REG - Glanbia PLC - Glanbia half year 2023 results
16/08/2023 07:00
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RNS Number : 4287J Glanbia PLC 16 August 2023
Glanbia half year 2023 results
First half ahead of expectations, full year guidance upgraded to 12% to 15%
growth in adjusted EPS(1)
16 August 2023 - Glanbia plc ("Glanbia", the "Group", the "Company", the
"plc"), the better nutrition company, announces its financial results for the
six month period ended 1 July 2023 ("Half Year 2023", or "HY 2023").
As announced on 1 March 2023, the Group has changed its presentation currency
from Euro to US Dollar. All figures presented are in US Dollar unless stated
otherwise, with comparative figures also restated in US Dollar.
Key highlights from HY 2023:
· Earnings growth in the first half, positive outlook for the
remainder of 2023; full year guidance upgraded to between 12% and 15% growth
in adjusted EPS reflecting improved outlook for GPN;
· Group revenues of $2.8 billion (HY 2022: $3.1 billion)
representing a decrease of 10.0% constant currency (down 10.3% reported);
· Group EBITA pre-exceptional of $198.6 million (HY 2022: $187.6
million), an increase of 6.1% constant currency (up 5.9% reported);
· Group EBITA pre-exceptional margins of 7.2% (HY 2022: 6.1%) with
margin growth across all business segments;
· Adjusted earnings per share of 60.78 $cent (HY 2022: 57.17 $cent)
representing growth of 6.6% constant currency (up 6.3% reported);
· Basic EPS from continuing operations of 71.90 $cent (HY 2022:
50.40 $cent);
· Glanbia Performance Nutrition ("GPN"):
o Like-for-like ("LFL") branded revenue +3.7% with pricing +10.9% and volume
-7.2%;
o Optimum Nutrition ("ON") brand delivered LFL revenue growth of +16.2% with
volume and price momentum; ON sustained US consumption growth(2) of 14.3%;
o EBITA margin 12.1% (HY 2022: 10.4%), an increase of 170bps;
· Glanbia Nutritionals - Nutritional Solutions ("GN NS"):
o LFL revenue -15.2% with pricing -4.8% and volume -10.4%;
o EBITA margin 12.9% (HY 2022: 12.2%), an increase of 70bps;
o Sequential improvement in volumes through the period;
· Capital allocation:
o Interim dividend increased by 10% to 14.22 €cent per share;
o Returned €64.5 million to shareholders in the period via share buyback
activity;
o Completed the sale of Glanbia Cheese joint ventures for initial proceeds
of €178.9 million (including the repayment of shareholder loans);
· Strong balance sheet with net debt to adjusted EBITDA ratio of
0.99 times (HY 2022: 1.75 times); and
· Siobhán Talbot to retire as Group Managing Director on 31
December 2023, Hugh McGuire to be appointed CEO on 1 January 2024.
1. Adjusted Earnings Per Share ("EPS") growth on a constant currency basis
2. Consumption growth is US measured in channels and includes Online, FDMC
(Food, Drug, Mass, Club) and Specialty channels. Data compiled from published
external sources and Glanbia estimates for the 12 week period to 16 July 2023
Commenting today Siobhán Talbot, Group Managing Director, said:
"I am pleased to report that Glanbia's performance in the first half of the
year was ahead of our expectations as the Group successfully navigated some
continuing volatility in global market conditions. This was driven by a strong
operating performance, continued demand for our better nutrition brands and
ingredients and the exceptional commitment of our people. We are upgrading our
guidance for FY 2023, with adjusted Earnings Per Share now expected to grow by
between 12% and 15% on a constant currency basis.
Our earnings momentum in the first half of 2023 was driven by a good
performance in GPN as growth in revenue, earnings and margin reflected a
strong global performance for our flagship Optimum Nutrition brand. GN's first
half performance was in line with expectations, as customer supply chain
rebalancing trends reduced volumes, with progressive improvements in demand
trends as the period progressed which we expect to continue into the second
half of the year.
Our strategy is on track as we continue to reshape and simplify our portfolio,
invest to sustain consumer and customer relevance, drive margin improvement
and deliver strong operating returns and cash conversion. In terms of returns
to shareholders, the interim dividend is raised by 10% and €64.5 million was
returned in the period via share buybacks. As we look to the second half of
the year, we believe that the combination of market opportunity and our strong
operating capabilities set us up for sustained delivery of future growth.
Today I have announced my plans to retire as Group Managing Director of
Glanbia at the end of this year. My colleague, Hugh McGuire will be appointed
CEO of Glanbia on 1 January 2024. I want to thank my colleagues right across
the Group for their hard work, commitment and friendship during my career with
the Company. I would like to wish Hugh well as he takes the helm in 2024 and I
look forward to working with him on the leadership transition over the coming
months."
Summary financials(1)- continuing operations(2)
2023 half year results Reported Constant
$m HY 2023 HY 2022 Change Currency Change(3)
Wholly-owned business (pre-exceptional)
Revenue 2,771.4 3,091.3 -10.3% -10.0%
EBITA(4) 198.6 187.6 5.9% 6.1%
EBITA margin 7.2% 6.1%
Joint Ventures (pre-exceptional)
Share of profit after tax 6.5 12.5
Profit after tax 193.4 140.4
$
Adjusted earnings per share 60.78c 57.17c 6.3% 6.6%
Basic earnings per share 71.90c 50.40c
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 37 to 45.
2. There was no profit or loss from discontinued operations in the
period. In HY 2022, an exceptional profit after tax from discontinued
operations of $61.1m arose, relating to the once-off profit on disposal of the
Group's interest in Tirlán Limited (formerly known as Glanbia Ireland DAC).
3. To arrive at the constant currency change, the average exchange
rate for the current period is applied to the relevant reported result from
the same period in the prior year. The average US dollar euro exchange rate
for HY 2023 was $1 = €0.9253 (HY 2022: $1 = €0.9151). Reported and
constant currency movements are on a pre-exceptional basis.
4. EBITA (pre-exceptional) is defined as earnings before interest, tax
and amortisation.
HY 2023 results summary (pre-exceptional)
Revenue progression HY 2023 versus HY 2022
Constant currency movement Reported movement
Volume Price Like-for-like Acquisition / (Disposals) Total constant currency Total reported
Glanbia Performance Nutrition (7.5%) 10.9% 3.4% - 3.4% 2.4%
Glanbia Nutritionals (2.8%) (11.7%) (14.5%) (0.7%) (15.2%) (15.3%)
Nutritional Solutions (10.4%) (4.8%) (15.2%) (2.6%) (17.8%) (18.3%)
US Cheese 0.4% (14.5%) (14.1%) - (14.1%) (14.1%)
Total wholly-owned businesses (4.1%) (5.4%) (9.5%) (0.5%) (10.0%) (10.3%)
Revenue, EBITA and margin
HY 2023 HY 2022
$m Revenue EBITA Margin % Revenue EBITA Margin %
Glanbia Performance Nutrition 888.9 107.8 12.1% 867.8 89.9 10.4%
Glanbia Nutritionals 1,882.5 90.8 4.8% 2,223.5 97.7 4.4%
Nutritional Solutions 525.5 67.8 12.9% 643.4 78.4 12.2%
US Cheese 1,357.0 23.0 1.7% 1,580.1 19.3 1.2%
Total wholly-owned businesses 2,771.4 198.6 7.2% 3,091.3 187.6 6.1%
2023 half year overview
Glanbia delivered a strong financial and operating performance in HY 2023.
Group revenue was $2,771.4 million (HY 2022: $3,091.3 million), down 10.0%
constant currency (down 10.3% reported). Group EBITA (before exceptional
items) was $198.6 million (HY 2022: $187.6 million) up 6.1% constant currency
(up 5.9% reported). Group profit after tax from continuing operations for the
period was $193.4 million (HY 2022: $140.4 million) up $53.6 million constant
currency (up $53.0 million reported).
Adjusted earnings per share ("EPS") was 60.78 $cent (HY 2022: 57.17 $cent) up
6.6% constant currency (up 6.3% reported).
Balance sheet and financing
Glanbia's net debt at 1 July 2023 was $450.8 million (HY 2022: $675.6 million)
which represents a decrease of $224.8 million driven by strong cash
generation, the sale of the Group's interest in the Glanbia Cheese mozzarella
joint ventures and a disciplined approach to capital allocation. Net debt to
adjusted EBITDA was 0.99 times (HY 2022: 1.75 times). At the end of the period
the Group had committed debt facilities of $1.3 billion. Glanbia's ability to
generate cash and its available debt facilities ensure the Group has
considerable capacity to finance future investments.
Capital investment
Glanbia's total investment in capital expenditure (strategic and maintenance)
was $36.8 million in the first half of 2023 (HY 2022: $32.0 million).
Strategic investment totalled $27.3 million. Key strategic projects include IT
investments and new process technologies in GN NS. Total capital expenditure
for the year is expected to be $75 to $85 million.
Dividend per share
The Board is recommending an interim dividend of 14.22 €cent per share (HY
2022: 12.93 €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 6 October 2023 to shareholders on the
register of members as at 25 August 2023. Irish withholding tax will be
deducted at the standard rate where appropriate. The Company's primary
dividend payment currency remains Euro.
Share buyback
Glanbia maintained share buyback activity through the first half of 2023,
deploying €64.5 million in the period (HY 2022: €127.1 million). On 4 May
2023, the Group announced a €50 million increase and extension of the March
2023 share buyback programme, bringing the total programme amount to €100
million.
Sale of share of Joint Ventures
On 28 April 2023, Glanbia completed the sale of its shareholdings in its
Glanbia Cheese Limited and Glanbia Cheese EU Limited (collectively "Glanbia
Cheese") mozzarella joint ventures to its joint venture partner Leprino Foods
Company. On completion, Glanbia received initial proceeds of €178.9 million,
which included repayment of shareholder loans.
Board and management update
Today, the Glanbia plc board (the "Glanbia Board") announces that Siobhán
Talbot has notified it of her intention to retire from Glanbia plc following
ten successful years as Group Managing Director. Siobhán will step down from
her position and from the Glanbia Board on 31 December 2023 and will retire
from the Group in January 2024. Hugh McGuire, currently Chief Executive
Officer ("CEO") of Glanbia Performance Nutrition, will be appointed CEO of
Glanbia plc and join the Glanbia Board as an Executive Director effective 1
January 2024.
In line with the relationship agreement with Tirlán Co-operative Society
Limited (the "Society") Patsy Ahern and John Murphy retired at the AGM held on
4 May 2023, reducing the Society's representation on the Board to three
directors.
On the same date, the Group announced the appointment of Ms Gabriella Parisse
to its Board as an Independent Non-Executive Director effective 1 June 2023.
Following Ms Parisse's appointment, the Board is comprised of 13 members
including, the Chairman, two Executive Directors, three representatives from
Tirlán Co-operative Society Limited and seven Independent Non-Executive
Directors.
2023 Outlook
The Group is today upgrading its full year guidance to 12% to 15% growth in
adjusted EPS constant currency, based on delivery of the first half results
and the continued momentum in GPN. The Group outlines the following guidance
for FY 2023:
· GPN expects revenue to be at the lower end of the previously
guided 5% to 7% growth on a constant currency basis and has upgraded full year
EBITA margin expectations to be between 13.5% and 14.5%.
· GN NS expects a low double digit decline in like-for-like revenue
driven by lower dairy market pricing and a mid-single digit volume decline. GN
NS EBITA margins are expected to be between 12% and 13%.
· Group EBITA growth is expected to be driven largely by strong
growth in GPN.
· The performance in joint ventures is expected to be reduced due
to the disposal of the Glanbia Cheese joint ventures.
· The Group continues to target an operating cash flow conversion
rate of 80%+ for FY 2023.
Change in US Joint Venture Commercial Arrangements
Glanbia is in the process of amending the commercial agreements associated
with its US joint venture. Subject to the successful completion of these
amendments, under the new commercial terms, which are expected to come into
effect from 2024, Glanbia will only recognise commissions earned on the sale
of joint venture products. Under existing commercial terms, Glanbia records
the gross value of revenues and corresponding cost of sales on joint venture
products sold. The change in commercial terms will only impact the
recognition and presentation of revenues and cost of sales from 2024 onwards,
and will not have any material impact on profit.
For illustrative purposes, Group revenues will reduce by approximately $2
billion and Group EBITA margins will increase by approximately 300+ basis
points.
Inside Information
This announcement contains inside information. 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, 16 August 2023.
Half year 2023 operations review
(Commentary on percentage movements is on a constant currency basis
throughout)
Glanbia Performance Nutrition
$m - pre-exceptional HY 2023 HY 2022 Reported Constant
change currency change
Revenue 888.9 867.8 2.4% 3.4%
EBITA 107.8 89.9 19.9% 20.4%
EBITA margin 12.1% 10.4%
· Like-for-like ("LFL") branded revenue growth of +3.7% with volume
-7.2% and pricing +10.9%.
· ON, the leading brand in the sports nutrition sector globally,
delivered LFL revenue growth of 16.2%.
· EBITA margin of 12.1%, an increase of 170bps versus HY 2022.
GPN revenue increased by 3.4% in HY 2023 versus prior year. This was driven by
price increases of 10.9% offset by a volume decline of 7.5%. Pricing was
positive across all brands following the execution of strategic price
increases in 2022. The implemented price increases have largely been
maintained across the portfolio with consumer elasticity within the
performance nutrition category better than expected. The volume decline was
largely driven by the SlimFast brand, with the previously highlighted
challenges in the diet category impacting brand performance. ON, which
represents 60% of the GPN portfolio, delivered both volume and price growth in
the period as the brand continues to drive global distribution and velocities,
supported by increased marketing activation and brand investment.
GPN EBITA increased by 20.4% versus prior year to $107.8 million and EBITA
margin increased by 170 basis points to 12.1%. This was driven by strong
continued focus on revenue growth management initiatives, operating
efficiencies and margin optimisation. The positive phasing of input costs in
the second half of 2023 will support both further brand investment and margin
improvement.
Americas
GPN Americas revenue for HY 2023 was broadly in line with the prior year, with
strong growth in the ON and Isopure brands offsetting the anticipated declines
in the SlimFast brand. Pricing was positive across all brands.
The ON brand continues its strong performance and delivered US consumption
growth in the 12 weeks to mid-July of 14.3% building on a strong comparative
period. Trends in the healthy lifestyle portfolio remained robust, with US
consumption growth in the 12 weeks to mid-July of 11.7% across the think!,
Isopure and Amazing Grass brands. The strong growth in the ON and Isopure
brands in the period was driven largely by the powders format, which continues
to resonate as a value offering with consumers.
The SlimFast brand, which now represents 11% of the GPN global portfolio,
continues to decline as ongoing challenges within the diet and weight
management category have resulted in reduced shelf space and velocities. US
consumption in the 12 weeks to mid-July was down 33.0%. Pending a recovery of
the diet and weight management categories, GPN plans to prioritise investment
and resources behind the performance nutrition and healthy lifestyle brands.
International
GPN International grew like-for-like revenues by 11.6% in HY 2023. This was
driven by volume growth of the ON brand in key priority markets which was
supported by increased brand investment. Pricing was positive across all
regions due to the execution of the 2022 price increases.
Glanbia Nutritionals
HY 2023 HY 2022
$m - pre-exceptional Revenue EBITA Margin % Revenue EBITA Margin %
Nutritional Solutions 525.5 67.8 12.9% 643.4 78.4 12.2%
US Cheese 1,357.0 23.0 1.7% 1,580.1 19.3 1.2%
Total Glanbia Nutritionals 1,882.5 90.8 4.8% 2,223.5 97.7 4.4%
Nutritional Solutions
Reported Constant
change currency change
$m - pre-exceptional HY 2023 HY 2022
Revenue 525.5 643.4 (18.3%) (17.8%)
EBITA 67.8 78.4 (13.5%) (13.3%)
EBITA margin 12.9% 12.2%
· LFL revenue decline of 15.2% with volumes -10.4% and pricing
-4.8%.
· EBITA margin of 12.9%, an increase of 70 basis points versus HY
2022.
· Sequential volume improvement as the period progressed.
GN NS revenue decreased by 17.8% in HY 2023. This was driven by a 10.4%
decrease in volume, 4.8% decrease in price and a decrease of 2.6% driven by
the net impact of acquisitions and disposals. The volume decline was driven
largely by the expected customer supply chain rebalancing in the custom premix
solutions business. The price decline was driven by the decline in dairy
market pricing, with positive pricing in the custom premix solutions business.
Protein volumes were stable in the period and while customer supply chain
rebalancing reduced revenue in the custom premix solutions business, overall
GN NS saw a sequential improvement in volumes as the period progressed. Based
on customer engagements, this improving volume trend is expected to continue
with year-on-year volume growth expected in the second half of the year
leading to an expectation of a mid-single digit decline in overall GN NS
volumes for FY 2023.
GN NS EBITA was $67.8 million, a 13.3% decline versus prior year primarily as
a result of the volume decline in the first half of 2023. EBITA margins
increased by 70 basis points versus prior year to 12.9% as a result of both
operating efficiencies and the accretive impact of lower dairy pricing.
US Cheese
$m - pre-exceptional HY 2023 HY 2022 Reported Constant
change currency change
Revenue 1,357.0 1,580.1 (14.1%) (14.1%)
EBITA 23.0 19.3 19.2% 18.6%
EBITA margin 1.7% 1.2%
US Cheese revenue declined by 14.1% in HY 2023. This was driven by a 0.4%
increase in volume and a 14.5% decline in price, with the pricing decline
aligned to the lower year-on-year market pricing.
US Cheese EBITA increased by 18.6% to $23.0 million as a result of strong
operating efficiencies. US Cheese operates a robust pass through pricing model
which protects earnings from changes in market pricing.
Joint Ventures (Glanbia share)
$m - pre-exceptional HY 2023 HY 2022 Change
Share of joint ventures' profit after tax 6.5 12.5 (6.0)
The Group's share of joint ventures' profit after tax pre‐exceptional items
for continuing operations decreased by $6.0 million to $6.5 million.
Glanbia's only joint venture at the period end is MWC‐Southwest Holdings in
the US.
The Group completed the sale of its shareholdings in Glanbia Cheese Limited
and Glanbia Cheese EU Limited (collectively "Glanbia Cheese") joint ventures
on 28 April 2023. On completion, the Group received initial proceeds of
€178.9 million, which included repayment of shareholder loans. The
memorandum of understanding for the sale was signed on 14 February 2023 and
the Group ceased to apply the equity method of accounting for its interest in
these joint ventures from this date.
HALF YEAR 2023 Finance Review
As announced on 1 March 2023, the Group has changed the currency in which it
presents its financial results from euro to US Dollar. Unless stated
otherwise, the figures in this finance review are stated in US Dollar.
Comparative figures have been restated in US Dollar.
Half year 2023 Group Income Statement
HY 2023 HY 2022
$m Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total
Revenue 2,771.4 - 2,771.4 3,091.3 - 3,091.3
Earnings before interest, tax and amortisation (EBITA) 198.6 55.9 254.5
187.6 (0.6) 187.0
EBITA margin 7.2% - 9.2% 6.1% - 6.1%
Intangible asset amortisation (40.0) - (40.0) (39.5) - (39.5)
158.6 55.9 214.5
Operating profit 148.1 (0.6) 147.5
Finance income 5.7 - 5.7 0.5 8.0 8.5
Finance costs (12.7) - (12.7) (11.1) - (11.1)
Share of results of joint ventures 6.5 - 6.5 12.5 0.2 12.7
158.1 55.9 214.0
Profit before taxation 150.0 7.6 157.6
Income taxes (21.2) 0.6 (20.6) (17.2) - (17.2)
136.9 56.5 193.4
Profit from continuing operations 132.8 7.6 140.4
Discontinued operations - - - - 61.1 61.1
Profit after tax from discontinued operations
Profit for the half year 136.9 56.5 193.4 132.8 68.7 201.5
Revenue
Revenue decreased by 10% versus prior half year on a constant currency basis
to $2.8 billion, a decrease of 10.3% on a reported basis. GPN revenues grew by
3.4% constant currency (2.4% reported) on prior period driven by positive
pricing of 10.9%, net of volume decline of 7.5%. GN revenues declined 15.2%
constant currency (15.3% reported) on prior period driven by volume decreases
of 2.8%, price decreases of 11.7% and M&A related reductions of 0.7% as
the positive impact of recent acquisitions was more than offset by divestment
activity.
EBITA
EBITA before exceptional items increased by 6.1% constant currency (5.9%
reported) to $198.6 million (HY 2022: $187.6 million), with EBITA margin
growth of 110 basis points to 7.2% (HY 2022: 6.1%).
GPN pre-exceptional EBITA increased by 20.4% constant currency (19.9%
reported) to $107.8 million (HY 2022: $89.9 million). GPN pre-exceptional
EBITA margin increased by 170 basis points to 12.1% (HY 2022: 10.4%).
GN pre-exceptional EBITA decreased by 7.0% constant currency (7.1% reported)
to $90.8 million (HY 2022: $97.7 million). GN pre-exceptional EBITA margin
increased by 40 basis points to 4.8% (HY 2022: 4.4%).
Net finance costs
Net finance costs before exceptional items decreased by $3.6 million to $7.0
million (HY 2022: $10.6 million). The decrease was driven primarily by a
reduction in the Group's average net financial indebtedness during HY 2023 vs
HY 2022. The Group's average interest rate in HY 2023 was 2.1% (HY 2022:
2.2%). Glanbia operates a policy of fixing a significant amount of its
interest exposure, with 95% of projected 2023 debt currently contracted at
fixed rates.
Share of results of Joint Ventures
The Group's pre-exceptional share of joint venture (continuing operations)
profits decreased by $6.0 million to $6.5 million (HY 2022: $12.5 million).
The share of results of joint ventures is stated after tax.
Following the agreement reached to sell the Group's share of its investment in
the Glanbia Cheese UK and Glanbia Cheese EU joint venture operations on 14
February 2023, equity accounting ceased to apply from this date and the
investments were considered held-for-sale. This sales transaction was
completed on 28 April 2023.
Prior year discontinued operations relate to the Tirlán Limited (formerly
known as Glanbia Ireland DAC) joint venture operation which was classified as
an asset 'held-for-sale' in 2021. Following the receipt of all shareholder
approvals and regulatory clearances, the disposal was completed in April 2022,
with the related once off gain on disposal treated as an exceptional item in
the prior period.
Income taxes
The half year 2023 pre-exceptional tax charge increased by $4.0 million to
$21.2 million (HY 2022: $17.2 million). This represents an effective tax rate,
excluding joint ventures, of 14.0% (HY 2022: 12.5%) and is in line with
expectation. The Group currently expects that its effective tax rate for FY
2023 will be in the range of 13.5% to 14.5%.
Exceptional items
Exceptional items incurred in the first half of 2023 resulted in a net
post-tax exceptional gain of $56.5m (HY 2022: $68.7m). Details of the
exceptional items incurred in the period are as follows:
$m - continuing operations HY 2023 HY 2022
Net exceptional gain on disposal of operations (note 1) 57.8 -
Pension related costs (note 2) (1.2) (0.6)
Portfolio related reorganisation costs (note 3) (0.7) -
Changes in fair value of contingent consideration (note 4) - 8.0
Wholly-owned exceptional gain before tax 55.9 7.4
Share of results of equity accounted investees, net of tax (note 2) - 0.2
Exceptional tax credit 0.6 -
Exceptional gain after tax 56.5 7.6
$m - discontinued operations
Exceptional gain from discontinued operations (note 5) - 61.1
Exceptional gain after tax - discontinued operations - 61.1
Total exceptional gain in the period 56.5 68.7
1. Net exceptional gain on disposal of operations relates to the gain on
disposal of the UK and Ireland Glanbia Cheese joint venture operations and a
small US based bottling facility (Aseptic Solutions) which was designated as
held-for-sale at 31 December 2022. Both transactions concluded during H1, 2023
and the gain represents the difference between proceeds received (and
contingent consideration anticipated), net of costs associated with the
divestment and exit of these non-core businesses and the carrying value of the
investments.
2. Pension related costs relate to the restructure of legacy defined benefit
pension schemes associated with the Group and joint ventures, which included
initiating a process for the ultimate buy out and wind up of these schemes and
a further simplification of the schemes that remain. Costs incurred relate to
the 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 effort
involves the careful navigation of external market factors, with final wind up
of schemes targeted by the end of 2023.
3. Portfolio related reorganisation costs relate to the one-off costs as a
result of recent portfolio changes. Following divestment decisions related to
non-core businesses, the Group launched a programme to realign Group-wide
support functions and optimise structures of the remaining portfolio, to more
efficiently support business operations and growth. This programme continues
into 2023, with realisation of benefits from 2024 onwards. Costs incurred to
date relate to advisory fees and people related costs.
4. Prior year changes in fair value of contingent consideration relate to
contingent payments associated with the 2021 LevlUp acquisition that reduced
following an assessment of conditions that gave rise to the additional
payments.
5. Prior year exceptional gain from discontinued operations relates to the
gain arising on the completion of the disposal of the Group's 40% interest in
Tirlán Limited (formerly known as Glanbia Ireland DAC) ("Tirlán") to Tirlán
Co-operative Society Limited (formerly known as 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
Tirlán. The transaction completed on 1 April 2022.
Profit after tax
Profit after tax for the half year was $193.4 million compared to $201.5
million in HY 2022, comprising continuing operations of $193.4 million (HY
2022: $140.4 million) and discontinued operations of $nil (HY 2022: $61.1
million). Profit after tax from continuing operations comprises
pre-exceptional profit of $136.9 million (HY 2021: $132.8 million) and
exceptional gains of $56.5 million (HY 2022: gain of $7.6 million).
Pre-exceptional profitability is relatively consistent period on period.
Profit after tax from discontinued operations in the prior period relates
entirely to the Group's share of Tirlán Limited (formerly known as Glanbia
Ireland DAC) which was disposed of in April 2022, with the resulting gain on
disposal being recognised as an exceptional gain.
Earnings per share (EPS)
HY 2023 HY 2022 Reported Constant currency
change change
Basic EPS 71.90c 72.29c (0.5%) 0.0%
- continuing operations 71.90c 50.40c 42.7% 43.1%
- discontinued operations - 21.89c - -
Adjusted EPS 60.78c 57.17c +6.3% +6.6%
- continuing operations 60.78c 57.17c +6.3% +6.6%
- discontinued operations - - - -
Basic EPS remained consistent with the prior period, with the reduction in
profits from discontinued operations largely offset by increased profitability
from continuing operations.
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 increased by 6.6% constant currency
(+6.3% reported), all from continuing operations. Full year 2023 adjusted EPS
is expected to be in the range of 12% to 15% 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 2023 HY 2022
EBITDA pre-exceptional 232.2 222.9
Movement in working capital (pre-exceptional) (181.4) (246.2)
Business-sustaining capital expenditure (9.5) (8.0)
Operating cash flow 41.3 (31.3)
Net interest and tax paid (37.0) (34.8)
Dividends from joint ventures 19.5 2.9
Payment of lease liabilities (10.8) (8.1)
Other outflows (5.0) (2.1)
Free cash flow 8.0 (73.4)
Strategic capital expenditure (27.3) (24.0)
Dividend paid to Company shareholders (57.3) (53.5)
Share buyback (purchase of own shares) (69.3) (138.9)
Payment for acquisition of subsidiaries - (59.8)
Exceptional costs paid (8.5) (16.2)
Repayment of loans from joint ventures 67.8 27.6
Proceeds on disposal of non-core businesses 130.8 339.3
Net cash flow 44.2 1.1
Exchange translation (5.0) 4.9
Cash acquired on acquisition - 1.0
Net debt movement 39.2 7.0
Net debt at the beginning of the period (490.0) (682.6)
Net debt at the end of the period (450.8) (675.6)
OCF was an inflow of $41.3 million (HY 2022: outflow of $31.3 million) and
represents a cash conversion on EBITDA of 17.8% (HY 2022: -14%) in the period.
The increase in OCF versus prior period was due primarily to a reduced
investment in working capital as pricing and inventory volumes returned to
more normalised levels following a period of significant inflation and supply
chain disruption throughout 2022. Full year OCF cash conversion expected to be
in line with the 80%+ target.
FCF was an inflow of $8.0 million (HY 2022: outflow of $73.4 million), with
the movement since prior period primarily as a result of movements in OCF
outlined above, as well as an increase in dividend income from Joint Ventures.
Capital allocated for the benefit of shareholders includes regular dividend
payments of $57.3 million (HY 2022: $53.5 million) and the execution of share
buyback programmes of $69.3 million (HY 2022: $138.9 million), with the most
recent buyback programme that launched in March 2023 and extended in May 2023
ongoing at HY 2023.
The prior year acquisition relates to the acquisition of Sterling Technology,
with no further acquisitions in the current period. Divestment proceeds
primarily related to the disposal of the Group's interest in the UK and
Ireland Glanbia Cheese joint ventures and the prior year relates to the
completion of the disposal of the Group's 40% holding in Tirlán Limited
(formerly known as Glanbia Ireland DAC).
Group financing
Financing key performance indicators HY 2023 HY 2022
Net debt: adjusted EBITDA 0.99 times 1.75 times
Adjusted EBIT: net finance cost 23.1 times 16.0 times
The Group's financial position remains strong. Net debt at the 2023 half year
was $450.8 million. This represents a decrease of $224.8 million from the
prior half year net debt of $675.6 million. At half year 2023, Glanbia had
committed debt facilities of $1.31 billion (HY 2022: $1.27 billion) with a
weighted average maturity of 5.2 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 0.99 times and interest cover was 23.1 times, with both metrics
remaining well within financing covenants.
Use of capital
Capital expenditure
The cash outflow relating to capital expenditure for half year 2023 amounted
to $36.8 million (HY 2022: $32.0 million) which includes $9.5 million of
business-sustaining capital expenditure and $27.3 million of strategic capital
expenditure.
Investments in equity accounted investees
During half year 2023, a further $3.5 million was advanced to Glanbia Cheese
EU which was subsequently divested in the period. In advance of the divestment
of both Glanbia Cheese joint venture operations in the UK and Ireland which
completed in April 2023, outstanding loans of $71.3 million were repaid in
full.
Pension
The Group's net pension position under IAS 19 (revised) 'Employee Benefits',
before deferred tax, improved by $5.0 million since 1 January 2023, resulting
in a net pension asset of $6.7 million at 1 July 2023. 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 an increase in the 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 14.22 €cent
per share (HY 2022: 12.93 €cent per share). The dividend will be paid on 6
October 2023 to shareholders on the register of members as at 25 August 2023.
Irish withholding tax will be deducted at the standard rate where appropriate.
Share buyback
In March 2023, the Group commenced a share buyback programme of €50 million,
which was subsequently extended by a further €50 million in May 2023, and
which was ongoing at half year 2023. A total of $69.3 million (HY 2022: $138.9
million) was deployed under this programme in the period, with the completion
of this programme expected over the second half of 2023.
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,
Glanbia has recently changed the currency in which it presents its financial
results from euro to US Dollar to reduce (but not eliminate) the impact to
reported numbers arising from currency movements year-on-year and on
retranslation of non-monetary assets and liabilities in the preparation of the
half year consolidated financial statements. Commentary continues to be
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. Key
non-US Dollar currencies for the Group over the period were euro and pound
sterling, for which period end exchange rates were as follows:
HY 2023 FY 2022 HY 2022
1 US Dollar converted to euro 0.9203 0.9376 0.9592
1 US Dollar converted to pound sterling 0.7899 0.8315 0.8312
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
strategically designed to foster risk awareness and ensure active
participation across all levels of the business to the management of risk. A
primary objective is to enable the Group to remain responsive to the dynamic
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
67-77 of Glanbia plc's 2022 Annual Report.
The Group's principal risks and uncertainties, which are summarised in the
risk profile table below, continue to remain relevant and unchanged from the
risks reported for the year ended 31 December 2022. While no new principal
risks were identified during the period, the underlying risk trend and
potential impacts of some of these risks has evolved including:
· Supply Chain risks have stabilised during the period, primarily
due to the strategic purchasing of whey and where required, the alternative
sourcing of ingredients to ensure that sufficient quantities are on hand to
fulfil orders. While continued inflationary pressures exist on non-whey
ingredients there has been a notable improvement in global supply chain
performance and significantly improved whey pricing.
· Talent Management risks have also stabilised during the first
half of the year. While labour market remains strong, despite several interest
rate increases in our core operating regions, the Group is seeing an
improvement in the employee turnover trend versus 2022 which is supported by
improved employee engagement scores, particularly for hourly employees. Given
the potential for a combination of external factors to influence this
position, the Group will remain cautious and continue to closely monitor
employment trends and adjust our recruitment and retention practices as
required.
· Economic, Industry and Political risk, Market Disruption risk,
Climate Change risk and Cyber Security and Data Protection risk continue to
remain elevated risks.
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
• Supply chain
• Talent management
Risk where trend is increasing • Economic, Industry and Political • Cyber security and data protection
• Market disruption
• 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 global
economic outlook and the continued inflationary, energy and interest rate
pressures. Similar, to our previous disclosures, these risks have wide-ranging
consequences on our principal risks and uncertainties with the consequences
being captured in the relevant principal risks rather than shown as
stand-alone items. The key risk factors and uncertainties with the potential
to impact on the Group's financial performance in the second half of 2023
include:
· Economic, industry and political risk - the global macroeconomic
and market consequences of the war in Ukraine continue to create volatility.
The Board is also closely monitoring 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,
persistent inflationary, energy rate and interest rate pressures have
continued to increase the cost of living and could result in reduced consumer
spending which may disrupt demand and increase operational and financial
costs.
· Supply chain risk - while supply chain volatility has reduced in
the period, the ongoing geopolitical tensions and inflation headwinds could
potentially impact the importation of key raw materials and/or negatively
impact on the Group's international sales channels. The Group is holding
appropriate safety stocks of core raw materials, however a prolonged impact to
supply chains due to a pandemic or geopolitical event in a key trading region
would have negative consequences from both a supply and pricing perspective.
· Customer concentration risk - while strategically the Group aims
to build strong customer relationships with major customers, material
disruption with, or loss of, one or more of these customers, or a significant
deterioration in commercial terms, could materially impact profitability. This
risk can also expose the Group to credit exposure and other balance sheet
risks. The Board is focused on utilising available mitigation to limit such
exposures where possible.
· Health and safety risk - a failure to maintain good health and
safety practices or the risk of a global pandemic, such as Covid-19, in
Glanbia's core markets, may adversely impact performance. A wide range of
additional measures and mitigations have been introduced as a result of the
Covid-19 pandemic and remain in place which build on the existing strong
controls across the Group.
Management continues to identify, monitor, assess and embed our climate
related risks and opportunities (CROs). The CROs as outlined in the 2022
Annual Report on pages 62 to 65 continue to apply to the Group and are
expected to remain the same for the remainder of 2023. The key focus for 2023
is the completion of the required scoping and feasibility assessment to fulfil
the transition plan, in order to remain on track to comply with the Group's
commitments. This is currently in progress together with the plan to
accelerate the modelling work to develop a comprehensive roadmap to reduce
Scope 3 emissions to meet the Group's stated target.
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 77 of the
Group's 2022 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-reports-and-presentations, where the
presentation can also be viewed or downloaded. In addition, a dial-in facility
is available using the following numbers:
Ireland +353 (0)1 691 7842
United Kingdom +44 (0) 203 936 2999
United States +1 646 787 9445
Rest of the world +44 (0) 203 936 2999
The access code for all participants is: 767571
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 & Head of Investor Relations +353 (0)86 046 8375
Donal O'Keeffe, Investor Relations Director +353 (0)86 047 2974
Martha Kavanagh, Director of Corporate Affairs +353 (0)87 646 2006
2023 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 (http://www.glanbia.com) ), confirms that
to the best of each person's knowledge and belief:
· the 2023 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 2023 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 1 July
2023, and material changes to related party transactions described in the
Annual Report for the year ended 31 December 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
15 August 2023
Condensed Group Income statement
for the half year ended 1 JULY 2023
Half year 2023 Restated*
Half year 2022
Notes Pre-exceptional $m Total Pre- Total
Exceptional $m $m Exceptional Exceptional $m
(note 7) $m $m
(note 7)
CONTINUING OPERATIONS
Revenue 4 2,771.4 - 2,771.4 3,091.3 - 3,091.3
Operating profit before intangible asset amortisation (earnings before 6 198.6 55.9 254.5 187.6 (0.6) 187.0
interest, tax and amortisation (EBITA))
Intangible asset amortisation 6 (40.0) - (40.0) (39.5) - (39.5)
Operating profit 6 158.6 55.9 214.5 148.1 (0.6) 147.5
Finance income 9 5.7 - 5.7 0.5 8.0 8.5
Finance costs 9 (12.7) - (12.7) (11.1) - (11.1)
Share of results of joint ventures accounted for using the equity method 4 6.5 - 6.5 12.5 0.2 12.7
Profit before taxation 158.1 55.9 214.0 150.0 7.6 157.6
Income taxes 10 (21.2) 0.6 (20.6) (17.2) - (17.2)
Profit from continuing operations 136.9 56.5 193.4 132.8 7.6 140.4
DISCONTINUED OPERATIONS
Profit after tax from discontinued operations - - - - 61.1 61.1
Profit for the period 136.9 56.5 193.4 132.8 68.7 201.5
Attributable to:
Equity holders of the Company 12 193.6 201.8
Non-controlling interests (0.2) (0.3)
193.4 201.5
Earnings Per Share from continuing operations attributable to the equity
holders of the Company
Basic Earnings Per Share (cent) 12 71.90 50.40
Diluted Earnings Per Share (cent) 12 70.91 49.90
Earnings Per Share attributable to the equity holders of the Company
Basic Earnings Per Share (cent) 12 71.90 72.29
Diluted Earnings Per Share (cent) 12 70.91 71.57
* Restated throughout for presentation in US Dollar. See note 2 for further
details.
Condensed Group Statement of comprehensive Income
for the half year ended 1 JULY 2023
Notes Half year Restated*
2023 Half year
$m 2022
$m
Profit for the period 193.4 201.5
Other comprehensive income
Items that will not be reclassified subsequently to the Group income statement
Remeasurements on defined benefit plans, net of deferred tax 2.3 15.0
Share of other comprehensive income of joint ventures, net of deferred tax 19.2 0.1 0.7
Revaluation of equity instruments at FVOCI, net of deferred tax 19.1 0.1 0.3
Items that may be reclassified subsequently to the Group income statement
Currency translation differences 19.1 2.4 (14.0)
Currency translation difference arising on net investment hedge 19.1 1.8 (8.2)
(Loss)/gain on cash flow hedges, net of deferred tax (2.0) 2.4
Share of other comprehensive income of joint ventures, net of deferred tax 0.1 10.6
Other comprehensive income for the period, net of tax 4.8 6.8
Total comprehensive income for the period 198.2 208.3
Total comprehensive income attributable to:
Equity holders of the Company 198.4 208.6
Non-controlling interests (0.2) (0.3)
Total comprehensive income for the period 198.2 208.3
* Restated throughout for presentation in US Dollar. See note 2 for further
details.
Condensed Group Balance sheet
as at 1 JULY 2023
Notes 1 July Restated*
2023 31 December
$m 2022
$m
ASSETS
Non-current assets
Property, plant and equipment 509.4 510.8
Right-of-use assets 94.4 100.7
Intangible assets 1,530.9 1,549.0
Interests in joint ventures 14 162.3 225.3
Other financial assets 2.4 2.3
Loans to joint ventures - 65.6
Deferred tax assets 4.3 5.0
Other receivables 0.2 0.3
Retirement benefit assets 8 7.4 3.2
2,311.3 2,462.2
Current assets
Inventories 582.5 750.5
Trade and other receivables 524.3 404.7
Current tax receivables 17.2 13.7
Derivative financial instruments 2.0 3.1
Cash and cash equivalents (excluding bank overdrafts) 251.0 467.9
1,377.0 1,639.9
Assets held for sale - 15.2
1,377.0 1,655.1
Total assets 3,688.3 4,117.3
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium 18 129.9 130.2
Other reserves 19.1 180.1 168.0
Retained earnings 19.2 1,751.7 1,686.2
2,061.7 1,984.4
Non-controlling interests 8.2 8.4
Total equity 2,069.9 1,992.8
LIABILITIES
Non-current liabilities
Borrowings 15 578.9 682.5
Lease liabilities 96.4 103.5
Retirement benefit obligations 8 0.7 1.5
Deferred tax liabilities 119.8 138.3
Provisions 17 4.2 4.0
800.0 929.8
Current liabilities
Trade and other payables 595.5 826.5
Borrowings 15 122.9 275.4
Lease liabilities 18.1 19.0
Current tax liabilities 67.7 54.1
Derivative financial instruments 0.4 1.0
Provisions 17 13.8 12.0
818.4 1,188.0
Liabilities held for sale - 6.7
818.4 1,194.7
Total liabilities 1,618.4 2,124.5
Total equity and liabilities 3,688.3 4,117.3
* Restated throughout for presentation in US Dollar. See note 2 for further
details.
Condensed Group Statement of changes in equity
For the half year ended 1 JULY 2023
Attributable to equity holders of the Company
Share capital and share premium Other Retained Non- Total
Half year 2023 $m reserves earnings Total controlling interests $m
(note 18) $m $m $m $m
(note 19.1) (note 19.2)
Balance at 1 January 2023 130.2 168.0 1,686.2 1,984.4 8.4 1,992.8
Profit for the period - - 193.6 193.6 (0.2) 193.4
Other comprehensive income - 2.4 2.4 4.8 - 4.8
Total comprehensive income for the period - 2.4 196.0 198.4 (0.2) 198.2
Dividends - - (57.3) (57.3) - (57.3)
Purchase of own shares - (82.7) - (82.7) - (82.7)
Cancellation of own shares (0.3) 68.4 (68.1) - - -
Cost of share-based payments - 10.0 - 10.0 - 10.0
Transfer on exercise, vesting or expiry of share-based payments - 5.9 (5.9) - - -
Deferred tax on share-based payments - - 0.8 0.8 - 0.8
Transfer to Group income statement - 8.1 - 8.1 - 8.1
Balance at 1 July 2023 129.9 180.1 1,751.7 2,061.7 8.2 2,069.9
Restated*
Half year 2022
Balance at 2 January 2022 131.1 161.8 1,669.0 1,961.9 9.2 1,971.1
Profit for the period - - 201.8 201.8 (0.3) 201.5
Other comprehensive income - (8.9) 15.7 6.8 - 6.8
Total comprehensive income for the period - (8.9) 217.5 208.6 (0.3) 208.3
Dividends - - (53.5) (53.5) - (53.5)
Purchase of own shares - (149.3) - (149.3) - (149.3)
Cancellation of own shares (0.7) 138.6 (137.9) - - -
Cost of share-based payments - 8.3 - 8.3 - 8.3
Transfer on exercise, vesting or expiry of share-based payments - (2.4) 2.4 - - -
Deferred tax on share-based payments - - 1.0 1.0 - 1.0
Changes in fair value of put option liability - 6.8 - 6.8 - 6.8
Transfer to Group income statement - 1.7 - 1.7 - 1.7
Balance at 2 July 2022 130.4 156.6 1,698.5 1,985.5 8.9 1,994.4
* Restated throughout for presentation in US Dollar. See note 2 for further
details.
Condensed gROUP Statement of cash flows
For the half year ended 1 JULY 2023
Notes Half year Restated*
2023 Half year
$m 2022
$m
Cash flows from operating activities
Net cash flows from operating activities before exceptional items 21 59.2 (15.3)
Cash outflow related to exceptional items (8.5) (7.4)
Interest received 5.2 1.1
Interest paid (including interest expense on lease liabilities) (13.5) (10.3)
Tax paid (28.7) (25.6)
Net cash inflow/(outflow) from operating activities 13.7 (57.5)
Cash flows from investing activities
Payment for acquisition of subsidiaries - (59.8)
Purchase of property, plant and equipment (18.3) (13.9)
Purchase of intangible assets (18.5) (18.1)
Dividends received from joint ventures 20 19.5 2.9
Proceeds from disposal/redemption from FVOCI financial assets - 0.3
Proceeds from disposal of Glanbia Cheese (exceptional) 123.4 -
Proceeds on repayment of loans advanced to Glanbia Cheese 3 71.3 -
Loans advanced to Glanbia Cheese 20 (3.5) (3.9)
Proceeds from disposal of assets and liabilities held for sale (exceptional) 7.4 -
Net cash inflow from discontinued operations** - 362.0
Net cash inflow from investing activities 181.3 269.5
Cash flows from financing activities
Purchase of own shares 19.1 (82.7) (149.3)
Drawdown of borrowings 15 140.8 464.1
Repayment of borrowings 15 (245.6) (424.6)
Payment of lease liabilities (10.8) (8.1)
Dividends paid to Company shareholders 19.2 (57.3) (53.5)
Net cash outflow from financing activities (255.6) (171.4)
Net (decrease)/increase in cash and cash equivalents 15 (60.6) 40.6
Cash and cash equivalents at the beginning of the period 192.5 107.1
Cash and cash equivalents acquired on acquisition 15 - 1.0
Effects of exchange rate changes on cash and cash equivalents (3.8) (3.5)
Cash and cash equivalents at the end of the period 15 128.1 145.2
Cash and cash equivalents at the end of the period include:
1 July 2 July
2023 2022
$m $m
Cash and cash equivalents (excluding bank overdrafts) 251.0 241.9
Bank overdrafts (122.9) (96.7)
15 128.1 145.2
* Restated throughout for presentation in US Dollar. See note 2 for further
details.
** Relates to disposal of Tirlán Limited (formerly known as Glanbia Ireland
DAC). Comprised proceeds from disposal of $339.3 million (exceptional),
proceeds on repayment of loans of $31.5 million (note 20), and cash outflow
related to exceptional items of $8.8 million.
Notes to the financial statements
For the half year ended 1 JULY 2023
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 1 January 2023 and ended 1 July 2023 (half year/six months)
("interim financial statements") were approved for issue by the Board of
Directors on 15 August 2023.
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 31 December 2022 ("2022 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 2022 Annual Report other than those noted below. The Group's
accounting policies are set out in note 2 to the financial statements in the
2022 Annual Report.
Change of presentation currency
Glanbia generates the majority of its revenue and earnings, and has
significant assets and liabilities denominated in US Dollar. To reduce the
potential for foreign exchange volatility in current and future reported
earnings, the Group has decided to change its presentation currency from euro
to US Dollar effective from 1 January 2023.
A change of presentation currency represents a change in accounting policy
under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
which is accounted for retrospectively. The reported results for the six
months ended 2 July 2022 and for the year ended 31 December 2022 have been
translated from euro to US Dollar using the following procedures:
• Assets and liabilities denominated in non-US Dollar
currencies were translated into US Dollar at the relevant closing rates of
exchange;
• Non-US Dollar trading results were translated into US
Dollar at the relevant average rates of exchange;
• Share capital, share premium, own shares, dividends and
movements in capital and merger account were translated at the historic rates
prevailing on the date of each transaction. Movements in other equity accounts
were translated into US Dollar at the relevant average rates of exchange; and
• The cumulative translation reserve was set to nil at 4
January 2004, the date of transition to IFRS, and has been restated as if the
Group has reported in US Dollar since that date.
The principal exchange rates used for the translation of results and balance
sheets into US Dollar are as follows:
Average Period end
1 US Dollar = Half year Half year Year 1 July 2 July 31 December 2022
2023 2022 2022 2023 2022
euro 0.9253 0.9151 0.9493 0.9203 0.9592 0.9376
Pound sterling 0.8110 0.7707 0.8095 0.7899 0.8312 0.8315
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
2022 Annual Report other than the judgement relating to the interest in
Glanbia Cheese Limited which is no longer applicable as the joint venture was
disposed of during the first half of 2023.
New and amended standards adopted in the current period
The following changes to IFRS became effective for the Group for the current
year but did not result in a material impact on the Group's results.
· IFRS 17 Insurance Contracts
· Definition of Accounting Estimates - Amendments to IAS 8
· Disclosure of Accounting Policies - Amendments to IAS 1
· Deferred Tax related to Assets and Liabilities arising
from a Single Transaction - Amendments to IAS 12
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 2022 Annual Report, the nature of business activities and the factors
likely to impact operating performance and future growth.
Having assessed the relevant business risks identified and discussed in the
Principal risks and uncertainties on pages 14 to 15, 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. The Group therefore
considers it appropriate to adopt the going concern basis in preparing its
interim financial statements.
3. Assets and liabilities held for sale
The Group signed a memorandum of understanding for the sale of its
shareholding in the Glanbia Cheese EU and Glanbia Cheese UK joint ventures
("Glanbia Cheese") to Leprino Foods Company on 14 February 2023. The Group
treated the joint venture arrangements in Glanbia Cheese as an asset held for
sale and ceased to apply the equity method of accounting to its interest in
Glanbia Cheese from this date (note 14). The transaction allowed the Group to
focus on its core better nutrition strategy and to allocate further capital to
its global growth businesses.
The sale was completed on 28 April 2023 for an initial cash consideration of
$125.2 million (€114.0 million) and repayment of $71.3 million (€64.9
million) of shareholder loans, with further contingent consideration of up to
$27.2 million (€25.0 million), dependent on the performance of Glanbia
Cheese over the next three years (see note 16). The gain of $59.9 million on
disposal of Glanbia Cheese (included in net exceptional gain on disposal of
operations (note 7)) is based on the $125.2 million received less working
capital adjustments of $1.8 million, carrying amount of the asset held for
sale at 28 April 2023 of $52.2 million, estimated costs of $3.2 million, and
associated cumulative debit amounts recognised in other comprehensive income
of $8.1 million (note 19.1) that were reclassified to the Group income
statement.
The assets and liabilities held for sale at 31 December 2022 related to the
non-core assets of a small US based bottling facility (Aseptic Solutions USA
Ventures, LLC). Following the completion of a strategic portfolio review,
these assets and related liabilities which were part of the Glanbia
Nutritionals segment were determined to be non-core and a decision was made to
divest of them, resulting in the designation as held for sale at 2022 year
end. The divestment was completed on 6 March 2023. The gain on disposal of
$0.4 million (included in net exceptional gain on disposal of operations (note
7)) is based on $11.2 million received, less the carrying amount of the net
assets held for sale of $9.3 million on the date of the transaction and costs
associated with the transaction of $1.5 million.
The above divestments are not regarded as discontinued operations as they were
not considered to be either separate major lines of business or geographical
areas of operations.
4. Segment information
Half year 2023 Half year 2022
Glanbia Performance Nutrition Glanbia Nutritionals All other Glanbia Performance Nutrition Glanbia Nutritionals All other
$m $m segments and unallocated $m $m segments
$m Total and unallocated Total
$m $m $m
Segment results (pre-exceptional)
Total gross segment revenue 889.0 1,929.3 - 2,818.3 867.9 2,276.7 - 3,144.6
Inter-segment revenue (0.1) (46.8) - (46.9) (0.1) (53.2) - (53.3)
Revenue 888.9 1,882.5 - 2,771.4 867.8 2,223.5 - 3,091.3
Operating profit before intangible asset amortisation (EBITA) 107.8 90.8 - 198.6 89.9 97.7 - 187.6
Shares of results of joint ventures accounted for using the equity method - - 6.5 6.5 - - 12.5 12.5
1 July 2023 31 December 2022
Glanbia Performance Nutrition Glanbia Nutritionals All other Glanbia Performance Nutrition Glanbia Nutritionals All other
$m $m segments and unallocated $m $m segments
$m Total and unallocated Total
$m $m $m
Segment assets and liabilities
Segment assets 1,875.8 1,320.7 491.8 3,688.3 1,939.3 1,348.5 829.5 4,117.3
Segment liabilities 357.6 359.1 901.7 1,618.4 461.9 503.3 1,159.3 2,124.5
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.
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 1 July 31 December 2022
2023 2022 2023 $m
$m $m $m
Ireland (country of domicile) 10.6 5.9 806.0 818.4
US 2,192.9 2,532.6 1,290.1 1,316.8
Other
- North America (excluding US) 52.0 53.7 6.3 6.4
- Europe (excluding Ireland) 238.3 250.1 183.5 232.6
- Asia Pacific 200.6 188.4 11.2 11.9
- LATAM 52.5 37.9 0.1 -
- Rest of World 24.5 22.7 - -
2,771.4 3,091.3 2,297.2 2,386.1
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 2023 Half year 2022
Glanbia Performance Nutrition Total Glanbia Performance Nutrition Total
$m Glanbia Nutritionals $m $m Glanbia Nutritionals $m
$m $m
Internal reporting structures
Nutritional Solutions - 525.5 525.5 - 643.4 643.4
US Cheese - 1,357.0 1,357.0 - 1,580.1 1,580.1
GPN Americas 585.5 - 585.5 588.7 - 588.7
GPN International (including Direct-to-Consumer) 303.4 - 303.4 279.1 - 279.1
Total 888.9 1,882.5 2,771.4 867.8 2,223.5 3,091.3
Primary geographical markets
North America 593.2 1,651.7 2,244.9 589.0 1,997.3 2,586.3
Europe 180.9 68.0 248.9 175.4 80.6 256.0
Asia Pacific 90.5 110.1 200.6 78.8 109.6 188.4
LATAM 7.7 44.8 52.5 9.1 28.8 37.9
Rest of World 16.6 7.9 24.5 15.5 7.2 22.7
Total 888.9 1,882.5 2,771.4 867.8 2,223.5 3,091.3
Timing of revenue recognition
Products transferred at point in time 888.9 1,882.5 2,771.4 867.8 2,223.5 3,091.3
Products transferred over time - - - - - -
Total 888.9 1,882.5 2,771.4 867.8 2,223.5 3,091.3
Channel mix for Glanbia Performance Nutrition Half year Half year
2023 2022
$m $m
Distributor 176.7 192.4
Food, Drug, Mass, Club (FDMC) 311.5 294.1
Online 281.8 274.4
Specialty 118.9 106.9
Total 888.9 867.8
The disaggregation of revenue by channel mix is most relevant for Glanbia
Performance Nutrition.
5. Seasonality
Due to the somewhat seasonal nature of the retail segment into which the
Glanbia Performance Nutrition segment sells, higher revenues and operating
profits are expected in the second half of the year than in the first six
months. Glanbia Nutritionals revenues and operating profits, although impacted
by dairy markets, are typically more evenly spread throughout the year.
6. Operating profit
Half year 2023 Half year 2022
Notes Pre-exceptional $m Total Pre-exceptional Total
Exceptional $m $m $m Exceptional $m
(note 7) $m
(note 7)
Revenue 4 2,771.4 - 2,771.4 3,091.3 - 3,091.3
Cost of goods sold (2,246.6) - (2,246.6) (2,549.6) - (2,549.6)
Gross profit 524.8 - 524.8 541.7 - 541.7
Selling and distribution expenses (226.8) (0.6) (227.4) (241.9) - (241.9)
Administration expenses (100.7) 56.5 (44.2) (110.4) (0.6) (111.0)
Net impairment reversal/(losses) on financial assets 1.3 - 1.3 (1.8) - (1.8)
Operating profit before intangible asset amortisation (EBITA) 4 198.6 55.9 254.5 187.6 (0.6) 187.0
Intangible asset amortisation 13 (40.0) - (40.0) (39.5) - (39.5)
Operating profit 158.6 55.9 214.5 148.1 (0.6) 147.5
7. Exceptional items
Notes Half year Half year
2023 2022
$m $m
Net exceptional gain on disposal of operations (a) (57.8) -
Pension related costs (b) 1.2 0.6
Portfolio related reorganisation costs (c) 0.7 -
Changes in fair value of contingent consideration (d) - (8.0)
Share of results of joint ventures accounted for using the equity method (b) - (0.2)
Total (55.9) (7.6)
Exceptional tax credit 10 (0.6) -
Total exceptional gain from continuing operations (56.5) (7.6)
Exceptional gain after tax from discontinued operations (e) - (61.1)
Total exceptional gain for the period 21 (56.5) (68.7)
(a) Net exceptional gain on disposal of operations relates to the gain
on disposal of the UK and Ireland Glanbia Cheese joint venture operations and
a small US based bottling facility (Aseptic Solutions) which was designated as
held-for-sale at 31 December 2022. Both transactions concluded during H1, 2023
and the gain represents the difference between proceeds received (and
contingent consideration anticipated), net of costs associated with the
divestment and exit of these non-core businesses and the carrying value of the
investments.
(b) Pension related costs relate to the restructure of legacy defined
benefit pension schemes associated with the Group and joint ventures, which
included initiating a process for the ultimate buy out and wind up of these
schemes and a further simplification of the schemes that remain. Costs
incurred relate to the 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 effort involves the careful navigation of external market
factors, with final wind up of schemes targeted by the end of 2023.
(c) Portfolio related reorganisation costs relate to the one off costs
as a result of recent portfolio changes. Following divestment decisions
related to non-core businesses, the Group launched a programme to realign
Group-wide support functions and optimise structures of the remaining
portfolio, to more efficiently support business operations and growth. This
programme continues into 2023, with realisation of benefits from 2024 onwards.
Costs incurred to date relate to advisory fees and people related costs.
(d) Prior year changes in fair value of contingent consideration relate
to contingent payments associated with the 2021 LevlUp acquisition that
reduced following an assessment of conditions that gave rise to the additional
payments.
(e) Prior year exceptional gain from discontinued operations relates to
the gain arising on the completion of the disposal of the Group's 40% interest
in Tirlán Limited (formerly known as Glanbia Ireland DAC) ("Tirlán") to
Tirlán Co-operative Society Limited (formerly known as 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 Tirlán. The transaction completed on 1 April 2022.
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. 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 1 July 2023 and 31 December
2022 relates primarily to Guaranteed Minimum Pension equalisation ("GMPe") of
the UK pension plans. During the first half of 2023, there was an additional
contribution from the Group of $1.6 million in respect of these GMPe
liabilities which resulted in a charge to the income statement of $0.7
million.
Reconciliation of the amounts recognised on the condensed Group balance sheet
to net defined benefit pension plans asset/(liability):
1 July 31 December
2023 2022
$m $m
Non-current assets - Surplus on defined benefit pension plan 7.4 3.2
Non-current liabilities - Deficit on defined benefit pension plan (0.7) (1.5)
Net defined benefit pension plans asset 6.7 1.7
The net asset disclosed above relates to funded plans. The movement in the net
defined benefit pension plans asset is as follows:
1 July 31 December
2023 2022
$m $m
At the beginning of the period 1.7 (16.1)
Current service cost (0.5) (1.9)
Interest income/(expense) 0.1 (0.2)
Settlement loss* (0.7) (0.2)
Total amount recognised in profit or loss (1.1) (2.3)
Remeasurements
- Return of plan assets excluding interest income - (69.3)
- Gain/(loss) from experience adjustments 1.8 (4.9)
- Gain from demographic adjustments 0.4 -
- Gain from changes in financial assumptions 1.6 90.4
Effect of irrevocable plan surplus (1.2) (1.8)
Total amount recognised in other comprehensive income 2.6 14.4
Exchange differences 0.1 1.2
Contributions paid/payable by the employer 3.4 4.5
At the end of the period 6.7 1.7
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.
* Included in pension related costs (note 7).
The principal assumptions used for the purposes of the actuarial valuations
were as follows:
Half year 2023 Half year 2022 Year 2022
ROI UK ROI UK ROI UK
Discount rate 3.60% 5.40% 3.40% 3.85% 3.70% 5.00%
Inflation rate 2.40% 2.75%-3.35% 2.40% 2.65%-3.25% 2.50% 2.65%-3.30%
Future salary increases* 3.40% 0.00% 3.40% 0.00% 3.50% 0.00%
Future pension increases 0.00% 2.75%-3.30% 0.00% 2.65%-3.10% 0.00% 2.65%-3.15%
Mortality rates (years):
- Male - reaching 65 years of age in 20 years' time 24.2 22.3 24.2 22.3 24.2 22.2
- Female - reaching 65 years of age in 20 years' time 26.3 24.6 26.3 24.6 26.3 24.5
- Male - currently aged 65 years old 21.9 21.3 21.9 21.2 21.9 21.2
- Female - currently aged 65 years old 24.3 23.4 24.3 23.4 24.3 23.3
*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
2023 2022
$m $m
Finance income
Interest income on loans to joint ventures 1.0 0.5
Interest income on cash and deposits 1.6 -
Interest income on swaps 3.1 -
Remeasurements of contingent consideration 7 - 8.0
Total finance income 5.7 8.5
Finance costs
Bank borrowing costs (4.3) (2.7)
Facility fees (1.4) (0.9)
Finance cost of private placement debt (5.1) (5.3)
Interest expense on lease liabilities (1.4) (1.4)
Interest expense on swaps - (0.2)
Remeasurements of contingent consideration (0.5) (0.6)
Total finance costs (12.7) (11.1)
Net finance costs (7.0) (2.6)
10. Income taxes
The Group's income tax charge of $20.6 million (HY 2022: $17.2 million) net of
an exceptional tax credit of $0.6 million (HY 2022: nil) (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
2023 2022
$m $m
Equity dividends to shareholders
Final - EUR 19.28c per ordinary share, paid on 5 May 2023 (FY 2022: EUR 57.6 53.7
17.53c, paid on 6 May 2022)
Interim - EUR 14.22c per ordinary share, payable on 6 October 2023 (HY 2022: 41.4 37.2
EUR 12.93c, paid on 7 October 2022)
Of the $57.6 million (HY 2022: $53.7 million) dividends paid during the half
year ended 1 July 2023, $0.3 million (HY 2022: $0.2 million) are waived in
relation to own shares.
These interim financial statements do not reflect the interim dividends
recommended for 2023. The amount of interim dividends recommended is based on
the number of issued shares at period end (note 18). The actual amount will be
based on the number of issued shares on the record date. There are no income
tax consequences for the Company in respect of dividends proposed prior to
issuance of the interim financial statements.
12. Earnings per share
Basic
Basic Earnings Per Share is calculated by dividing profit after tax
attributable to the equity holders of the Company by the weighted average
number of ordinary shares in issue during the period, excluding ordinary
shares purchased by the Group and held as own shares. The weighted average
number of ordinary shares in issue used in the calculation of Basic Earnings
Per Share is 269,254,932 (HY 2022: 279,154,299).
Diluted
Diluted Earnings Per Share is calculated by adjusting the weighted average
number of ordinary shares in issue to assume conversion of all potential
dilutive ordinary shares. Share awards are the Company's only potential
dilutive ordinary shares.
The share awards, which are performance based, are treated as contingently
issuable shares because their issue is contingent upon satisfaction of
specified performance conditions as well as the passage of time. Contingently
issuable shares are included in the calculation of Diluted Earnings Per Share
to the extent that conditions governing exercisability have been satisfied, as
if the end of the reporting period were the end of the vesting period.
Half year 2023 Half year 2022
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Profit after tax attributable to equity holders of the Company ($m) 193.6 - 193.6 140.7 61.1 201.8
Basic Earnings Per Share (cent) 71.90 - 71.90 50.40 21.89 72.29
Diluted Earnings Per Share (cent) 70.91 - 70.91 49.90 21.67 71.57
Half year Half year
2023 2022
Weighted average number of ordinary shares in issue 269,254,932 279,154,299
Shares deemed to be issued for no consideration in respect of share awards 3,761,216 2,822,926
Weighted average number of shares used in the calculation of diluted Earnings 273,016,148 281,977,225
Per Share
13. Property, plant and equipment, right-of-use assets and intangible assets
Property, plant and equipment
During the six month period to 1 July 2023, there was an increase of property,
plant and equipment arising from additions of $21.0 million (HY 2022: $14.4
million). Exchange differences gain of $1.4 million (HY 2022: $5.6 million
loss) and depreciation charges of $23.8 million (HY 2022: $25.7 million) were
also recognised in the period.
Right-of-use assets
During the six month period to 1 July 2023, there was an increase of
right-of-use assets arising from additions of $2.4 million (HY 2022: $6.8
million), and remeasurements of $1.0 million (HY 2022: nil). The increase was
offset by depreciation charges of $9.8 million (HY 2022: $9.6 million) and
disposals of $0.1 million (HY 2022: $2.0 million). Exchange differences gain
of $0.2 million (HY 2022: $1.2 million loss) were also recognised in the
period.
Intangible assets
During the six month period to 1 July 2023, there was an increase of
intangible assets arising from additions of $18.5 million (HY 2022: $17.8
million). Exchange differences gain of $3.4 million (HY 2022: $7.9 million
loss) and amortisation charges of $40.0 million (HY 2022: $39.5 million) were
also recognised in the period.
14. Interests in joint ventures
1 July 31 December
2023 2022
$m $m
At the beginning of the period 225.3 209.3
Share of profit after tax (post-exceptional) 6.5 16.5
Share of OCI - remeasurements on defined benefit plans, net of deferred tax 0.1 0.5
Share of OCI - fair value movement on cash flow hedges, net of deferred tax 0.1 17.1
Dividends received (19.5) (15.3)
Income tax movement - 2.9
Transferred to held for sale* (51.0) -
Exchange differences 0.8 (5.7)
At the end of the period 162.3 225.3
* Relates to the carrying amount of Glanbia Cheese which was translated using
the exchange rate on 14 February 2023 when it was reclassified as held for
sale. The carrying amount of $52.2 million in note 3 is based on the exchange
rate on 28 April 2023 when the sale transaction of Glanbia Cheese was
completed.
15. Borrowings
1 July 31 December
2023 2022
$m $m
Non-current
Bank borrowings 203.9 307.5
Private placement debt 375.0 375.0
578.9 682.5
Current
Bank overdrafts 122.9 275.4
Total borrowings 701.8 957.9
Bank borrowings decreased due to repayments of borrowings during the current
period.
The maturity profile of borrowings, and undrawn committed and uncommitted
facilities is as follows:
1 July 2023 31 December 2022
Borrowings Undrawn committed facilities Undrawn uncommitted facilities Borrowings Undrawn committed Undrawn uncommitted facilities
$m $m $m $m facilities $m
$m
12 months or less 122.9 - 16.9 275.4 - 16.4
Between 1 and 2 years - - - - - -
Between 2 and 5 years 303.9 730.0 - 307.5 613.8 -
More than 5 years 275.0 - - 375.0 - -
701.8 730.0 16.9 957.9 613.8 16.4
Net debt is a non-IFRS measure which we provide to investors as we believe
they find it useful. Net debt comprises the following:
1 July 2 July
2023 2022
$m $m
Bank borrowings and private placement debt 578.9 820.8
Cash and cash equivalents net of bank overdrafts (128.1) (145.2)
450.8 675.6
Net debt reconciliation is as follows:
1 July 2 July
2023 2022
$m $m
Net debt at the beginning of the period 490.0 682.6
Drawdown of borrowings 140.8 464.1
Repayment of borrowings (245.6) (424.6)
Exchange translation adjustment on net debt 5.0 (4.9)
Net decrease/(increase) in cash and cash equivalents 60.6 (40.6)
Cash and cash equivalents acquired on acquisition - (1.0)
Net debt at the end of the period 450.8 675.6
16. Fair value of financial instruments
There have been no changes to the risk management procedures or policies since
31 December 2022. Refer to note 30 of the 2022 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:
1 July 2023 31 December 2022
Carrying Fair value Carrying Fair value
amount $m amount $m
$m $m
Non-current borrowings payable (578.9) (508.6) (682.5) (605.0)
Non-current loans receivable from joint ventures - - 65.6 65.6
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 1 July 31 December
2023 2022
$m $m
Assets
Equity instrument designated at FVOCI - BDO Development Capital Fund Level 2 1.5 1.4
Foreign exchange contracts - cash flow hedges Level 2 0.3 0.1
Interest rate swaps - cash flow hedges Level 2 1.7 3.0
Contingent consideration receivable - Glanbia Cheese Level 3 - -
Liabilities
Foreign exchange contracts - cash flow hedges Level 2 (0.2) (0.3)
Cross currency swaps - fair value through income statement Level 2 (0.2) (0.7)
Contingent consideration payable - Sterling Technology, LLC Level 3 (27.5) (27.0)
The movement in carrying amounts associated with Level 3 financial instruments
are as follows:
Contingent consideration payable
$m
At 1 January 2023 (27.0)
Remeasurements (0.5)
At 1 July 2023 (27.5)
Refer to note 29 of the 2022 Annual Report for details of the valuation
process of the financial assets and liabilities other than contingent
consideration receivable - Glanbia Cheese which is described herein.
As described in note 3, the contingent consideration arrangement relating to
the disposal of Glanbia Cheese requires Leprino Foods Company to pay the Group
amounts over the next three years if pre-defined earnings thresholds are met.
The total of undiscounted future payments receivable by the Group over the
three years ranges from nil to $27.2 million (€25.0 million translated at
period end exchange rate). The fair value of the contingent consideration was
estimated by calculating the present value of the future expected payments and
was nil at period end. The main significant unobservable input in the
calculation is the forecast EBITDA of the disposed businesses over the
relevant period. A 10% increase/decrease in the forecast EBITDA would not have
a material effect on the fair value of the contingent consideration.
17. Provisions
Property Legal and operational Total
and lease commitments $m $m
$m
At 1 January 2023 - non-current 4.0 - 4.0
At 1 January 2023 - current 2.7 9.3 12.0
Amount provided for in the period 0.1 2.4 2.5
Utilised in the period (0.2) - (0.2)
Unused amounts reversed in the period - (0.7) (0.7)
Exchange differences 0.2 0.2 0.4
At 1 July 2023 6.8 11.2 18.0
Non-current 4.2 - 4.2
Current 2.6 11.2 13.8
6.8 11.2 18.0
18. Share capital and share premium
Number of Ordinary Share Total
shares shares premium $m
(thousands) $m $m
At 1 January 2023 272,287 20.3 109.9 130.2
Cancellation of own shares (4,637) (0.3) - (0.3)
At 1 July 2023 267,650 20.0 109.9 129.9
At 2 January 2022 287,169 21.2 109.9 131.1
Cancellation of own shares (10,831) (0.7) - (0.7)
At 2 July 2022 276,338 20.5 109.9 130.4
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 1 July 2023, 4.6 million ordinary shares (HY 2022:
10.8 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.
19. Other reserves and retained earnings
19.1 Other reserves
Half year 2023 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 1 January 2023 136.3 12.7 9.7 - (22.1) 31.4 - 168.0
Currency translation differences - 2.4 - - - - - 2.4
Net investment hedge - 1.8 - - - - - 1.8
Revaluation - gross - - (1.3) - - - 0.1 (1.2)
Reclassification to profit or loss - gross - - (0.9) - - - - (0.9)
Deferred tax - - 0.3 - - - - 0.3
- 4.2 (1.9) - - - 0.1 2.4
Purchase of own shares - - - - (82.7) - - (82.7)
Cancellation of own shares 0.3 - - - 68.1 - - 68.4
Cost of share-based payments - - - - - 10.0 - 10.0
Transfer on exercise, vesting or expiry of share-based payments - - - - 22.9 (17.0) - 5.9
Transfer to Group income statement (note 3) - 7.9 0.2 - - - - 8.1
Balance at 1 July 2023 136.6 24.8 8.0 - (13.8) 24.4 0.1 180.1
Half year 2022
Balance at 2 January 2022 135.3 50.8 (12.0) (28.0) (7.0) 23.2 (0.5) 161.8
Currency translation differences - (14.0) - - - - - (14.0)
Net investment hedge - (8.2) - - - - - (8.2)
Revaluation - gross - - 17.8 - - - 0.4 18.2
Reclassification to profit or loss - gross - - (0.7) - - - - (0.7)
Deferred tax - - (4.1) - - - (0.1) (4.2)
- (22.2) 13.0 - - - 0.3 (8.9)
Purchase of own shares - - - - (149.3) - - (149.3)
Cancellation of own shares 0.7 - - - 137.9 - - 138.6
Cost of share-based payments - - - - - 8.3 - 8.3
Transfer on exercise, vesting or expiry of share-based payments - - - - 7.9 (10.3) - (2.4)
Changes in fair value of put option liability - - - 6.8 - - - 6.8
Transfer to Group income statement - - 1.7 - - - - 1.7
Balance at 2 July 2022 136.0 28.6 2.7 (21.2) (10.5) 21.2 (0.2) 156.6
Refer to note 23 of the 2022 Annual Report for a description of the components
of other reserves.
19.2 Retained earnings
Notes Half year Half year
2023 2022
$m $m
At the beginning of the period 1,686.2 1,669.0
Profit for the period attributable to equity holders of the Company 193.6 201.8
Other comprehensive income
- Remeasurements on defined benefit plans 8 2.6 16.9
- Deferred tax on remeasurements on defined benefit plans (0.3) (1.9)
- Share of remeasurements on defined benefit plans from joint ventures, net of 0.1 0.7
deferred tax
2.4 15.7
Dividends (57.3) (53.5)
Cancellation of own shares 19.1 (68.1) (137.9)
Transfer on exercise, vesting or expiry of share-based payments 19.1 (5.9) 2.4
Deferred tax on share-based payments 0.8 1.0
At the end of the period 1,751.7 1,698.5
20. Related party transactions
Refer to note 3 for the disposal of Glanbia Cheese, which were joint ventures
of the Group up to 28 April 2023. Accordingly transactions with Glanbia Cheese
before the disposal are included within "Transactions with joint ventures".
Transactions that occurred with related parties during the period ended 1 July
2023 include:
Half year Half year
2023 2022
$m $m
Transactions with joint ventures
Dividend received* 19.5 2.9
Sales of services 9.6 15.9
Purchases of goods 957.0 1,146.9
Repayment of loans by Glanbia Cheese (HY 2022: Tirlán Limited)** 71.3 31.5
Loans advanced to Glanbia Cheese** 3.5 3.9
Transactions with Tirlán Co-operative group
Dividends paid 16.0 16.8
Sales of services 15.4 9.5
Sales of goods 0.3 -
Purchases of goods 27.2 18.0
Purchases of services 0.8 -
* $4.5 million (HY 2022: $2.9 million) relates to Glanbia Cheese
** There were $65.6 million of loans receivable from Glanbia Cheese as at 31
December 2022. The balance decreased to nil due to a loan repayment of $71.3
million which was offset by loan advanced of $3.5 million and exchange
differences gain of $2.2 million during the current period.
21. Net cash flows from operating activities before exceptional items
Notes Half year Half year
2023 2022
$m $m
Profit for the period 193.4 201.5
Exceptional items 7 (56.5) (68.7)
Income taxes 21.2 17.2
Profit before taxation 158.1 150.0
Share of results of joint ventures accounted for using the equity method 4 (6.5) (12.5)
Finance costs 12.7 11.1
Finance income (5.7) (0.5)
Amortisation of intangible assets 13 40.0 39.5
Depreciation of property, plant and equipment 13 23.8 25.7
Depreciation of right-of-use assets 13 9.8 9.6
Net movement in allowance for impairment of receivables (1.3) 2.3
Cost of share-based payments 19.1 10.0 8.3
Net write down of inventories 8.1 6.1
Other (3.8) 1.5
Operating cash flows before movement in working capital 245.2 241.1
Movement in working capital (186.0) (256.4)
Net cash flows from operating activities before exceptional items 59.2 (15.3)
22. Contingent liabilities and commitments
Contingent liabilities
Guarantees provided by financial institutions amounting to $8.4 million (FY
2022: $8.3 million) are outstanding at 1 July 2023. 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 1 July 2023 the Group had entered into contractual commitments for the
acquisition of property, plant and equipment amounting to $9.3 million (FY
2022: $9.0 million) and software of $0.7 million (FY 2022: $0.8 million).
Following the disposal of Glanbia Cheese (note 3), the Group is no longer
committed to invest in Glanbia Cheese EU Limited or provide a loan facility to
the former joint venture.
23. Events after the reporting period
See note 11 for the interim dividend, recommended by the Directors, to be paid
on 6 October 2023. Subsequent to the period end, the Group took control of the
remaining 40% shareholdings in LevlUp GmbH with no material impact on the
Group financial statements.
Other than as described above, there have been no material events subsequent
to the end of the interim period ended 1 July 2023 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 31 December 2022 will be annexed to the 2023 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 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 2023 Year 2022
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.
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.
Half year 2022 results have been restated throughout for presentation in US
Dollar. See note 2 of the interim financial statements for further details.
G 1. Constant currency
While the Group reports its results in US Dollar, it generates a proportion of
its earnings in currencies other than US Dollar, in particular Euro. Constant
currency reporting is used by the Group to eliminate the translational effect
of foreign exchange on the Group's results. To arrive at the constant currency
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 US Dollar = Half year Half year Year
2023 2022 2022
euro 0.9253 0.9151 0.9493
Pound sterling 0.8110 0.7707 0.8095
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 Revenue
Reference to the Half year 2023 Reported Half year 2022 Half year 2022 Constant currency Like-for-like growth (G 10)
interim financial $m Reported Constant currency growth (G 9.1) %
statements/glossary $m $'m %
Nutritional Solutions Note 4 525.5 643.4 639.6 (17.8%) (15.2%)
US Cheese Note 4 1,357.0 1,580.1 1,580.1 (14.1%) (14.1%)
Glanbia Nutritionals Note 4 1,882.5 2,223.5 2,219.7 (15.2%) (14.5%)
Americas Note 4 585.5 588.7 588.0 (0.4%) (0.4%)
International (including Direct-to-Consumer) Note 4 303.4 279.1 271.9 11.6% 11.6%
Glanbia Performance Nutrition Note 4 888.9 867.8 859.9 3.4% 3.4%
Revenue Note 6 2,771.4 3,091.3 3,079.6 (10.0%) (9.5%)
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 2023 Reported Half year 2022 Half year 2022 Constant currency
interim financial $m Reported Constant currency growth
statements/glossary $'m $m %
Nutritional Solutions 67.8 78.4 78.2 (13.3%)
US Cheese 23.0 19.3 19.4 18.6%
Glanbia Nutritionals Note 4 90.8 97.7 97.6 (7.0%)
Glanbia Performance Nutrition Note 4 107.8 89.9 89.5 20.4%
EBITA (pre-exceptional) Note 6 198.6 187.6 187.1 6.1%
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 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 2023 2022
statements/glossary $m $m
EBITA (pre-exceptional) G 3.1 198.6 187.6
Depreciation* 33.6 35.3
EBITDA (pre-exceptional) G 14 232.2 222.9
*Includes depreciation of property, plant and equipment of $23.8 million (HY
2022: $25.7 million) and depreciation of right-of-use assets of $9.8 million
(HY 2022: $9.6 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 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 (see note 12). Basic EPS has also been calculated
on a continuing basis (excluding Tirlán Limited (formerly known as Glanbia
Ireland DAC)) in line with the presentation of continuing and discontinued
operations in the Group income statement.
Reference to the Half year 2023 Reported Half year 2022 Half year 2022 Year 2022
interim financial $m Reported Constant currency Reported
statements/glossary $m $m $m
Profit after tax attributable to equity holders of the Company Condensed Group income statement 193.6 201.8 200.6 271.4
Less Profit after tax attributable to equity holders of the Company - Condensed Group income statement - 61.1 60.4 60.3
discontinued operations
Profit after tax attributable to equity holders of the Company - continuing Note 12 193.6 140.7 140.2 211.1
operations
Weighted average number of ordinary shares in issue (thousands) Note 12 269,255 279,154 279,154 275,761
Basic Earnings Per Share (cent) - continuing operations Note 12 71.90 50.40 50.23 76.55
Basic Earnings Per Share (cent) Note 12 71.90 72.29 71.88 98.40
Constant currency change - continuing operations 43.1%
Constant currency change 0.0%
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 believes that adjusted EPS provides useful
information of underlying performance as it excludes exceptional items (net of
related tax) that are not related to ongoing operational performance and
intangible asset amortisation, which allows for comparability of companies
that grow by acquisition to those that grow organically. Adjusted Earnings Per
Share has also been calculated on a continuing basis (excluding Tirlán
Limited (formerly known as Glanbia Ireland DAC)) in line with the presentation
of continuing and discontinued operations in the Group consolidated 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 2022 Half year 2022 Year 2022
interim financial 2023 Reported Reported Constant currency Reported
statements/glossary $m $m $m $m
Profit after tax from continuing operations Condensed Group income statement 193.4 140.4 139.8 210.3
Exceptional (credit)/charge - continuing operations Condensed Group income statement (56.5) (7.6) (7.5) 37.7
Profit after tax from continuing operations (pre-exceptional) Condensed Group income statement 136.9 132.8 132.3 248.0
Non-controlling interests Condensed Group income statement 0.2 0.3 0.3 0.8
Amortisation and impairment of intangible assets (excluding software 26.6 26.5 26.5 53.4
amortisation) net of related tax of $4.0 million (HY 2022: $4.2 million, HY
2022 retranslated $4.2 million, FY 2022: $8.4 million) - continuing operations
Adjusted net income - continuing operations 163.7 159.6 159.1 302.2
Profit after tax from discontinued operations Condensed Group income statement - 61.1 60.4 60.3
Exceptional (credit) - discontinued operations Condensed Group income statement - (61.1) (60.4) (60.3)
Profit from discontinued operations (pre-exceptional) Condensed Group income statement - - - -
Adjusted net income 163.7 159.6 159.1 302.2
Weighted average number of ordinary shares in issue (thousands) Note 12 269,255 279,154 279,154 275,761
Adjusted Earnings Per Share (cent) - continuing operations 60.78 57.17 57.01 109.57
Adjusted Earnings Per Share (cent) 60.78 57.17 57.01 109.57
Constant currency change- continuing operations 6.6%
Constant currency change 6.6%
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 2023 2022 2022
statements/glossary $m $m $m
Cash and cash equivalents Condensed Group balance sheet (251.0) (241.9) (467.9)
Current borrowings Condensed Group balance sheet 122.9 96.7 275.4
Non-current borrowings Condensed Group balance sheet 578.9 820.8 682.5
Net debt Note 15, G 14 450.8 675.6 490.0
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 2023 2022 2022
statements/glossary $m $m $m
Net debt Note 15, G 7 450.8 675.6 490.0
Rolling EBITDA 446.0 378.5 436.7
Adjustments in line with lenders' facility agreements 9.1 8.2 (2.7)
Rolling adjusted EBITDA 455.1 386.7 434.0
Net debt: adjusted EBITDA 0.99 times 1.75 times 1.13 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 plus borrowing
costs capitalised into assets less 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
2023 2022 2022
$m $m $m
Rolling operating profit 302.6 226.9 235.6
Rolling exceptional (credit)/charge (5.5) 5.1 51.0
Rolling operating profit (pre-exceptional) 297.1 232.0 286.6
Rolling dividends received from related parties 31.9 20.9 15.3
Rolling IFRS 16 adjustment - interest (2.7) (2.7) (2.7)
Rolling adjusted EBIT 326.3 250.2 299.2
Rolling net finance cost 14.1 15.6 17.6
Adjusted EBIT: net finance cost 23.1 times 16.0 times 17.0 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 and
disposals, 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
and disposals, 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 (10.4%) (4.8%) (2.6%) (17.8%)
US Cheese G 2.1 0.4% (14.5%) - (14.1%)
Glanbia Nutritionals G 2.1 (2.8%) (11.7%) (0.7%) (15.2%)
Glanbia Performance Nutrition G 2.1 (7.5%) 10.9% - 3.4%
HY 2023 decrease % - revenue G 2.1 (4.1%) (5.4%) (0.5%) (10.0%)
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 and disposals and the impact of a 53(rd)
week (when applicable), 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 and disposals
and the impact of a 53(rd) week (when applicable), on a constant currency
basis. Like-for-like branded revenue increase/(decrease) is one of the GPN
segment's Key Performance Indicators. Like-for-like branded revenue
increase/(decrease) is one of the performance conditions in Glanbia's Annual
Incentive Plan for GPN Senior Management.
G 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 and disposals and the impact of a 53(rd) week (when applicable),
on a constant currency basis.
G 11. Effective tax rate
The effective tax rate is defined as the pre-exceptional income tax charge
divided by the profit before tax less share of results of joint ventures.
Reference to the interim financial Half year Half year
statements/glossary 2023 2022
$m $m
Profit before tax - continuing operations Condensed Group income statement 214.0 157.6
Exceptional credit Condensed Group income statement (55.9) (7.6)
Profit before tax (pre-exceptional) Condensed Group income statement 158.1 150.0
Less share of results of joint ventures (pre-exceptional) Condensed Group income statement (6.5) (12.5)
151.6 137.5
Income tax Condensed Group income statement 20.6 17.2
Exceptional tax credit Condensed Group income statement 0.6 -
Income tax (pre-exceptional) Condensed Group income statement 21.2 17.2
Effective tax rate 14.0% 12.5%
G 12. Average interest rate
The average interest rate is defined as the rolling 12 month adjusted net
finance cost divided by average net debt.
Adjusted net finance cost comprises finance costs plus borrowing
costs capitalised into assets less finance income, finance income/costs on
changes in fair value of call options and contingent consideration and
interest expense on lease liabilities. Average net debt 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).
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 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 and one
of the performance conditions in Glanbia's Annual Incentive Plan.
Free cash flow is calculated as the net cash flow in the year before the
following items: strategic capital expenditure, dividends paid to Company
shareholders, loans/investments in joint ventures, exceptional costs paid,
payment for acquisition of subsidiaries, proceeds received on disposals and
purchase of own shares under share buyback.
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Earnings before interest, tax, depreciation and amortisation (pre-exceptional G 5 232.2 222.9
EBITDA)
Movement in working capital (pre-exceptional) G 14.2 (181.4) (246.2)
Business sustaining capital expenditure G 14.4 (9.5) (8.0)
Operating cash flow G 14.1 41.3 (31.3)
Net interest and tax paid G 14.3 (37.0) (34.8)
Dividends received from joint ventures Condensed Group statement of cash flows 19.5 2.9
Payments of lease liabilities Condensed Group statement of cash flows (10.8) (8.1)
Other outflows G 14.5 (5.0) (2.1)
Free cash flow 8.0 (73.4)
Strategic capital expenditure G 14.4 (27.3) (24.0)
Dividends paid to Company shareholders Condensed Group statement of cash flows (57.3) (53.5)
Purchase of own shares under share buyback G 14.8 (69.3) (138.9)
Loans/investments in joint ventures G 14.6 67.8 27.6
Cash outflow related to exceptional items G 14.7 (8.5) (16.2)
Acquisitions/disposals G 14.9 130.8 279.5
Net cash flow 44.2 1.1
Exchange translation Note 15 (5.0) 4.9
Cash acquired on acquisition Note 15 - 1.0
Net debt movement 39.2 7.0
Opening net debt (490.0) (682.6)
Closing net debt G 7, Note 15 (450.8) (675.6)
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
2023 2022
$m $m
Net cash flows from operating activities before exceptional items Note 21 59.2 (15.3)
Less business sustaining capital expenditure G 14.4 (9.5) (8.0)
Non-cash items not adjusted in computing operating cash flow:
Cost of share-based payments Note 21 (10.0) (8.3)
Other reconciling items 1.6 0.3
Operating cash flow G 14 41.3 (31.3)
G 14.2 Movement in working capital
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Movement in working capital (pre-exceptional) G 14 (181.4) (246.2)
Net write down of inventories (pre-exceptional) Note 21 (8.1) (6.1)
Net movement in allowance for impairment of receivables Note 21 1.3 (2.3)
Other reconciling items 2.2 (1.8)
Total change in net working capital Note 21 (186.0) (256.4)
G 14.3 Net interest and tax paid
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Interest received Condensed Group statement of cash flows 5.2 1.1
Interest paid (including interest expense on lease liabilities) Condensed Group statement of cash flows (13.5) (10.3)
Tax paid Condensed Group statement of cash flows (28.7) (25.6)
Total net interest and tax paid G 14 (37.0) (34.8)
G 14.4 Capital expenditure
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Business sustaining capital expenditure G 14 9.5 8.0
Strategic capital expenditure G 14 27.3 24.0
Total capital expenditure 36.8 32.0
Purchase of property, plant and equipment Condensed Group statement of cash flows 18.3 13.9
Purchase of intangible assets Condensed Group statement of cash flows 18.5 18.1
Total capital expenditure per the Condensed Group statement of cash flows 36.8 32.0
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
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Cost of share-based payments Note 21 10.0 8.3
Proceeds from disposal/redemption from FVOCI financial assets Condensed Group statement of cash flows - 0.3
Purchase of own shares by Employee Share (Scheme) Trust G 14.8 (13.4) (10.4)
Other reconciling items (1.6) (0.3)
Total other outflows G 14 (5.0) (2.1)
G 14.6 Loans/investments in joint ventures
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Loans advanced to Glanbia Cheese Condensed Group statement of cash flows (3.5) (3.9)
Proceeds on repayment of loans advanced to Glanbia Cheese Condensed Group statement of cash flows 71.3 -
Proceeds on repayments of loans advanced to Tirlán Limited Condensed Group statement of cash flows - 31.5
Total loans/investments in joint ventures G 14 67.8 27.6
G 14.7 Exceptional cash paid
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Cash outflow related to exceptional items - operating activities Condensed Group statement of cash flows (8.5) (7.4)
Cash outflow related to exceptional items - investing activities Condensed Group statement of cash flows - (8.8)
Total exceptional cash paid G 14 (8.5) (16.2)
G 14.8 Purchase of own shares
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Purchase of own shares under share buyback G 14 (69.3) (138.9)
Purchase of own shares by Employee Share (Scheme) Trust G 14.5 (13.4) (10.4)
Total purchase of own shares Condensed Group statement of cash flows (82.7) (149.3)
G 14.9 Acquisitions/disposals
Reference to the interim financial statements/glossary Half year Half year
2023 2022
$m $m
Proceeds from disposal of Glanbia Cheese (exceptional) Condensed Group statement of cash flows 123.4 -
Proceeds from disposal of assets and liabilities held for sale (exceptional) Condensed Group statement of cash flows 7.4 -
Proceeds from disposal of Tirlán Ltd (formerly known as Glanbia Ireland DAC) Condensed Group statement of cash flows - 339.3
Payment for acquisition of subsidiaries Condensed Group statement of cash flows - (59.8)
Total acquisitions/disposals G 14 130.8 279.5
G 15. Dividend payout ratio
Dividend payout ratio is defined as the US Dollar equivalent interim dividend
per ordinary share divided by the Adjusted Earnings Per Share. US Dollar
equivalent dividend is based on the actual dividend recommendation/payment in
Euro, retranslated to US Dollar at the average exchange rate for the period.
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 2023 2022
Adjusted Earnings Per Share G 6.2 $ 60.78c $ 57.17c
Dividend recommended/paid per ordinary share in Euro Note 11 € 14.22c € 12.93c
Equivalent US Dollar dividend translated at average exchange rate for the $ 15.37c $ 14.13c
period
Dividend payout ratio 25.3% 24.7%
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 2022 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 2023.
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