REG - Glanbia PLC - Glanbia Full Year 2023 Results
28/02/2024 07:00
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RNS Number : 6966E Glanbia PLC 28 February 2024
Glanbia Full Year 2023 results
Strong performance with adjusted EPS(1) growth of 20.5% constant currency
28 February 2024 - Glanbia plc ("Glanbia", the "Group", the "Company", the
"plc"), the 'Better Nutrition company', announces its preliminary results for
the 2023 financial year ended 30 December 2023 ("2023" or "FY23").
As announced on 1 March 2023, the Group has changed its presentation currency
from euro to US dollar. All figures presented are in US dollar unless stated
otherwise, with comparative figures also restated in US dollar.
Summary:
· Group Financial Performance:
o Adjusted earnings per share ("EPS")(1) of 131.37 $cent (2022: 109.57
$cent) representing growth of 20.5% constant currency (up 19.9% reported);
o Group revenues of $5.4 billion (2022: $5.9 billion) representing a decline
of 8.7%, constant and reported currency;
o Group EBITA pre-exceptional $424.0 million (2022: $365.7 million), an
increase of 16.4% constant currency (up 15.9% reported);
o Basic EPS of 129.21 $cent (2022: 98.40 $cent);
o Operating Cash Flow ("OCF") conversion of 90.4% (2022: 85.7%) and year end
net debt to adjusted EBITDA ratio of 0.5 times (2022: 1.13 times);
· Glanbia Performance Nutrition ("GPN"):
o Like-for-like ("LFL") branded revenue growth of 5.1% with pricing +5.4%
and volume -0.3%;
o Optimum Nutrition ("ON") brand delivered LFL revenue growth of 17.0% with
both volume and price growth; US consumption growth(2) of 13.7% for the 52
week period;
o Increased brand and marketing investment, prioritising the protein growth
brands of Optimum Nutrition, Isopure and think!;
o EBITA margin of 14.2% (2022: 11.2%), an increase of 300bps;
· Glanbia Nutritionals ("GN") - Nutritional Solutions ("GN NS"):
o LFL revenue decrease of 12.3% with pricing -9.0% and volume -3.3%;
o Volume trends continued to improve through the second half of FY23 with
volume growth in Q3 and Q4;
o EBITA margin of 12.5% (2022: 11.4%), an increase of 110bps;
· Capital allocation:
o Recommended final dividend per share of 21.21 €cent; representing a
total 2023 dividend of 35.43 €cent; a 10% increase on prior year,
representing a payout ratio of 29.2%;
o Returned €100 million to shareholders in the year via share buybacks.
Reflecting the Group's strong cash flow and financial position, the Group is
today announcing its intention to return a further €100 million via share
buybacks in FY 2024, starting initially with a €50m buyback programme;
· 2024 Outlook:
o Glanbia expects to deliver adjusted EPS growth of 5% to 8% constant
currency in FY 2024.
1 Adjusted earnings per share ("EPS") for continuing operations.
2 Consumption growth is US measured in channels and includes Online, FDMC
(Food, Drug, Mass, Club) and Specialty channels. Data compiled from published
external sources and Glanbia estimates for the 52 week period to 31 December
2023.
Commenting today Hugh McGuire, Chief Executive Officer, said:
"On behalf of the Glanbia team, I am pleased to report that the Group
delivered an excellent performance in 2023 with adjusted EPS(1) growing by
20.5% to 131.37c. This was driven by strong global consumer demand, with
Optimum Nutrition continuing its growth momentum, delivering volume and price
growth in the period. In our Nutritional Solutions business, overall volume
trends continued to improve through the year, with a sequential improvement in
volume growth in the fourth quarter.
Our strong operational and financial performance continued to generate
excellent cash flow, with 90.4% cash conversion in the year. We continued to
evolve our portfolio with the acquisition of a bioactive ingredients business
and the sale of our share of Glanbia Cheese joint ventures. We increased the
dividend by 10% and returned €100 million to shareholders via our share
buyback programme.
Glanbia is a company with very strong fundamentals - a clear strategy, a
portfolio of great brands and ingredients playing into strong underlying
consumer health and wellness trends with a team of talented people. Looking
ahead, we will focus on driving growth and shareholder value by stepping up
awareness and distribution of our great brands, with a robust innovation
pipeline across both our growth platforms. In 2024, we expect adjusted EPS
growth of 5% to 8% constant currency, which will be driven by a strong
operating performance across both GPN and GN NS."
Summary financials(1) - continuing operations
FY23 results Constant
$'m 2023 2022 Reported Currency
Change Change(2)
Wholly-owned business (pre-exceptional)
Revenue 5,425.4 5,943.7 (8.7%) (8.7%)
EBITA(3) 424.0 365.7 15.9% 16.4%
EBITA margin 7.8% 6.2%
Joint Ventures
Share of profit after tax (pre-exceptional) 12.5 16.3
Profit after tax 298.1 248.0
Adjusted earnings per share 131.37c 109.57c 19.9% 20.5%
Basic earnings per share 130.41c 76.55c
1. This release contains certain alternative performance measures.
Detailed explanation of the key performance indicators and non-IFRS
performance measures can be found in the glossary on pages 35 to 43.
2. To arrive at the constant currency change, the average exchange
rate for the current period is applied to the relevant reported result from
the same period in the prior year. The average US dollar euro exchange rate
for 2023 was $1 = €0.9247 (2022: $1 = €0.9493). Reported and constant
currency movements are on a pre-exceptional basis.
3. EBITA (pre-exceptional) is defined as earnings before interest, tax
and amortisation.
FY23 results summary
Revenue progression 2023 versus 2022
Constant Currency Movement Reported Movement
Volume Price Like-for-like Acquisition / (Disposals) Total Constant Currency Total Reported
Glanbia Performance Nutrition (0.6%) 5.4% 4.8% - 4.8% 4.9%
Glanbia Nutritionals (0.4%) (13.0%) (13.4%) (0.8%) (14.2%) (14.2%)
Nutritional Solutions (3.3%) (9.0%) (12.3%) (2.6%) (14.9%) (15.0%)
US Cheese 0.7% (14.6%) (13.9%) - (13.9%) (13.9%)
Total wholly-owned businesses (0.5%) (7.7%) (8.2%) (0.5%) (8.7%) (8.7%)
Revenue, EBITA and Margin
2023 2022
$'m Revenue EBITA Margin % Revenue EBITA Margin %
Glanbia Performance Nutrition 1,795.6 255.4 14.2% 1,712.5 191.9 11.2%
Glanbia Nutritionals 3,629.8 168.6 4.6% 4,231.2 173.8 4.1%
Nutritional Solutions 1,008.5 126.2 12.5% 1,186.8 135.0 11.4%
US Cheese 2,621.3 42.4 1.6% 3,044.4 38.8 1.3%
Total wholly-owned businesses 5,425.4 424.0 7.8% 5,943.7 365.7 6.2%
2023 full year overview
Glanbia delivered a strong financial and operating performance in 2023. Group
revenue was $5,425.4 million (2022: $5,943.7 million), down 8.7% constant and
reported currency, primarily driven by dairy pricing. Group EBITA (before
exceptional items) was $424.0 million (2022: $365.7 million), up 16.4%
constant currency (up 15.9% reported). Group pre-exceptional profit after tax
for continuing operations was $298.1 million (2022: $248.0 million), up 21.1%
constant currency (up 20.2% reported).
Adjusted earnings per share ("EPS") was 131.37 $cent (2022: 109.57 $cent), up
20.5% constant currency (up 19.9% reported).
Balance sheet and financing
The Group's continued focus on cash management delivered a strong performance
with an Operating Cash Flow of $445.9 million (2022: $374.3 million), which
represents an OCF conversion of 90.4% (2022: 85.7%). At year end, the Group
had a net debt position of $248.7 million (2022: $490.0 million) with the
decrease driven by strong cash generation, the sale of the Group's interest in
the Glanbia Cheese UK and EU joint ventures and a disciplined approach to
capital allocation. Net debt to adjusted EBITDA was 0.5 times (2022: 1.13
times). At year end, the Group had committed debt facilities of $1.3 billion
(2022: $1.3 billion) with a weighted average maturity of 4.7 years (2022: 5.8
years).
Capital investment
Glanbia's total investment in capital expenditure (tangible and intangible
assets) was $74.2 million in 2023 (2022: $72.5 million). Strategic investment
totalled $51.7 million and included ongoing capacity enhancement, business
integrations, and IT investments to drive further efficiencies in operations.
Total capital expenditure for 2024 is expected to be $75 million to $85
million. Glanbia's ability to generate cash and its available debt facilities
ensure the Group has considerable capacity to finance future investments.
Dividend per share
The Board is recommending a final dividend of 21.21 €cent per share which
brings the total dividend for the year to 35.43 €cent per share, a 10%
increase on prior year. This total dividend represents a payout ratio of 29.2%
of 2023 adjusted EPS, which is within the Company's target payout ratio of 25%
to 35%. The final dividend will be paid on 3 May 2024 to shareholders on the
share register on 22 March 2024. Irish withholding tax will be deducted at the
standard rate where appropriate. The Company's primary dividend payment
currency remains euro.
Share buyback
During 2023 Glanbia purchased and cancelled 7,215,827 million ordinary shares,
representing 2.7% of total issued ordinary shares at the beginning of 2023, at
a total cost of €100 million (2022: €173.5 million). The Company's Board
has approved a further €100 million share buyback authority in 2024 as part
of its capital allocation policy. Today, the Group will launch an initial
€50 million share buyback programme under this authority. Further details on
the share buyback programme will be provided in a separate announcement today.
Sustainability
The Group remains on track to meet its commitment to reduce Scope 1 and 2
carbon emissions by 50% by 2030 from a 2018 base, delivering a 15.9% reduction
of Scope 1 and 2 carbon emissions in 2023 versus the previous year. In
addition, the Group demonstrated continued progress across our other
environmental commitments relating to climate, water, waste and consumer
packaging.
Strategy
During 2023 the Group continued to sharpen its focus on its core better
nutrition growth platforms and simplify it's reporting structure. This
included the following initiatives:
· Portfolio evolution:
o Q1 2023 - divested Aseptic Solutions.
o Q2 2023 - divested Glanbia Cheese UK and EU joint ventures.
o Q4 2023 - acquired a bioactive nutritional ingredients business.
· Simplification of reporting:
o Q1 2023 - announced change of presentation currency to US dollar.
o Q3 2023 - announced amendment of commercial arrangements associated with
US joint ventures.
The Group remains confident in delivering the financial ambition outlined at
the Capital Markets event in November 2022, which was as follows:
2023-2025 financial ambition Ambition 2023 result
Group metrics*
Adjusted Earnings Per Share growth (on a constant currency basis) 5-10% 20.5%
Operating Cash Flow conversion % 80%+ 90.4%
Return on Capital Employed ("ROCE") 10-13% 12.2%
* All Group metrics are average annual metrics for the three years 2023-2025
and include M&A activity.
Change in commercial arrangements associated with US joint venture and change
to EBITDA in 2024
As announced on 16 August 2023, the Group has amended the commercial
arrangements associated with its US joint venture effective 1 January 2024.
Under the new commercial terms, in accordance with IFRS 15 Glanbia will
recognise commissions earned on the sale of joint venture products, whereas
previously Glanbia recorded the gross value of revenues and corresponding cost
of sales on joint venture products sold. The change in commercial terms will
impact the recognition and presentation of revenues and cost of sales from
2024 onwards only.
The Group has also decided to adopt EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) as a key performance measure from 2024. This
aligns with industry standards.
The table below re-presents the pro-forma revenue for 2023 and 2022 to reflect
the change in the Group's commercial arrangements associated with its US joint
venture as if the terms were effective from the beginning of 2022. The impact
is to decrease revenue; there is no change to EBITDA. The table also provides
EBITDA by segment, in line with future reporting.
Pro-forma Revenue, EBITDA and Margin (pre-exceptional)
2023 2022
$'m Reported Pro-forma Adjustment Pro-forma Reported Pro-forma Adjustment Pro-forma
Revenue
Glanbia Performance Nutrition 1,795.6 - 1,795.6 1,712.5 - 1,712.5
Glanbia Nutritionals 3,629.8 (1,795.6) 1,834.2 4,231.2 (2,123.3) 2,107.9
Nutritional Solutions 1,008.5 (123.1) 885.4 1,186.8 (183.1) 1,003.7
US Cheese 2,621.3 (1,672.5) 948.8 3,044.4 (1,940.2) 1,104.2
Group Revenue 5,425.4 (1,795.6) 3,629.8 5,943.7 (2,123.3) 3,820.4
EBITDA
Glanbia Performance Nutrition 282.3 - 282.3 216.0 - 216.0
Glanbia Nutritionals 211.1 - 211.1 220.8 - 220.8
Nutritional Solutions 157.3 - 157.3 171.2 - 171.2
US Cheese 53.8 - 53.8 49.6 - 49.6
Group EBITDA 493.4 - 493.4 436.8 - 436.8
EBITDA Margin
Glanbia Performance Nutrition 15.7% - 15.7% 12.6% - 12.6%
Glanbia Nutritionals 5.8% +570bps 11.5% 5.2% +530bps 10.5%
Nutritional Solutions 15.6% +220bps 17.8% 14.4% +270bps 17.1%
US Cheese 2.1% +360bps 5.7% 1.6% +290bps 4.5%
Group EBITDA Margin 9.1% +450bps 13.6% 7.3% +410bps 11.4%
Board changes
The following Board changes have taken place at the Company since the
beginning of 2023.
Siobhán Talbot stepped down from her position as Group Managing Director of
the Company and Executive Director on the Glanbia Board on 31 December 2023
and retired from the Group in January 2024. Hugh McGuire, was appointed Chief
Executive Officer of the Company and joined the Glanbia Board as an Executive
Director on 1 January 2024.
In line with the relationship agreement with Tirlán Co-operative Society
Limited (the "Society") Patsy Ahern and John Murphy retired at the Company's
annual general meeting ("AGM") held on 4 May 2023, reducing the Society's
representation on the Board to three directors. On the same date, the Group
announced the appointment of Gabriella Parisse to its Board as an Independent
Non-Executive Director effective 1 June 2023.
Róisín Brennan succeeded Dan O'Connor as Senior Independent Director of the
Company on 30 December 2023. Dan O'Connor succeeded Donard Gaynor as Chair of
the Environmental, Social and Governance ("ESG") Committee on 30 December
2023. Mr O'Connor has informed the Board that it is his intention to retire
from the Board at the Company's AGM in 2025.
Mark Garvey, Chief Financial Officer and Executive Director of the Company,
was appointed a member of the ESG Committee on 30 December 2023.
The Glanbia Board is comprised of 13 members: the Chairman, two Executive
Directors, ten Non-Executive Directors including three representatives from
Tirlán Co-operative Society Limited.
2024 Outlook
The Group's strong performance in 2023, despite the challenging global
environment, highlights the strength of its consumer focused Better Nutrition
portfolio, which is expected to drive growth in 2024 and beyond.
Based on the current market environment and expectations for the remainder of
the year the Group outlines the following guidance for FY 2024:
· GPN expects to deliver 4% to 7% revenue growth*.
· GN NS expects to deliver 3% to 5% volume growth.
· EBITDA margins for GPN and GN NS to be sustained at least at the
same level as 2023.
· The Group is targeting an operating cash flow conversion rate of
80%+.
Glanbia expects to deliver adjusted EPS growth of 5% to 8% constant currency
in 2024.
* on a constant currency basis and includes the impact of the 53(rd) week in
2024.
2023 operations review
(Commentary on percentage movements is on a constant currency basis
throughout)
Glanbia Performance Nutrition
$'m 2023 2022 Reported Constant
Change Currency
Change
Revenue 1,795.6 1,712.5 +4.9% +4.8%
EBITA 255.4 191.9 +33.1% +33.7%
EBITA margin 14.2% 11.2% +300bps
· Like-for-like ("LFL") branded revenue growth of +5.1% with volume
-0.3% and pricing +5.4%.
· Optimum Nutrition, the number 1 global brand in the sports
nutrition sector, delivered LFL revenue growth of 17.0% with both volume and
price growth.
· EBITA margin of 14.2%, an increase of 300bps versus 2022.
GPN revenue increased by 4.8% in 2023. This was driven by price increases of
5.4% partly offset by a volume decline of 0.6%. Pricing was positive following
the execution of price increases in 2022. The price increases implemented to
offset inflation have largely been maintained across the portfolio with
consumer elasticity within the performance nutrition category better than
expected. The volume decline was largely driven by the SlimFast brand, which
represents 9% of GPN revenue, with the previously highlighted challenges in
the diet category impacting the brand's performance. ON, which represents 62%
of GPN revenue, delivered both volume and price growth in the period as the
strength of the brand continues to drive global distribution and velocities,
supported by increased marketing activation and brand investment.
GPN EBITA increased by 33.7% versus prior year to $255.4 million and EBITA
margin increased by 300 basis points to 14.2%. This was driven by continued
focus on revenue growth management initiatives, operating efficiencies and
margin optimisation. The positive phasing of input costs in the second half of
2023 supported both further brand investment and margin improvement.
Americas
GPN Americas grew LFL revenue by 0.9% in 2023, with strong growth in the ON
and Isopure brands offset by anticipated declines in the SlimFast brand.
The ON brand continues to strengthen its strong consumer position and
delivered US consumption growth of 13.7%1 in 2023, building on a strong
comparative period. This was driven by strong growth in the club and online
channels and was supported by the successful activation of the 'More of You in
You' brand campaign. Trends in the healthy lifestyle portfolio remained
robust, with US consumption growth of 11.2%1 across the think!, Isopure and
Amazing Grass brands. The strong growth in the ON and Isopure brands in the
period was driven largely by the powders format, which continues to resonate
as a value offering with consumers.
International
GPN International, which represents 35% of GPN global revenue portfolio, grew
LFL revenue by 12.8% in 2023. Growth across the region was broad based and
driven by both volume and price growth of the ON brand, which was supported by
increased brand investment and expanded distribution.
Glanbia Nutritionals
2023 2022
$'m Revenue EBITA Margin % Revenue EBITA Margin %
Nutritional Solutions 1,008.5 126.2 12.5% 1,186.8 135.0 11.4%
US Cheese 2,621.3 42.4 1.6% 3,044.4 38.8 1.3%
Total Glanbia Nutritionals 3,629.8 168.6 4.6% 4,231.2 173.8 4.1%
1 Consumption growth is US measured in channels and includes Online, FDMC
(Food, Drug, Mass, Club) and Specialty channels. Data compiled from published
external sources and Glanbia estimates for the 52 week period to 31 December
2023.
Nutritional Solutions
Reported Constant
Change Currency
Change
$'m 2023 2022
Revenue 1,008.5 1,186.8 (15.0%) (14.9%)
EBITA 126.2 135.0 (6.5%) (6.2%)
EBITA margin 12.5% 11.4% +110bps
· LFL revenue decline of 12.3% with volumes -3.3% and pricing
-9.0%.
· EBITA margin of 12.5%, an increase of 110 basis points versus
2022.
· Sequential volume improvement as the period progressed, with
positive volumes in Q3 and Q4.
GN NS revenue decreased by 14.9% in 2023. This was driven by a 3.3% decrease
in volume, 9.0% decrease in price and a decrease of 2.6% driven by the net
impact of acquisitions and disposals. The volume decline was driven largely by
customer supply chain rebalancing in the custom premix solutions business in
the first half of the year, which sequentially improved as the year
progressed. Volumes in the protein business were positive and underpinned by
good demand for protein. The price decline was driven by the decline in dairy
market pricing, with positive pricing in the custom premix solutions business.
GN NS continues to support customers across a broad range of categories,
ultimately seeking to address growing consumer health and wellness trends.
While 2023 saw a period of customer inventory rebalancing in the custom premix
business, the demand at a consumer level remains fundamentally unchanged.
As announced on 1 November 2023, Glanbia acquired a B2B bioactive nutritional
ingredients business. This is an exciting addition to our portfolio of
nutritional ingredients, building out our dairy bioactive platform in
colostrum-enriched nutraceuticals that support gut health and immunity.
GN NS EBITA was $126.2 million, a 6.2% decline versus prior year, primarily as
a result of the volume decline in the first half of 2023. EBITA margins
increased by 110 basis points versus prior year to 12.5% as a result of both
operating efficiencies and the mathematical impact of lower dairy pricing.
US Cheese
$'m 2023 2022 Reported Constant
Change Currency
Change
Revenue 2,621.3 3,044.4 (13.9%) (13.9%)
EBITA 42.4 38.8 +9.3% +9.6%
EBITA margin 1.6% 1.3% +30bps
US Cheese revenue declined by 13.9% in 2023. This was driven by a 0.7%
increase in volume and a 14.6% decline in price, with the pricing decline
aligned to the lower year-on-year cheese market pricing.
US Cheese EBITA increased by 9.6% to $42.4 million as a result of strong
operating efficiencies and some procurement benefits. US Cheese operates a
pass-through pricing model which broadly protects earnings from changes in
market pricing.
Joint Ventures (Glanbia share) - continuing operations
$'m 2023 2022 Reported
Change
Share of joint ventures' profit after tax 12.5 16.3 (3.8)
The Group's share of joint ventures' profit after tax pre‐exceptional items
decreased by $3.8 million to $12.5 million, largely driven by the sale of its
shareholdings in the Glanbia Cheese Limited and Glanbia Cheese EU Limited
joint ventures on 28 April 2023. On completion, the Group received initial
proceeds of €178.9 million, which included repayment of shareholder loans.
The memorandum of understanding for the sale was signed on 14 February 2023
and the Group ceased to apply the equity method of accounting for its interest
in these joint ventures from that date.
FULL YEAR 2023 Finance Review
As announced on 1 March 2023, the Group has changed the currency in which it
presents its financial results from euro to US dollar. Unless stated
otherwise, the figures in this finance review are stated in US dollar.
Comparative figures have been restated in US dollar.
2023 Group income statement
2023 2022
Pre- exceptional Pre- exceptional
$'m Exceptional Total Exceptional Total
Revenue - continuing operations 5,425.4 - 5,425.4 5,943.7 - 5,943.7
Earnings before interest, tax and amortisation (EBITA)
424.0 47.8 471.8 365.7 (23.1) 342.6
EBITA margin 7.8% - 8.7% 6.2% - 5.8%
Intangible asset amortisation and impairment
(79.6) - (79.6) (79.1) (27.9) (107.0)
Operating profit 344.4 47.8 392.2 286.6 (51.0) 235.6
Finance income 9.8 - 9.8 1.9 7.7 9.6
Finance costs (22.1) - (22.1) (23.7) (0.6) (24.3)
Share of results of joint ventures 12.5 - 12.5 16.3 0.2 16.5
Profit before taxation 344.6 47.8 392.4 281.1 (43.7) 237.4
Income taxes (46.5) 1.8 (44.7) (33.1) 6.0 (27.1)
Profit after tax from continuing operations
298.1 49.6 347.7 248.0 (37.7) 210.3
Discontinued operations
(Loss)/profit after tax from discontinued operations - (3.2) (3.2) - 60.3 60.3
Profit for the year 298.1 46.4 344.5 248.0 22.6 270.6
Revenue
Revenue decreased in 2023 by 8.7% versus prior year (constant and reported
currency basis) to $5.4 billion. Like-for-like wholly-owned revenue decreased
by 8.2%, driven by volume and pricing declines of 0.5% and 7.7% respectively.
Detailed analysis of revenue is set out within the operations review.
EBITA (pre-exceptional)
EBITA before exceptional items increased 16.4% constant currency (+15.9%
reported) to $424.0 million (2022:
$365.7 million) with strong EBITA delivery in GPN and with GN marginally down
primarily due to supply chain destocking. EBITA margin in FY 2023 was 7.8%,
compared to 6.2% in 2022, representing an increase of 160 basis points.
GPN pre-exceptional EBITA increased by 33.7% constant currency to $255.4
million (2022: $191.9 million), an increase of 33.1% on a reported basis. GPN
pre-exceptional EBITA margin at 14.2% was 300 basis points higher than prior
year (2022: 11.2%).
GN pre-exceptional EBITA declined 2.7% constant currency to $168.6 million
(2022: $173.8 million), a decrease of 3.0% on a reported basis. GN
pre-exceptional EBITA margin was 4.6%, an increase of 50 basis points from
2022 (2022: 4.1%).
Net finance costs (pre-exceptional)
Net finance costs (pre-exceptional items) decreased by $9.5 million to $12.3
million (2022: $21.8 million). The decrease was primarily driven by a
reduction in the Group's average net financial indebtedness during 2023
compared to 2022, as well as strong returns on gross cash balances as variable
interest rates rose in the period. The Group's average interest rate was 2.0%
(2022: 2.3%). Glanbia operates a policy of fixing a significant amount of its
interest exposure, with 95% of projected 2024 debt currently contracted at
fixed rates.
Share of results of joint ventures (all continuing operations)
The Group's share of results of joint ventures is stated after tax and before
exceptional items. The Group's share of joint venture profits from continuing
operations decreased by $3.8 million to $12.5 million (2022: $16.3 million),
primarily as a result of disposals in the year (see below), somewhat offset by
an improvement in the performance of the retained US joint venture operations.
Following the agreement reached to sell the Group's share of its investments
in the Glanbia Cheese UK and Glanbia Cheese EU joint venture operations on 14
February 2023, equity accounting ceased to apply from this date and the
investments were considered held-for-sale. This sales transaction was
completed on 28 April 2023.
Income taxes
The 2023 pre-exceptional tax charge increased by $13.4 million to $46.5
million (2022: $33.1 million). This represents an effective tax rate,
excluding joint ventures, of 14.0% (2022: 12.5%). The tax credit related to
exceptional items is $1.8 million (2022: $6.0 million). The Group currently
expects that its effective tax rate for 2024 will increase as a result of
global tax legislation changes in the jurisdictions in which the Group
operates.
Exceptional items
$'m - continuing operations 2023 2022
Net exceptional gain on disposal/exit of operations (note 1) 56.3 -
Pension related costs (note 2) (2.5) (1.8)
Portfolio related re-organisation costs (note 3) (6.0) (3.1)
Changes in fair value of contingent consideration (note 4) - 7.1
Non-core assets held-for-sale (note 5) - (46.1)
Wholly-owned exceptional gain/(charge) before tax 47.8 (43.9)
Share of results of joint ventures (note 2) - 0.2
Exceptional tax credit 1.8 6.0
Exceptional gain/(charge) after tax 49.6 (37.7)
$'m - discontinued operations 2023 2022
Exceptional (charge)/gain from discontinued operations (note 6) (3.2) 60.3
Exceptional (charge)/gain after tax - discontinued operations (3.2) 60.3
Total exceptional gain in the year 46.4 22.6
Details of the exceptional items are as follows:
1. Net exceptional gain on disposal/exit of operations primarily relates
to the net gains on disposal of the UK and EU Glanbia Cheese joint venture
operations and a small US bottling facility (Aseptic Solutions) which was
designated as held-for-sale at 31 December 2022 (note 5 below). Both
transactions concluded during 2023 and the net gain represents the difference
between proceeds received, net of costs associated with the divestment and
exit of these non-core businesses and the carrying value of the investments.
2. Pension related costs relate to the restructure of legacy defined
benefit pension schemes associated with the Group and joint ventures, which
included initiating a process for the ultimate buyout and wind up of these
schemes and a further simplification of schemes that remain. Costs incurred
relate to the estimated cost of the settlement loss as a result of acquiring
bulk purchase annuity policies to mirror and offset movements in known
liabilities of the schemes ('buy-in' transaction), as well as related advisory
and execution costs, net of gains from risk reduction activities. The
restructuring effort involved the careful navigation of external market
factors, with final wind up of schemes anticipated in 2024.
3. Portfolio related re-organisation costs relate to indirect one off
costs as a result of recent portfolio changes. Following these divestment
decisions related to non-core businesses, the Group launched a programme to
realign Group-wide support functions and optimise structures of the remaining
portfolio, to more efficiently support business operations and growth. This
strategic multi-year programme continues in 2024. Costs incurred to date
relate to advisory fees and people related costs.
4. Prior year changes in fair value of contingent consideration relate
to contingent payments associated with the 2021 LevlUp acquisition that
reduced following an assessment of conditions that gave rise to the additional
payments.
5. Prior year non-core assets held-for-sale relate to fair value
adjustments to reduce the carrying value of certain assets to recoverable
value. The assets relate to the Aseptic Solutions business which was
successfully divested during 2023 (see note 1 above).
6. Exceptional (charge)/gain from discontinued operations relates to the
divestment of Tirlán Limited (formerly known as Glanbia Ireland DAC)
("Tirlán"). The prior year gain represents the initial gain on disposal of
the Group's interest in this entity. The current year charge relates to the
crystallisation of certain contingent costs associated with the divestment
transaction following the conclusion of negotiations on separation of the
common infrastructure of both organisations.
Profit after tax
Profit after tax for the year was $344.5 million compared to $270.6 million in
2022, comprising continuing operations of $347.7 million (2022: $210.3
million) and a loss on discontinued operations of $3.2 million (2022: profit
of $60.3 million). Profit after tax from continuing operations comprises
pre-exceptional profit of $298.1 million (2022: $248.0 million) and a net
exceptional gain of $49.6 million (2022: charge of $37.7 million). The $50.1
million increase in pre-exceptional profit after tax from continuing
operations is driven by the continued growth in profitability of wholly-owned
businesses net of reduced profitability of joint ventures following the
disposal of the UK and EU cheese joint venture operations in April 2023.
Profit after tax from discontinued operations relates entirely to the
divestment of the Group's interest in Tirlán which completed in April 2022,
with further costs associated with the transaction crystallising in 2023.
Earnings Per Share (EPS)
Reported Constant Currency
2023 2022 Change Change
Basic EPS 129.21c 98.40c +31.3% +31.3%
- continuing operations 130.41c 76.55c +70.4% +71.7%
- discontinued operations (1.2c) 21.85c (105.5%) (105.3%)
Adjusted EPS 131.37c 109.57c +19.9% +20.5%
- continuing operations 131.37c 109.57c +19.9% +20.5%
- discontinued operations nil nil nil nil
Basic EPS increased by 31.3% reported versus prior year, driven by a
year-on-year increase in pre-exceptional profitability and the exceptional one
off gains on portfolio related adjustments.
Adjusted EPS is a Key Performance Indicator ("KPI") of the Group, a key metric
guided to the market and a key element of Executive Director and senior
management remuneration. Adjusted EPS increased by 20.5% constant currency
(19.9% reported) in the year, all from continuing operations.
Cash flow
The principal cash flow KPIs of the Group and Business Units are Operating
Cash Flow ("OCF") and Free Cash Flow ("FCF"). OCF represents EBITDA of the
wholly-owned businesses net of business-sustaining capital expenditure and
working capital movements, excluding exceptional cash flows. FCF is calculated
as the cash flow in the year before the following items: strategic capital
expenditure, equity dividends paid, expenditure on share buyback, acquisition
spend, proceeds received on disposal, exceptional costs paid, loans/equity
invested in joint ventures and foreign exchange movements. These metrics are
used to monitor the cash conversion performance of the Group and Business
Units and identify available cash for strategic investment. OCF conversion,
which is OCF as a percentage of EBITDA is a key element of Executive Director
and senior management remuneration. OCF and FCF results for the Group are
outlined below.
$'m 2023 2022
EBITDA pre-exceptional 493.4 436.8
Movement in working capital (pre-exceptional) (25.0) (42.1)
Business-sustaining capital expenditure (22.5) (20.4)
Operating cash flow 445.9 374.3
Net interest and tax paid (51.8) (85.7)
Dividends from joint ventures 32.0 15.3
Payment of lease liabilities (19.9) (17.4)
Other inflows/(outflows) (16.4) (3.5)
Free cash flow 389.8 283.0
Strategic capital expenditure (51.7) (52.1)
Dividends paid to Company shareholders (97.2) (88.9)
Share buyback (purchase of own shares) (108.7) (182.8)
Payment for acquisition of businesses/subsidiaries (72.2) (60.3)
Exceptional costs paid (13.5) (22.4)
Proceeds from sale of property, plant and equipment - 3.6
Loans/investment in joint ventures 67.8 (19.2)
Proceeds on disposal of non-core businesses 132.0 339.3
Net cash flow 246.3 200.2
Exchange translation (5.5) (8.6)
Cash/(debt) acquired on acquisition 0.5 1.0
Net debt movement 241.3 192.6
Opening net debt (490.0) (682.6)
Closing net debt (248.7) (490.0)
OCF was $445.9 million in the year (2022: $374.3 million) and represents a
strong cash conversion on EBITDA of 90.4% (2022: 85.7%). The OCF conversion
target for the year was 80%. The increase in OCF since prior year was due
primarily to the increased profitability across the business, combined with a
reduced investment in working capital as pricing and inventory volumes
returned to more normalised levels following a level of significant inflation
supply chain disruption throughout 2022.
FCF was $389.8 million versus $283.0 million in 2023, with the movement since
prior year primarily as a result of movements in OCF (outlined above), as well
as reduction in net interest cost and increased dividend returns from joint
venture operations.
Capital allocated for the benefit of shareholders includes regular dividend
payments of $97.2 million (2022: $88.9 million) and the execution of a share
buyback programme of €100 million (2022: €173.5 million). The Board
continues to review buyback programmes as part of the Group's capital
allocation strategy as they provide an opportunity to allocate capital to the
benefit of shareholders.
Acquisition spend relates primarily to the acquisition of the B2B bioactive
ingredients business of PanTheryx, for an initial consideration of $45.1
million and the final contingent payment in respect of the 2022 Sterling
Technology acquisition of $26.8 million. Divestment proceeds relate primarily
to the disposal of the Group's interest in Glanbia Cheese UK and EU joint
ventures in April 2023.
Loans to/equity in joint ventures during 2023 includes the full repayment of
outstanding loans to Glanbia Cheese EU, in advance of completing the disposal
of the UK and EU cheese businesses in April 2023.
Group financing
Financing Key Performance Indicators 2023 2022
Net debt ($'m) 248.7 490.0
Net debt: adjusted EBITDA 0.5 times 1.13 times
Adjusted EBIT: adjusted net finance cost 38.1 times 17.0 times
The Group's financial position continues to be strong. At year-end 2023, net
debt was $248.7 million (2022: $490.0 million), a decrease of $241.3 million
from prior year and the Group had committed debt facilities of $1.3 billion
(2022: $1.3 billion) with a weighted average maturity of 4.7 years (2022: 5.8
years). Glanbia's ability to generate cash, as well as its available debt
facilities ensures the Group has considerable capacity to finance future
investments. Net debt to adjusted EBITDA was 0.5 times (2022: 1.13 times) and
interest cover was 38.1 times (2022: 17.0 times), both metrics remaining well
within financing covenants.
Use of capital
Capital expenditure
Cash outflow relating to capital expenditure for the year amounted to $74.2
million (2022: $72.5 million) including
$22.5 million of business-sustaining capital expenditure and $51.7 million of
strategic capital expenditure. Key strategic projects completed in 2023
include ongoing capacity enhancement, business integrations, and IT
investments to drive further efficiencies in operations.
Investments in Joint Ventures
During 2023, a further $3.5 million was advanced to the Glanbia Cheese EU
operations which were subsequently divested along with the Glanbia Cheese UK
operations. In advance of the divestment of UK and EU joint venture
operations, which completed in April 2023, outstanding loans of $71.3 million
were repaid in full.
Return on Capital Employed ("ROCE")
2023 2022 Change
Return on Capital Employed 12.2% 10.7% +150bps
- continuing operations 12.2% 10.7% +150bps
- discontinued operations - - -
Return on Capital Employed increased in 2023 by 150 basis points to 12.2%.
This increase was primarily due to the continued growth in profitability of
the wholly-owned business, as well as the successful execution of strategy
through pricing and efficiency improvements to improve margin and drive
sustainable long term returns. Acquisitions remain a key part of the growth
strategy of the Group with investments assessed against a target benchmark of
12% return after tax by the end of year three.
Dividends
The Board is recommending a final dividend of 21.21 €cent per share which
brings the total dividend for the year to
35.43 €cent per share, a 10% increase over 2022. This total dividend
represents a return of €93.9 million to shareholders from 2023 earnings and
a payout ratio of 29.2% of 2023 adjusted Earnings Per Share which is in line
with the Board's target dividend payout ratio of 25% to 35%. The final
dividend will be paid on 3 May 2024 to shareholders on the share register on
22 March 2024.
Total Shareholder Return
Total Shareholder Return (TSR) for 2023 was +28.04%. The STOXX Europe 600 Food
& Beverage Index (F&B Index), a benchmark for the Group, decreased by
0.73% in 2023. The three-year period 2021 to 2023 Glanbia TSR was +54.16%
versus the F&B Index which increased by 8.03%. The five-year Glanbia TSR
to 2023 was +2.28% versus the F&B Index of +31.79%. Glanbia's share price
at the end of the financial year was €14.91 compared to €11.92 at the 2022
year end, representing an increase of 25.1%.
Impact of new and amended accounting standards
Adoption of new standards and amendments to existing standards during the year
did not have a material impact on the Group.
Pension
The Group's net pension position under IAS 19 (revised) 'Employee Benefits',
before deferred tax, improved by $5.5 million since 2022, resulting in a net
pension asset of $7.2 million at 30 December 2023 (2022: asset of $1.7
million). The defined benefit pension position is calculated by discounting
the estimated future cash outflows using appropriate corporate bond rates.
During 2023, the Company progressed the restructuring of UK pension schemes,
successfully completing the "buy-out" of two legacy schemes and further
reducing the Group's exposure to liabilities on these schemes. It is
anticipated that these UK schemes will ultimately be wound up in 2024.
Foreign exchange
Glanbia generates the majority of its earnings in US dollar currency and has
significant assets and liabilities denominated in US dollars. As a result,
from 2023 Glanbia changed the currency in which it presents its financial
results from euro to US dollar to reduce (but not eliminate) the impact to
reported numbers arising from currency movements year-on-year and on
retranslation of non-monetary assets and liabilities in the preparation of the
consolidated financial statements. Commentary continues to be provided on a
constant currency basis to provide a better reflection of the underlying
operating results in the year, removing the translational currency impact. To
arrive at the constant currency change, the average foreign exchange rate for
the current period is applied to the relevant reported result from the same
period in the prior year. Key non-US dollar currencies for the Group over the
period were euro and pound sterling, for which average and year-end rates were
as follows: Average and year end euro to US dollar rates were as follows:
Average Year end
2023 2022 2023 2022
1 US dollar converted to euro 0.9247 0.9493 0.9050 0.9376
1 US dollar converted to pound sterling 0.8043 0.8095 0.7865 0.8315
Investor relations
Glanbia has a proactive approach to shareholder engagement with the Annual
General Meeting ("AGM") being a key event annually. In 2023, an in person AGM
was held on 4 May at the Lyrath Hotel in Kilkenny. All details relating to the
AGM were published on the Company's website: www.glanbia.com/agm.
(http://www.glanbia.com/agm)
The Group Chairman consulted directly with a number of shareholders during the
year. In addition, the Chair of the Remuneration Committee consulted with
shareholders on the Company's Remuneration Policy. Feedback from these
engagements was shared with and discussed with the Board.
In 2023, Glanbia attended 11 international equities investor conferences. In
May 2023, the Group held an analyst event in London, UK, providing a deep dive
on the GPN business, its strategy and key growth drivers.
In addition to full year and half year results, Glanbia publishes interim
management statements after the first and third quarters to provide investors
with a regular update on performance and expectations throughout the year. All
releases, reports and presentations are made available immediately on
publication on the Group's investor relations website.
Looking ahead
From 2024, the Group is adopting new commercial terms associated with our US
joint venture operations, changing the recognition and presentation of
revenues and cost of sales, without any material impact on profits. In
addition, the Group will move to presentation of Earnings Before Interest,
Tax, Depreciation and Amortisation ("EBITDA"). These presentational changes
will continue the Group's ambition to simplify reporting to be more in line
with our peers. Further pro-forma detail on the impact of these changes is
provided earlier in the release.
Principal Risks and Uncertainties
The Board of Glanbia plc has the ultimate responsibility for the Group's
systems of risk management and internal control. The Directors of Glanbia have
carried out a robust assessment of the Group's principal risks, including
those that may threaten Glanbia's business model, future performance, solvency
or liquidity. The risk categorisation recognises the external risks associated
with the operating environment, which are typically considered and managed
through strategic processes, and the mainly internal risks associated with
people, processes and systems which are managed through Glanbia's internal
controls. Emerging risks with the potential to impact longer term success are
also considered to ensure appropriate plans are in place to respond to them
over time.
The Group's principal risks and uncertainties are summarised in the risk
profile table below. The principal risk Economic, Industry and Political risk,
reported in 2022, has been split into two principal risks with the political
narrative now captured within a new Geopolitical principal risk and the
Economic and industry risk remaining as a standalone risk. No new emerging
principal risks were identified in 2023 while some fluctuation in the
principal risk trends did arise including:
· Geopolitical risk: As geopolitical tensions escalated and became
more widespread globally, the Directors have determined that this risk area
now warrants a standalone principal risk. The market consequences of the war
in Ukraine and tensions in the Middle East continue to create volatility.
· Economic and industry: the macroeconomic environment continues to
show volatility with recessionary conditions which impacted some countries in
2023 looking set to continue in 2024.
· Market disruption risk continues to trend upwards. Adverse changes in
economic conditions, persistent inflation, energy and interest rate pressures
have continued to increase the cost of living and could result in reduced
consumer spending which may disrupt demand and further increase operational
and financial costs.
· Climate change risk continues to trend upwards due to the evolving
climate landscape, expected future developments in ESG regulations, and the
increasing stakeholder reporting expectations.
· Cyber security and data protection risks continue to trend upwards
due to rapidly accelerating technological changes in areas such as Artificial
Intelligence ("AI") and growing global cybersecurity control threats.
· Supply chain and Talent management risks have stabilised as
supply chain risk mitigation measures have been successfully deployed, and
labour market conditions continue to normalise.
There may be other risks and uncertainties that are not yet considered
material or not yet known to Glanbia and this list will change if these risks
assume greater importance in the future. Likewise, some of the current risks
will drop off the key risks schedule as management actions are implemented or
changes in the operating environment occur.
Strategic/External Financial Technological Operational/Regulatory
Risk where trend is stable · Customer concentration · Taxation changes · Digital transformation · Health and safety
· Product safety and compliance
· Acquisition/integration
· Supply chain
· Talent management
Risk where trend is · Geopolitical · · Cyber security and data protection ·
increasing · Economic and industry
· Market disruption
· Climate change
Key risk factors and uncertainties with the potential to impact on the Group's
financial performance in 2024 include:
· Geopolitical risk - geopolitical tensions in the regions where we
operate, may pose potential challenges that could adversely affect our pursuit
of growth objectives. The Board is closely monitoring tensions in key trading
regions, particularly between China and Taiwan, where any potential conflict,
economic sanctions or trade rulings could impact Glanbia's growth objectives.
The upcoming US presidential election also has the potential to create
short-term uncertainty.
· Economic and industry risk - the macroeconomic environment
continued to be uncertain as some markets entered recession in 2023. There is
continuing pressure from high interest rates, monetary tightening by central
banks, and currency fluctuations which the Group continues to navigate and
mitigate where possible.
· Market disruption risk - while energy prices have shown signs of
stabilising, food prices remain elevated and further shocks from geopolitical
tensions may contribute to further inflationary pressures. The Group will
continue to monitor this and any other adverse changes in economic conditions,
such as the heightened cost of living and increased interest rates that could
result in reduced consumer spending and a slowdown in consumer demand.
· Supply chain risk - Glanbia is actively monitoring a number of
supply chain and inflationary pressures including:
o The overall impact on margins of movements in dairy pricing, particularly
in whey markets. The impact of any potential future price increases will
continue to be assessed for price elasticity effects and will be managed
against the Group's ambition to continue to drive revenue growth;
o The ability of governments and medical agencies to suppress the spread of
global pandemics. This is important in preventing unexpected supply chain
disruptions which could result in restrictions on the importation of key raw
materials and/or negative impacts on the Group's international sales channels;
and
o The Group is holding appropriate safety stocks of core raw materials
however the potential prolonged impact from a geopolitical event in a key
trading region, a material shift in the ESG regulatory landscape or heightened
inflationary impacts to supply chains would have negative consequences from
both a supply and pricing perspective.
· Customer concentration risk - while strategically the Group aims
to build strong customer relationships with major customers, material
disruption with, or loss of, one or more of these customers, or a significant
deterioration in commercial terms, could materially impact profitability. This
risk can also expose the Group to credit exposure and other balance sheet
risks. The Board is focused on utilising available mitigation to limit such
exposures where possible.
· Health and safety risk - a failure to maintain good health and
safety practices or the risk of a global pandemic, in Glanbia's core markets,
may adversely impact performance. A wide range of additional measures and
mitigations have been introduced as a result of the pandemic which build on
the existing strong controls across the Group.
The Group actively manages these and all other risks through its risk
management and internal control processes.
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.
On behalf of the Board
Hugh McGuire Mark Garvey
Chief Executive Officer Chief Financial Officer
27 February 2024
Annual General Meeting (AGM)
Glanbia plc's AGM will be held on Wednesday 1 May 2024, in the Newpark Hotel,
Kilkenny, Ireland.
Results webcast and dial-in details:
There will be a webcast and presentation to accompany this results
announcement at 8.30 a.m. GMT today. Please access the webcast from the
Glanbia website at
https://www.glanbia.com/investors/results-reports-and-presentations
(https://www.glanbia.com/investors/results-reports-and-presentations) where
the presentation can also be viewed or downloaded. In addition, a dial-in
facility is available using the following numbers:
Ireland +353 (0)1 691 7842
United Kingdom +44 (0) 203 936 2999
United States +1 646 787 9445
All other locations +44 (0) 203 936 2999
The access code for all participants is: 513573
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
Hugh McGuire, Chief Executive Officer
Mark Garvey, Chief Financial Officer
Liam Hennigan, Group Secretary & Head of Investor Relations +353 86 046 8375
Martha Kavanagh, Director of Corporate Affairs +353 87 646 2006
Group income statement
for the financial year ended 30 December 2023
2023 Restated*
2022
Notes Pre- Exceptional Total Pre- Exceptional Total
exceptional $m $m exceptional $m $m
$m (note 4) $m (note 4)
Continuing operations 2/3 5,425.4 - 5,425.4 5,943.7 - 5,943.7
Revenue
Operating profit before intangible asset amortisation and impairment (earnings 3 424.0 47.8 471.8 365.7 (23.1) 342.6
before interest, tax and amortisation (EBITA))
Intangible asset amortisation and impairment 3 (79.6) - (79.6) (79.1) (27.9) (107.0)
Operating profit 3 344.4 47.8 392.2 286.6 (51.0) 235.6
5 9.8 - 9.8 1.9 7.7 9.6
Finance income
Finance costs 5 (22.1) - (22.1) (23.7) (0.6) (24.3)
Share of results of joint ventures accounted for using the equity method 12.5 - 12.5 16.3 0.2 16.5
Profit before taxation 344.6 47.8 392.4 281.1 (43.7) 237.4
Income taxes 6 (46.5) 1.8 (44.7) (33.1) 6.0 (27.1)
Profit from continuing operations 298.1 49.6 347.7 248.0 (37.7) 210.3
13 - (3.2) (3.2) 60.3 60.3
Discontinued operations -
(Loss)/profit after tax from discontinued operations
Profit for the year 298.1 46.4 344.5 248.0 22.6 270.6
Attributable to:
Equity holders of the Company 11 344.4 271.4
Non-controlling interests 0.1 (0.8)
344.5 270.6
Earnings Per Share from continuing operations attributable to the equity
holders of the Company
Basic Earnings Per Share (cent) 7 130.41 76.55
Diluted Earnings Per Share (cent) 7 128.67 75.59
Earnings Per Share attributable to the equity holders of the Company
Basic Earnings Per Share (cent) 7 129.21 98.40
Diluted Earnings Per Share (cent) 7 127.50 97.18
* Restated throughout for presentation in US dollar. See note 1 for further
details.
Group statement of comprehensive income
for the financial year ended 30 December 2023
Notes 2023 Restated*
$m 2022
$m
Profit for the year 344.5 270.6
Other comprehensive income
Items that will not be reclassified subsequently to the Group income 1.5 12.7
statement:
Remeasurements on defined benefit plans, net of deferred tax
Revaluation of equity investments at FVOCI, net of deferred tax 10 0.2 0.5
Share of other comprehensive income of joint ventures accounted for using the 11 0.1 0.5
equity method,
net of deferred tax
10 4.4 (32.5)
Items that may be reclassified subsequently to the Group income statement:
Currency translation differences
Currency translation difference arising on net investment hedge 10 3.5 (5.7)
Movement in cash flow hedges, net of deferred tax (2.9) 2.8
Share of other comprehensive income of joint ventures accounted for using the
equity method,
net of deferred tax
(2.5) 17.2
Other comprehensive income for the year, net of tax 4.3 (4.5)
Total comprehensive income for the year 348.8 266.1
Attributable to:
Equity holders of the Company 348.7 266.9
Non-controlling interests 0.1 (0.8)
Total comprehensive income for the year 348.8 266.1
* Restated throughout for presentation in US dollar. See note 1 for further
details.
Group balance sheet
as at 30 December 2023
Notes 30 December Restated* Restated*
2023 31 December 2 January
$m 2022 2022
$m $m
ASSETS
Non-current assets
Property, plant and equipment 515.1 510.8 549.6
Right-of-use assets 88.3 100.7 113.2
Intangible assets 1,537.3 1,548.8 1,557.7
Interests in joint ventures 159.3 225.3 209.3
Other financial assets 2.6 2.3 2.2
Loans to joint ventures - 65.6 48.1
Deferred tax assets 5.2 5.0 5.4
Other receivables - 0.3 0.9
Derivative financial instruments - - 0.6
Retirement benefit assets 8.2 3.2 3.3
2,316.0 2,462.0 2,490.3
Current assets 550.2 750.5 672.3
Inventories
Trade and other receivables 501.8 404.8 407.0
Current tax receivable 17.4 13.7 10.0
Derivative financial instruments - 3.1 2.5
Cash and cash equivalents (excluding bank overdrafts) 9 413.7 467.9 261.7
1,483.1 1,640.0 1,353.5
Assets held for sale 13 - 15.2 265.0
1,483.1 1,655.2 1,618.5
Total assets 3,799.1 4,117.2 4,108.8
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium 129.7 130.2 131.1
Other reserves 10 172.1 167.9 161.8
Retained earnings 11 1,830.8 1,686.2 1,669.0
2,132.6 1,984.3 1,961.9
Non-controlling interests - 8.4 9.2
Total equity 2,132.6 1,992.7 1,971.1
LIABILITIES
Non-current liabilities
Borrowings 9 553.5 682.5 789.7
Lease liabilities 89.3 103.5 119.0
Other payables - - 36.9
Retirement benefit obligations 1.0 1.5 19.3
Deferred tax liabilities 137.9 138.3 163.6
Provisions 4.3 4.0 4.1
786.0 929.8 1,132.6
Current liabilities
Trade and other payables 659.1 826.5 758.1
Borrowings 9 108.9 275.4 154.6
Lease liabilities 20.1 19.0 16.4
Current tax liabilities 67.3 54.1 60.0
Derivative financial instruments 2.0 1.0 1.4
Provisions 23.1 12.0 14.6
880.5 1,188.0 1,005.1
Liabilities held for sale 13 - 6.7 -
880.5 1,194.7 1,005.1
Total liabilities 1,666.5 2,124.5 2,137.7
Total equity and liabilities 3,799.1 4,117.2 4,108.8
* Restated throughout for presentation in US dollar. See note 1 for further
details.
Group statement of changes in equity
for the financial year ended 30 December 2023
Attributable to equity holders of the Company
2023 Share capital and share premium Other Retained Total Non- Total
$m reserves earnings $m Controlling interests $m
$m
$m
$m
(note 10)
(note 11)
Balance at 1 January 2023 130.2 167.9 1,686.2 1,984.3 8.4 1,992.7
- - 344.4 344.4 0.1 344.5
Profit for the year
Other comprehensive income - 2.7 1.6 4.3 - 4.3
Total comprehensive income for the year - 2.7 346.0 348.7 0.1 348.8
Dividends - - (97.2) (97.2) - (97.2)
Purchase of own shares - (148.1) - (148.1) - (148.1)
Cancellation of own shares (0.5) 109.2 (108.7) - - -
Cost of share-based payments - 24.5 - 24.5 - 24.5
Transfer on exercise, vesting or expiry of share-based payments - 5.8 (5.8) - - -
Deferred tax on share-based payments - - 2.1 2.1 - 2.1
Acquisition of NCI - - 8.2 8.2 (8.5) (0.3)
Transfer to Group income statement - 10.1 - 10.1 - 10.1
Balance at 30 December 2023 129.7 172.1 1,830.8 2,132.6 - 2,132.6
Restated*
2022
Balance at 2 January 2022 131.1 161.8 1,669.0 1,961.9 9.2 1,971.1
- - 271.4 271.4 (0.8) 270.6
Profit for the year
Other comprehensive income - (17.7) 13.2 (4.5) - (4.5)
Total comprehensive income for the year - (17.7) 284.6 266.9 (0.8) 266.1
(88.9) (88.9) (88.9)
Dividends - - -
Purchase of own shares - (207.4) - (207.4) - (207.4)
Cancellation of own shares (0.9) 183.7 (182.8) - - -
Cost of share-based payments - 19.8 - 19.8 - 19.8
Transfer on exercise, vesting or expiry of share-based payments
- (2.0) 2.0 - - -
Deferred tax on share-based payments - - 0.5 0.5 - 0.5
Sale of shares held by a subsidiary - - 1.8 1.8 - 1.8
Remeasurement of put option liability - 28.0 - 28.0 - 28.0
Transfer to Group income statement - 1.7 - 1.7 - 1.7
Balance at 31 December 2022 130.2 167.9 1,686.2 1,984.3 8.4 1,992.7
* Restated throughout for presentation in US dollar. See note 1 for further
details.
Group statement of cash flows
for the financial year ended 30 December 2023
Notes 2023 Restated*
$m 2022
$m
Cash flows from operating activities 12 491.4 413.6
Cash generated from operating activities before exceptional items
Cash outflow related to exceptional items (11.8) (13.6)
Interest received 10.7 1.6
Interest paid (including interest expense on lease liabilities) (22.0) (24.4)
Tax paid (40.5) (62.9)
Net cash inflow from operating activities 427.8 314.3
Cash flows from investing activities (71.9) (60.3)
Payment for acquisition of subsidiaries
Purchase of property, plant and equipment (42.0) (33.4)
Purchase of intangible assets (32.2) (39.1)
Proceeds from sale of property, plant and equipment - 3.6
Dividends received from related parties 32.0 15.3
Proceeds from disposal/redemption of FVOCI financial assets - 0.4
Proceeds on sale of shares held by subsidiary - 1.8
Proceeds from disposal of Glanbia Cheese** (exceptional) 13 123.4 -
Proceeds on repayment of loans advanced to Glanbia Cheese 13 71.3 -
Loans advanced to Glanbia Cheese (3.5) (49.5)
Proceeds from disposal of assets and liabilities held for sale (exceptional) 8.6 -
Net cash (outflow)/inflow from discontinued operations*** (1.7) 360.8
Net cash inflow from investing activities 84.0 199.6
10
Cash flows from financing activities (148.1) (207.4)
Purchase of own shares
Drawdown of borrowings 140.8 707.5
Repayment of borrowings (271.6) (822.5)
Payment of lease liabilities (19.9) (17.4)
Acquisition of NCI (0.3) -
Dividends paid to Company shareholders 8 (97.2) (88.9)
Net cash outflow from financing activities (396.3) (428.7)
115.5
Net increase in cash and cash equivalents 85.2
Cash and cash equivalents at the beginning of the year 192.5 107.1
Cash and cash equivalents acquired on acquisition 14 0.5 1.0
Effects of exchange rate changes on cash and cash equivalents (3.7) (0.8)
Cash and cash equivalents at the end of the year 9 304.8 192.5
* Restated throughout for presentation in US Dollar. See note 1 for further
details.
** Comprised Glanbia Cheese Limited and Glanbia Cheese EU Limited (collectively
referred to as "Glanbia Cheese") which are now named Leprino Foods Limited and
Leprino Foods EU Limited respectively (collectively referred to as "Leprino
Foods").
*** Related to disposal of Tirlán Limited (formerly known as Glanbia Ireland
DAC). $1.7 million related to reimbursement of rebranding costs to Tirlán
Limited (note 13) (exceptional). $360.8 million in the prior year comprised
proceeds from disposal of $339.3 million (exceptional), proceeds on repayment
of loans of $30.3 million and cash outflow related to exceptional items of
$8.8 million.
Notes to the financial statements
for the financial year ended 30 December 2023
1. Accounting policies
The financial information set out in this document does not constitute full
statutory financial statements but has been derived from the Group financial
statements for the year ended 30 December 2023 (referred to as the 2023
financial statements). The Group financial statements have been prepared in
accordance with EU adopted International Financial Reporting Standards
("IFRS"), IFRIC interpretations and those parts of the Companies Act 2014,
applicable to companies reporting under IFRS. The 2023 financial statements
have been audited and have received an unqualified audit report. Amounts are
stated in US Dollar millions ($m) unless otherwise stated. These financial
statements are prepared for the 52‐week period ended 30 December 2023.
Comparatives are for the 52‐week period ended 31 December 2022. The balance
sheets for 2023 and 2022 have been drawn up as at 30 December 2023 and 31
December 2022 respectively.
The financial statements have been prepared under the historical cost
convention as modified by use of fair values for certain other financial
assets, contingent consideration, put option liability, and derivative
financial instruments.
All notes to the financial statements include amounts for continuing
operations, unless indicated otherwise.
The Group's accounting policies which will be included in the 2023 financial
statements are consistent with those as set out in the 2022 financial
statements other than the change of presentation currency as detailed below.
There are no new IFRS standards or amendments effective for the Group in 2023
which had a material impact on the financial statements.
The financial statements were approved and authorised for issue by the Board
of Directors on 27 February 2024 and signed on its behalf by
D Gaynor, H McGuire, and M Garvey.
Change of presentation currency
Glanbia generates the majority of its revenue and earnings, and has
significant assets and liabilities denominated in US Dollar. To reduce the
potential for foreign exchange volatility in current and future reported
earnings, the Group decided to change its presentation currency from euro to
US Dollar effective from 1 January 2023.
A change of presentation currency represents a change in accounting policy
under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
which is accounted for retrospectively. The reported financial information for
the year ended 31 December 2022 and Group balance sheet as at 1 January 2022
have been translated from euro to US Dollar using the following procedures:
• Assets and liabilities denominated in non-US Dollar currencies were
translated into US Dollar at the relevant closing rates of exchange;
• Non-US Dollar trading results were translated into US Dollar at the
relevant average rates of exchange;
• Share capital, share premium, own shares, dividends and movements in
capital and merger account were translated at the historic rates prevailing on
the date of each transaction. Movements in other equity accounts were
translated into US Dollar at the relevant average rates of exchange; and
• The cumulative translation reserve was set to nil at 4 January 2004,
the date of transition to IFRS, and has been restated as if the Group has
reported in US Dollar since that date.
The principal exchange rates used for the translation of results and balance
sheets into US Dollar are as follows:
Average Closing Rates
1 US Dollar = 2023 2022 30 December 2023 31 December 1 January 2022
2022
euro 0.9247 0.9493 0.9050 0.9376 0.8829
Pound sterling 0.8043 0.8095 0.7865 0.8315 0.7419
Going concern
After making appropriate enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for a period of at least 12 months from the date of approval of the
financial statements. The Group therefore considers it appropriate to adopt
the going concern basis in preparing its financial statements.
Adoption of new and amended standards
The following changes to IFRS became effective for the Group during the
financial year but did not result in material changes to the Group's financial
statements:
• IFRS 17 Insurance Contracts
• Definition of Accounting Estimates - Amendments to IAS 8
• Disclosure of Accounting Policies - Amendments to IAS 1
• Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
• International Tax Reform - Pillar Two Model Rules - Amendments to
IAS 12
New and amended standards that are not yet effective
The Group has not applied new standards and amendments to existing standards
that have been issued but are not yet effective. The Group intends to adopt
these amended standards, if applicable, when they become effective.
Classification of Liabilities as Current or Non-current - Amendments to IAS 1
(EU effective date: on or after 1 January 2024)
The amendments clarify that liabilities are classified as either current or
non-current, depending on the rights that exist at the end of the reporting
period. Classification is unaffected by the expectations of the entity or
events after the reporting date (e.g. the receipt of a waiver or a breach of
covenant). The amendments also clarify what IAS 1 means when it refers to the
'settlement' of a liability. The Group is currently evaluating the impact of
the amendments on future periods.
Other changes to IFRS have been issued but are not yet effective for the
Group. However, they are either not expected to have a material impact on the
Group or they are not currently relevant for the Group.
2. Segment information
In accordance with IFRS 8 'Operating Segments', the Group has identified
Glanbia Performance Nutrition and Glanbia Nutritionals as reportable segments
as at 30 December 2023. Glanbia Performance Nutrition manufactures and sells
sports nutrition and lifestyle nutrition products through a variety of
channels including specialty retail, online, Food, Drug, Mass, Club (FDMC),
and gyms in a variety of formats, including powders, Ready-to-Eat (bars and
snacking foods) and Ready-to-Drink beverages. Glanbia Nutritionals
manufactures and sells cheese, dairy and non-dairy nutritional and functional
ingredients, and vitamin and mineral premixes targeting the increased market
focus on health and nutrition.
Following the disposal of Tirlán Limited in the prior year (note 13), it was
no longer reported as a segment.
All other segments and unallocated include both the results of joint ventures
who manufacture and sell cheese and dairy ingredients and unallocated
corporate costs. These investees did not meet the quantitative thresholds for
reportable segments in 2023 or 2022. Amounts stated for joint ventures
represents the Group's share.
These segments align with the Group's internal financial reporting system and
the way in which the CODM assesses performance and allocates the Group's
resources. Each segment is reviewed in its totality by the CODM. The CODM
assesses the trading performance of operating segments based on a measure of
earnings before interest, tax, amortisation and exceptional items. Given that
net finance costs and income tax are managed on a centralised basis, these
items are not allocated between operating segments for the purposes of the
information presented to the CODM and are accordingly omitted from the
detailed segmental analysis below.
2023 2022
Glanbia Performance Nutrition Glanbia Nutritionals $m All other segments Total Glanbia Performance Nutrition Glanbia Nutritionals All other segments Total
$m and unallocated $m $m $m and unallocated $m
$m $m
Segment results (pre-exceptional)
Total gross segment revenue 1,795.7 3,717.4 - 5,513.1 1,712.6 4,343.3 - 6,055.9
Inter-segment revenue (0.1) (87.6) - (87.7) (0.1) (112.1) - (112.2)
Revenue 1,795.6 3,629.8 - 5,425.4 1,712.5 4,231.2 - 5,943.7
Operating profit before intangible asset amortisation and impairment (EBITA) 255.4 168.6 - 424.0 191.9 173.8 - 365.7
Share of results of joint ventures accounted for using the equity method - 16.3
- 12.5 12.5 - - 16.3
Segment assets and liabilities
Segment assets 1,859.6 1,285.1 654.4 3,799.1 1,939.3 1,348.5 829.4 4,117.2
Segment liabilities 394.7 403.5 868.3 1,666.5 461.9 503.3 1,159.3 2,124.5
Other segment information (pre-exceptional)
Depreciation of PP&E and ROU assets 26.9 42.5 - 69.4 24.1 47.0 - 71.1
Amortisation of intangible assets 56.8 22.8 - 79.6 55.9 23.2 - 79.1
Capital expenditure - additions 16.1 48.9 12.6 77.6 21.4 46.7 17.0 85.1
Capital expenditure - business combinations - 41.8 - 41.8 - 78.1 - 78.1
Inter-segment transfers or transactions are entered into under the normal
commercial terms and conditions that would also be available to unrelated
third parties. Revenue of approximately $966.2 million (2022: $1,133.8
million) and $771.3 million (2022: $873.7 million) is derived from two
external customers respectively within the Glanbia Nutritionals segment.
Pre-exceptional segment operating profit before intangible asset amortisation
and impairment (EBITA) is reconciled to reported profit before tax and profit
after tax in the Group income statement.
Geographical information
Revenue from external customers, and non-current assets, other than financial
instruments, deferred tax assets, and retirement benefit assets attributable
to the country of domicile and all foreign countries of operation for which
revenue/non-current assets exceed 10% of total Group revenue/non-current
assets are set out on the following page.
Revenue from external customers in the table below and in the disaggregation
of revenue by primary geographical markets table below is allocated to
geographical areas based on the place of delivery or collection of the
products sold as agreed with customers as opposed to the end use market where
the product may be consumed.
2023 2022
Revenue Non-current Revenue Non-current
$m assets $m assets
$m $m
Ireland (country of domicile) 18.0 821.4 11.6 818.2
US 4,296.7 1,281.5 4,859.8 1,316.8
Other
- North America (excluding US) 106.6 6.3 101.5 6.4
- Europe (excluding Ireland) 473.0 178.7 455.7 232.6
- Asia Pacific 379.3 12.0 394.5 11.9
- LATAM 95.0 0.1 72.9 -
- Rest of World 56.8 - 47.7 -
5,425.4 2,300.0 5,943.7 2,385.9
Disaggregation of revenue
Revenue is disaggregated based on the Group's internal reporting structures,
the primary geographical markets in which the Group operates, the timing of
revenue recognition, and channel mix as set out in the following tables.
2023 2022
Glanbia Glanbia Total Glanbia Glanbia Total
Performance Nutrition Nutritionals $m Performance Nutrition Nutritionals $m
$m $m $m $m
Internal reporting structures
Nutritional Solutions - 1,008.5 1,008.5 - 1,186.8 1,186.8
US Cheese - 2,621.3 2,621.3 - 3,044.4 3,044.4
GPN Americas 1,166.7 - 1,166.7 1,156.6 - 1,156.6
GPN International (including Direct-to-Consumer) 628.9 - 628.9 555.9 - 555.9
1,795.6 3,629.8 5,425.4 1,712.5 4,231.2 5,943.7
3,801.7 4,961.3
Primary geographical markets 1,185.5 3,217.8 4,403.3 1,159.6
North America
Europe 361.1 129.9 491.0 334.8 132.5 467.3
Asia Pacific 196.6 182.7 379.3 170.3 224.2 394.5
LATAM 13.6 81.4 95.0 14.5 58.4 72.9
Rest of World 38.8 18.0 56.8 33.3 14.4 47.7
1,795.6 3,629.8 5,425.4 1,712.5 4,231.2 5,943.7
Timing of revenue recognition
Products transferred at point in time 1,795.6 3,629.8 5,425.4 1,712.5 4,231.2 5,943.7
Products transferred over time - - - - - -
1,795.6 3,629.8 5,425.4 1,712.5 4,231.2 5,943.7
Channel mix for Glanbia Performance Nutrition 2023 2022
$m $m
Distributor 369.3 386.6
Food, Drug, Mass, Club (FDMC) 630.3 606.3
Online 576.3 508.1
Specialty 219.7 211.5
1,795.6 1,712.5
The disaggregation of revenue by channel mix is most relevant for Glanbia
Performance Nutrition.
3. Operating profit
2023 2022
Notes Pre- Exceptional Total Pre- Exceptional Total
exceptional $m $m exceptional $m $m
$m $m
Revenue 5,425.4 - 5,425.4 5,943.7 - 5,943.7
Cost of goods sold (4,301.3) - (4,301.3) (4,920.7) (17.5) (4,938.2)
Gross profit 1,124.1 - 1,124.1 1,023.0 (17.5) 1,005.5
Selling and distribution expenses (474.6) (0.4) (475.0) (437.5) (0.1) (437.6)
Administration expenses (228.1) 48.2 (179.9) (219.3) (5.0) (224.3)
Net impairment gain/(loss) on financial assets 2.6 - 2.6 (0.5) (0.5) (1.0)
Operating profit before intangible asset amortisation and impairment (EBITA) 424.0 47.8 471.8 365.7 (23.1) 342.6
Intangible asset amortisation and impairment 12 (79.6) - (79.6) (79.1) (27.9) (107.0)
Operating profit 344.4 47.8 392.2 286.6 (51.0) 235.6
4. Exceptional items
The nature of the total exceptional items is as follows:
Notes 2023 2022
$m $m
Net exceptional gain on disposal/exit of operations (a) (56.3) -
Pension related costs (b) 2.5 1.8
Portfolio related reorganisation costs (c) 6.0 3.1
Remeasurements of contingent consideration (d) - (7.1)
Non-core assets held for sale (e) - 46.1
Total (47.8) 43.9
Share of results of joint ventures (b) - (0.2)
Tax credit on exceptional items 6 (1.8) (6.0)
Total exceptional (gain)/charge from continuing operations (49.6) 37.7
Exceptional charge/(gain) after tax from discontinued operations (f) 3.2 (60.3)
Total exceptional gain after tax for the year 12 (46.4) (22.6)
Details of the exceptional items are as follows:
(a) Net exceptional gain on disposal/exit of operations primarily relates
to the net gains on disposal of the UK and EU Glanbia Cheese joint venture
operations and a small US bottling facility (Aseptic Solutions) which was
designated as held for sale at 31 December 2022 (note (e) below). Both
transactions concluded during 2023 and the net gain represents the difference
between proceeds received, net of costs associated with the divestment and
exit of these non-core businesses and the carrying value of the investments.
(b) Pension related costs relate to the restructure of legacy defined
benefit pension schemes associated with the Group and joint ventures, which
included initiating a process for the ultimate buy-out and wind up of these
schemes and a further simplification of schemes that remain. Costs incurred
relate to the estimated cost of the settlement loss as a result of acquiring
bulk purchase annuity policies to mirror and offset movements in known
liabilities of the schemes ('buy-in' transaction), as well as related advisory
and execution costs, net of gains from risk reduction activities. The
restructuring effort involved the careful navigation of external market
factors, with final wind up of the schemes anticipated in 2024.
(c) Portfolio related reorganisation costs relate to indirect one off
costs as a result of recent portfolio changes. Following divestment decisions
related to non-core businesses, the Group launched a programme to realign
Group-wide support functions and optimise structures of the remaining
portfolio, to more efficiently support business operations and growth. This
strategic multi-year programme continues in 2024. Costs incurred to date
relate to advisory fees and people-related costs.
(d) Prior year remeasurements of contingent consideration relate to
contingent payments associated with the 2021 LevlUp acquisition that reduced
following an assessment of conditions that gave rise to the additional
payments.
(e) Prior year non-core assets held for sale relate to fair value
adjustments to reduce the carrying value of certain assets to recoverable
value. The assets relate to the Aseptic Solutions business which was
successfully divested during 2023 (see note (a) above).
(f) Exceptional charge/(gain) after tax from discontinued operations
relates to the divestment of Tirlán Limited (formerly known as Glanbia
Ireland DAC) ("Tirlán"). The prior year gain represented the initial gain on
disposal of the Group's interest in this entity. The current year charge
relates to the crystallisation of certain contingent costs associated with the
divestment transaction following the conclusion of negotiations on separation
of the common infrastructure of both organisations.
5. Finance income and costs
2023 2022
$m $m
Finance income
Interest income on loans to joint ventures 1.0 1.2
Interest income on cash and deposits 4.6 0.4
Interest income on swaps 4.0 0.2
Remeasurements of call option - 0.1
Remeasurements of contingent consideration 0.2 7.7
Total finance income 9.8 9.6
Finance costs
Bank borrowing costs (6.4) (7.4)
Facility fees (2.9) (1.8)
Finance cost of private placement debt (10.1) (10.2)
Interest expense on lease liabilities (2.7) (2.7)
Remeasurements of call option - (0.6)
Remeasurements of contingent consideration - (1.6)
Total finance costs (22.1) (24.3)
(12.3) (14.7)
Net finance costs
6. Income taxes
2023 2022
$m $m
Current tax
Irish current tax charge 5.3 20.9
Adjustments in respect of prior years (2.3) (1.3)
Irish current tax for the year 3.0 19.6
47.0
Foreign current tax charge 29.9
Adjustments in respect of prior years (5.8) 2.1
Foreign current tax for the year 41.2 32.0
Total current tax 44.2 51.6
Deferred tax
Deferred tax - current year (5.2) (25.0)
Adjustments in respect of prior years 5.7 0.5
Total deferred tax 0.5 (24.5)
Tax charge 44.7 27.1
The tax credit on exceptional items included in the above amounts is as
follows:
Notes 2023 2022
$m $m
Current tax credit on exceptional items (1.8) (0.6)
Deferred tax credit on exceptional items - (5.4)
Total tax credit on exceptional items for the year 4 (1.8) (6.0)
The tax credit on exceptional items has been disclosed separately above as it
relates to costs and income which have been presented as exceptional.
The tax on the Group's profit before tax differs from the theoretical amount
that would arise applying the corporation tax rate in Ireland, as follows:
2023 2022
$m $m
Profit before tax 392.4 237.4
Income tax calculated at Irish rate of 12.5% (2022: 12.5%) 49.1 29.7
Earnings at non-standard Irish tax rate 0.9 1.4
Difference due to overseas tax rates (capital and trading) (4.8) 0.2
Adjustment to tax charge in respect of previous periods (2.3) 1.4
Tax on share of results of joint ventures accounted for using the equity (1.6) (2.1)
method included in profit before tax
Other reconciling items 3.4 (3.5)
Total tax charge 44.7 27.1
7. Earnings Per Share
Basic
Basic Earnings Per Share is calculated by dividing profit after tax
attributable to the equity holders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares
purchased by the Group and held as own shares (note 10). The weighted average
number of ordinary shares in issue used in the calculation of Basic Earnings
Per Share is 266,548,048 (2022: 275,760,676).
Diluted
Diluted Earnings Per Share is calculated by adjusting the weighted average
number of ordinary shares in issue to assume conversion of all potential
dilutive ordinary shares. Share awards are the Company's only potential
dilutive ordinary shares. The share awards, which are performance based, are
treated as contingently issuable shares, because their issue is contingent
upon satisfaction of specified performance conditions, as well as the passage
of time. Contingently issuable shares are included in the calculation of
Diluted Earnings Per Share to the extent that conditions governing
exercisability have been satisfied, as if the end of the reporting period were
the end of the vesting period.
2023 2022
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Profit after tax attributable to equity holders of the Company ($m) 347.6 (3.2) 344.4 211.1 60.3 271.4
Basic Earnings Per Share (cent) 130.41 (1.20) 129.21 76.55 21.85 98.40
Diluted Earnings Per Share (cent) 128.67 (1.17) 127.50 75.59 21.59 97.18
2023 2022
Weighted average number of ordinary shares in issue 266,548,048 275,760,676
Shares deemed to be issued for no consideration in respect of share awards 3,594,033 3,505,766
Weighted average number of shares used in the calculation of Diluted Earnings 270,142,081 279,266,442
Per Share
8. Dividends
The dividends paid and recommended on ordinary share capital are as follows:
Notes 2023 2022
$m $m
Equity dividends to shareholders
Final - paid EUR 19.28c per ordinary share (2022: EUR 17.53c) 57.6 51.7
Interim - paid EUR 14.22c per ordinary share (2022: EUR 12.93c) 39.9 37.3
Total 97.5 89.0
Reconciliation to Group statement of cash flows and Group statement of changes
in equity
Dividends to shareholders 97.5 89.0
Waived dividends in relation to own shares (0.3) (0.1)
Total dividends paid to equity holders of the Company 11 97.2 88.9
Equity dividends recommended
Final 2023 - proposed EUR 21.21c per ordinary share (2022: EUR 19.28c) 15 62.1 56.0
The amount of dividends recommended is based on the number of issued shares at
year end. The actual amount will be based on the number of issued shares on
the record date (note 15).
9. Net debt
2023 2022
$m $m
Non-current
Bank borrowings 178.5 307.5
Private placement debt 375.0 375.0
553.5 682.5
Current 108.9 275.4
Bank overdrafts
662.4 957.9
Total borrowings
Net debt is a non-IFRS measure which we provide to investors as we believe
they find it useful. It is also used to calculate leverage under the Group's
financing arrangements, as defined within covenants. Refer to the Financing
Key Performance Indicators section in the Glossary for more details. Net debt
comprises the following:
2023 2022
$m $m
Private placement debt 375.0 375.0
Bank borrowings 169.0 169.0
Not subject to interest rate changes* 544.0 544.0
Bank borrowings 9.5 138.5
Cash and cash equivalents net of bank overdrafts (304.8) (192.5)
Subject to interest rate changes* (295.3) (54.0)
Net debt 248.7 490.0
* Taking into account contractual repricing dates at the reporting date.
2023 2022
$m $m
Cash at bank and in hand 404.5 461.3
Short term bank deposits 9.2 6.6
Cash and cash equivalents in the Group balance sheet 413.7 467.9
Bank overdrafts used for cash management purposes (108.9) (275.4)
Cash and cash equivalents in the Group statement of cash flows 304.8 192.5
10. Other reserves
Capital and Currency reserve Hedging reserve Own Share-based payment reserve Other Total
merger reserve $m $m shares $m $m $m
$m $m
Balance at 1 January 2023 136.2 12.6 9.7 (22.0) 31.4 - 167.9
- 4.4 - - - - 4.4
Currency translation differences
Net investment hedge - 3.5 - - - - 3.5
Revaluation - gross - - (6.5) - - 0.3 (6.2)
Reclassification to profit or loss - gross - - (0.3) - - - (0.3)
Deferred tax - - 1.4 - - (0.1) 1.3
Net change in OCI - 7.9 (5.4) - - 0.2 2.7
Purchase of own shares - - - (148.1) - - (148.1)
Cancellation of own shares 0.5 - - 108.7 - - 109.2
Cost of share-based payments - - - - 24.5 - 24.5
Transfer on exercise, vesting or expiry
of share-based payments
- - - 23.9 (18.1) - 5.8
Transfer to Group income statement* - 9.9 0.2 - - - 10.1
Balance at 30 December 2023 136.7 30.4 4.5 (37.5) 37.8 0.2 172.1
135.3 50.8 (12.0) (7.0) 23.2 (28.5) 161.8
Balance at 2 January 2022
- (32.5) - - - - (32.5)
Currency translation differences
Net investment hedge - (5.7) - - - - (5.7)
Revaluation - gross - - 29.8 - - 0.7 30.5
Reclassification to profit or loss - gross - - (3.4) - - - (3.4)
Deferred tax - - (6.4) - - (0.2) (6.6)
Net change in OCI - (38.2) 20.0 - - 0.5 (17.7)
Purchase of own shares - - - (207.4) - - (207.4)
Cancellation of own shares 0.9 - - 182.8 - - 183.7
Cost of share-based payments - - - - 19.8 - 19.8
Transfer on exercise, vesting or expiry - - - 9.6 (11.6) - (2.0)
of share-based payments
Remeasurement of put option liability - - - - - 28.0 28.0
Transfer to Group income statement* - - 1.7 - - - 1.7
Balance at 31 December 2022 136.2 12.6 9.7 (22.0) 31.4 - 167.9
* On disposal of foreign operations in the current year (2022: discontinued
operation).
11. Retained earnings
Notes 2023 2022
$m $m
At the beginning of the year 1,686.2 1,669.0
Profit for the year attributable to equity holders of the Company 344.4 271.4
Other comprehensive income
- Remeasurements on defined benefit plans 1.7 14.4
- Deferred tax on remeasurements on defined benefit plans (0.2) (1.7)
- Share of remeasurements on defined benefit plans from joint ventures, net of 0.1 0.5
deferred tax
1.6 13.2
Dividends 8 (97.2) (88.9)
Cancellation of own shares 10 (108.7) (182.8)
Transfer on exercise, vesting or expiry of share-based payments 10 (5.8) 2.0
Deferred tax on share-based payments 2.1 0.5
Sale of shares held by a subsidiary - 1.8
Derecognition of NCI 8.2 -
At the end of the year 1,830.8 1,686.2
12. Cash generated from operating activities
Notes 2023 2022
$m $m
Profit for the year 344.5 270.6
Exceptional items 4 (46.4) (22.6)
Income taxes 46.5 33.1
Profit before taxation 344.6 281.1
Share of results of joint ventures accounted for using the equity method (12.5) (16.3)
Finance costs 22.1 23.7
Finance income (9.8) (1.9)
Amortisation of intangible assets 3 79.6 79.1
Depreciation of property, plant and equipment 49.7 51.3
Depreciation of right-of-use assets 19.7 19.8
Cost of share-based payments 24.5 19.8
Difference between pension charge and cash contributions (2.7) (0.5)
Net write down of inventories 18.4 14.3
Non-cash movement in/on:
- provisions 7.4 1.0
- allowance for impairment of receivables (3.8) 0.4
- cross currency swaps 0.7 2.7
- disposal of leases - (0.4)
Loss on disposal of property, plant and equipment 1.2 0.4
Operating cash flows before movement in working capital 539.1 474.5
Decrease/(increase) in inventories 191.2 (105.5)
(Increase)/decrease in short-term receivables (91.1) 8.6
(Decrease)/increase in short-term liabilities (144.4) 39.7
Decrease in provisions (3.4) (3.7)
Cash generated from operating activities before exceptional items 491.4 413.6
13. Assets and liabilities held for sale, and discontinued operations
Assets and liabilities held for sale
The Group signed a memorandum of understanding for the sale of its
shareholding in the Glanbia Cheese EU and Glanbia Cheese UK joint ventures
("Glanbia Cheese") to Leprino Foods Company on 14 February 2023. The Group
treated the joint venture arrangements in Glanbia
Cheese as an asset held for sale and ceased to apply the equity method of
accounting to its interest in Glanbia Cheese from this date. The transaction
allowed the Group to focus on its core better nutrition strategy and to
allocate further capital to its global growth businesses.
The sale was completed on 28 April 2023 for an initial cash consideration of
$125.2 million (€114.0 million) and repayment of $71.3 million (€64.9
million) of shareholder loans. The gain of $60.3 million on disposal of
Glanbia Cheese (included in net exceptional gain on disposal/exit of
operations (note 4)) is based on the $125.2 million received less working
capital adjustments of $1.8 million, carrying amount of the asset held for
sale at 28 April 2023 of $52.2 million, costs of $2.8 million, and associated
cumulative debit amounts recognised in other comprehensive income of $8.1
million that were reclassified to the Group income statement.
The assets and liabilities held for sale at 31 December 2022 related to the
non-core assets of a small US based bottling facility (Aseptic Solutions).
Following the completion of a strategic portfolio review, these assets and
related liabilities which were part of the Glanbia Nutritionals segment were
determined to be non-core and a decision was made to divest of them, resulting
in the designation as held for sale at 2022 year end. The divestment was
completed on 6 March 2023. The gain on disposal of $0.4 million (included in
net exceptional gain on disposal/exit of operations (note 4)) is based on
$11.2 million consideration, less the carrying amount of the net assets held
for sale of $9.3 million on the date of the transaction and costs associated
with the transaction of $1.5 million.
Assets and liabilities held for sale at 31 December 2022 relate to:
2022
$m
Property, plant and equipment 10.1
Right-of-use assets 2.7
Inventories 2.4
Assets held for sale 15.2
Lease liabilities (6.7)
Liabilities held for sale (6.7)
The above divestments are not regarded as discontinued operations as they were
not considered to be either separate major lines of business
or geographical areas of operations.
Discontinued operations
The profit from discontinued operations in the prior year relates to the
disposal of Tirlán Limited on 1 April 2022. The gain of $60.3 million (note
4) is based on the $339.3 million received, less the carrying amount of the
asset held for sale of $265.0 million and costs associated with the
transaction of $14.0 million. As part of the terms of the disposal, the
Company paid Tirlán Limited a contribution of $8.8 million in 2022 related to
pension obligations, separation and rebranding costs and an additional $1.7
million in the current year for the re-imbursement of rebranding costs. The
charge in the current year of $3.2 million (note 4) relates to the
crystallisation of certain contingent costs associated with the divestment
transaction following the conclusion of negotiations on separation of the
common infrastructure of both organisations.
14. Business combinations
On 2 October 2023 Glanbia acquired the B2B bioactive ingredients business of
PanTheryx, Inc. ("PanTheryx"), a US based health and nutrition business*. The
acquisition builds on Glanbia Nutritionals' strategic capabilities and will
complement the existing ingredient technology portfolio of Nutritional
Solutions providing a wider breadth of technical capabilities to support its
customers. The provisional amount of unallocated goodwill relates to the
acquired workforce, the expectation that the business will give rise to
synergies across the Glanbia Nutritionals segment, will generate future sales
beyond the existing customer base, as well as the opportunity to expand the
business into new markets, where there are no existing customers, and further
builds on our offering in bioactive solutions in Nutritional Solutions.
Goodwill of $11.4 million is expected to be deductible for tax purposes.
Details of the net assets acquired and goodwill arising from the acquisition
are as follows:
Total
$m
Cash consideration 45.1
Less: fair value of net assets acquired (33.7)
Goodwill 11.4
* Glanbia acquired a group of assets and liabilities which constituted a
business. Accordingly, the transaction is accounted for using acquisition
accounting.
The fair value of assets and liabilities arising from the acquisition are as
follows:
Property, plant and equipment 11.4
Right-of-use assets 1.2
Intangible assets - customer relationships 4.5
Intangible assets - recipes and know-how 10.0
Intangible assets - trade names 3.3
Inventories 5.6
Trade and other receivables 2.4
Cash and cash equivalents 0.5
Trade and other payables (4.1)
Lease liabilities (1.1)
Fair value of net assets acquired 33.7
Due to the proximity of the date of the acquisition to the reporting date,
completion accounts have not been formally agreed between the purchaser and
seller at the date of approving the financial statements. Accordingly, the
initial assignment of fair values to identifiable net assets acquired has been
performed on a provisional basis. In addition, management will need to
finalise the valuation exercise undertaken by the Group's external valuation
specialist relating to the acquisition. It is therefore possible the final
amounts for the assets and liabilities may differ from the provisional values.
Any amendments to these fair values within the 12 month timeframe from the
date of acquisition will be disclosed in the 2024 interim financial
statements.
The fair value of PanTheryx's trade and other receivables at the acquisition
date amounted to $2.4 million. The gross contractual amount for receivables
due is $2.2 million, of which $0.2 million is expected to be uncollectible.
Acquisition-related costs of $1.0 million incurred primarily on professional
fees are included in administrative expenses.
PanTheryx contributed $4.0 million of revenues and $(0.2) million of profit
before taxation and exceptional items for the period from the date of
acquisition to the reporting date. If the acquisition of PanTheryx had
occurred on 1 January 2023, pro-forma Group revenue and Group profit before
taxation and exceptional items for the year ended 30 December 2023 would have
been $5,442.5 million and $346.8 million respectively.
In 2022, the Group acquired Sterling Technology, LLC ("Sterling"). Refer to
2022 Annual Report for details of the Sterling acquisition. During the year,
the Group paid the former owners of Sterling an earnout of $26.8 million.
15. Events after the reporting period
See note 8 for the final dividend, recommended by the Directors. Subject to
shareholder approval, this dividend will be paid on 3 May 2024 to shareholders
on the register of members on 22 March 2024, the record date.
16. Statutory financial statements
The financial information in this preliminary announcement does not constitute
the full statutory financial statements of Glanbia plc (the 'Company'), a copy
of which is required to be annexed to the Company's annual return filed with
the Companies Registration Office and will be published on www.glanbia.com
(http://www.glanbia.com) . A copy of the full statutory financial statements
in respect of the financial year ended 30 December 2023 will be annexed to the
Company's annual return for 2024. The auditors of the Company have made a
report, without any qualification, on their audit of the financial statements
of the Group and Company in respect of the financial year ended 30 December
2023, which were approved by the Directors on 27 February 2024. A copy of the
financial statements of the Group in respect of the year ended 31 December
2022 has been annexed to the Company's annual return for 2023 and filed with
the Companies Registration Office and is available on www.glanbia.com
(http://www.glanbia.com)
Glossary of non-IFRS performance measures
The Group reports certain performance measures including key performance
indicators 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.
These non-IFRS performance measures may not be uniformly defined by all
companies and accordingly they may not be directly comparable with similarly
titled measures and disclosures by other companies. 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 are defined
below with a reconciliation of these measures to IFRS measures where
applicable. Please note where referenced "GIS" refers to Group income
statement, "GBS" refers to Group balance sheet, and "GSCF" refers to Group
statement of cash flows. EBITA and EBITDA references throughout the annual
report are on a pre-exceptional basis unless otherwise indicated.
The sequencing of the non-IFRS performance measures has been changed in the
current year such that related measures are grouped together. 2022 financial
information has been restated throughout for presentation in US Dollar. See
note 1 of the financial statements for further details.
G 1. Revenue
Revenue comprises sales of goods and services to external customers net of
value added tax, rebates and discounts.
Reference 2023 2022 2022 Constant Like-for-like
Reported Reported Constant currency revenue
$m $m currency revenue growth
$m growth (G 2) (G 3)
% %
Nutritional Solutions Note 2 1,008.5 1,186.8 1,185.5 (14.9%) (12.3%)
US Cheese Note 2 2,621.3 3,044.4 3,044.4 (13.9%) (13.9%)
Glanbia Nutritionals Note 2 3,629.8 4,231.2 4,229.9 (14.2%) (13.4%)
GPN Americas Note 2 1,166.7 1,156.6 1,156.0 0.9% 0.9%
GPN International (including Direct-to-Consumer) Note 2 628.9 555.9 557.4 12.8% 12.8%
Glanbia Performance Nutrition Note 2 1,795.6 1,712.5 1,713.4 4.8% 4.8%
Revenue Note 3 5,425.4 5,943.7 5,943.3 (8.7%) (8.2%)
G 2. Volume and pricing increase/(decrease)
Volume increase/(decrease) represents the impact of sales volumes within the
revenue movement year-on-year, excluding volume from acquisitions and
disposals and the impact of a 53rd week (when applicable), on a constant
currency basis.
Pricing increase/(decrease) represents the impact of sales pricing (including
trade spend) within revenue movement year-on-year, excluding acquisitions and
disposals, on a constant currency basis.
Reconciliation of volume and pricing increase/(decrease) to constant currency
revenue growth:
Volume Price Acquisitions / (disposals) Constant
increase/ (decrease) increase/ currency
(decrease) revenue growth
(G 1)
Nutritional Solutions (3.3%) (9.0%) (2.6%) (14.9%)
US Cheese 0.7% (14.6%) - (13.9%)
Glanbia Nutritionals (0.4%) (13.0%) (0.8%) (14.2%)
Glanbia Performance Nutrition (0.6%) 5.4% - 4.8%
2023 decrease % - revenue (0.5%) (7.7%) (0.5%) (8.7%)
G 3. Like-for-like revenue increase/(decrease)
GN and GPN like-for-like total revenue represents the sales
increase/(decrease) year-on-year, excluding the incremental revenue
contributions from current year and prior year acquisitions and disposals and
the impact of a 53rd week (when applicable), on a constant currency basis.
GPN like-for-like branded revenue represents the sales increase/(decrease)
year-on-year on branded sales, excluding the incremental revenue contributions
from current year and prior year acquisitions and disposals and the impact of
a 53rd week (when applicable), on a constant currency basis. Like-for-like
branded revenue increase/(decrease) is one of the GPN segment's Key
Performance Indicators. Like-for-like branded revenue increase/(decrease) is
one of the performance conditions in Glanbia's Annual Incentive Plan for GPN
Senior Management.
G 4. EBITDA (pre-exceptional)
EBITDA (pre-exceptional) is defined as earnings before interest, tax,
depreciation (net of grant amortisation) and amortisation.
Reference 2023 2022
$m $m
EBITA (pre-exceptional) G 5 424.0 365.7
Depreciation* Note 2 69.4 71.1
EBITDA (pre-exceptional) G 9.2, G 13 493.4 436.8
* Includes depreciation of property, plant and equipment of $49.7 million (2022:
$51.3 million) and depreciation of right-of-use assets of $19.7 million (2022:
$19.8 million).
G 5. EBITA (pre-exceptional)
EBITA (pre-exceptional) is defined as earnings before interest, tax and
amortisation. Business Segment EBITA growth on a constant currency basis is
one of the performance conditions in Glanbia's Annual Incentive Plan for
Senior Management. Refer to note 3 of the financial statements for the
reconciliation of EBITA (pre-exceptional) to IFRS measures.
Reference 2023 2022 2022 Constant
Reported Reported Constant currency
$m $m currency growth
$m %
Nutritional Solutions 126.2 135.0 134.5 (6.2%)
US Cheese 42.4 38.8 38.7 9.6%
Glanbia Nutritionals Note 2 168.6 173.8 173.2 (2.7%)
Glanbia Performance Nutrition Note 2 255.4 191.9 191.0 33.7%
EBITA (pre-exceptional) Note 3 424.0 365.7 364.2 16.4%
G 6. EBITA margin % (pre-exceptional)
EBITA margin % (pre-exceptional) is defined as EBITA (pre-exceptional) as a
percentage of revenue. Refer to G 1 and G 5 for revenue and EBITA
(pre-exceptional) respectively.
G 7. Constant Currency Basic and Adjusted Earnings Per Share ("EPS")
G 7.1 Constant Currency Basic EPS
Basic EPS is an IFRS measure and defined in note 7 of the financial
statements. Basic EPS has also been calculated on a
continuing basis in line with the presentation of continuing and discontinued
operations in the GIS. (Loss)/profit after tax in this
performance measure refers to the amount attributable to equity holders of the
Company.
Reference 2023 2022 2022
Reported Reported Constant
$m $m currency
$m
Profit after tax GIS 344.4 271.4 271.4
Loss/(profit) after tax - discontinued operations GIS 3.2 (60.3) (61.9)
Profit after tax - continuing operations G 7.2 347.6 211.1 209.5
Weighted average number of ordinary shares in issue (thousands) Note 7 266,548 275,761 275,761
Basic EPS (cent) - continuing operations Note 7 130.41 76.55 75.95
Basic EPS (cent) Note 7 129.21 98.40 98.39
Constant currency change - continuing operations 71.7%
Constant currency change 31.3%
G 7.2 Constant Currency Adjusted EPS
Adjusted EPS is defined as the profit after tax attributable to the equity
holders of the Company, before exceptional items and intangible asset
amortisation and impairment (excluding software amortisation), net of related
tax, divided by the weighted average number of ordinary shares in issue during
the year, excluding ordinary shares purchased by the Group and held as own
shares (see note 10). The Group believes that adjusted EPS provides useful
information of underlying performance as it excludes exceptional items (net of
related tax) that are not related to ongoing operational performance and
intangible asset amortisation, which allows for comparability of companies
that grow by acquisition to those that grow organically. Adjusted EPS has also
been calculated on a continuing basis in line with the presentation of
continuing and discontinued operations in the GIS.
Adjusted EPS growth on a constant currency basis is one of the performance
conditions in Glanbia's Annual Incentive Plan and in Glanbia's Long-term
Incentive Plan.
Reference 2023 2022 2022
Reported Reported Constant
$m $m currency
$m
Profit after tax from continuing operations G 7.1 347.6 211.1 209.5
Exceptional (gain)/charge - continuing operations GIS (49.6) 37.7 37.6
Profit after tax from continuing operations (pre-exceptional) 298.0 248.8 247.1
Amortisation and impairment of intangible assets (excluding software 52.1 53.4 53.4
amortisation) net of related tax of $7.8 million (2022: $8.4 million, 2022
constant currency: $8.5 million) - continuing operations
Adjusted net income - continuing operations 350.1 302.2 300.5
(Loss)/profit after tax from discontinued operations GIS (3.2) 60.3 61.9
Exceptional charge/(credit) - discontinued operations GIS 3.2 (60.3) (61.9)
Profit from discontinued operations (pre-exceptional) GIS - - -
Adjusted net income 350.1 302.2 300.5
Weighted average number of ordinary shares in issue (thousands) Note 7 266,548 275,761 275,761
Adjusted EPS (cent) - continuing operations 131.37 109.57 108.98
Adjusted EPS (cent) G 16 131.37 109.57 108.98
Constant currency growth - continuing operations 20.5%
Constant currency growth 20.5%
G 8. Compound annual growth rate ("CAGR")
The compound annual growth rate is the annual growth rate over a period of
years. It is calculated on the basis that each year's growth is compounded.
G 9. Financing Key Performance Indicators
G 9.1 Net debt
Net debt is calculated as current and non-current borrowings less cash and
cash equivalents. Refer to note 9 of the financial statements for net debt at
the end of the reporting period.
G 9.2 Net debt: adjusted EBITDA
Net debt: adjusted EBITDA is calculated as net debt at the end of the period
divided by adjusted EBITDA. Adjusted EBITDA is calculated in accordance with
lenders' facility agreements definitions which adjust EBITDA for items such as
exceptional items, dividends received from related parties, acquisitions or
disposals and to reverse the net impact on EBITDA as a result of adopting IFRS
16 "Leases". Adjusted EBITDA is a rolling 12 month measure (a period of 12
consecutive months determined on a rolling basis with a new 12 month period
beginning on the first day of each month).
Reference 2023 2022
$m $m
Net debt Note 9 248.7 490.0
EBITDA G 4 493.4 436.8
Adjustments in line with lenders' facility agreements 6.8 (2.7)
Adjusted EBITDA 500.2 434.1
Net debt: adjusted EBITDA 0.50 times 1.13 times
G 9.3 Adjusted EBIT: adjusted net finance cost
Adjusted EBIT: adjusted net finance cost is calculated as earnings before
interest and tax adjusted for the IFRS 16 "Leases" impact on operating profit
plus dividends received from related parties divided by adjusted net finance
cost. Adjusted net finance cost comprises finance costs plus borrowing costs
capitalised into assets less adjustments including finance income/costs on
remeasurements of call options and contingent consideration and interest
expense on lease liabilities. Adjusted EBIT and adjusted net finance cost are
rolling 12 month measures (a period of 12 consecutive months determined on a
rolling basis with a new 12 month period beginning on the first day of each
month).
Reference 2023 2022
$m $m
Operating profit GIS 392.2 235.6
Exceptional (credit)/charge GIS (47.8) 51.0
Operating profit (pre-exceptional) GIS 344.4 286.6
Dividends received from related parties GSCF 32.0 15.3
IFRS 16 adjustment - interest expense on lease liabilities Note 5 (2.7) (2.7)
Adjusted EBIT 373.7 299.2
Net finance costs Note 5 12.3 14.7
Adjustments (2.5) 2.9
Adjusted net finance cost 9.8 17.6
Adjusted EBIT: adjusted net finance cost 38.1 times 17.0 times
G 10. Average interest rate
The average interest rate is defined as the annualised net finance costs
(excluding capitalised borrowing costs, finance income/costs on remeasurements
of call option and contingent consideration and interest expense on lease
liabilities) divided by the average net debt during the reporting period.
G 11. Return on capital employed ("ROCE")
ROCE is defined as the Group's earnings before interest, and amortisation (net
of related tax) plus the Group's share of the results of joint ventures after
interest and tax divided by capital employed. Capital employed comprises the
sum of the Group's total assets plus cumulative intangible asset amortisation
and impairment less current liabilities and deferred tax liabilities excluding
all borrowings and lease liabilities, retirement benefit assets, cash and
acquisition related contingent consideration and contract options. It is
calculated by taking the average of the relevant opening and closing balance
sheet amounts. ROCE has also been calculated on a continuing basis in line
with the presentation of continuing and discontinued operations in the GIS.
ROCE is one of the performance conditions in Glanbia's Long-term Incentive
Plan.
Reference 2023 2022
$m $m
Operating profit (pre-exceptional) G 9.3 344.4 286.6
Tax on operating profit (48.2) (35.8)
Amortisation and impairment of intangible assets net of related tax of $12.7m 66.9 66.9
(2022: $12.2m) (pre-exceptional)
Share of results of joint ventures accounted for using the equity method GIS 12.5 16.3
(pre-exceptional)
Return - continuing operations 375.6 334.0
(Loss)/profit after tax from discontinued operations GIS (3.2) 60.3
Exceptional charge/(credit) - discontinued operations GIS 3.2 (60.3)
Profit after tax from discontinued operations (pre-exceptional) GIS - -
Return 375.6 334.0
3,068.2
Capital employed before adjustments (a) 3,188.8
Adjustment for acquisitions (b) (23.4) 52.7
Adjustment for joint venture held for sale (b) (65.4) (265.0)
Adjustment for disposal of assets held for sale (b) (9.8) -
Capital employed after adjustments 2,969.6 2,976.5
3,079.2 3,133.3
Average capital employed - continuing operations
Average capital employed 3,079.2 3,133.3
Return on capital employed - continuing operations 12.2% 10.7%
Return on capital employed 12.2% 10.7%
(a) Capital employed before adjustments
Reference 2023 2022
$m $m
Total assets GBS 3,799.1 4,117.2
Current liabilities GBS (880.5) (1,188.0)
Deferred tax liabilities GBS (137.9) (138.3)
Less: cash and cash equivalents GBS (413.7) (467.9)
Less: current financial liabilities (borrowings) GBS 108.9 275.4
Less: acquisition related liabilities - 27.0
Less: short term lease liabilities GBS 20.1 19.0
Less: retirement benefit assets GBS (8.2) (3.2)
Plus: accumulated amortisation and impairment 580.4 547.6
Capital employed before adjustments 3,068.2 3,188.8
(b) Adjustment for acquisitions, joint ventures and assets held for sale
In years where the Group makes significant acquisitions or disposals, the ROCE
calculation is adjusted appropriately, to ensure the acquisition or disposal
are equally time apportioned in the numerator and the denominator. For
information on acquisitions and assets held for sale, refer to notes 14 and 13
respectively.
G 12. Cash flow Key Performance Indicators
G 12.1 Operating cash flow
Operating cash flow is defined as EBITDA (pre-exceptional) net of business
sustaining capital expenditure and working capital movements, excluding
exceptional cash flows.
Reconciliation of operating cash flow to cash generated from operating
activities before exceptional items:
Reference 2023 2022
$m $m
Cash generated from operating activities before exceptional items GSCF 491.4 413.6
Less: business sustaining capital expenditure G 20(b) (22.5) (20.4)
Non-cash items not adjusted in computing operating cash flow:
- Cost of share-based payments Note 12 (24.5) (19.8)
- Difference between pension charge and cash contributions Note 12 2.7 0.5
- Other items (1.2) 0.4
Operating cash flow G 13 445.9 374.3
G 12.2 Free cash flow
Free cash flow is calculated as the net cash flow in the year before the
following items: strategic capital expenditure, dividends paid to Company
shareholders, loans/investments in related parties, exceptional costs paid,
payment for acquisition of subsidiaries, proceeds received on disposals,
purchase of own shares under share buyback. Refer to G 12.1 and G 13 for the
reconciliation of free cash flow to GSCF.
G 13. Summary cash flow
The summary cash flow is prepared on a different basis to the Group statement
of cash flows and as such the reconciling items between EBITDA and net debt
movement may differ from amounts presented in the Group statement of cash
flows. The summary cash flow details movements in net debt while the Group
statement of cash flow details movements in cash and cash equivalents. The
reconciliations of various reconciling items in the summary cash flow to IFRS
information are presented separately in G 20 for a clear presentation of
information.
Reference 2023 2022
$m $m
EBITDA (pre-exceptional) G 4 493.4 436.8
Movement in working capital (pre-exceptional) G 20(a) (25.0) (42.1)
Business sustaining capital expenditure G 20(b) (22.5) (20.4)
Operating cash flow G 12.1 445.9 374.3
Net interest and tax paid G 20(c) (51.8) (85.7)
Dividends received from related parties GSCF 32.0 15.3
Payments of lease liabilities GSCF (19.9) (17.4)
Other outflows G 20(d) (16.4) (3.5)
Free cash flow 389.8 283.0
Strategic capital expenditure G 20(b) (51.7) (52.1)
Dividends paid to Company shareholders GSCF (97.2) (88.9)
Loans/investments in related parties G 20(e) 67.8 (19.2)
Purchase of own shares under share buyback G 20(f) (108.7) (182.8)
Exceptional cash paid G 20(g) (13.5) (22.4)
Proceeds from sale of property, plant and equipment GSCF - 3.6
Acquisitions/disposals G 20(h) 59.8 279.0
Net cash flow 246.3 200.2
Exchange translation (5.5) (8.6)
Cash acquired on acquisition 0.5 1.0
Net debt movement 241.3 192.6
Opening net debt (490.0) (682.6)
Closing net debt Note 9 (248.7) (490.0)
G 14. Operating cash conversion
Operating cash conversion is defined as Operating Cash Flow divided by EBITDA
(pre-exceptional). Cash conversion is a measure of the Group's ability to
convert adjusted trading profits into cash and is an important metric in the
Group's working capital management programme. The measure is a key element of
Executive Director and senior management remuneration.
G 15. Effective tax rate
The effective tax rate is defined as the pre-exceptional income tax charge
divided by the profit before tax less share of results of joint
ventures.
Reference 2023 2022
$m $m
Profit before tax - continuing operations GIS 392.4 237.4
Exceptional (credit)/charge GIS (47.8) 43.7
Profit before tax (pre-exceptional) - continuing operations GIS 344.6 281.1
Less share of results of joint ventures (pre-exceptional) GIS (12.5) (16.3)
332.1 264.8
Income tax GIS 44.7 27.1
Exceptional tax credit GIS 1.8 6.0
Income tax (pre-exceptional) GIS 46.5 33.1
Effective tax rate 14.0% 12.5%
G 16. Dividend payout ratio
Dividend payout ratio is defined as the US Dollar equivalent annual dividend
per ordinary share divided by the Adjusted EPS. US Dollar equivalent dividend
is based on the actual dividend recommendation/payment in Euro, retranslated
to US Dollar at the average exchange rate in the year. The dividend payout
ratio provides an indication of the value returned to shareholders relative to
the Group's total earnings.
Reference 2023 2022
Adjusted EPS G 7.2 $ 131.37c $ 109.57c
Dividend recommended/paid per ordinary share in Euro € 35.43c € 32.21c
Equivalent US Dollar dividend translated at average rate for the year $ 38.32c $ 33.93c
Dividend payout ratio 29.2% 31.0%
G 17. Total shareholder return ("TSR")
TSR represents the change in the capital value of a listed quoted company over
a period, plus dividends reinvested, expressed as a plus or minus percentage
of the opening value. TSR is one of the performance conditions in Glanbia's
Long-term Incentive Plan.
G 18. Exceptional items
The definition of exceptional items and the analysis of exceptional items is
disclosed in note 2 of the published financial statements and note 4 of the
financial statements respectively.
G 19. Constant currency
While the Group reports its results in US Dollar, it generates a proportion of
its earnings in currencies other than US Dollar, in particular Euro. 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
year-on-year change, the results for the prior year are retranslated using the
average exchange rates for the current year and compared to the current year
reported numbers. The principal average exchange rates used to translate
results for 2023 and 2022 are outlined in note 1 of the financial statements.
G 20. Cash flow items
This section presents reconciliations of various reconciling items in the
summary cash flow (G 13) to IFRS information.
(a) Movement in working capital
Reference 2023 2022
$m $m
Movement in working capital (47.7) (60.9)
Net write down of inventories (pre-exceptional) Note 12 18.4 14.3
Non-cash movement in allowance for impairment of receivables Note 12 (3.8) 0.4
Non-cash movement in provisions Note 12 7.4 1.0
Non-cash movement on cross currency swaps Note 12 0.7 2.7
Other reconciling items - 0.4
Movement in working capital (pre-exceptional) G 13 (25.0) (42.1)
(b) Capital expenditure
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 Group to keep operating 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.
Reference 2023 2022
$m $m
Business sustaining capital expenditure G 13 (22.5) (20.4)
Strategic capital expenditure G 13 (51.7) (52.1)
Total capital expenditure (74.2) (72.5)
Reconciliation of capital expenditure to GSCF:
Reference 2023 2022
$m $m
Purchase of property, plant and equipment GSCF (42.0) (33.4)
Purchase of intangible assets GSCF (32.2) (39.1)
Total capital expenditure per the GSCF (74.2) (72.5)
(c) Net interest and tax paid
Reference 2023 2022
$m $m
Interest received GSCF 10.7 1.6
Interest paid (including interest expense on lease liabilities) GSCF (22.0) (24.4)
Tax paid GSCF (40.5) (62.9)
Net interest and tax paid G 13 (51.8) (85.7)
(d) Other inflows/(outflows)
Reference 2023 2022
$m $m
Cost of share-based payments Note 12 24.5 19.8
Difference between pension charge and cash contributions Note 12 (2.7) (0.5)
Loss on disposal of property, plant and equipment Note 12 1.2 0.4
Purchase of own shares by Employee Share (Scheme) Trust (39.4) (24.6)
Proceeds from disposals/redemption of FVOCI financial assets GSCF - 0.4
Proceeds on sale of shares held by subsidiary GSCF - 1.8
Non-cash movement on disposal of leases Note 12 - (0.4)
Other reconciling items - (0.4)
Total other outflows G 13 (16.4) (3.5)
(e) Loans/investments in related parties
Reference 2023 2022
$m $m
Loans advanced to Glanbia Cheese* GSCF (3.5) (49.5)
Proceeds on repayment of loans advanced to Glanbia Cheese GSCF 71.3 -
Proceeds on repayments of loans advanced to Tirlán Ltd GSCF - 30.3
Total loans/investments in related parties G 13 67.8 (19.2)
* Comprised Glanbia Cheese Limited and Glanbia Cheese EU Limited (collectively
referred to as "Glanbia Cheese") which are now named Leprino Foods Limited and
Leprino Foods EU Limited respectively (collectively referred to as "Leprino
Foods").
(f) Purchase of own shares
Reference 2023 2022
$m $m
Purchase of own shares under share buyback G 13 (108.7) (182.8)
Purchase of own shares by Employee Share (Scheme) Trust G 20(d) (39.4) (24.6)
Total purchase of own shares GSCF (148.1) (207.4)
(g) Exceptional cash paid
Reference 2023 2022
$m $m
Cash outflow related to exceptional items - operating activities GSCF (11.8) (13.6)
Cash outflow related to exceptional items - investing activities GSCF (1.7) (8.8)
Total exceptional cash paid G 13 (13.5) (22.4)
(h) Acquisitions/disposals
Reference 2023 2022
$m $m
Proceeds from disposal of Glanbia Cheese (exceptional) GSCF 123.4 -
Proceeds from disposal of assets and liabilities held for sale (exceptional) GSCF 8.6 -
Proceeds from disposal of Tirlán Ltd GSCF - 339.3
Payment for acquisition of subsidiaries GSCF (71.9) (60.3)
Payment for acquisition of NCI GSCF (0.3) -
Total acquisitions/disposals G 13 59.8 279.0
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