REG - Glanbia PLC - Glanbia half year 2022 results
17/08/2022 07:00
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RNS Number : 2501W Glanbia PLC 17 August 2022
Glanbia half year 2022 results
Good first half momentum, full year outlook upgraded to 9% to 13% growth in
adjusted EPS constant currency
17 August 2022 - Glanbia plc ("Glanbia", the "Group", the "Company", the
"plc"), the global nutrition company, is publishing its financial results for
the six month period ended 2 July 2022 ("half year 2022", or "HY 2022").
Half year highlights include:
· Group revenues of €2.8 billion (HY 2021: €2 billion) represents
growth of 26.8% constant currency (up 38.5% reported);
· Strong operating performance
o Glanbia Performance Nutrition ("GPN") branded like-for-like volume +1.9%,
pricing +13.9%
o Nutritional Solutions ("NS") like-for-like volume +1.6%, pricing +17.9%;
· Group EBITA pre-exceptional €171.7m (HY 2021: €159.9m), a
decrease of 3.5% constant currency (up 7.4% reported);
· Adjusted earnings per share(1) ("EPS") ahead of expectations at 52.31
cent (HY 2021: 48.84 cent), a decrease of 3.8% constant currency (up 7.1%
reported);
· Basic EPS of 66.13 cent (HY 2021: 27.90 cent);
· Net debt to adjusted EBITDA ratio of 1.83 times (HY 2021: 1.51
times);
· Completed the disposal of 40% interest in Glanbia Ireland and
acquired Sterling Technology, a US bioactive ingredient company;
· Continued progress against ESG targets and Board diversity
increased;
· Returned €127.1m to shareholders in the period via share
buybacks;
· Interim dividend increased by 10% to 12.93 cent per share; and
· Strong H2 EBITA growth expected over prior year - full year
guidance upgraded to 9% to 13% adjusted EPS constant currency growth (21% to
25% reported(2))
Commenting today Siobhán Talbot, Group Managing Director, said:
"I am pleased to report that half year 2022 results have exceeded our plans,
demonstrating the impact of a series of actions implemented since the latter
part of last year in response to unprecedented inflation.
Revenues grew strongly with significant pricing initiatives and volume growth
in all business segments in the period. Adjusted EPS1 at 52.31 cent, reflected
improving momentum across the Group, building on a strong 2021 comparator. We
continue to make progress on our strategic agenda and with the completion of
the sale of the Company's minority interest in Glanbia Ireland, Glanbia plc
continues to evolve as a focused, purpose led global nutrition company.
We will continue to monitor inflationary trends into the second half of the
year but are confident that further pricing action and operational
efficiencies will deliver improving margins and strong year-on-year EBITA
growth.
Current expectations for improved EBITA growth in GPN underpin the upgrade in
full year guidance for the Group, with growth in adjusted EPS1 now expected to
be 9% to 13%, constant currency. Based on current foreign exchange rates, the
reported adjusted EPS growth is expected to be 21% to 25%."
1 Adjusted earnings per share ("EPS") for continuing operations
2 Based on foreign exchange rates being sustained for the reminder of 2022
Summary financials (pre-exceptional)(1)
2022 half year results Reported Constant
€m HY 2022 HY 2021 Change Currency Change(2)
Wholly-owned business
Revenue 2,828.8 2,042.2 +38.5% +26.8%
EBITA(3) 171.7 159.9 +7.4% -3.5%
EBITA margin 6.1% 7.8%
Joint Ventures (continuing operations(4))
Share of profit after tax 11.4 18.8
Profit after tax 121.5 133.5
Profit after tax - continuing operations 121.5 122.4
Profit after tax - discontinued operations - 11.1
Adjusted earnings per share(5) 52.31c 52.86c -1.0% -10.4%
Adjusted earnings per share (continuing operations) 52.31c 48.84c +7.1% -3.8%
Adjusted earnings per share (discontinued operations) - 4.02c
Exceptional gains/(costs) (after tax) (continuing operations) 6.9 (52.2)
Basic earnings per share (continuing operations) 46.1c 24.09c
Basic earnings per share (discontinued operations) 20.03c 3.81c
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 euro US dollar
exchange rate for HY 2022 was €1 = $1.093 (HY 2021: €1 = $1.204). Reported
and constant currency movements are on a pre-exceptional basis.
3. EBITA is defined as earnings before interest, tax and
amortisation.
4. Continuing operations. The Glanbia Ireland joint venture
was classified as a discontinued operation on 17 December 2021. Results
presented for continuing operations excludes the impact on the Group of the
Glanbia Ireland joint venture. Discontinued operations reflects the
contribution from the Glanbia Ireland joint venture. Prior year comparatives
have been restated on the same basis.
5. Adjusted earnings per share includes the contribution of
continuing and discontinued operations.
2022 financial half year results summary
Revenue progression HY 2022 versus HY 2021
Constant currency movement Reported movement
Volume Price Like-for-like Acquisition Total constant currency(2) Total reported
Glanbia Performance Nutrition 0.5% 13.6% 14.1% 0.8% 14.9% 24.4%
Glanbia Nutritionals 5.1% 25.4% 30.5% 1.7% 32.2% 44.9%
Nutritional Solutions 1.6% 17.9% 19.5% 5.4% 24.9% 35.4%
US Cheese 6.6% 28.8% 35.4% - 35.4% 49.2%
Total wholly-owned businesses 3.7% 21.7% 25.4% 1.4% 26.8% 38.5%
Revenue, EBITA and margin
HY 2022 HY 2021
€m Revenue EBITA Margin % Revenue EBITA Margin %
Glanbia Performance Nutrition 794.1 82.3 10.4% 638.4 90.2 14.1%
Glanbia Nutritionals 2,034.7 89.4 4.4% 1,403.8 69.7 5.0%
Nutritional Solutions 588.8 71.7 12.2% 434.8 56.6 13.0%
US Cheese 1,445.9 17.7 1.2% 969.0 13.1 1.4%
Total wholly-owned businesses 2,828.8 171.7 6.1% 2,042.2 159.9 7.8%
2022 half year overview
The Group's results for the first half of 2022 were very solid in the context
of unprecedented inflationary trends across the business. Significant
management actions were taken to mitigate cost inflation including price
increases and other efficiency measures. Consumer response to date to higher
pricing has been better than expected in key areas with volume growth in both
GPN and GN for the half year. EBITA margins in the period reduced as actions
to mitigate inflation did not fully insulate year-on-year margins which,
particularly in GPN, were comparatively high in the first half of 2021.
Glanbia wholly-owned revenue was €2,828.8 million, an increase of 26.8%
constant currency (up 38.5% reported). GPN revenues grew by 14.9% constant
currency (up 24.4% reported) on prior year driven by a 0.5% increase in
volumes, favourable pricing of 13.6% and the positive impact of acquisitions
of 0.8%. GPN had good volume and consumption growth in performance nutrition,
healthy lifestyle and direct-to-consumer ("D2C") brands which was offset by
continuing headwinds in the diet category and the SlimFast brand. Pricing was
positive across all GPN brands. GN revenues were up 32.2% constant currency
(up 44.9% reported) on prior period driven by volume increase of 5.1%, price
increases of 25.4%, and the positive impact of the PacMoore and Sterling
Technology acquisitions of 1.7%. GN volume growth was largely driven by growth
in the Nutritional Solutions non-dairy ingredient portfolio and US Cheese.
Wholly-owned EBITA pre-exceptional was €171.7 million, down 3.5% constant
currency (up 7.4% reported).
GPN pre-exceptional EBITA decreased by 18.1% constant currency (down 8.8%
reported) to €82.3 million (HY 2021: €90.2 million). GPN pre-exceptional
EBITA margin at 10.4% (HY 2021: 14.1%) was 370 basis points lower than prior
year as significant inflation in cost of goods sold was not fully mitigated by
increased pricing and incremental benefits from the GPN transformation
programme. GN pre-exceptional EBITA increased by 15.5% constant currency (up
28.3% reported) to €89.4 million (HY 2021: €69.7 million) with good growth
in both NS and US Cheese. GN pre-exceptional EBITA margin at 4.4% (HY 2021:
5.0%) was 60 basis points lower than prior year largely due to the dilutive
impact of higher pricing.
The Group's joint ventures (continuing operations) performed in line with
expectations with profit after tax decreasing by €7.4 million to €11.4
million for the first half of 2022 due to strong prior year comparatives.
Total Group profit after tax for continuing operations (pre-exceptional items)
for the period was €121.5 million, down €0.9 million on prior half year.
Adjusted EPS for continuing operations for the period of 52.31 cent represents
a decline of 3.8% constant currency (up 7.1% reported) versus a strong prior
year comparative.
Capital investment
Glanbia's total investment in capital expenditure (tangible and intangible
assets) was €29.3 million in the first half of 2022 (HY 2021: €39.7
million). Strategic investment totalled €22.0 million related largely to IT
investment supporting a global transformation of the Group's HR systems and
operating model. Total capital expenditure for the year is expected to be
€70 million to €80 million.
Dividend per share
The Board is recommending an interim dividend of 12.93 cent per share (HY
2021: 11.75 cent per share) representing a 10% increase on prior year interim
dividend. Glanbia's overall dividend policy remains unchanged at a target
annual dividend payout ratio of between 25% and 35% of adjusted EPS. The
interim dividend will be paid on 7 October 2022 to shareholders on the
register of members as at 26 August 2022. Irish withholding tax will be
deducted at the standard rate where appropriate.
Share buyback
Glanbia maintained share buyback activity through the first half of 2022,
deploying €127.1 million in the period (HY 2021: €33.4 million). Following
the Company's AGM on 5 May 2022, Glanbia consulted with, and received support
from, a number of its independent shareholders on the use of share buy-backs
as a capital allocation tool, where appropriate. On 23 June 2022, the Group
launched a further €50 million share buyback which is ongoing. In the year
to date Glanbia has deployed a total of €148.0 million on share buybacks.
Board update
As part of Glanbia's focus on Board renewal, on 29 July 2022, the Company
announced the appointment of two non-executive Directors to the Board
effective 1 August 2022, Ms. Ilona Haaijer and Ms. Kimberly Underhill. This
follows the reduction in Glanbia Co-operative Society Limited's representation
on the Board from seven Directors in 2021, to five in 2022 with a further
agreed reduction to three in 2023. Ms. Haaijer, a Dutch citizen, brings
extensive and significant leadership experience of strategic development,
change management, mergers and acquisitions and leading complex, global
businesses in the food ingredients and consumer sectors. Ms. Underhill, a US
citizen, brings extensive and significant leadership experience in US and
international consumer products businesses, with particular strength in
product development, marketing, portfolio management, brand-building,
strategic planning and international business development. The Board is
currently made up of 14 members, five of which are female, and in 2023 the
overall size of the Board is planned to reduce to 13 Members.
ESG update
Glanbia continues to make solid progress against its stated objectives in its
environmental, social and governance agenda. As referenced above, recent Board
changes have increased female Board membership to 36%. Initiatives in the
roadmap to decarbonise operations (Scope 1 & 2) emissions in line with the
Group's Science Based Targets initiative ("SBTi") targets are advancing
through technical, engineering, procurement and financial evaluation and
decision making. A separate working strand on dairy supply chain (Scope 3)
emissions reductions is also progressing, together with assessing priority
suppliers in all categories through EcoVadis, a provider of business
sustainability ratings. The Group will finalise water targets, and is
completing zero waste planning for all operational sites, in 2022. Glanbia's
Diversity, Equity & Inclusion ("DEI") agenda has further progressed with
the launch of an inclusive leadership development programme for senior leaders
as well as additional employee resource groups for LGBTQ+ and multicultural
employees. DEI targets have been cascaded into leadership incentives deeper in
the organisation and, to assist target delivery, Glanbia is formally measuring
employee attitudes to inclusion and belonging as well as female management
participation levels.
Capital Markets Event
The Group will be holding a Capital Markets event on November 9(th) to update
the market on its growth agenda, while also providing an opportunity to meet
divisional management.
Outlook
The resilience and momentum of Glanbia's core brands and nutritional solutions
ingredients portfolio in HY 2022 supports the Group's confidence in its
ability to navigate continuing external risks including an increasingly
challenging economic environment, the impact of geopolitical tensions, and
unprecedented inflation. In the absence of any further unanticipated major
market disruption, Glanbia expects sustained revenue and earnings momentum in
H2 2022.
In FY 2022, GPN expects to deliver low teens percentage revenue growth while
GN NS expects strong double-digit percentage revenue growth. As previously
noted, revenue growth in both platforms will be primarily driven by
pricing. EBITA growth is expected to be delivered in GPN, GN NS and US Cheese
based on the momentum to date and the actions taken to mitigate material
inflation headwinds. Full year expectations for joint ventures are unchanged
from prior views. The full year GPN EBITA margin outlook has improved with the
targeted EBITA margin of 12% expected to be achieved in the fourth quarter and
full year margin contraction now expected to be up to 50bps versus prior year.
In GN NS, the expected full year margin contraction of c.100bps will be driven
by the mathematical dilution related to significant pricing changes,
particularly in dairy ingredients. From a Group perspective the strong focus
on cash generation is expected to deliver an operating cash flow conversion
rate of over 80% for FY 2022.
Based on these latest expectations for full year earnings growth in GPN and
GN, Glanbia is now confident to upgrade full year guidance for growth in
adjusted EPS to a range of 9% to 13% constant currency. Should current foreign
exchange rates be sustained for the remainder of 2022 the reported adjusted
EPS growth would be expected to be in a range of 21% to 25%.
Inside Information
This announcement contains inside information as set out in the paragraphs
titled Outlook. The person responsible for arranging for the release of this
announcement on behalf of Glanbia plc is Liam Hennigan, Group Secretary and
Head of Investor Relations. The time and date of this announcement is, at 7am
BST, 17 August 2022.
Financial half year 2022 operations review
Glanbia Performance Nutrition
Reported Constant currency
€m HY 2022 HY 2021 change change
Revenue 794.1 638.4 +24.4% +14.9%
EBITA 82.3 90.2 -8.8% -18.1%
EBITA margin 10.4% 14.1%
Commentary on percentage movements is on a constant currency basis throughout.
GPN revenue increased by 14.9% in HY 2022 versus prior year. This was driven
by volume growth of 0.5%, price increases of 13.6%, and the LevlUp acquisition
contributing 0.8%. Excluding the impact of contract business, which has been
exited in North America, branded like-for-like revenues increased by 15.8%
with 13.9% growth in pricing and 1.9% volume growth. Pricing was driven by the
execution of price increases in the third quarter of 2021 and first half of
2022 to mitigate cost inflation. Volume growth was strong in the performance
nutrition and lifestyle brand portfolios with volume decline in SlimFast as
the expected weakness in the diet category continues. Globally the Optimum
Nutrition ("ON") brand grew by 23.2% in the period with strong volume and
pricing growth. The healthy lifestyle brands of think!, Isopure and Amazing
Grass also grew strongly at 28.1% with both volume and price growth. SlimFast
revenue declined by 12.1% in the period and plans are well underway to
navigate category weakness and drive brand performance into the key diet
season of early 2023.
GPN EBITA decreased by 18.1% versus prior year to €82.3 million. Earnings
declined in the period as the net impact of inflation reduced margins. The GPN
transformation programme, the scope of which was increased in HY 2022 to help
mitigate inflation, is providing a fundamental underpin to margins as the
business moves through the current inflationary cycle. The continuing benefits
from this programme together with further planned pricing action is expected
to increase EBITA margins in the second half of the year with margins expected
to reach the targeted level of 12% in the fourth quarter.
Americas
GPN Americas delivered 12.0% revenue growth in the first half of 2022 compared
to the prior year, with branded like-for-like revenue increasing by 13.8%.
This was driven by volume growth in the performance nutrition and healthy
lifestyle categories offset by challenges in the diet category. Pricing was
positive in all categories. The ON brand had a very strong performance in the
period with ON consumption(1) growth in the 12 weeks to mid-June 2022 of
32.3%. ON continues to leverage its strong position with innovation to support
new consumer opportunities in plant protein, dairy RTD and energy/hydration.
The SlimFast brand performance continues to be impacted by headwinds in the
diet category with consumption(1) in the 12 weeks to mid-June 2022 down 16.7%.
The brand refresh planned for the second half of the year is on track to be in
market in advance of the early 2023 key diet season, supported by new brand
and pack design, creative content and innovation. The strong consumption
trends in the healthy lifestyle portfolio continued in the period across the
think!, Isopure and Amazing Grass brands.
International
GPN International, which includes D2C brands, grew like-for-like revenues by
19.0% in the first half of 2022 compared to prior year. This was driven by
volume growth in key regional markets, with consumption trends in Europe and
Asia particularly strong. Pricing was positive across all regions due to price
increases in response to inflationary trends.
1. Consumption growth is measured in North American channels
and includes Online, FDMC (Food, Drug, Mass, Club) and Specialty channels.
Data compiled from published external sources and Glanbia estimates to 12 June
2022.
Glanbia Nutritionals
HY 2022 HY 2021
€m Revenue EBITA Margin % Revenue EBITA Margin %
Nutritional Solutions 588.8 71.7 12.2% 434.8 56.6 13.0%
US Cheese 1,445.9 17.7 1.2% 969.0 13.1 1.4%
Total Glanbia Nutritionals 2,034.7 89.4 4.4% 1,403.8 69.7 5.0%
Commentary on percentage movements is on a constant currency basis throughout.
Nutritional Solutions
Reported Constant currency
€m HY 2022 HY 2021 change change
Revenue 588.8 434.8 +35.4% +24.9%
EBITA 71.7 56.6 +26.7% +14.4%
EBITA margin 12.2% 13.0%
NS revenues increased in the first half of 2022 by 24.9%. This was driven by a
1.6% increase in volume, 17.9% increase in price, and the PacMoore and
Sterling Technology acquisitions delivering 5.4% of the revenue growth. Volume
growth for the period reflects strong growth in the non-dairy portfolio
somewhat offset by a decline in dairy as NS increased internal sales to GPN in
the period. Price increase was driven by dairy ingredients due to strong
market pricing, along with pricing action taken across the portfolio to offset
the impact of raw material cost inflation.
The PacMoore acquisition, which completed in September 2021, is performing
well and NS completed the acquisition of Sterling Technology in March 2022
which further complements the NS portfolio.
NS EBITA was €71.7 million, 14.4% higher than prior year due to a strong
performance across all areas of the business. Margins decreased from 13% to
12.2% due to the dilutive impact of higher pricing.
US Cheese
Reported Constant currency
€m HY 2022 HY 2021 change change
Revenue 1,445.9 969.0 +49.2% +35.4%
EBITA 17.7 13.1 +35.1% +20.4%
EBITA margin 1.2% 1.4%
US Cheese revenue increased in the first half of 2022 by 35.4%. This was
driven by a 6.6% increase in volume and a 28.8% increase in price. Volume
growth was related to the new joint venture plant in Michigan which was
commissioned during 2021. Price increase was related to the higher
year-on-year market pricing.
US Cheese EBITA increased by 20.4% to €17.7 million in HY 2022 due to
incremental volumes. Margin declined from 1.4% to 1.2% as a result of the
dilutive impact of higher pricing.
Joint Ventures (Glanbia share)
€m - pre-exceptionals HY 2022 HY 2021 Change
Share of joint ventures' profit after tax - continuing operations 11.4 18.8 (7.4)
Share of joint ventures' profit after tax - discontinued operations - 11.1 (11.1)
Total 11.4 29.9 (18.5)
Glanbia's principal joint ventures (continuing operations) include
MWC‐Southwest Holdings, Glanbia Cheese UK and Glanbia Cheese EU. Glanbia
uses the equity method of accounting for its joint ventures and includes its
share of joint venture profit after tax in the adjusted earnings per share
calculation. The Group's share of joint ventures' profit after tax
pre‐exceptionals for continuing operations decreased by €7.4 million to
€11.4 million in the first half of 2021. Joint ventures continue to perform
in line with expectations with growth expected in the second half versus prior
year.
On 1 April 2022, Glanbia completed the disposal of its 40% interest in the
Glanbia Ireland joint venture ("Glanbia Ireland") to Glanbia Co-operative
Society Limited (the 'Society') for €307 million. The transaction was
approved by members of the Society on 17 December 2021, following which this
joint venture investment was considered as an investment 'held‐for‐sale',
with equity accounting ceasing to apply from that date. Other joint venture
operations remain part of the Group and are unaffected by this transaction.
HALF YEAR 2022 Finance Review
Half year 2022 Group Income Statement
HY 2022 HY 2021
€m Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total
Revenue 2,828.8 - 2,828.8 2,042.2 - 2,042.2
Earnings before interest, tax and amortisation (EBITA)
171.7 (0.6) 171.1 159.9 (53.7) 106.2
EBITA margin 6.1% - 6.1% 7.8% - 5.2%
Intangible asset amortisation (36.2) - (36.2) (30.0) - (30.0)
(0.6)
Operating profit 135.5 134.9 129.9 (53.7) 76.2
Finance income 0.5 7.3 7.8 0.7 - 0.7
Finance costs (10.2) - (10.2) (11.5) - (11.5)
Share of results of Joint Ventures 11.4 0.2 11.6 18.8 (2.3) 16.5
Profit before taxation 137.2 6.9 144.1 137.9 (56.0) 81.9
Income taxes (15.7) - (15.7) (15.5) 3.8 (11.7)
Profit from continuing operations 121.5 6.9 128.4 122.4 (52.2) 70.2
Discontinued operations - 55.9 55.9 11.1 - 11.1
Profit after tax from discontinued operations
Profit for the half year 121.5 62.8 184.3 133.5 (52.2) 81.3
Revenue
Revenue increased by 26.8% versus prior half year on a constant currency basis
to €2.8 billion, an increase of 38.5% on a reported basis. GPN revenues grew
by 14.9% constant currency (up 24.4% reported) on prior period driven by a
0.5% increase in volumes, favourable pricing of +13.6% and acquisitions
contributing a further 0.8%. GN also recorded a strong performance with
revenues up 32.2% constant currency (up 44.9% reported) on prior period driven
by volume increases of 5.1%, positive pricing of 25.4% and the positive impact
of the recent PacMoore and Sterling Technology acquisitions of 1.7%.
EBITA
EBITA before exceptional items decreased by 3.5% constant currency (increase
of 7.4% reported) to €171.7 million (HY 2021: €159.9 million).
GPN pre-exceptional EBITA decreased by 18.1% constant currency (decrease of
8.8% reported) to €82.3 million (HY 2021: €90.2 million). GPN
pre-exceptional EBITA margin at 10.4% reduced from 14.1% at HY 2021.
GN pre-exceptional EBITA increased by 15.5% constant currency (up 28.3%
reported) to €89.4 million (HY 2021: €69.7 million). GN pre-exceptional
EBITA margin decreased from 5.0% to 4.4% since HY 2021.
Net finance costs
Net finance costs before exceptional items decreased by €1.1 million to
€9.7 million (HY 2021: €10.8 million). The decrease was driven primarily
by the full period impact of lower interest rates on fixed rate indebtedness
refinanced during 2021. The Group's average interest rate in HY 2022 was 2.2%
(HY 2021: 3.8%). Glanbia operates a policy of fixing a significant amount of
its interest exposure, with 95% of projected 2022 debt currently contracted at
fixed rates.
Share of results of Joint Ventures (continuing operations)
The Group's pre-exceptional share of joint venture (continuing operations)
profits decreased by €7.4 million to €11.4 million (HY 2021: €18.8
million) in the half year. The share of results of joint ventures is stated
after tax.
Income taxes
The half year 2022 pre-exceptional tax charge increased by €0.2 million to
€15.7 million (HY 2021: €15.5 million). This represents an effective tax
rate, excluding joint ventures, of 12.5% (HY 2021: 13%) and is in line with
expectation. The Group currently expects that its effective tax rate for FY
2022 will be in the range of 12% to 13%.
Share of results of Joint Ventures (discontinued operations)
In November 2021, the Group announced its intention to sell its remaining 40%
interest in Glanbia Ireland DAC to Glanbia Co-operative Society Limited, and
following the receipt of all shareholder approvals and regulatory clearances,
completed the disposal in April 2022. As the investment was considered 'held
for sale' in the period, equity accounting did not apply. The resulting once
off gain on disposal of the investment has been treated as an exceptional item
in the period.
Exceptional items
Exceptional items incurred in the first half of 2022 resulted in a net
post-tax exceptional gain of €62.8m (HY 2021: charge of €52.2m). Details
of the exceptional items incurred in the period are as follows:
€m - continuing operations HY 2022 HY 2021
Pension related costs (note 1) (0.6) (38.9)
Changes in fair value of contingent consideration (note 2) 7.3 -
Organisation redesign costs (note 3) - (14.8)
Wholly-owned exceptional gain/(charge) before tax 6.7 (53.7)
Share of results of equity accounted investees, net of tax (note 1) 0.2 (2.3)
Exceptional tax credit - 3.8
Exceptional gain/(charge) after tax 6.9 (52.2)
€m - discontinued operations
Exceptional gain from discontinued operations (note 4) 55.9 -
Exceptional gain after tax - discontinued operations 55.9 -
Total Exceptional gain/(charge) in the period 62.8 (52.2)
1. 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 the 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 arising from risk reduction
activities. This restructuring, which commenced in 2021 is on track and
anticipated to conclude during the second half of 2022.
2. Changes in fair value of contingent consideration relate to
contingent payments associated with the 2021 LevlUp acquisition that have now
reduced following an assessment of conditions that give rise to the additional
payments.
3. Prior year organisation redesign costs related to a fundamental
reorganisation of the GPN segment that realigned operating and supply chain
structures in support of individual businesses, sharpened focus on brands and
optimised routes-to-market across non-US markets to drive greater
efficiencies, improve margin and deliver top line growth. The investment phase
of this multi-year strategic programme is now complete, with no further costs
incurred during the period.
4. Exceptional gain from discontinued operations relates to the gain
arising on the completion of the disposal of the Group's 40% interest in
Glanbia Ireland DAC ("Glanbia Ireland") to Glanbia Co-operative Society
Limited. The gain represents the difference between proceeds received, net of
transaction related costs, and the carrying value of the Group's investment in
Glanbia Ireland. The transaction completed on 1 April 2022.
Profit after tax
Profit after tax for the half year was €184.3 million compared to €81.3
million in HY 2021, comprising continuing operations of €128.4 million (HY
2021: €70.2 million) and discontinued operations of €55.9 million (HY
2021: €11.1). Profit after tax from continuing operations comprises
pre-exceptional profit of €121.5 million (HY 2021: €122.4 million) and
exceptional gains of €6.9 million (HY 2021: charge of €52.2 million).
Pre-exceptional profitability is consistent period on period.
Profit after tax from discontinued operations in both the current and
preceding period relates entirely to Glanbia Ireland. As outlined above, the
Group's share of Glanbia Ireland was disposed in April 2022, with the
resulting gain on disposal being recognised as an exceptional gain.
Earnings per share (EPS)
HY 2022 HY 2021 Reported Constant currency
change change
Basic EPS 66.13c 27.90c +137.0% +107.4%
- continuing operations 46.10c 24.09c +91.4% +64.2%
- discontinued operations 20.03c 3.81c +425.7% +425.7%
Adjusted EPS 52.31c 52.86c (1.0%) (10.4%)
- continuing operations 52.31c 48.84c +7.1% (3.8%)
- discontinued operations - 4.02c - -
Basic EPS increased by 137.0% versus prior period, as a result of exceptional
gains in the current period, compared to exceptional losses in the prior
period.
Adjusted EPS is a key performance indicator ("KPI") of the Group and a key
metric guided to the market and a key element of Executive Director and senior
management remuneration. Adjusted EPS remained consistent with the prior
period and comprises continuing operations of 52.31 cent (HY 2021: 48.84 cent)
and discontinued operations (related to Glanbia Ireland which was divested in
April 2022) of nil (HY 2021: 4.02 cent). Full year 2022 adjusted EPS is
expected to be in the range of 9% to 13% growth on a constant currency basis
versus prior year.
Cash flow
The principal cash flow KPIs of the Group and business segments 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 period 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 the Executive
Directors and senior management remuneration. OCF and FCF half year results
for the Group are outlined below.
€m HY 2022 HY 2021
EBITDA pre-exceptional 204.0 191.2
Movement in working capital (pre-exceptional) (225.3) (24.0)
Business-sustaining capital expenditure (7.3) (5.8)
Operating cash flow (28.6) 161.4
Net interest and tax paid (31.8) (30.6)
Dividends from joint ventures 2.6 17.4
Payment of lease liabilities (7.4) (9.7)
Other (outflows)/inflows (2.0) 3.2
Free cash flow (67.2) 141.7
Strategic capital expenditure (22.0) (33.9)
Dividend paid to Company shareholders (49.0) (46.4)
Share buyback (purchase of own shares) (127.1) (33.4)
Payment for acquisition of subsidiaries (54.4) (31.4)
Exceptional costs paid (14.8) (43.5)
Repayment of/(loans) to joint ventures 25.3 (3.5)
Proceeds on disposal of interest in Glanbia Ireland 307.0 -
Net cash flow (2.2) (50.4)
Exchange translation (44.1) (9.8)
Cash acquired on acquisition 0.9 4.4
Net debt movement (45.4) (55.8)
Net debt at the beginning of the period (602.7) (493.9)
Net debt at the end of the period (648.1) (549.7)
OCF was an outflow of €28.6 million (HY 2021: inflow of €161.4 million)
and represents a cash conversion on EBITDA of -14% (HY 2021: 84.4%) in the
period. The decrease in OCF versus prior period was due primarily to an
increased investment in working capital as a result of higher pricing in both
inventory and receivables. The OCF conversion rate is expected to gradually
adjust to more normalised levels during the second half of 2022 and full year
cash conversion is expected to be c.80% in line with target.
FCF was an outflow of €67.2 million (HY 2021: inflow of €141.7 million),
with the movement since prior period primarily as a result of movements in OCF
outlined above, as well as a decrease in dividend income from Joint Ventures
following the disposal of Glanbia Ireland.
Capital allocated for the benefit of shareholders includes regular dividend
payments of €49 million (HY 2021: €46.4 million) and the execution of
share buyback programmes of €127.1 million (HY 2021: €33.4 million), with
the most recent buyback programme that launched in June 2022 ongoing at HY
2022.
Acquisition spend relates to the acquisition of Sterling Technology, a US
based bioactive ingredient company, for an initial consideration of US$59.4
million which concluded in March 2022, and divestment proceeds relate to the
completion of the disposal of the Group's 40% holding in Glanbia Ireland for a
consideration of €307 million in April 2022.
Group financing
Financing key performance indicators HY 2022 HY 2021
Net debt: adjusted EBITDA 1.83 times 1.51 times
Adjusted EBIT: net finance cost 16.0 times 14.5 times
The Group's financial position remains strong. Net debt at the 2022 half year
was €648.1 million. This is an increase of €98.4 million from the prior
half year net debt of €549.7 million. At half year 2022, Glanbia had
committed debt facilities of €1.22 billion (HY 2021: €1.13 billion) with a
weighted average maturity of 3.5 years. Glanbia's ability to generate cash as
outlined above and available debt facilities ensures the Group has
considerable capacity to finance future investments. Net debt to adjusted
EBITDA was 1.83 times and interest cover was 16 times, with both metrics
remaining well within financing covenants.
Use of capital
Capital expenditure
The cash outflow relating to capital expenditure for half year 2022 amounted
to €29.3 million (HY 2021: €39.7 million) which includes €7.3 million of
business-sustaining capital expenditure and €22 million of strategic capital
expenditure.
Investments in equity accounted investees
During half year 2022, a further €3.5 million was invested in Glanbia Cheese
EU, the joint venture mozzarella cheese plant in Portlaoise, Ireland, bringing
the total invested to €42.2 million, with a further €13.0 million
committed. Commissioning is ongoing and remains on track to be completed in
2022.
Pension
The Group's net pension position under IAS 19 (revised) 'Employee Benefits',
before deferred tax, improved by €16.1 million since 1 January 2022,
resulting in a net pension asset of €1.9 million at 2 July 2022. The defined
benefit pension position is calculated by discounting the estimated future
cash outflows using appropriate corporate bond rates. Restructuring of legacy
defined pension schemes which began in 2021 is ongoing. Favourable market
conditions resulted in actuarial gains in the period, which reduced the net
pension liability resulting in a net asset position at period end.
Dividends
Glanbia's overall dividend policy remains unchanged at a target annual
dividend payout ratio of between 25% and 35% of adjusted EPS. In line with
this policy the Board is recommending an interim dividend of 12.93 cent per
share (HY 2021: 11.75 cent per share). The dividend will be paid on 7 October
2022 to shareholders on the register of members as at 26 August 2022. Irish
withholding tax will be deducted at the standard rate where appropriate.
Share buyback
During the first half of 2022, the Group completed a share buyback programme
of €50 million which launched in December 2021 and commenced a further
programme of €50 million in June 2022, which was ongoing at HY 2022. A total
of €96.1 million was deployed under these programmes in the period, with a
further €31.0 million deployed to participate in a share placement by
Glanbia Co-operative Society in advance of completing the Glanbia Ireland
transaction.
Foreign exchange
Glanbia generates over 90% of its earnings in US dollar currency and has
significant assets and liabilities denominated in US dollars. As a result, and
as Glanbia's reporting currency is euro, there can be a significant impact to
reported numbers arising from currency movements year-on-year and on
translation of US dollar non-monetary assets and liabilities in the
preparation of the half year consolidated financial statements. Commentary has
been provided within the income statement on a constant currency basis to
provide a better reflection of the underlying operating results in the year,
as this removes 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. At the balance sheet date, primarily due to the strengthening of the US
dollar compared to 2021 year end, there was a translation gain arising on the
translation of non-euro denominated assets and liabilities into euro. The gain
on translation of non-monetary assets and liabilities into euro is presented
within other comprehensive income and amounted to €140.3 million in the half
year (HY 2021: €62.0 million). Period-end euro to US dollar rates were as
follows:
HY 2022 FY 2021 HY 2021
1 euro converted to US dollar 1.0425 1.1326 1.1823
Financial strategy
Glanbia's financial strategy is very much aligned with its overall strategy of
ensuring the Group delivers on its key financial goals. Specific financial
goals to enable this strategy include:
· Assessing both external and organic investment opportunities
against a target benchmark of 12% return after tax by end of year three;
· Focusing the organisation on cash conversion through improved
working capital management and disciplined business-sustaining capital
expenditure, with a goal of greater than 80% cash conversion as a percentage
of EBITDA;
· Leveraging the Group's activities to enable improved cost
structures utilising shared services, procurement, IT and a continuous
improvement mindset;
· Maintaining the capital structure of the Group within an implicit
investment-grade credit profile; and
· Capital allocation policy to return capital to shareholders which
includes a dividend policy with a payout ratio of between 25% and 35% and the
authorisation to implement a share buyback programme.
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 Group's risk management
framework outlines the key stakeholder risk management responsibilities. It is
designed to ensure that there is input across all levels of the business to
the management of risk and to enable the Group to remain responsive to the
ever changing environment in which it operates. This framework, together with
the processes to identify, manage and mitigate potential material key risks to
the achievement of the Group's strategic objectives are set out in detail on
pages 67-75 of Glanbia plc's 2021 Annual Report.
The Group's principal risks and uncertainties are summarised in the risk
profile diagram below and remain relevant and unchanged from the risks
reported for the year ended 1 January 2022, with no new principal risks
identified. The underlying risk trend and potential impacts of some of these
risks has evolved with the Market Disruption risk trend increasing partly due
to the continued inflationary pressures which may disrupt consumer demand as
price increases are implemented. There may be other risks and uncertainties
that are not yet considered material or not yet known to the Group and this
list will change if these risks assume greater importance in the future.
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
Risk where trend is increasing • Economic, Industry and Political • Cyber security and data protection • Supply chain
• Market disruption • Talent management
• Climate change
The Board is closely monitoring the key risks that could materially and
adversely affect the Group's ability to achieve its strategic objectives,
particularly those whose probability of occurrence/extent of impact are
elevated by the consequences of the ongoing war in Ukraine, the deteriorating
global economic outlook and the increasing inflationary, energy and interest
rate pressures together with the continually evolving nature of Covid-19.
In our previous disclosures, we explained how Covid-19 had wide-ranging
consequences on our principal risks and uncertainties and was not presented as
a single principal risk. This has not changed and the same approach has been
taken in relation to the impacts of the Russian invasion of Ukraine, with the
consequences being captured in the relevant principal risks rather than shown
as a stand-alone item. The key risk factors and uncertainties with the
potential to impact on the Group's financial performance in the second half of
2022 include:
· Economic, industry and political risk - continues to increase
primarily due to the current and potential future consequences of the Russian
invasion of Ukraine, the resulting geopolitical and macroeconomic
uncertainties and the significant inflationary impacts affecting both our
operational costs and our consumer's finances. The Board is also closely
monitoring the escalating tensions in other key trading regions, particularly
between China and Taiwan, where any potential conflict, economic sanctions or
trade rulings would impact Glanbia's growth objectives.
· Market disruption risk - adverse changes in economic conditions,
continued inflationary pressures, energy availability and cost impacts, and
interest rate increases could result in reduced consumer spending which may
disrupt demand and increase operational and financial costs. The risk of
further waves of Covid-19 and the inability to contain the spread of new
variants may also disrupt markets in the second half of 2022.
· 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, which experienced significant price increases over the last
eighteen months and may continue into the remainder of 2022. This has resulted
in price increases to offset some of the increased input costs and further
price increases are envisaged in H2 2022 which may disrupt demand due to price
elasticity. Any further price increases 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
the Covid-19 virus. This continues to be important in preventing unexpected
supply chain disruptions which could result in restrictions on the importation
of key raw materials and/or negative impacts on our international sales
channels. The Group is holding appropriate safety stocks of core raw
materials, however a prolonged impact to supply chains due to Covid-19 or the
geopolitical environment in key trading regions would have negative
consequences from both a supply and pricing perspective; and
o Labour markets continue to be competitive and plants are operating at a
high capacity. Labour inflation, together with global supply chain cost
increases in energy transport, logistics and containers will continue to
require careful navigation.
· 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. This remains relevant for the remainder of 2022 as
customers navigate the macroeconomic downturn on their operations and any
potential challenges imposed by Covid-19 restrictions.
· Health and safety risk - a failure to maintain good health and
safety practices or a significant escalation in the spread of the virus or new
variants, in our core markets, may adversely impact performance. A wide range
of additional measures and mitigations have been introduced as a result of the
Covid-19 pandemic which build on the existing strong controls across the
Group.
Thirteen thematic Climate-related Risks and Opportunities (CROs) were outlined
in the plc's 2021 Annual Report following a comprehensive climate change risk
assessment in conjunction with The Carbon Trust, an independent sustainability
consultant, on the parts of the business over which Glanbia has operational
control. This helped the plc to better understand the potential impacts from
physical climate risks largely associated with a failure to act, and the
potential transition risks associated with the transition to a decarbonised
economy.
The reassessment of these CROs and the completion of scenario and
quantification analysis which will consider available mitigation measures and
the interplay of the material CROs identified with each other under a number
of temperature scenarios and the associated potential impact, including taking
into consideration a two-degree or lower scenario, are currently in progress
and will be outlined in the plc's 2022 Annual Report.
The Group actively manages these and all other risks (inclusive of emerging
risks) through its risk management and internal control processes.
Cautionary statement
Glanbia plc has made forward-looking statements in this document that are
based on management's beliefs and assumptions and on information currently
available to management. Forward-looking statements include, but are not
limited to, information concerning the Group's possible or assumed future
results of operations, business strategies, financing plans, competitive
position, potential growth opportunities, potential operating performance
improvements, the effects of competition and the effects of future legislation
or regulations. Forward-looking statements include all statements that are not
historical facts and can be identified by the use of forward-looking
terminology such as the words 'believe', 'develop', 'expect', 'ensure',
'arrive', 'achieve', 'anticipate', 'maintain', 'grow', 'aim', 'deliver',
'sustain', 'should' or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You should not place undue reliance on any
forward-looking statements. The risk factors included on pages 72 to 75 of the
Group's 2021 Annual Report, could cause the Group's results to differ
materially from those expressed in forward-looking statements. There may be
other risks and uncertainties that the Group is unable to predict at this time
or that the Group currently does not expect to have a material adverse effect
on its business. These forward-looking statements are made as of the date of
this document. The Group expressly disclaims any obligation to update these
forward-looking statements other than as required by law. The forward-looking
statements in this release do not constitute reports or statements published
in compliance with any of Regulations 6 to 8 of the Transparency (Directive
2004/109/EC) Regulations 2007.
Results webcast and dial-in details
There will be a webcast and presentation to accompany this results
announcement at 8.30 a.m. BST today. Please access the webcast from the
Glanbia website at https://www.glanbia.com/investors/results-and-events, where
the presentation can also be viewed or downloaded. In addition, a dial-in
facility is available using the following numbers:
Ireland +353 (0)1 246 5638
UK +44 (0)330 165 4012
Netherlands +31 (0)20 703 8218
France +33 (0)1 70 73 03 39
Germany +49 (0)69 22222 5197
Italy +39 02 00638217
Sweden +46 (0)8 5664 2765
USA +1 323-701-0160
Rest of the world +44 (0)330 165 4016
The access code for all participants is: 9182171
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
Mark Garvey, Group Finance Director
Liam Hennigan, Group Secretary and Head of Investor Relations +353 (0)86 046 8375
Martha Kavanagh, Head of Corporate Communications +353 (0)87 646 2006
2022 half year financial report
Responsibility statement
Each of the Directors of Glanbia plc, whose names and functions are listed on
the Group's website (www.glanbia.com), confirms that to the best of each
person's knowledge and belief:
· the 2022 Half Year Financial Report is in accordance with
International Accounting Standard (IAS) 34, 'Interim Financial Reporting', as
adopted by the European Union and the Transparency (Directive 2004/109/EC)
Regulations 2007, as amended, and the Central Bank (Investment Market Conduct)
Rules 2019; and
· the 2022 Half Year Financial Report includes a fair review of:
o important events that have occurred during the first six months of the
year, and their impact on the condensed consolidated interim financial
statements;
o a description of the principal risks and uncertainties for the remaining
six months of the financial year;
o details of any related party transactions that have materially affected
the Group's financial position or performance in the six months ended 2 July
2022, and material changes to related party transactions described in the
Annual Report for the year ended 1 January 2022; and
o any changes in the related parties' transactions described in the last
annual report that could have a material effect on the financial position or
performance of the group in the first six months of the current financial
year.
On behalf of the Board
Siobhán
Talbot
Mark Garvey
Group Managing Director
Group Finance Director
16 August 2022
Condensed Group Income statement
for the half year ended 2 JULY 2022
Half year 2022 Half year 2021
Notes Pre-exceptional €m Total Pre-exceptional €m Total
Exceptional €m €m Exceptional €m €m
(note 7) (note 7)
CONTINUING OPERATIONS
Revenue 6 2,828.8 - 2,828.8 2,042.2 - 2,042.2
Operating profit before intangible asset amortisation (earnings before 6 171.7 (0.6) 171.1 159.9 (53.7) 106.2
interest, tax and amortisation (EBITA))
Intangible asset amortisation 13 (36.2) - (36.2) (30.0) - (30.0)
Operating profit 6 135.5 (0.6) 134.9 129.9 (53.7) 76.2
Finance income 9 0.5 7.3 7.8 0.7 - 0.7
Finance costs 9 (10.2) - (10.2) (11.5) - (11.5)
Share of results of joint ventures accounted for using the equity 4 11.4 0.2 11.6 18.8 (2.3) 16.5
method
Profit before taxation 137.2 6.9 144.1 137.9 (56.0) 81.9
Income taxes 10 (15.7) - (15.7) (15.5) 3.8 (11.7)
Profit from continuing operations 121.5 6.9 128.4 122.4 (52.2) 70.2
DISCONTINUED OPERATIONS
Profit after tax from discontinued operations 3 - 55.9 55.9 11.1 - 11.1
Profit for the period 121.5 62.8 184.3 133.5 (52.2) 81.3
Attributable to:
Equity holders of the Company 12 184.6 81.3
Non-controlling interests (0.3) -
184.3 81.3
Earnings Per Share from continuing operations attributable to the equity
holders of the Company
Basic Earnings Per Share (cent) 12 46.10 24.09
Diluted Earnings Per Share (cent) 12 45.64 24.01
Earnings Per Share attributable to the equity holders of the Company
Basic Earnings Per Share (cent) 12 66.13 27.90
Diluted Earnings Per Share (cent) 12 65.47 27.81
Condensed Group Statement of comprehensive Income
for the half year ended 2 JULY 2022
Notes Half year Half year
2022 2021
€m €m
Profit for the period 184.3 81.3
Other comprehensive income
Items that will not be reclassified subsequently to the Group income statement
Remeasurements on defined benefit plans, net of deferred tax 14.0 3.4
Share of other comprehensive income of joint ventures, net of deferred tax 18.2 0.6 -
Revaluation of equity instruments at FVOCI, net of deferred tax 18.1 0.2 (0.2)
Share of other comprehensive income of discontinued operations, net of 18.2 - 11.2
deferred tax
Items that may be reclassified subsequently to the Group income statement
Currency translation differences 18.1 140.3 62.0
Currency translation difference arising on net investment hedge 18.1 (7.5) (3.0)
Gain on cash flow hedges, net of deferred tax 2.1 1.8
Share of other comprehensive income of joint ventures, net of deferred tax 9.5 3.7
Share of other comprehensive income of discontinued operations, net of - 0.1
deferred tax
Other comprehensive income for the period, net of tax 159.2 79.0
Total comprehensive income for the period 343.5 160.3
Total comprehensive income attributable to:
Equity holders of the Company 343.8 160.3
Non-controlling interests (0.3) -
Total comprehensive income for the period 343.5 160.3
Condensed Group Balance sheet
as at 2 JULY 2022
Notes 2 July 1 January
2022 2022
€m €m
ASSETS
Non-current assets
Property, plant and equipment 517.1 485.2
Right-of-use assets 103.5 99.9
Intangible assets 1,533.5 1,375.4
Interests in joint ventures 215.3 184.8
Other financial assets 1.9 1.9
Loans to joint ventures 17.2 42.5
Deferred tax assets 4.8 4.7
Other receivables 0.6 0.8
Derivative financial instruments 0.5 0.5
Retirement benefit assets 8 4.8 2.9
2,399.2 2,198.6
Current assets
Inventories 713.7 593.6
Trade and other receivables 558.6 359.4
Current tax receivables 8.8 8.8
Derivative financial instruments 2.2 2.2
Cash and cash equivalents (excluding bank overdrafts) 232.0 231.0
1,515.3 1,195.0
Joint venture held for sale 3 - 234.0
1,515.3 1,429.0
Total assets 3,914.5 3,627.6
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium 17 104.4 105.0
Other reserves 18.1 391.8 245.5
Retained earnings 18.2 1,408.8 1,381.7
1,905.0 1,732.2
Non-controlling interests 7.8 8.1
Total equity 1,912.8 1,740.3
LIABILITIES
Non-current liabilities
Borrowings 14 787.3 697.2
Lease liabilities 106.9 105.0
Other payables 20.7 32.6
Retirement benefit obligations 8 2.9 17.1
Deferred tax liabilities 146.0 144.4
Provisions 16 3.3 3.6
1,067.1 999.9
Current liabilities
Trade and other payables 757.9 669.3
Borrowings 14 92.8 136.5
Lease liabilities 18.9 14.5
Current tax liabilities 52.9 53.0
Derivative financial instruments 0.8 1.2
Provisions 16 11.3 12.9
934.6 887.4
Total liabilities 2,001.7 1,887.3
Total equity and liabilities 3,914.5 3,627.6
Condensed Group Statement of changes in equity
For the half year ended 2 JULY 2022
Attributable to equity holders of the Company
Share capital and share premium Other Retained Non- Total
Half year 2022 €m reserves earnings controlling interests €m
(note 17) €m €m Total €m
(note 18.1) (note 18.2) €m
Balance at 2 January 2022 105.0 245.5 1,381.7 1,732.2 8.1 1,740.3
Profit for the period - - 184.6 184.6 (0.3) 184.3
Other comprehensive income - 144.6 14.6 159.2 - 159.2
Total comprehensive income for the period - 144.6 199.2 343.8 (0.3) 343.5
Dividends - - (49.0) (49.0) - (49.0)
Purchase of own shares - (136.6) - (136.6) - (136.6)
Cancellation of own shares (0.6) 126.8 (126.2) - - -
Cost of share-based payments - 7.6 - 7.6 - 7.6
Transfer on exercise, vesting or expiry of share-based payments - (2.1) 2.1 - - -
Deferred tax on share-based payments - - 1.0 1.0 - 1.0
Changes in fair value of put option liability - 4.5 - 4.5 - 4.5
Transfer to Group income statement - 1.5 - 1.5 - 1.5
Balance at 2 July 2022 104.4 391.8 1,408.8 1,905.0 7.8 1,912.8
Half year 2021
Balance at 3 January 2021 105.3 126.0 1,380.5 1,611.8 - 1,611.8
Profit for the period - - 81.3 81.3 - 81.3
Other comprehensive income - 64.4 14.6 79.0 - 79.0
Total comprehensive income for the period - 64.4 95.9 160.3 - 160.3
Dividends - - (46.4) (46.4) - (46.4)
Purchase of own shares - (35.3) - (35.3) - (35.3)
Issuance of shares 0.2 - - 0.2 - 0.2
Cancellation of own shares (0.2) 33.6 (33.4) - - -
Cost of share-based payments - 6.2 - 6.2 - 6.2
Deferred tax on share-based payments - - 0.8 0.8 - 0.8
Non-controlling interests on acquisition of subsidiary - - - - 7.8 7.8
Recognition of put option liability - (23.2) - (23.2) - (23.2)
Balance at 3 July 2021 105.3 171.7 1,397.4 1,674.4 7.8 1,682.2
Condensed gROUP Statement of cash flows
For the half year ended 2 JULY 2022
Notes Half year Half year
2022 2021
€m €m
Cash flows from operating activities
Net cash flows from operating activities before exceptional items 20 (14.1) 171.8
Cash outflow related to exceptional items (6.8) (43.5)
Interest received 1.0 0.4
Interest paid (including interest expense on lease liabilities) (9.4) (10.6)
Tax paid (23.4) (20.4)
Net cash (outflow)/inflow from operating activities (52.7) 97.7
Cash flows from investing activities
Proceeds from disposal of Glanbia Ireland DAC (exceptional) 3 307.0 -
Cash outflow related to exceptional items (8.0) -
Payment for acquisition of subsidiaries (54.4) (31.4)
Purchase of property, plant and equipment (12.7) (25.6)
Purchase of intangible assets (16.6) (14.1)
Loans advanced to joint ventures 19 (3.5) (3.5)
Loans advanced to Glanbia Ireland DAC which were repaid 19 28.8 -
Dividends received from joint ventures 19 2.6 17.4
Proceeds from disposal/redemption from FVOCI financial assets 0.3 0.5
Net cash inflow/(outflow) from investing activities 243.5 (56.7)
Cash flows from financing activities
Purchase of own shares 18.1 (136.6) (35.3)
Drawdown of borrowings 14 427.9 308.1
Repayment of borrowings 14 (388.5) (274.7)
Payment of lease liabilities (7.4) (9.7)
Dividends paid to Company shareholders (49.0) (46.4)
Net cash outflow from financing activities (153.6) (58.0)
Net increase/(decrease) in cash and cash equivalents 14 37.2 (17.0)
Cash and cash equivalents at the beginning of the period 94.5 91.6
Cash and cash equivalents acquired on acquisition 14 0.9 4.4
Effects of exchange rate changes on cash and cash equivalents 6.6 4.6
Cash and cash equivalents at the end of the period 139.2 83.6
Cash and cash equivalents at the end of the period include:
2 July 3 July
2022 2021
€m €m
Cash and cash equivalents (excluding bank overdrafts) 232.0 156.6
Bank overdrafts 14 (92.8) (73.0)
14 139.2 83.6
Net cash inflow from investing activities from discontinued operations was
€327.8 million (2021 HY: €12.2 million)
Notes to the financial statements
For the half year ended 2 JULY 2022
1. General information
Glanbia plc (the "Company") and its subsidiaries (together the "Group") is a
leading global nutrition group with geographical presence in regions that
include North America, Europe and Asia Pacific. The Company is a public
limited company incorporated and domiciled in Ireland, the number under which
it is registered is 129933. The address of its registered office is Glanbia
House, Kilkenny, Ireland, R95 E866. The Company is the ultimate parent company
of the Group and its shares are quoted on the Euronext Dublin and London Stock
Exchange.
These condensed consolidated interim financial statements as at, and for the
period commencing 2 January 2022 and ended 2 July 2022 (half year/six months)
("interim financial statements") were approved for issue by the Board of
Directors on 16 August 2022.
2. Basis of preparation
The interim financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the European Union, the
Transparency (Directive 2004/109/EC) Regulations 2007 as amended, and the
Central Bank (Investment Market Conduct) Rules 2019. The interim financial
statements should be read in conjunction with the financial statements as at,
and for the year ended 1 January 2022 ("2021 Annual Report"). The interim
financial statements do not include all of the information required for a
complete set of IFRS financial statements and have not been audited or
reviewed by the Group's auditor.
The methods of computation, presentation and accounting policies adopted in
the preparation of the interim financial statements are consistent with those
applied in the 2021 Annual Report other than those noted below. The Group's
accounting policies are set out in note 2 to the financial statements in the
2021 Annual Report.
Amended standard adopted in the current period
Amendments to IAS 16 'Property, Plant and Equipment: Proceeds before intended
use' were adopted in the current year. They did not result in a material
impact on the Group's results.
Re-presentation
Certain comparative amounts in the Group statement of changes in equity and
the "other reserves and retained earnings" note have been re‐presented on a
basis consistent with the current period. The re‐presentation is to present
the recognition of put option liability in other reserves. There was no impact
on previously reported profit or net assets. In addition, consistent with the
2021 Annual Report, the comparative Group income statement and Group statement
of comprehensive income were re‐presented to reflect a discontinued
operation (note 3).
Critical accounting judgements and estimates
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty in preparing
the interim financial statements were the same as those that applied to the
2021 Annual Report.
Going concern
The time period that the Directors have considered in evaluating the
appropriateness of the going concern basis in preparing the interim financial
statements is a period of at least 12 months from the date of approval of
these interim financial statements (the "period of assessment").
The Directors have given due regard to the Group's available cash resources,
borrowing facilities and related covenant requirements which taken together,
provide confidence that the Group will be able to meet its obligations as they
fall due; and the Group's financial risk management policies as described in
the 2021 Annual Report, the nature of business activities and the factors
likely to impact operating performance and future growth. No material
uncertainties have been identified.
Having assessed the relevant business risks identified and discussed in the
Principal risks and uncertainties on page 12, the Directors believe that the
Group is well placed to manage these risks successfully and they have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the period of assessment with no material
uncertainties. The Group therefore considers it appropriate to adopt the going
concern basis in preparing its interim financial statements.
Foreign currency translation
The interim financial statements are presented in euro, which is the Company's
functional and presentation currency.
The principal exchange rates used for the translation of results and balance
sheets into euro are as follows:
Average Period end
1 euro = Half year Half year Year 2 July 3 July 1 January
2022 2021 2021 2022 2021 2022
US dollar 1.0928 1.2044 1.1826 1.0425 1.1823 1.1326
Pound sterling 0.8422 0.8677 0.8596 0.8665 0.8600 0.8403
3. Joint venture held for sale and discontinued operations
The Company announced its intention to sell its 40% holding in Glanbia Ireland
DAC ("Glanbia Ireland") to Glanbia Co-operative Society Ltd (the "Society")
for €307.0 million in November 2021 (the "Transaction"). Members of the
Society approved the Transaction on 17 December 2021. Accordingly, in the
prior year, the Group has treated the joint venture arrangement in Glanbia
Ireland as an asset held for sale on the Group balance sheet and ceased to
apply the equity method of accounting to its interest in Glanbia Ireland from
17 December 2021.
The Transaction was completed on 1 April 2022 for €307.0 million cash
following the approval of the independent shareholders of the Company and
receipt of regulatory approvals. The gain of €55.9 million on disposal of
Glanbia Ireland (note 7) is based on the €307.0 million received, less the
carrying amount of the asset held for sale of €234.0 million and costs
associated with the transaction of €17.1 million. Refer to note 19 for
further details of the Transaction.
4. Segment information
Glanbia Ireland is no longer reported as a segment following its disposal on 1
April 2022 (note 3). Accordingly, the prior period pre-exceptional segment
results excludes Glanbia Ireland and the segment assets associated with
Glanbia Ireland is included within "All other segments and unallocated" for
the comparative period.
Pre-exceptional segment results are as follows:
Half year 2022 Glanbia Performance Nutrition Glanbia Nutritionals Total reportable segments All other
€m €m €m segments and unallocated
€m Total
€m
Total gross segment revenue 794.2 2,083.4 2,877.6 - 2,877.6
Inter-segment revenue (0.1) (48.7) (48.8) - (48.8)
Revenue 794.1 2,034.7 2,828.8 - 2,828.8
Operating profit before intangible asset amortisation (EBITA) 82.3 89.4 171.7 - 171.7
Shares of results of joint ventures accounted for using the equity method - - - 11.4 11.4
Half year 2021
Total gross segment revenue 638.5 1,423.0 2,061.5 - 2,061.5
Inter-segment revenue (0.1) (19.2) (19.3) - (19.3)
Revenue 638.4 1,403.8 2,042.2 - 2,042.2
Operating profit before intangible asset amortisation (EBITA) 90.2 69.7 159.9 - 159.9
Shares of results of joint ventures accounted for using the equity method - - - 18.8 18.8
Segment earnings before interest, tax, amortisation and exceptional items are
reconciled to reported profit before tax and profit after tax in the Group
income statement.
The segment assets and liabilities are as follows:
2 July 2022 Glanbia Performance Nutrition Glanbia Nutritionals Total reportable segments All other
€m €m €m segments and unallocated
€m Total
€m
Segment assets 1,918.1 1,462.8 3,380.9 533.6 3,914.5
Segment liabilities 453.4 481.8 935.2 1,066.5 2,001.7
1 January 2022
Segment assets 1,741.3 1,138.9 2,880.2 747.4 3,627.6
Segment liabilities 441.4 446.7 888.1 999.2 1,887.3
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 below.
Revenue from external customers in the table below and in the disaggregation
of revenue by primary geographical markets table 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.
Revenue Non-current assets
Half year Half year 2 July 1 January
2022 2021 2022 2022
€m €m €m €m
Ireland (country of domicile) 5.4 3.7 830.0 713.1
US 2,317.5 1,646.2 1,309.2 1,201.9
Other
- North America (excluding US) 49.1 38.1 5.3 5.2
- Europe (excluding Ireland) 228.9 175.4 213.9 214.7
- Asia Pacific 172.4 134.2 11.6 11.2
- LATAM 34.7 26.1 - -
- Rest of World 20.8 18.5 - -
2,828.8 2,042.2 2,370.0 2,146.1
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:
Half year 2022 Half year 2021
Glanbia Performance Nutrition Total Glanbia Performance Nutrition Total
€m Glanbia Nutritionals €m €m €m Glanbia Nutritionals €m €m
Internal reporting structures
Nutritional Solutions - 588.8 588.8 - 434.8 434.8
US Cheese - 1,445.9 1,445.9 - 969.0 969.0
GPN Americas 538.7 - 538.7 436.6 - 436.6
GPN International (including Direct-to-Consumer) 255.4 - 255.4 201.8 - 201.8
Total 794.1 2,034.7 2,828.8 638.4 1,403.8 2,042.2
Primary geographical markets
North America 539.0 1,827.6 2,366.6 439.3 1,245.0 1,684.3
Europe 160.5 73.8 234.3 117.5 61.6 179.1
Asia Pacific 72.1 100.3 172.4 63.3 70.9 134.2
LATAM 8.3 26.4 34.7 4.8 21.3 26.1
Rest of World 14.2 6.6 20.8 13.5 5.0 18.5
Total 794.1 2,034.7 2,828.8 638.4 1,403.8 2,042.2
Timing of revenue recognition
Products transferred at point in time 794.1 2,034.7 2,828.8 638.4 1,403.8 2,042.2
Products transferred over time - - - - - -
Total 794.1 2,034.7 2,828.8 638.4 1,403.8 2,042.2
Channel mix for Glanbia Performance Nutrition Half year Half year
2022 2021
€m €m
Distributor 176.1 139.8
Food, Drug, Mass, Club (FDMC) 269.1 208.0
Online 251.1 199.4
Specialty 97.8 91.2
Total 794.1 638.4
The disaggregation of revenue by channel mix is most relevant for Glanbia
Performance Nutrition.
5. Seasonality
Historically, due to the somewhat seasonal nature of the retail segment into
which the Glanbia Performance Nutrition segment sells, higher revenues and
operating profits were expected in the second half of the year than in the
first six months. This has not occurred in the current and prior year with
strong demand in the first half. Glanbia Nutritionals revenues and operating
profits, although impacted by dairy markets, are typically more evenly spread
throughout the year.
6. Operating profit
Half year 2022 Half year 2021
Notes Pre-exceptional €m Total Pre-exceptional €m Total
Exceptional €m €m Exceptional €m €m
(note 7) (note 7)
Revenue 4 2,828.8 - 2,828.8 2,042.2 - 2,042.2
Cost of goods sold (2,333.1) - (2,333.1) (1,613.2) (5.5) (1,618.7)
Gross profit 495.7 - 495.7 429.0 (5.5) 423.5
Selling and distribution expenses (221.4) - (221.4) (175.0) - (175.0)
Administration expenses (101.0) (0.6) (101.6) (93.4) (48.2) (141.6)
Net impairment losses on financial assets (1.6) - (1.6) (0.7) - (0.7)
Operating profit before intangible asset amortisation (EBITA) 4 171.7 (0.6) 171.1 159.9 (53.7) 106.2
Intangible asset amortisation 13 (36.2) - (36.2) (30.0) - (30.0)
Operating profit 135.5 (0.6) 134.9 129.9 (53.7) 76.2
7. Exceptional items
Notes Half year Half year
2022 2021
€m €m
Pension related costs (a) 0.6 38.9
Changes in fair value of contingent consideration (b) (7.3) -
Organisation redesign costs (c) - 14.8
Share of results of joint ventures accounted for using the equity method (a) (0.2) 2.3
Exceptional tax credit 10 - (3.8)
Total exceptional (gain)/charge from continuing operations (6.9) 52.2
Exceptional gain after tax from discontinued operations (d) (55.9) -
Total exceptional (gain)/charge for the period 20 (62.8) 52.2
(a) 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 the 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 arising from risk reduction
activities. This restructuring, which commenced in 2021 is on track and
anticipated to conclude during the second half of 2022.
(b) Changes in fair value of contingent consideration relate to
contingent payments associated with the 2021 LevlUp acquisition that have now
reduced following an assessment of conditions that give rise to the additional
payments.
(c) Prior year Organisation redesign costs related to a
fundamental reorganisation of the GPN segment that realigned operating and
supply chain structures in support of individual businesses, sharpened focus
on brands and optimised routes-to-market across non-US markets to drive
greater efficiencies, improve margin and deliver top line growth. The
investment phase of this multi-year strategic programme is now complete, with
no further costs incurred during the period.
(d) Exceptional gain from discontinued operations relates to the
gain arising on the completion of the disposal of the Group's 40% interest in
Glanbia Ireland to Glanbia Co-Operative Society Limited. The gain represents
the difference between proceeds received, net of transaction related costs,
and the carrying value of the Group's investment in Glanbia Ireland. The
transaction completed on 1 April 2022 (note 3).
8. Retirement benefit obligations
The Group has a number of defined benefit pension plans in the Republic of
Ireland ("Ireland") and the United Kingdom ("UK"). The defined benefit pension
plans in Ireland and the UK are administered by independent Boards of Trustees
through separate trustee controlled funds.
During 2021, the Trustee Boards of the UK pension plans completed a buy-in
transaction whereby the assets of the plans were invested in a bulk purchase
annuity policy with a UK pension insurance specialist. The insurance policy
was purchased using the existing assets of the plans and a contribution of
€35.9 million from the Group. It is the intention of the Trustee Boards that
the plans will move to a full buy-out as soon as practical, following which
the insurance company will become responsible for the UK pension plan
obligations. On completion of the buy-out, the defined benefit assets
(comprising the annuity policy) and matching defined benefit obligations will
be derecognised from the (condensed) Group balance sheet.
The majority of the net UK pension liabilities at 2 July 2022 and 1 January
2022 relates primarily to Guaranteed Minimum Pension equalisation ("GMPe").
These GMPe liabilities may require an additional contribution from the Group
prior to the completion of the aforementioned buy-out which is expected to
occur in the second half of 2022 and result in the recognition of a
charge/gain in the income statement.
Reconciliation of the amounts recognised on the condensed Group balance sheet
to net defined benefit pension plan asset/(liability):
2 July 1 January
2022 2022
€m €m
Retirement benefit asset 4.8 2.9
Retirement benefit obligation (2.9) (17.1)
Net defined benefit pension plan asset/(liability) 1.9 (14.2)
The net asset disclosed above relates to funded plans. The movement in the net
defined benefit pension plan asset/(liability) is as follows:
2 July 1 January
2022 2022
€m €m
At the beginning of the period (14.2) (29.3)
Current service cost (0.9) (1.9)
Net interest cost (0.1) (0.1)
Settlement loss - (28.8)
Total amount recognised in profit or loss (1.0) (30.8)
Remeasurements:
- Return of plan assets excluding interest income (44.7) 1.9
- Actuarial loss arising from experience adjustments (1.8) (1.7)
- Actuarial loss arising from demographic adjustments - (0.7)
- Actuarial gain arising from changes in financial assumptions 68.6 0.5
- Change in asset ceiling excluding interest expense (6.5) -
Total amount recognised in other comprehensive income 15.6 -
Exchange differences 0.1 (0.4)
Contributions paid/payable by the employer 1.4 46.2
Net asset attributed to the Group - 0.1
At the end of the period 1.9 (14.2)
During the current period the Group recognised an amount of the total surplus
on one of the plans based on the economic benefits that the Group could gain
from a reduction in future contributions.
The principal assumptions used for the purposes of the actuarial valuations
were as follows:
Half year 2022 Half year 2021 Year 2021
ROI UK ROI UK ROI UK
Discount rate 3.40% 3.85% 1.10% 1.95% 1.10% 1.90%
Inflation rate 2.40% 2.65%-3.25% 1.50% 2.60%-3.20% 2.10% 2.80%-3.40%
Future salary increases* 3.40% 0.00% 2.50% 0.00% 3.10% 0.00%
Future pension increases 0.00% 2.65%-3.10% 0.00% 2.60%-3.05% 0.00% 2.75%-3.25%
Mortality rates (years):
- Male - reaching 65 years of age in 20 years' time 24.2 22.3 24.1 22.2 24.1 22.1
- Female - reaching 65 years of age in 20 years' time 26.3 24.6 26.2 24.4 26.2 24.5
- Male - currently aged 65 years old 21.9 21.2 21.8 21.1 21.8 21.1
- Female - currently aged 65 years old 24.3 23.4 24.2 23.2 24.2 23.2
*The ROI defined benefit pension plans are on a career average structure
therefore this assumption does not have a material impact. The UK defined
benefit pension plans comprise solely pensioners and deferred pensioners.
9. Finance income and costs
Notes Half year Half year
2022 2021
€m €m
Finance income
Interest income on loans to related parties 20 0.5 0.7
Changes in fair value of contingent consideration 7 7.3 -
Total finance income 7.8 0.7
Finance costs
Bank borrowing costs (2.5) (2.7)
Facility fees (0.8) (1.0)
Finance cost of private placement debt (4.9) (6.4)
Interest expense on lease liabilities (1.2) (1.3)
Interest expense on swaps (0.2) (0.1)
Changes in fair value of contingent consideration (0.6) -
Total finance costs 20 (10.2) (11.5)
Net finance costs (2.4) (10.8)
Included within finance income is an exceptional item of €7.3 million (note
7).
10. Income taxes
The Group's income tax charge of €15.7 million (HY 2021: €11.7 million)
net of an exceptional tax credit of nil (HY 2021: €3.8 million) (note 7) has
been prepared based on the Group's best estimate of the weighted average tax
rate that is expected for the full financial year.
11. Dividends
Half year Half year
2022 2021
€m €m
Equity dividends to shareholders
Final - 17.53c per ordinary share, paid on 6 May 2022 (FY 2021: 15.94c, paid 49.1 46.5
on 7 May 2021)
Interim - 12.93c per ordinary share, payable on 7 October 2022 (HY 2021: 35.7 34.2
11.75c, paid on 1 October 2021)
Of the €49.1 million (HY 2021: €46.5 million) dividends paid during the
half year ended 2 July 2022, €0.1 million (HY 2021: €0.1 million) are
waived in relation to own shares.
These interim financial statements do not reflect interim dividends. The
amount of interim dividends recommended is based on the number of issued
shares at period end (note 17). The actual amount will be based on the number
of issued shares on the record date. There are no income tax consequences for
the Company in respect of dividends proposed prior to issuance of the interim
financial statements.
12. 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 period, excluding ordinary
shares purchased by the Group and held as own shares. The weighted average
number of ordinary shares in issue used in the calculation of Basic Earnings
Per Share is 279,154,299 (HY 2021: 291,355,433).
Half year 2022 Half year 2021
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Profit after tax attributable to equity holders of the Company (€m) 128.7 55.9 184.6 70.2 11.1 81.3
Basic Earnings Per Share (cent) 46.10 20.03 66.13 24.09 3.81 27.90
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.
Half year Half year
2022 2021
Weighted average number of ordinary shares in issue 279,154,299 291,355,433
Shares deemed to be issued for no consideration in respect of share awards 2,822,926 944,385
Weighted average number of shares used in the calculation of diluted Earnings 281,977,225 292,299,818
Per Share
Half year 2022 Half year 2021
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Diluted Earnings Per Share (cent) 45.64 19.83 65.47 24.01 3.80 27.81
13. Property, plant and equipment, right-of-use assets, intangible assets and interests in joint ventures
Property, plant and equipment
During the six month period to 2 July 2022, there was an increase of property,
plant and equipment arising from additions of €13.2 million (HY 2021:
€25.0 million) and from business combinations of €5.9 million (HY 2021:
€0.2 million). Exchange differences gain of €36.3 million (HY 2021:
€14.6 million gain) and depreciation charges of €23.5 million (HY 2021:
€22.3 million) were also recognised in the period. An impairment of nil (HY
2021: €4.8 million) was recognised in the period.
Right-of-use assets
During the six month period to 2 July 2022, there was an increase of
right-of-use assets arising from additions of €6.3 million (HY 2021: €9.2
million) and from business combinations of €0.6 million (HY 2021: €0.3
million). The increase was offset by depreciation charges of €8.7 million
(HY 2021: €10.4 million) and disposals of €1.8 million (HY 2021: €1.3
million). Exchange differences gain of €7.2 million (HY 2021: €2.9 million
gain) were also recognised in the period. An impairment charge of nil (HY
2021: €0.5 million credit) was recognised in the period.
Intangible assets
During the six month period to 2 July 2022, the Group spent €16.3 million
(HY 2021: €14.1 million) in relation to software and development costs. In
addition, there was an increase of €64.1 million (HY 2021: €49.0 million)
of intangible assets arising from business combinations during the period.
Exchange differences gain of €113.9 million (HY 2021: €42.5 million gain)
and amortisation charges of €36.2 million (HY 2021: €30.0 million) were
also recognised in the period.
Interests in joint ventures
The increase in interests in joint ventures during the current period is due
to share of profit after tax of €11.6 million (HY 2021: €16.5 million),
exchange differences gain of €11.4 million (HY 2021: €7.0 million gain),
share of OCI of €10.1 million (HY 2021: €3.7 million) and dividend
received of €2.6 million (HY 2021: €5.2 million).
14. Borrowings
2 July 1 January
2022 2022
€m €m
Non-current
Bank borrowings 427.6 366.1
Private placement debt 359.7 331.1
787.3 697.2
Current
Bank overdrafts 92.8 136.5
Total borrowings 880.1 833.7
The maturity profile of borrowings, and undrawn committed and uncommitted
facilities is as follows:
2 July 2022 1 January 2022
Borrowings Undrawn committed facilities Undrawn uncommitted facilities Borrowings Undrawn committed facilities Undrawn uncommitted facilities
€m €m €m €m €m €m
12 months or less 92.8 - 15.9 136.5 - 15.9
Between 1 and 2 years - - - - - -
Between 2 and 5 years 427.6 434.1 - 366.1 463.2 -
More than 5 years 359.7 - - 331.1 - -
880.1 434.1 15.9 833.7 463.2 15.9
Net debt is a non-IFRS measure which we provide to investors as we believe
they find it useful. Net debt comprises the following:
2 July 3 July
2022 2021
€m €m
Bank borrowings and private placement debt 787.3 633.3
Cash and cash equivalents net of bank overdrafts (139.2) (83.6)
648.1 549.7
Net debt reconciliation is as follows:
Notes Half year Half year
2022 2021
€m €m
Net debt at the beginning of the period 602.7 493.9
Drawdown of borrowings 427.9 308.1
Repayment of borrowings (388.5) (274.7)
Exchange translation adjustment on net debt 44.1 9.8
Net (increase)/decrease in cash and cash equivalents (37.2) 17.0
Cash and cash equivalents acquired on acquisition 22 (0.9) (4.4)
Net debt at the end of the period 648.1 549.7
15. Fair value of financial instruments
There have been no changes to the risk management procedures or policies since
1 January 2022. Refer to note 29 of the 2021 Annual Report for details on
these risk management procedures and policies.
Except as detailed in the following table, the Group deemed that the carrying
amounts of financial instruments measured at amortised cost in the interim
financial statements approximate their fair value due to their short-term
nature:
2 July 2022 1 January 2022
Carrying Fair value Carrying Fair value
amount €m amount €m
€m €m
Financial assets
Non-current loans to joint ventures 17.2 16.6 42.5 42.6
Non-current financial asset measured at amortised cost 0.1 0.1 0.2 0.2
Financial liabilities
Non-current borrowings 787.3 728.0 697.2 673.2
Fair value is estimated by discounting future contractual cash flows using
current market interest rates from observable interest rates at the end of the
reporting period that are available to the Group for similar financial
instruments (classified as level 2 in the fair value hierarchy).
The following table shows the fair values of financial instruments measured at
fair value:
Fair value hierarchy 2 July 1 January
2022 2022
€m €m
Assets
Equity instrument designated at FVOCI - BDO Development Capital Fund Level 2 1.3 1.1
Interest rate swaps - cash flow hedges Level 2 1.2 -
Cross currency swaps - fair value through income statement Level 2 - 1.4
Foreign exchange contracts - cash flow hedges Level 2 1.0 0.8
Call option over non-controlling interests (NCI) Level 3 0.5 0.5
Liabilities
Cross currency swaps - fair value through income statement Level 2 (0.7) -
Foreign exchange contracts - cash flow hedges Level 2 (0.1) -
Interest rate swaps - cash flow hedges Level 2 - (1.2)
Put option liability Level 3 (20.3) (24.8)
Contingent consideration Level 3 (24.9) (7.3)
Refer to note 29 of the 2021 Annual Report for details of the valuation
process of the above financial assets and liabilities and note 22 of these
interim financial statements for the valuation methodology of the contingent
consideration at period end which is related to the acquisition of Sterling
Technology, LLC.
The movement in carrying amounts associated with Level 3 financial instruments
are as follows:
Call option Put option liability Contingent consideration
over NCI €m €m
€m
At 2 January 2022 0.5 (24.8) (7.3)
Additions through business combination (note 22) - - (23.1)
Remeasurements - 4.5 6.7
Exchange translation adjustments - - (1.2)
At 2 July 2022 0.5 (20.3) (24.9)
At 3 January 2021 - - (17.4)
Additions through business combination 0.4 (23.2) (7.2)
Exchange translation adjustments - - (0.6)
At 3 July 2021 0.4 (23.2) (25.2)
16. Provisions
Restructuring Property Legal and operational Total
€m and lease commitments €m €m
€m
At 2 January 2022 - non-current - 3.6 - 3.6
At 2 January 2022 - current 2.3 2.5 8.1 12.9
Amount provided for in the period - - 0.2 0.2
Utilised in the period (2.1) (0.3) (0.2) (2.6)
Unused amounts reversed in the period - - (0.3) (0.3)
Exchange differences 0.1 0.4 0.3 0.8
At 2 July 2022 0.3 6.2 8.1 14.6
Non-current - 3.3 - 3.3
Current 0.3 2.9 8.1 11.3
0.3 6.2 8.1 14.6
17. Share capital and share premium
Number of Ordinary Share Total
shares shares premium €m
(thousands) €m €m
At 2 January 2022 287,169 17.2 87.8 105.0
Cancellation of own shares (10,831) (0.6) - (0.6)
At 2 July 2022 276,338 16.6 87.8 104.4
At 3 January 2021 294,402 17.7 87.6 105.3
Issuance of shares 40 - 0.2 0.2
Cancellation of own shares (3,147) (0.2) - (0.2)
At 3 July 2021 291,295 17.5 87.8 105.3
The total authorised number of ordinary shares in the current and prior period
is 350 million shares with a par value of €0.06 per share. All issued shares
are fully paid, and carry one vote per share and a right to dividends.
During the half year ended 2 July 2022, 10.8 million ordinary shares (HY 2021:
3.1 million) were cancelled through the share buyback programme. The amount
paid to repurchase these shares was initially recognised in the own shares
reserve and was transferred to retained earnings on cancellation.
18. Other reserves and retained earnings
18.1 Other reserves
Half year 2022 Capital and merger reserve Currency reserve Hedging reserve Put option liability reserve Own Share based payment reserve Other
€m €m €m €'m shares €m €m Total
€m €m
Balance at 2 January 2022 116.5 151.9 (10.6) (24.8) (6.4) 19.3 (0.4) 245.5
Currency translation differences - 140.3 - - - - - 140.3
Net investment hedge - (7.5) - - - - - (7.5)
Revaluation - gross - - 15.9 - - - 0.3 16.2
Reclassification to profit or loss - gross - - (0.7) - - - - (0.7)
Deferred tax - - (3.6) - - - (0.1) (3.7)
- 132.8 11.6 - - - 0.2 144.6
Purchase of own shares - - - - (136.6) - - (136.6)
Cancellation of own shares 0.6 - - - 126.2 - - 126.8
Cost of share-based payments - - - - - 7.6 - 7.6
Transfer on exercise, vesting or expiry of - - - - 7.2 (9.3) - (2.1)
share-based payments
Changes in fair value of put option liability (note 15) - - - 4.5 - - - 4.5
Transfer to Group income statement* - - 1.5 - - - - 1.5
Balance at 2 July 2022 117.1 284.7 2.5 (20.3) (9.6) 17.6 (0.2) 391.8
Half year 2021
Balance at 3 January 2021 116.0 31.9 (20.6) - (11.4) 10.3 (0.2) 126.0
Currency translation differences - 62.0 - - - - - 62.0
Net investment hedge - (3.0) - - - - - (3.0)
Revaluation - gross - - 7.0 - - - (0.3) 6.7
Reclassification to profit or loss - gross - - 0.2 - - - - 0.2
Deferred tax - - (1.6) - - - 0.1 (1.5)
- 59.0 5.6 - - - (0.2) 64.4
Purchase of own shares - - - - (35.3) - - (35.3)
Cancellation of own shares 0.2 - - - 33.4 - - 33.6
Cost of share-based payments - - - - - 6.2 - 6.2
Transfer on exercise, vesting or expiry of - - - - 5.4 (5.4) - -
Share-based payments
Recognition of put option liability - - - (23.2) - - - (23.2)
Balance at 3 July 2021 116.2 90.9 (15.0) (23.2) (7.9) 11.1 (0.4) 171.7
*On disposal of discontinued operation.
Refer to note 23 of the 2021 Annual Report for a description of the components
of other reserves.
18.2 Retained earnings
Notes Half year Half year
2022 2021
€m €m
At the beginning of the period 1,381.7 1,380.5
Profit for the period attributable to equity holders of the Company 184.6 81.3
Other comprehensive income
- Remeasurements on defined benefit plans 8 15.6 3.6
- Deferred tax on remeasurements on defined benefit plans (1.6) (0.2)
- Share of remeasurements on defined benefit plans from joint ventures, net of 0.6 -
deferred tax
- Share of remeasurements on defined benefit plans from discontinued - 11.2
operations, net of deferred tax
14.6 14.6
Dividends (49.0) (46.4)
Cancellation of own shares (126.2) (33.4)
Transfer on exercise, vesting or expiry of share-based payments 18.1 2.1 -
Deferred tax on share-based payments 1.0 0.8
At the end of the period 1,408.8 1,397.4
19. Related party transactions
Refer to note 3 for the disposal of Glanbia Ireland which was a joint venture
of the Group up to 1 April 2022. From 2 April 2022, Glanbia Ireland became a
wholly owned subsidiary of Glanbia Co-operative Society Limited and also a
other related party to the Group. Accordingly transactions with Glanbia
Ireland from 2 April 2022 were included within Glanbia Co-operative Society
Limited and its subsidiaries ("Glanbia Co-operative Group") in the table
below. As part of the terms of the Transaction, the Company paid Glanbia
Ireland a contribution of €8 million related to pension obligations,
separation and rebranding costs and has committed to a maximum additional
€1.5 million re-imbursement of rebranding costs in connection with the
Transaction.
Other transactions that occurred with related parties during the period ended
2 July 2022 include:
Half year Half year
2022 2021
€m €m
Dividends paid to Glanbia Co-operative Group 15.3 14.9
Dividend received from joint ventures 2.6 17.4*
Loans advanced to joint ventures 3.5 3.5
Loans advanced to Glanbia Ireland which were repaid 28.8 -
Sales of goods and services
- Sales of services to joint ventures 14.6 32.0
- Sales of services to Glanbia Co-operative Group 8.7 1.4
Purchases of goods and services
- Purchases of goods from joint ventures 1,049.5 663.9
- Purchases of goods from Glanbia Co-operative Group 16.5 -
* Includes €12.2 million received from Glanbia Ireland.
20. Net cash flows from operating activities before exceptional items
Notes Half year Half year
2022 2021
€m €m
Profit for the year 184.3 81.3
Exceptional items 7 (62.8) 52.2
Profit after tax from discontinued operations - (11.1)
Income taxes 15.7 15.5
Profit before taxation 137.2 137.9
Share of results of joint ventures accounted for using the equity method 4 (11.4) (18.8)
Finance costs 9 10.2 11.5
Finance income 9 (0.5) (0.7)
Amortisation of intangible assets 13 36.2 30.0
Depreciation of property, plant and equipment 13 23.5 22.3
Depreciation of right-of-use assets 13 8.7 10.4
Net movement in allowance for impairment of receivables 2.1 0.4
Cost of share-based payments 18.1 7.6 6.2
Net write down/(reversal) of inventories 5.6 (1.2)
Other 1.3 (1.8)
Operating cash flows before movement in working capital 220.5 196.2
Movement in working capital (234.6) (24.4)
Net cash flows from operating activities before exceptional items (14.1) 171.8
21. Contingent liabilities and commitments
Contingent liabilities
Guarantees provided by financial institutions amounting to €7.2 million (FY
2021: €6.9 million) are outstanding at 2 July 2022. The Group does not
expect any material loss to arise from these guarantees. The Group has
contingent liabilities in respect of legal claims arising in the ordinary
course of business. It is not anticipated that any material liability will
arise from these contingent liabilities other than those provided for.
Commitments
At 2 July 2022 the Group had entered into contractual commitments for the
acquisition of property, plant and equipment amounting to €6.2 million (FY
2021: €8.3 million) and software of €1.2 million (FY 2021: €1.5).
As at 2 July 2022, the Group has committed to invest €10.0 million (FY 2021:
€10.0 million) cash contributions in Glanbia Cheese EU Limited, a joint
venture of the Group, which is contingent on the successful commissioning of
the plant. Additionally, there was an undrawn loan facility of €3.0 million
as at 2 July 2022 (FY 2021: €1.3 million) which was provided by the Group to
the joint venture.
22. Business combinations
On 11 March 2022 Glanbia acquired 100% of the voting shares of Sterling
Technology, LLC ("Sterling"), a bioactive ingredient company based in South
Dakota, USA. Sterling will complement the existing ingredient technology
portfolio of Nutritional Solutions providing bioactive ingredients which are
mainly used in the growing immunity and gut-health segments as well as in pet
nutrition. The 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 immunity solutions
in Nutritional Solutions. Goodwill of €22.0 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 paid 54.0
Contingent consideration 23.1
Total purchase consideration 77.1
Less: Fair value of net assets acquired (55.1)
Goodwill 22.0
The provisional fair value of assets and liabilities arising from the
acquisition are as follows:
Notes Total
€m
Property, plant and equipment 13 5.9
Right-of-use assets 13 0.6
Intangible assets - customer relationships 30.5
Intangible assets - recipes and know-how 10.0
Intangible assets - trade names 1.6
Inventories 3.3
Trade and other receivables 5.5
Cash and cash equivalents 14 0.9
Trade and other payables (2.6)
Lease liabilities (0.6)
Fair value of net assets acquired 55.1
The contingent consideration arrangement requires the Group to pay the former
owners of Sterling an earnout in 2023 if a pre-defined earnings threshold is
exceeded within a defined period post acquisition. Under the acquisition
agreement, the undiscounted amount of future payments for which the Group may
be liable ranges from nil to US$27.5 million (€26.4 million translated at
the period end exchange rate).
The fair value of the contingent consideration of €24.9 million at period
end (note 15) was estimated by calculating the present value of the future
expected payments. The main significant unobservable input in the calculation
is the forecast EBITDA of Sterling over the relevant period. As it is deemed
highly probable that the higher end of the EBITDA range will be met, the Group
have assumed that the upper limit of the earnout will be payable. A 10%
increase in the forecast EBITDA would not change the fair value of the
contingent consideration. A 10% decrease in forecast EBITDA would result in a
decrease in fair value of the contingent consideration by €8.4 million.
The fair value of Sterling's trade and other receivables at the acquisition
date amounted to €5.5 million. The gross contractual amount for receivables
due is €5.8 million, of which €0.3 million is expected to be
uncollectible. Acquisition-related costs of €0.6 million incurred primarily
on professional fees are included in administrative expenses.
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 interim 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 2022 Annual Report as stipulated
by IFRS 3 'Business Combinations'.
Combined impact of acquisitions
The revenue and profit before taxation and exceptional items of the Group,
including the post-acquisition impact of acquisition completed during the
period ended 2 July 2022, were as follows:
2022 Group excluding Consolidated group including
acquisition acquisition acquisition
€m €m €m
Revenue 9.4 2,819.4 2,828.8
Profit before taxation and exceptional items 2.2 135.0 137.2
The revenue and profit before taxation and exceptional items of the Group for
the period ended 2 July 2022 determined in accordance with IFRS 3 as though
the acquisition date for all business combinations effected during the year
had been at the beginning of the period would be as follows:
2022 Group excluding Pro-forma consolidated
acquisition acquisition group
€m €m €m
Revenue 14.3 2,819.4 2,833.7
Profit before taxation and exceptional items 2.5 135.0 137.5
The Group acquired PacMoore Process Technologies, LLC in 2021 for which the
fair value of assets and liabilities were determined provisionally. There was
no change to goodwill following the finalisation of the fair value of assets
and liabilities during the measurement period.
23. Events after the reporting period
See note 11 for the interim dividend, recommended by the Directors, to be paid
on 7 October 2022.
Other than as described above, there have been no material events subsequent
to the end of the interim period ended 2 July 2022 which require disclosure in
this report.
24. Information
The interim financial statements are considered non-statutory financial
statements for the purposes of the Companies Act 2014 and in compliance with
section 340(4) of that Act we state that:
· the interim financial statements have been prepared to meet our
obligation under the Transparency (Directive 2004/109/EC) Regulations 2007 as
amended (Statutory Instrument No. 277 of 2007);
· the interim financial statements do not constitute the statutory
financial statements of the Group and are unaudited;
· the statutory financial statements as at, and for the financial
year ended 1 January 2022 will be annexed to the 2021 annual return and filed
with the Companies Registration Office;
· the statutory auditor of the Group have made a report under
section 391 in the form required by section 336 Companies Act 2014 in respect
of the statutory financial statements of the Group; and
· the matters referred to in the statutory auditor's report were
unqualified, and did not include a reference to any matters to which the
statutory auditor drew attention by way of emphasis without qualifying the
report.
Copies of this half yearly financial report are available for download from
the Group's website at www.glanbia.com.
glossary
Key peRformance indicators and non-ifrs performance measures
Non-IFRS performance measures
The Group reports certain performance measures that are not defined under IFRS
but which represent additional measures used by the Board of Directors and the
Glanbia Operating Executive in assessing performance and for reporting both
internally and to shareholders and other external users. The Group believes
that the presentation of these non-IFRS performance measures provides useful
supplemental information which, when viewed in conjunction with our IFRS
financial information, provides readers with a more meaningful understanding
of the underlying financial and operating performance of the Group.
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:
Relevant for Relevant for
Half year 2022 Year 2021
G 1. Constant currency √ √
G 2. Revenue √ √
G 3. EBITA (pre-exceptional) √ √
G 4. EBITA margin % (pre-exceptional) √ √
G 5. EBITDA √ √
G 6. Constant Currency Basic and Adjusted Earnings Per Share ("EPS") √ √
G 7. Net debt √ √
G 8. Financing Key Performance Indicators √ √
G 9. Volume and pricing increase/(decrease) √ √
G 10. Like-for-like revenue increase/(decrease) √ √
G 11. Effective tax rate √ √
G 12. Average interest rate √ √
G 13. Operating cash conversion √ √
G 14. Operating cash flow and free cash flow √ √
G 15. Dividend payout ratio √ √
G 16. Compound annual growth rate ("CAGR") √ √
G 17. Exceptional items √ √
Total shareholder return √
Return on capital employed √
The principal non-IFRS performance measures relevant to the interim period are
defined below with a reconciliation of these measures to IFRS measures where
applicable.
A number of the non-IFRS performance measures below have been re-presented to
reflect continuing and discontinued operations in line with the presentation
adopted in the Group income statement.
Total shareholder return and return on capital employed are not considered
relevant by the Group for the interim period as they are performance measures
considered on an annual basis only as part of the performance conditions in
Glanbia's Long-term Incentive Plan.
G 1. Constant currency
While the Group reports its results in euro, it generates a significant
proportion of its earnings in currencies other than euro, in particular US
dollar. Constant currency reporting is used by the Group to eliminate the
translational effect of foreign exchange on the Group's results. To arrive at
the constant currency period-on-period change, the results for the prior
period are retranslated using the average exchange rates for the current
period and compared to the current period reported numbers.
The principal average exchange rates used to translate results as at the
reporting dates are set out below:
1 euro = Half year Half year Year
2022 2021 2021
US dollar 1.0928 1.2044 1.1826
Pound sterling 0.8422 0.8677 0.8596
G 2. Revenue
Revenue comprises sales of goods and services to external customers net of
value added tax, rebates and discounts. Revenue is one of the Group's Key
Performance Indicators and is an IFRS performance measure.
G 2.1 Group revenue
Reference to the Half year Half year 2021 Half year 2021 Constant currency Like-for-like growth
interim financial 2022 Reported Retranslated growth %
statements/glossary €'m €'m €'m %
Nutritional Solutions Note 4 588.8 434.8 471.5 24.9% 19.5%
US Cheese Note 4 1,445.9 969.0 1,068.0 35.4% 35.4%
Glanbia Nutritionals Note 4 2,034.7 1,403.8 1,539.5 32.2% 30.5%
Americas Note 4 538.7 436.6 480.9 12.0% 12.0%
International (including Direct-to-Consumer) Note 4 255.4 201.8 210.2 21.5% 19.0%
Glanbia Performance Nutrition Note 4 794.1 638.4 691.1 14.9% 14.1%
Revenue Note 6 2,828.8 2,042.2 2,230.6 26.8% 25.3%
G 3. EBITA (pre-exceptional)
EBITA (pre-exceptional) is defined as earnings before interest, tax and
amortisation. EBITA references throughout the half year results are on a
pre-exceptional basis unless otherwise indicated. EBITA (pre-exceptional) is
one of the Group's Key Performance Indicators. Business Segment EBITA
(pre-exceptional) growth on a constant currency basis is one of the
performance conditions in Glanbia's Annual Incentive Plan for Senior
Management. Refer to note 6 of the interim financial statements for the
reconciliation of EBITA (pre-exceptional).
G 3.1 EBITA (pre-exceptional)
Reference to the Half year Half year 2021 Half year 2021 Constant currency
interim financial 2022 Reported Retranslated growth
statements/glossary €'m €'m €'m %
Nutritional Solutions 71.7 56.6 62.7 14.4%
US Cheese 17.7 13.1 14.7 20.4%
Glanbia Nutritionals Note 4 89.4 69.7 77.4 15.5%
Glanbia Performance Nutrition Note 4 82.3 90.2 100.5 (18.1%)
EBITA (pre-exceptional) Note 6 171.7 159.9 177.9 (3.5%)
G 4. EBITA margin % (pre-exceptional)
EBITA margin % (pre-exceptional) is defined as EBITA (pre-exceptional) as a
percentage of revenue. Refer to G 2.1 and G 3.1 for reconciliations of revenue
and EBITA (pre-exceptional) respectively. EBITA references throughout the half
year results are on a pre-exceptional basis unless otherwise indicated.
G 5. EBITDA
EBITDA is defined as earnings before interest, tax, depreciation (net of grant
amortisation) and amortisation. EBITDA references throughout the half year
results are on a pre-exceptional basis unless otherwise indicated.
Reference to the Half year Half year
interim financial 2022 2021
statements/glossary €'m €'m
EBITA (pre-exceptional) G 3.1 171.7 159.9
Depreciation* 32.3 31.3
EBITDA (pre-exceptional) G 14 204.0 191.2
*Includes depreciation of property, plant and equipment of €23.5 million (HY
2021: €22.3 million) and depreciation of right-of-use assets (excluding
exceptional) of €8.8 million (HY 2021: €9.0 million).
G 6. Constant Currency Basic and Adjusted Earnings Per Share ("EPS")
G 6.1 Constant Currency Basic Earnings Per Share
Basic EPS is calculated by dividing the net profit attributable to the equity
holders of the Company by the weighted average number of ordinary shares in
issue during the period, excluding ordinary shares purchased by the Group and
held as own shares (see note 12). Basic EPS has also been calculated on a
continuing basis (excluding Glanbia Ireland) in line with the presentation of
continuing and discontinued operations in the Condensed Group income
statement.
Reference to the Half year Half year Half year Year
interim financial 2022 2021 2021 2021
statements/glossary €'m Reported Retranslated Reported
€'m €'m €'m
Profit after tax attributable to equity holders of the Company Condensed Group income statement 184.6 81.3 92.9 167.0
Less: Profit after tax attributable to equity holders of the Company - Condensed Group income statement (55.9) (11.1) (11.1) (26.4)
discontinued operations
Profit after tax attributable to equity holders of the Company - continuing Note 12 128.7 70.2 81.8 140.6
operations
Weighted average number of ordinary shares in issue (thousands) Note 12 279,154 291,355 291,355 290,059
Basic Earnings Per Share (cent) - continuing operations 46.10 24.09 28.08 48.47
Basic Earnings Per Share (cent) Note 12 66.13 27.90 31.89 57.57
Constant currency change - continuing operations 64.2%
Constant currency change 107.4%
G 6.2 Constant Currency Adjusted Earnings Per Share
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 period, excluding ordinary shares purchased by the Group and held as own
shares (see note 12). The Group concluded that adjusted EPS is a better
measure of underlying performance than Basic EPS as it excludes exceptional
items (net of related tax) that are not related to ongoing operational
performance and intangible asset amortisation, which allows better
comparability of companies that grow by acquisition to those that grow
organically. Adjusted EPS has also been calculated on a continuing basis
(excluding Glanbia Ireland) in line with the presentation of continuing and
discontinued operations in the Condensed Group income statement.
Adjusted EPS is one of the Group's Key Performance Indicators. Adjusted EPS
growth on a constant currency basis is one of the performance conditions in
Glanbia's Annual Incentive Plan and in Glanbia's Long-term incentive plan.
Reference to the Half year Half year Half year Year
interim financial 2022 2021 2021 2021
statements/glossary €'m Reported Retranslated Reported
€'m €'m €'m
Profit after tax from continuing operations Condensed Group income statement 128.4 70.2 81.8 141.0
Exceptional (credit)/charge - continuing operations Condensed Group income statement (6.9) 52.2 54.8 42.8
Profit after tax from continuing operations (pre-exceptional) Condensed Group income statement 121.5 122.4 136.6 183.8
Non-controlling interests Condensed Group income statement 0.3 - - (0.4)
Amortisation of intangible assets (excluding software amortisation) net of 24.2 19.9 21.9 42.4
related tax of €3.8 million (HY 2021: €3.4 million, HY 2021 retranslated
€3.7 million, FY 2021: €7.0 million) - continuing operations
Adjusted net income - continuing operations 146.0 142.3 158.5 225.8
Profit after tax from discontinued operations Condensed Group income statement 55.9 11.1 11.1 26.4
Exceptional credit - discontinued operations Condensed Group income statement (55.9) - - (0.7)
Profit after tax from discontinued operations (pre-exceptional) Condensed Group income statement - 11.1 11.1 25.7
Amortisation and impairment of intangible assets (excluding software - 0.6 0.6 1.3
amortisation) net of related tax of nil (HY 2021: €0.1 million, HY 2021
retranslated €0.1 million, FY 2021: €0.2 million) - discontinued
operations
Adjusted net income 146.0 154.0 170.2 252.8
Weighted average number of ordinary shares in issue (thousands) Note 12 279,154 291,355 291,355 290,059
Adjusted Earnings Per Share (cent) - continuing operations 52.31 48.84 54.39 77.84
Adjusted Earnings Per Share (cent) G 15 52.31 52.86 58.41 87.15
Constant currency change - continuing operations (3.8%)
Constant currency change (10.4%)
G 7. Net debt
Net debt is calculated as current and non-current borrowings less cash and
cash equivalents.
Reference to the Half year Half year Year
interim financial 2022 2021 2021
statements/glossary €'m €'m €'m
Cash and cash equivalents Condensed Group balance sheet (232.0) (156.6) (231.0)
Current borrowings Condensed Group balance sheet 92.8 73.0 136.5
Non-current borrowings Condensed Group balance sheet 787.3 633.3 697.2
Net debt Note 14, G 14 648.1 549.7 602.7
G 8. Financing Key Performance Indicators
The following are the financing key performance indicators defined as per the
Group's financing agreements.
G 8.1 Net debt: adjusted EBITDA
Net debt: adjusted EBITDA is calculated as net debt at the end of the period
divided by adjusted EBITDA. Net debt is calculated as current and non-current
borrowings less cash and cash equivalents. Adjusted EBITDA is calculated in
accordance with lenders' facility agreements definitions which adjust EBITDA
for items such as exceptional items, dividends received from joint ventures,
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 to the Half year Half year Year
interim financial 2022 2021 2021
statements/glossary €'m €'m €'m
Net debt Note 14, G 7 648.1 549.7 602.7
Rolling EBITDA 346.4 346.5 333.6
Adjustments in line with lenders' facility agreements 7.4 16.4 19.2
Rolling adjusted EBITDA 353.8 362.9 352.8
Net debt: adjusted EBITDA 1.83 times 1.51 times 1.71 times
G 8.2 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 joint ventures divided by adjusted net finance
cost. Adjusted net finance cost comprises finance costs less finance income
per the Condensed Group income statement plus borrowing costs capitalised into
assets and excludes finance income/costs on changes in fair value 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).
Half year Half year Year
2022 2021 2021
€'m €'m €'m
Operating profit 207.6 297.1 158.3
Exceptional charge 4.7 (73.0) 48.4
Operating profit (pre-exceptional) 212.3 224.1 206.7
Dividends received from joint ventures 19.1 36.1 33.9
IFRS 16 adjustment - interest (2.5) (2.5) (2.5)
Rolling adjusted EBIT 228.9 257.7 238.1
Rolling net finance cost 14.3 17.8 15.8
Adjusted EBIT: net finance cost 16.0 times 14.5 times 15.1 times
G 9. Volume and pricing increase/(decrease)
Volume increase/(decrease) represents the impact of sales volumes within the
revenue movement period-on-period, excluding volume from acquisitions, on a
constant currency basis.
Pricing increase/(decrease) represents the impact of sales pricing (including
trade spend) within revenue movement period-on-period, excluding acquisitions,
on a constant currency basis.
G 9.1 Reconciliation of volume and pricing increase/(decrease) to constant
currency revenue growth
Reference to the Volume increase/ Price Acquisitions/ Revenue increase/
interim financial (decrease) increase/ (disposals) (decrease)
statements/glossary (decrease)
Nutritional Solutions G 2.1 1.6% 17.9% 5.4% 24.9%
US Cheese G 2.1 6.6% 28.8% - 35.4%
Glanbia Nutritionals G 2.1 5.1% 25.4% 1.7% 32.2%
Glanbia Performance Nutrition G 2.1 0.5% 13.6% 0.8% 14.9%
HY 2022 increase % - revenue G 2.1 3.7% 21.7% 1.4% 26.8%
G 10. Like-for-like revenue increase/(decrease)
G 10.1 Glanbia Performance Nutrition ("GPN") like-for-like revenue
GPN like-for-like revenue represents the sales increase/(decrease)
period-on-period, excluding the incremental revenue contributions from current
period and prior period acquisitions, on a constant currency basis.
GPN like-for-like branded revenue represents the sales increase/(decrease)
period-on-period on branded sales, excluding the incremental revenue
contributions from current period and prior period acquisitions, 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 10.2 Glanbia Nutritionals like-for-like revenue
This represents the sales increase/(decrease) period-on-period, excluding the
incremental revenue contributions from current period and prior period
acquisitions, on a constant currency basis.
G 11. Effective tax rate
The effective tax rate is defined as the income tax charge divided by the
profit before tax less share of results of joint ventures which is calculated
on a pre-exceptional basis.
Reference to the interim financial Half year Half year
statements/glossary 2022 2021
€'m €'m
Profit before tax - continuing operations Condensed Group income statement 144.1 81.9
Exceptional charge Condensed Group income statement (6.9) 56.0
Profit before tax (pre-exceptional) - continuing operations Condensed Group income statement 137.2 137.9
Less share of results of joint ventures (pre-exceptional) Condensed Group income statement (11.4) (18.8)
125.8 119.1
Income tax Condensed Group income statement 15.7 11.7
Exceptional tax credit - 3.8
Income tax (pre-exceptional) Condensed Group income statement 15.7 15.5
Effective tax rate 12.5% 13.0%
G 12. Average interest rate
The average interest rate is defined as the annualised net finance costs
(excluding capitalised borrowing costs, finance income/costs on changes in
fair value of call option and contingent consideration and interest expense on
lease liabilities) divided by the average net debt during the reporting
period.
G 13. Operating cash conversion
Operating cash conversion is defined as Operating Cashflow ("OCF") divided by
pre-exceptional EBITDA. Cash conversion is a measure of the Group's ability to
convert trading profits into cash and is an important metric in the Group's
working capital management programme.
G 14. Operating cash flow and free cash flow
Operating cash flow is defined as pre-exceptional Group EBITDA net of business
sustaining capital expenditure and working capital movements, excluding
exceptional cash flows.
Operating cash flow is one of the Group's Key Performance Indicators.
Operating cash flow is one of the performance conditions in Glanbia's Annual
Incentive Plan.
Free cash flow is calculated as the net cash flow in the period before the
following items: strategic capital expenditure, dividends paid to Company
shareholders, loans/investments in joint ventures, exceptional costs paid,
payment for acquisition of subsidiaries, proceeds received on disposals,
purchase of own shares under share buyback and currency translation movements.
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
EBITDA (pre-exceptional) G 5 204.0 191.2
Movement in working capital (pre-exceptional) G 14.2 (225.3) (24.0)
Business sustaining capital expenditure G 14.4 (7.3) (5.8)
Operating cash flow G 14.1 (28.6) 161.4
Net interest and tax paid G 14.3 (31.8) (30.6)
Dividends received from joint ventures Condensed Group statement of cash flows 2.6 17.4
Payments of lease liabilities Condensed Group statement of cash flows (7.4) (9.7)
Other (outflows)/inflows G 14.5 (2.0) 3.2
Free cash flow (67.2) 141.7
Strategic capital expenditure G 14.4 (22.0) (33.9)
Dividends paid to Company shareholders Condensed Group statement of cash flows (49.0) (46.4)
Purchase of own shares under share buyback (127.1) (33.4)
Loans/investments in joint ventures Condensed Group statement of cash flows 25.3 (3.5)
Cash outflow related to exceptional items Condensed Group statement of cash flows (14.8) (43.5)
Proceeds from sale of Glanbia Ireland DAC Condensed Group statement of cash flows 307.0 -
Payment for acquisition of subsidiaries Condensed Group statement of cash flows (54.4) (31.4)
Net cash flow (2.2) (50.4)
Exchange translation Note 14 (44.1) (9.8)
Cash acquired on acquisition Note 14 0.9 4.4
Net debt movement (45.4) (55.8)
Opening net debt Note 14 (602.7) (493.9)
Closing net debt G 7, Note 14 (648.1) (549.7)
G 14.1 Reconciliation of operating cash flow to the Condensed Group statement
of cash flows in the interim financial statements
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
Net cash flows from operating activities before exceptional items Note 20 (14.1) 171.8
Less: business sustaining capital expenditure G 14.4 (7.3) (5.8)
Non-cash items not adjusted in computing operating cash flow:
Cost of share-based payments Note 20 (7.6) (6.2)
Other reconciling items 0.4 1.6
Operating cash flow G 14 (28.6) 161.4
G 14.2 Movement in working capital
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
Movement in working capital (pre-exceptional) G 14 (225.3) (24.0)
Net (write-down)/reversal of inventories (pre-exceptional) Note 20 (5.6) 1.2
Net movement in allowance for impairment of receivables Note 20 (2.1) (0.4)
Other reconciling items (1.6) (1.2)
Movement in net working capital Note 20 (234.6) (24.4)
G 14.3 Net interest and tax paid
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
Interest received Condensed Group statement of cash flows 1.0 0.4
Interest paid (including interest expense on leases liabilities) Condensed Group statement of cash flows (9.4) (10.6)
Tax paid Condensed Group statement of cash flows (23.4) (20.4)
Net interest and tax paid G 14 (31.8) (30.6)
G 14.4 Capital expenditure
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
Business sustaining capital expenditure G 14 7.3 5.8
Strategic capital expenditure G 14 22.0 33.9
Total capital expenditure 29.3 39.7
Purchase of property, plant and equipment Condensed Group statement of cash flows 12.7 25.6
Purchase of intangible assets Condensed Group statement of cash flows 16.6 14.1
Total capital expenditure per the Condensed Group statement of cash flows 29.3 39.7
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.
G 14.5 Other (outflows)/inflows
Reference to the interim financial statements/glossary Half year Half year
2022 2021
€'m €'m
Cost of share-based payments Note 20 7.6 6.2
Proceeds from disposal/redemption from FVOCI financial assets Condensed Group statement of cash flows 0.3 0.5
Purchase of own shares (9.5) (1.9)
Other reconciling items (0.4) (1.6)
Total other (outflows)/inflows G 14 (2.0) 3.2
G 15. Dividend payout ratio
Dividend payout ratio is defined as the interim dividend per ordinary share
divided by the Adjusted Earnings Per Share. The dividend payout ratio provides
an indication of the value returned to shareholders relative to the Group's
total earnings.
Reference to the interim financial Half year Half year
statements/glossary 2022 2021
€ cent € cent
Adjusted Earnings Per Share G 6.2 52.31 52.86
Dividend recommended/paid per ordinary share Note 11 12.93 11.75
Dividend payout % 24.7% 22.2%
G 16. 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 17. Exceptional items
The Group considers that items of income or expense which are material by
virtue of their scale and nature should be disclosed separately if the Group
financial statements are to fairly present the financial performance and
financial position of the Group. Determining which transactions are to be
considered exceptional in nature is often a subjective matter. However,
circumstances that the Group believes would give rise to exceptional items for
separate disclosure are outlined in the accounting policy on exceptional items
in note 2 to the 2021 financial statements. Exceptional items are included on
the income statement line item to which they relate. In addition, for clarity,
separate disclosure is made of all items in one column on the face of the
Group income statement. Refer to note 7 for an analysis of exceptional items
recognised in half year 2022.
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