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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Glanbia Plc | LSE:GLB | London | Ordinary Share | IE0000669501 | ORD EUR0.06 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.90 | 16.90 | 18.10 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 5.43B | 344.5M | 1.2652 | 13.36 | 4.6B |
TIDMGLB
RNS Number : 3656H
Glanbia PLC
17 August 2016
Hot Features
Premium
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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August 17, 2016 02:00 ET (06:00 GMT)
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