7,838) (26,342)
Exceptional tax credit 1,629 533 2,543
========= ========= ========
Total exceptional charge (7,256) (7,305) (23,799)
========= ========= ========
The nature of the total exceptional charge before tax is as
follows:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
========================================== ========= ========= ========
Employee benefit expense (3,385) (1,162) (7,416)
Defined benefit pension scheme settlement
loss - - (4,306)
Other operating costs (5,500) (6,676) (14,620)
========= ========= ========
(8,885
Total exceptional charge before tax ) (7,838) (26,342)
========= ========= ========
The total cash outflow during the period in respect of
exceptional charges was EUR10.5 million (HY 2015: EUR3.0 million)
of which EUR6.4 million (HY 2015: EUR0.6 million) was in respect of
prior year exceptional charges.
a) The organisation redesign costs relate to the on-going
programme announced in 2015 in Glanbia Nutritionals to
fundamentally reorganise the business to leverage future market
opportunities. Costs of EUR6.2 million include consultancy of
EUR2.3 million, employee benefit expense (directly attributable
employee costs and redundancy) of EUR1.7 million and other costs of
EUR2.2 million.
b) Acquisition integration costs comprise of costs relating to
the integration, restructuring and redesign of route to market
capabilities within acquired businesses in the Glanbia Performance
Nutrition segment. Costs of EUR1.9 million include consultancy of
EUR0.7 million, employee benefit expense (directly attributable
payroll costs and redundancy) of EUR0.9 million and other costs of
EUR0.3 million.
c) Rationalisation costs primarily relate to the current
redundancy and rationalisation programme in the Dairy Ireland
segment. Costs of EUR0.8 million include employee benefit expense
(redundancy) of EUR0.8 million.
d) The Group undertook a review of its pension arrangements in
2015 and agreed with the pension trustees to wind up three of its
smaller Irish defined benefit pension schemes. This transaction
resulted in an exceptional charge in the year of EUR5.0 million.
This charge relates to gains and losses on settlement of EUR4.3
million, in accordance with IAS 19 'Employee Benefits', and
professional fees of EUR0.7 million in relation to the transaction.
This settlement reduced the gross retirement benefit obligation by
EUR60.2 million.
e) On 01 April 2015, the Group disposed of its investment in
Milk Ventures (UK) Limited which is the parent company of Nutricima
Limited, a non-core Joint Venture business involved in the supply
and distribution of evaporated and powdered milk based in Nigeria,
resulting in a non cash loss of EUR3.6 million.
7. Finance income and costs
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
======================================= ========= ========= ========
Finance income
Interest income 1,160 885 1,706
Total finance income 1,160 885 1,706
Finance costs
Bank borrowing costs (3,632) (2,233) (4,109)
Facility fees (1,325) (1,414) (2,761)
Unwinding of discounts (73) (74) (142)
Finance lease costs (38) (72) (127)
Finance cost of private debt placement (7,664) (7,795) (15,677)
Total finance costs (12,732) (11,588) (22,816)
========= ========= ========
Net finance costs (11,572) (10,703) (21,110)
========= ========= ========
Net finance costs do not include borrowing costs of EUR0.5
million (HY 2015: EUR1.25 million) attributable to the acquisition,
construction or production of a qualifying asset, which have been
capitalised, as disclosed in note 11. Borrowing costs are
capitalised at the Group's average interest rate for the period of
3.6% (HY 2015: 3.9%).
8. Income taxes
The Group's income tax charge after exceptional items of EUR20.0
million (HY 2015: EUR18.5 million) has been prepared based on the
Group's best estimate of the weighted average tax rate that is
expected for the full financial year.
9. Dividends
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
======================================== ========= ========= =======
Dividends paid per ordinary share
are as follows:
Final dividend for the year ended
02 January 2016 of 7.22 cent per share
paid on 29 April 2016 21,374 - -
Final dividend for the year ended
03 January 2015 of 6.57 cent per share
paid on 15 May 2015 - 19,449 19,449
Interim dividend for the year ended
02 January 2016 of 4.88 cent per share
paid on 16 October 2015 - - 14,446
========= ========= =======
21,374 19,449 33,895
========= ========= =======
The Directors have recommended the payment of an interim
dividend of 5.37 cent per share on the ordinary shares which
amounts to EUR15.9 million. This dividend will be paid on 07
October 2016 to shareholders on the register of members at 26
August 2016, the record date. These condensed financial statements
do not reflect this interim dividend. There are no income tax
consequences for the Company in respect of dividends proposed prior
to issuance of the condensed interim financial statements.
10. Earnings per share
Basic
Basic earnings per share is calculated by dividing the net profit attributable
to the equity holders of the Parent by the weighted average number of ordinary
shares in issue during the period, excluding ordinary shares purchased by the
Group and held as own shares.
Half year Half year Year
2016 2015 2015
==================================================== =========== =========== ===========
Profit attributable to equity holders of the Parent
(EUR'000) 109,364 98,674 183,271
Weighted average number of ordinary shares in issue 295,127,674 295,124,380 295,196,003
Basic earnings per share (cent) 37.06 33.43 62.08
Diluted
=======================================================================================
Diluted earnings per ordinary share is calculated by adjusting the weighted
average number of ordinary shares in issue to assume conversion of all potential
dilutive ordinary shares. Share options and share awards are the Company's only
potential dilutive ordinary shares. Share awards, which are performance based,
are treated as contingently issuable shares because their issue is contingent
upon satisfaction of specified performance conditions in addition to the passage
of time. These contingently issuable ordinary shares are excluded from the computation
of diluted earnings per share where the exercise conditions have not been satisfied
as at the end of the reporting period.
Half year Half year Year
2016 2015 2015
====================================================== =========== =========== ===========
Weighted average number of ordinary shares in issue 295,127,674 295,124,380 295,196,003
Adjustments for share awards 1,090,798 2,182,723 1,002,678
Adjustments for share options 34,191 42,162 42,617
=========== =========== ===========
Adjusted weighted average number of ordinary shares 296,252,663 297,349,265 296,241,298
=========== =========== ===========
Diluted earnings per share (cent) 36.92 33.18 61.87
Adjusted
==================================================================================
Adjusted earnings per share is calculated on the net profit attributable to
equity holders of the Parent, before net exceptional items and intangible asset
amortisation (net of related tax). Adjusted earnings per share is considered
to be more reflective of the Group's overall underlying performance, and reflects
the metrics used by the Group to measure profitability and financial performance.
Half year Half year Year
2016 2015 2015
======================================================= ========= ========= =======
Profit attributable to equity holders of the Parent
(EUR'000) 109,364 98,674 183,271
Amortisation of intangible assets (net of related
tax) (EUR'000) 15,531 13,620 26,126
Amortisation of Joint Ventures & Associates intangible
assets (net of related tax) (EUR'000) 270 208 417
Exceptional items (net of related tax) (EUR'000) 7,256 7,305 23,799
========= ========= =======
Adjusted net income (EUR'000) 132,421 119,807 233,613
========= ========= =======
Adjusted earnings per share (cent) 44.87 40.60 79.14
Diluted adjusted earnings per share (cent) 44.70 40.29 78.86
11. Property, plant and equipment, intangible assets and capital
commitments
During the six month period to 02 July 2016 the Group spent
EUR41.7 million (HY 2015: EUR58.8 million) on additions to
property, plant and equipment and intangible assets. There were no
significant disposals during the period.
As part of the business combination during the period (note 21),
the Group acquired intangible assets, comprising customer
relationships and goodwill, amounting to EUR2.5 million and
property, plant and equipment amounting to EUR0.2 million.
At 02 July 2016 the Group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to EUR11.3 million (HY 2015: EUR24.6 million). During the
six month period the Group capitalised borrowing costs amounting to
EUR0.5 million (HY 2015: EUR1.25 million) on qualifying assets
(note 7).
12. Inventories
The amount written off as an expense to the condensed income
statement in respect of inventories carried at net realisable value
was EUR2.5 million (HY 2015: EUR0.7 million).
13. Net debt
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
================================ ========= ========= =========
Non-current
Bank borrowings 380,187 340,393 453,978
Private debt placement 291,872 292,898 298,521
Finance lease liabilities 349 724 464
========= ========= =========
672,408 634,015 752,963
Current
Bank overdraft and borrowings 66,490 37,040 41,764
Finance lease liabilities 351 408 405
--------- --------- ---------
66,841 37,448 42,169
Total borrowings 739,249 671,463 795,132
Less: cash and cash equivalents (94,909) (94,400) (210,889)
Net debt 644,340 577,063 584,243
========= ========= =========
The maturity of non-current borrowings is EUR0.3 million (HY
2015: EUR0.4 million, 2015: EUR0.4 million) in 1 to 2 years,
EUR672.1 million (HY 2015: EUR340.7 million, 2015: EUR454.1
million) in 2 to 5 years and EURnil (HY 2015: EUR292.9 million,
2015: EUR298.5 million) in more than 5 years.
Cash and cash equivalents include the following for the purposes
of the condensed statement of cash flows at the reporting date:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
========================== ========= ========== ===========
Cash and cash equivalents (94,909) (94,400) (210,889)
Bank overdraft 66,490 37,040 41,764
========= ========== ===========
(28,419) (57,360) (169,125)
========= ========== ===========
Borrowings include the following for the purposes of the
condensed statement of cash flows at the reporting date:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
======================================== ========= ========= ========
Borrowings 739,249 671,463 795,132
Bank overdraft included as part of cash
and cash equivalents (66,490) (37,040) (41,764)
========= ========= ========
672,759 634,423 753,368
========= ========= ========
The Group has the following undrawn borrowing facilities at the
reporting date:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
======================= ========= ========= =======
Expiring within 1 year 97,790 76,113 80,701
Expiring beyond 1 year 337,781 377,473 265,652
========= ========= =======
435,571 453,586 346,353
========= ========= =======
Movement in net borrowings in the period is analysed as
follows:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
================================ ========= ========= ========
At the beginning of the period 584,243 510,363 510,363
Net drawdown of borrowings 71,007 37,753 40,056
Exchange translation adjustment (10,910) 28,947 33,824
At the end of the period 644,340 577,063 584,243
========= ========= ========
14. Financial risk management
The Group's activities expose it to a variety of financial risks
as follows: currency risk, interest rate risk, price risk,
liquidity risk, cash flow risk and credit risk. The condensed
interim financial statements do not include all financial risk
management information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's 2015 Annual Report.
There have been no changes to the risk management procedures or
policies since 2015 year end.
Fair value estimation
The condensed interim financial statement fair value estimation
disclosures below should be read in conjunction with the Group's
2015 Annual Report.
Fair value of financial assets and liabilities measured at fair
value
The table below analyses the Group's financial instruments
measured at fair value by valuation method. The different levels
have been defined as follows:
-- quoted prices (unadjusted) in active markets for identical
assets and liabilities (level 1);
-- inputs, other than quoted prices included in level 1, that
are observable for the asset and liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2); and,
-- inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The following table presents the Group's financial assets and
liabilities that are measured at fair value at the reporting
dates:
Fair Value Half year Half year Year
Hierarchy 2016 2015 2015
EUR'000 EUR'000 EUR'000
========================================= ========= ========= =======
Assets
Non hedging derivatives Level 2 - 649 -
Derivatives used for hedging Level 2 1,012 1,037 414
Available for sale financial
assets - equity securities Level 1 132 212 161
Available for sale financial
assets - equity securities Level 2 6,111 5,360 5,666
Total assets 7,255 7,258 6,241
========= ========= =======
Liabilities
Non hedging derivatives Level 2 (3,299) - (666)
Derivatives used for hedging Level 2 (597) (408) (283)
========= ========= =======
Total liabilities (3,896) (408) (949)
========= ========= =======
There were no transfers between levels 1 and 2 during the
period. There were no changes in valuation techniques during the
periods. The Group did not hold any level 3 financial assets or
liabilities at the reporting dates.
Valuation techniques used to derive level 2 fair values
Level 2 equities are fair valued using the latest prices quoted
in the grey market as at the reporting dates.
Level 2 derivatives comprise mainly of foreign exchange
contracts and commodity futures. These foreign exchange contracts
and commodity futures have been fair valued using forward rates
that are quoted in active markets. The effects of discounting are
generally insignificant for level 2 derivatives.
Group's valuation process
The Group's finance department includes a team that performs the
valuations of financial assets and financial liabilities required
for financial reporting purposes, including level 3 fair values.
The Group did not hold any level 3 financial assets or liabilities
at 02 July 2016, 04 July 2015 or 02 January 2016. The valuation
team reports directly to the Group Finance Director who in turn
reports to the Audit Committee. Discussions of valuation processes
and results are held between the Group Finance Director and the
Audit Committee.
Changes in level 2 and level 3 fair values are analysed at each
reporting date. As part of this discussion, the valuation team
presents a report that explains the reasons for the fair value
movements.
Fair value of financial assets and liabilities measured at
amortised cost
The fair value of the Group's trade and other receivables, cash
and cash equivalents and trade and other payables approximate their
carrying value.
The following table presents the fair value of the Group's
financial assets and liabilities that are measured at amortised
cost at the reporting dates:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
=============== ========= ========= =======
Non-current
borrowings
Carrying value 672,408 634,015 752,963
Fair value 705,814 658,058 776,931
========= ========= =======
The carrying value of current borrowings approximates to their
fair value.
15. Provisions
UK Legal
Restructuring pension claims Lease commitments Operational Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
note (a) note (b) note (c) note (d) note (e)
===================== ============= ======== ======== ================= =========== ========
At 02 January
2016 5,692 18,898 6,928 992 5,602 38,112
Provided for
in the period 828 - - - - 828
Utilised in the
period (1,747) (94) (199) (64) (3) (2,107)
Exchange differences - (2,348) (112) - (18) (2,478)
Unwinding of
discounts - 70 - 3 - 73
At 02 July 2016 4,773 16,526 6,617 931 5,581 34,428
============= ======== ======== ================= =========== ========
Non-current - 15,776 - 802 - 16,578
Current 4,773 750 6,617 129 5,581 17,850
============= ======== ======== ================= =========== ========
4,773 16,526 6,617 931 5,581 34,428
============= ======== ======== ================= =========== ========
a) The restructuring provision relates to rationalisation
programmes in Dairy Ireland. The provision, which relates to
redundancy payments, is expected to be utilised during the year.
The amount provided in the period is recognised in the income
statement as an exceptional item.
b) The UK pension provision relates to administration and
certain costs associated with pension schemes attached to
businesses disposed of in prior years. This provision is expected
to be fully utilised over the next 27.5 years.
c) The legal claims provision represents legal claims brought
against the Group. Due to the nature of these items, there is some
uncertainty around the amount and timing of payments. In the
opinion of the Directors, after taking appropriate legal advice,
the outcome of these legal claims is not expected to give rise to
any significant loss beyond the amounts provided for at 02 July
2016.
d) The lease commitments provision relates to onerous leases in
respect of two properties where the Group has present and future
obligations to make lease payments. It is expected that EUR0.1
million will be utilised during the year and the balance will be
fully utilised in 2017.
e) The operational provision represents provisions relating to
certain insurance claims, property remediation works and product
returns. Due to the nature of these items, there is some
uncertainty around the amount and timing of payments.
16. Share capital and share premium
Number of Ordinary
shares shares Share premium Total
(thousands) EUR'000 EUR'000 EUR'000
At 03 January 2015 295,876 17,752 86,976 104,728
Shares issued 155 9 633 642
============ ======== ============= ========
At 04 July 2015 and
02 January 2016 296,031 17,761 87,609 105,370
Shares issued 10 1 22 23
============ ======== ============= ========
At 02 July 2016 296,041 17,762 87,631 105,393
============ ======== ============= ========
The total authorised number of ordinary shares is 350 million
shares (HY 2015 and 2015: 350 million shares) with a par value of
EUR0.06 per share (HY 2015 and 2015: EUR0.06 per share). All issued
shares are fully paid.
During the period ended 02 July 2016 10,000 (HY 2015 and 2015:
155,000) of the 2002 Long Term Incentive Plan shares were exercised
with exercise proceeds of EUR0.02 million (HY 2015 and 2015: EUR0.6
million). The exercise price was EUR2.29 (HY 2015 and 2015 average
exercise price: EUR4.14) per share.
17. Retirement benefit obligations
The movement in the liability recognised in the Group condensed
balance sheet is as follows:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
========================================= ========= ========= =========
At the beginning of the period (87,288) (114,808) (114,808)
Exchange differences 2,584 (2,362) (1,557)
Service cost and net interest cost (3,699) (4,299) (8,512)
Loss on settlement - - (4,306)
Remeasurements - defined benefit schemes (51,379) 18,178 20,856
Contributions paid/payable by employer 7,707 9,320 21,039
========= ========= =========
At the end of the period (132,075) (93,971) (87,288)
========= ========= =========
The amounts recognised in the Group condensed balance sheet are
determined as follows:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
========================================= ========= ========= =========
Fair value of plan assets 360,877 416,691 352,789
Present value of funded obligations (492,952) (510,662) (440,077)
========= ========= =========
Liability in the Group condensed balance
sheet (132,075) (93,971) (87,288)
========= ========= =========
The following actuarial assumptions have been made in
determining the Group's retirement benefit obligations for the half
years ended 02 July 2016 and 04 July 2015 and full year ended 02
January 2016:
Half year 2016 Half year 2015 Year 2015
IRL UK IRL UK IRL UK
=============== ============= ======= ============= ======= ============= =============
Discount rate 1.40% 2.60% 2.40% 3.65% 2.25% 3.70%
1.75% - 2.15% -
Inflation rate 1.10% - 1.20% 2.75% 1.50% - 1.60% 3.15% 1.30% - 1.40% 2.00% - 3.00%
Future salary
increases 2.20% 3.50% 2.60% 3.90% 2.40% 3.75%
Future pension 1.90% - 2.20% -
increases 0.00% 2.65% 0.00% 2.95% 0.00% 2.10% - 2.80%
The following table analyses for the Group's pension schemes,
the estimated impact in the plan liabilities resulting from a 0.25%
change in the discount rate:
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
================================== ================= ================= ===================
Decrease/increase Decrease/increase
Discount rate - increase/decrease by by Decrease/increase
0.25% EUR21.8 million EUR23.6 million by EUR19.4 million
----------------- ----------------- -------------------
Mortality rates
The mortality assumptions are consistent with those applied in
the 2015 Annual Report.
18. Related party transactions
The Group is controlled by the Society, which holds 36.5% of the
issued share capital of Glanbia plc and is the ultimate parent of
the Group. During the period, dividends of EUR7.8 million (HY 2015:
EUR8.0 million) were paid to the Society and its wholly owned
subsidiaries based on their shareholding in Glanbia plc.
During the six months to 02 July 2016, sales to related parties
amounted to EUR16.6 million (HY 2015: EUR18.1 million), purchases
from related parties amounted to EUR35.2 million (HY 2015: EUR39.5
million) and net balances owed to related parties were EUR39.9
million (HY 2015: EUR54.3 million). During 2016 the Group advanced
a loan of EUR12.8 million at arms length to Glanbia Ingredients
Ireland Limited (Associate), which is repayable on 03 July 2018.
The related party transactions relate primarily to trading between
the Group, Southwest Cheese Company, LLC, Glanbia Ingredients
Ireland Limited and the Society.
In the opinion of the Directors, there have been no related
party transactions, or changes therein, since the year ended 02
January 2016, that have materially affected the Group's financial
position or performance during the six months ended 02 July
2016.
19. Contingent liabilities
Group bank guarantees amounting to EUR4.9 million (HY 2015:
EUR3.6 million) are outstanding at 02 July 2016. The Group does not
expect any material loss to arise from these guarantees.
The Group has contingent liabilities in respect of legal claims
arising in the ordinary course of business. It is not anticipated
that any material liability will arise from these contingent
liabilities other than those provided for.
20. Cash generated from operations
Half year Half year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
================================================= ========= ========= ========
Profit before taxation 129,836 117,633 218,696
Non cash element of exceptional charge 4,785 5,386 18,299
Share of results of Joint Ventures & Associates (12,328) (13,267) (26,270)
Write off of property, plant and equipment 183 - -
Depreciation 24,588 21,209 43,137
Amortisation 19,424 15,566 31,125
Cost of share based payments 5,693 3,565 8,724
Difference between pension charge and cash
contributions (4,008) (5,023) (6,027)
Loss on disposal of property, plant and
equipment 87 96 209
Finance income (1,160) (885) (1,706)
Finance expense 12,732 11,588 22,816
Amortisation of government grants received (121) (103) (282)
========= ========= ========
Cash generated before changes in working
capital 179,711 155,765 308,721
Changes in net working capital:
- Decrease in inventory 9,309 7,184 20,287
- (Increase) in short term receivables (100,690) (88,962) (12,187)
- (Decrease)/increase in short term liabilities (32,607) (38,114) 846
- (Decrease) in provisions (2,107) (10,410) (9,802)
========= ========= ========
Cash generated from operating activities 53,616 25,463 307,865
21. Business combinations
For the acquisitions completed in 2015 there have been no
material revisions, as at the reporting date, of the provisional
fair value adjustments since the initial values were
established.
On 29 February 2016, the Group acquired 100% of the business and
operating assets of EMI Nutrition Distributors Pty Limited ("EMI").
EMI's principal activity is the distribution and marketing of
performance nutrition products. The acquisition will allow the
Group to expand and further enhance Glanbia Performance Nutrition
distribution channels. Goodwill is attributable to the
profitability and development opportunities associated with
complementing and enhancing existing distribution channels.
Goodwill is not deductible for tax purposes.
Acquisition related costs charged to the condensed income
statement, included within other expenses, during the period ended
02 July 2016 amounted to EUR0.2 million (HY 2015: EURnil).
Details of the net assets acquired and goodwill arising from the
acquisition are as follows:
Half year
2016
EUR'000
==================================== =========
Purchase consideration 10,318
Less: Fair value of assets acquired (9,355)
=========
Goodwill 963
=========
Prior to the acquisition, EMI was a distributor of the Group's
product in Australia. As at the acquisition date, EMI's trade
payable balance to the Group amounted to EUR1.6 million, being the
contractual value. This balance was effectively settled on the
acquisition date and is excluded from the liabilities acquired.
The total purchase consideration is as follows:
Half year
2016
EUR'000
========================================== =========
Purchase consideration - cash paid 8,724
Pre-existing relationship payable balance 1,594
=========
Purchase consideration 10,318
=========
The fair value of assets and liabilities arising from the
acquisition are as follows:
Half year
2016
EUR'000
=========================================== =========
Property, plant and equipment 165
Intangible assets - customer relationships 1,508
Inventories 3,686
Trade and other receivables 4,225
Trade and other payables (41)
Deferred tax liability (188)
=========
Fair value of assets acquired 9,355
=========
The fair value of EMI's trade and other receivables at the
acquisition date amounted to EUR4.2 million, which equates to the
gross contractual amount.
The revenue and profit (net of transaction costs) of the Group
including the impact of the acquisition during the period ended 02
July 2016 were as follows:
Group Consolidated
2016 excluding Group including
Acquisition acquisition acquisition
EUR'000 EUR'000 EUR'000
============================================== =========== =========== ================
Revenue 1,761 1,433,003 1,434,764
(Loss)/profit before taxation and exceptional
items (1,228) 139,949 138,721
=========== =========== ================
The revenue and profit (net of transaction costs) of the Group
for the period ended 02 July 2016 determined in accordance with
IFRS 3 as though the acquisition date for all business combinations
effected during the period had been at the beginning of the period
would be as follows:
Group Pro Forma
2016 excluding Consolidated
Acquisition acquisition Group
EUR'000 EUR'000 EUR'000
============================================== =========== =========== =============
Revenue 2,612 1,433,003 1,435,615
(Loss)/profit before taxation and exceptional
items (798) 139,949 139,151
=========== =========== =============
22. Events after the reporting period
There have been no material events subsequent to the end of the
interim period 02 July 2016 which require disclosure in this
report.
23. Information
Copies of this half yearly financial report are available for
download from the Group's website at www.glanbia.com.
Glossary
Key performance indicators and non-IFRS performance measures
Non-IFRS performance measures
The Group reports certain performance measures that are not
defined under IFRS but which represent additional measures used by
the Board of Directors and the Glanbia Operating Executive in
assessing performance and for reporting both internally and to
shareholders and other external users. The Group believes that the
presentation of these non-IFRS performance measures provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides readers with a more meaningful
understanding of the underlying financial and operating performance
of the Group.
None of these non-IFRS performance measures should be considered
as an alternative to financial measures drawn up in accordance with
IFRS.
The principal non-IFRS performance measures used by the Group
for the half year results are consistent with those presented in
the Group's 2015 Annual Report and there have been no changes to
the basis of calculation. The full list of key performance
indicators and non-IFRS performance measures used by the Group are
set out in the 2015 Annual Report.
Constant currency
While the Group reports its results in euro, it generates a
significant proportion of its earnings in currencies other than
euro, in particular US dollar. Constant currency reporting is used
by the Group to eliminate the translational effect of foreign
exchange on the Group's results. To arrive at the constant currency
change, the results for the prior period are retranslated using the
average exchange rates for the current period and compared to the
current period reported numbers.
The principal average exchange rates used to translate results
as at the reporting dates were as follows:
Half
Half year year Year
2016 2015 2015
=============== ========== ======= =======
euro 1 =
US dollar 1.1161 1.1150 1.1092
Pound Sterling 0.7795 0.7316 0.7259
Danish Kroner 7.4497 7.4567 7.4589
========== ======= =======
Total Group
The Group has a number of strategically important Joint Ventures
& Associates which when combined with the Group's wholly owned
businesses give an important indication of the scale and reach of
the Group's operations. Total Group is used to describe certain
financial metrics such as Revenue and EBITA when they include both
the wholly owned businesses and the Group's share of Joint Ventures
& Associates.
Revenue
Revenue comprises sales of goods and services of the wholly
owned businesses to external customers net of value-added tax,
rebates and discounts. Revenue is one of the Group's Key
Performance Indicators.
Total Group Revenue
Total Group Revenue comprises the revenue of the wholly owned
businesses and the Group's share of the revenue of its Joint
Ventures & Associates.
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
================================= ====== ========== ========== ==========
Revenue per the Group condensed
income statement 1,434,764 1,431,590 2,774,326
Group's share of revenue of
Joint Ventures & Associates 4 402,257 445,327 893,089
========== ========== ==========
Total Group Revenue 1,837,021 1,876,917 3,667,415
========== ========== ==========
EBITA
EBITA is defined as earnings before interest, tax and
amortisation excluding exceptional items.
EBITA is one of the Group's Key Performance Indicators. Business
Segment EBITA growth on a constant currency basis is one of the
performance conditions in Glanbia's Annual Incentive Plan for
Executive Directors with Business Unit responsibility.
Total Group EBITA
Total Group EBITA comprises EBITA of the wholly owned businesses
and the Group's share of its Joint Ventures & Associates
EBITA.
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
=============================== ====== ========== ========= =========
EBITA per the Group condensed
income statement 157,389 138,473 271,003
Group's share of EBITA of
Joint Ventures & Associates 4 19,135 20,204 39,690
========== ========= =========
Total Group EBITA 176,524 158,677 310,693
========== ========= =========
Reconciliation of the Group's share of Joint Ventures &
Associates EBITA to the share of results of Joint Ventures &
Associates per the Group condensed income statement is as
follows:
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
======================================= ====== ========== ========= =========
EBITA of Joint Ventures & Associates 4 19,135 20,204 39,690
Amortisation (309) (238) (476)
Finance costs (2,799) (2,574) (5,037)
Income tax (3,699) (4,125) (7,907)
========== ========= =========
Share of results of Joint Ventures
& Associates per the Group condensed
income statement 12,328 13,267 26,270
========== ========= =========
EBITA margin
EBITA margin is defined as EBITA as a percentage of the revenue
of the wholly owned businesses.
Half
Half year year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
================================= ========== ========== ==========
EBITA per the Group condensed
income statement 157,389 138,473 271,003
Revenue per the Group condensed
income statement 1,434,764 1,431,590 2,774,326
========== ========== ==========
EBITA margin 11.0% 9.7% 9.8%
========== ========== ==========
Total Group EBITA margin
Total Group EBITA margin is defined as Total Group EBITA as a
percentage of Total Group Revenue.
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
========================== ====== ========== ========== ==========
Total Group EBITA 4 176,524 158,677 310,693
Total Group Revenue 4 1,837,021 1,876,917 3,667,415
========== ========== ==========
Total Group EBITA margin 9.6% 8.5% 8.5%
========== ========== ==========
Adjusted Earnings per share (EPS)
Adjusted EPS is defined as the net profit attributable to the
equity holders of Glanbia plc, before exceptional items and
intangible asset amortisation, net of related tax, divided by the
weighted average number of ordinary shares in issue during the
period. The Group believes that Adjusted EPS is a better measure of
underlying performance than Basic EPS as it excludes exceptional
items that are not related to on-going operational performance and
intangible asset amortisation, which allows better comparability of
segments and companies that grow by acquisition to those that grow
organically.
Adjusted EPS is one of the Group's Key Performance Indicators.
Adjusted EPS growth on a constant currency basis is one of the
performance conditions in Glanbia's Annual Incentive Plan. Adjusted
EPS growth on a reported basis is one of the performance conditions
in Glanbia's Long-term Incentive Plan.
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
============================================ ====== ============ ============ ============
Profit attributable to equity holders
of the Parent 109,364 98,674 183,271
Amortisation of intangible assets
(net of related tax) 10 15,531 13,620 26,126
Amortisation of Joint Venture & Associates
intangible assets (net of related
tax) 10 270 208 417
Exceptional items (net of related
tax) 6 7,256 7,305 23,799
============ ============ ============
Adjusted net income 132,421 119,807 233,613
============ ============ ============
Weighted average number of ordinary
shares in issue 10 295,127,674 295,124,380 295,196,003
============ ============ ============
Adjusted earnings per share (cent) 44.87 40.60 79.14
============ ============ ============
Financing Key Performance Indicators
The following are the financing key performance indicators
defined as per the Group's financing agreements and are for a
rolling 12 month period.
Net debt : adjusted EBITDA is calculated as net debt at the end
of the period divided by adjusted EBITDA. Net debt is calculated as
total borrowings less cash and cash equivalents. Adjusted EBITDA is
calculated as EBITDA for the wholly owned businesses (earnings
before interest, taxation, depreciation and amortisation) plus
dividends received from Joint Ventures & Associates, and in the
event of an acquisition in the period, includes pro-forma EBITDA as
though the acquisition date had been at the beginning of the
period.
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
===================================== ====== ========== ========= =========
Rolling 12 month EBITDA 336,135 278,060 313,858
Rolling 12 month dividends received
from Joint Ventures & Associates 13,935 12,714 14,924
Acquisition pro-forma EBITDA 2,088 2,180 5,188
========== ========= =========
Adjusted EBITDA 352,158 292,954 333,970
========== ========= =========
Net Debt 13 644,340 577,063 584,243
========== ========= =========
Net debt : adjusted EBITDA 1.83 1.97 1.75
========== ========= =========
Adjusted EBIT : net finance cost is calculated as earnings
before interest and tax plus dividends received from Joint Ventures
& Associates divided by net finance cost. Net finance cost
comprises finance costs less finance income per the Group condensed
income statement plus capitalised borrowing costs.
Half
Half year year Year
2016 2015 2015
EUR'000 EUR'000 EUR'000
===================================== ========== ========= =========
Rolling 12 month operating profit 254,936 212,280 239,878
Rolling 12 month dividends received
from Joint Ventures & Associates 13,935 12,714 14,924
========== ========= =========
Adjusted EBIT 268,871 224,994 254,802
========== ========= =========
Rolling 12 month net finance cost 23,629 22,932 23,510
========== ========= =========
Adjusted EBIT : net finance cost 11.4 9.8 10.8
========== ========= =========
Operating cashflow
Operating cashflow is defined as earnings before interest,
taxation, depreciation and amortisation (EBITDA) of the wholly
owned businesses net of business sustaining capital expenditure and
working capital movements, excluding exceptional cash flows. EBITDA
represents pre-exceptional EBITA of the wholly owned businesses
plus depreciation, net of grant amortisation.
Operating cashflow is one of the Group's Key Performance
Indicators. Operating cashflow on a constant currency basis is one
of the performance conditions in Glanbia's Annual Incentive
Plan.
Reconciliation of Operating cashflow to the condensed statement
of cash flows in the condensed interim financial statements:
Half
Half year year Year
2016 2015 2015
Notes EUR'000 EUR'000 EUR'000
============================================================= ====== ========== ========= =========
Cash generated from operating activities 20 53,616 25,463 307,865
Add back exceptional costs paid in
period - note 1 10,505 3,040 15,090
Add back non operating working capital
movements in period 1,517 512 (1,295)
Less business sustaining capital
expenditure - note 2 (13,926) (13,868) (37,391)
Non cash items not adjusted in computing
Operating Cash Flow:
Cost of share options 20 (5,693) (3,565) (8,724)
Difference between pension charge
and cash contributions 20 4,008 5,023 6,027
Loss on disposal of property, plant
and equipment 20 (87) (96) (209)
========== ========= =========
Operating cashflow 49,940 16,509 281,363
========== ========= =========
Exceptional costs paid in the period
Pre-tax exceptional charge for period 6 8,885 7,838 26,342
Non-cash element of exceptional charge 20 (4,785) (5,386) (18,299)
========== ========= =========
Current period exceptional costs
paid in the period 4,100 2,452 8,043
Prior period exceptional costs paid
in the period 6,405 588 7,047
Total exceptional costs paid in the
period 10,505 3,040 15,090
========== ========= =========
Capital expenditure analysis
Business sustaining capital expenditure 13,926 13,868 37,391
Strategic capital expenditure 27,768 44,896 86,199
========== ========= =========
Total capital expenditure 41,694 58,764 123,590
========== ========= =========
Capital expenditure reconciled to
condensed statement of cash flows:
Purchase of property plant and equipment 34,471 52,241 103,792
Purchase of intangible assets 7,223 6,523 19,798
========== ========= =========
Total capital expenditure per the
condensed statement of cash flows 41,694 58,764 123,590
========== ========= =========
Business sustaining capital expenditure
The Group defines business sustaining capital expenditure as the
expenditure required to maintain/replace existing assets with a
high proportion of expired useful life. This expenditure does not
attract new customers or create the capacity for a bigger business.
It enables the company to keep running at current throughput rates
but also keep pace with regulatory and environmental changes as
well as complying with new requirements from existing
customers.
Strategic capital expenditure
The Group defines strategic capital expenditure as the
expenditure required to facilitate growth and generate additional
returns for the Group. This is generally expansionary expenditure
beyond what is necessary to maintain the Group's current
competitive position.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGMRNVVGVZM
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