Glanbia PLC - Interim Results
RNS Number : 0760C
Glanbia PLC
27 August 2008
NEWS RELEASE
Glanbia Corporate Communications
Telephone + 353 56 777 2200
Facsimile + 353 56 77 50834
www.glanbia.com
2008 Half Yearly Financial Report
For a full copy of this document - go to www.glanbia.com
For further information contact
Glanbia plc +353 56 777 2200
Geoff Meagher, Deputy Group Managing Director/Group Finance
Director
Siobhan Talbot, Deputy Group Finance Director
Geraldine Kearney, Corporate Communications Director + 353 87
231 9430
Hogarth Partnership UK +44 207 357 9477
John Olsen / Anthony Arthur
26% growth in adjusted earnings per share on target for double digit growth in
2008
27 August 2008 - Glanbia plc ('Glanbia'), the international cheese and
nutritional ingredients Group, announces its results for the half year ended 28
June 2008. The content and structure of this announcement reflects the new
requirements for half
yearly results, under the EU Transparency Directive.
2008 Half Yearly Results Summary
* Good half year performance, with increased revenue, profits, margins and
earnings per share;
* Revenue up 6.3%, like-for-like revenue up 20%;
* Profit before tax pre exceptional up 37.6%, like-for-like profit before tax
pre exceptional up 49%;
* 10% increase in dividend per share;
* Food Ingredients USA and Nutritionals delivered strong results;
* Significantly improved performance from the Group's international joint
ventures; and
* All other divisions performed broadly in line with expectations.
HY 2008 HY 2007 Change
Revenue(1) EUR1,106.2 m EUR1,040.3 m Up 6.3%
Operating profit pre exceptional EUR56.5 m EUR48.5 m Up 16.5%
Operating margin pre exceptional 5.1% 4.7% Up 40 bps
Net financing costs (EUR9.1 m) (EUR8.6 m) Up EUR0.5 m
Share of results of joint ventures EUR5.6 m (EUR1.3 m) Up EUR6.9 m
and associates(1)
Profit before tax pre exceptional EUR53.1 m EUR38.6 m Up 37.6%
Profit after tax pre exceptional EUR44.1 m EUR33.8 m Up 30.5%
Exceptional items(2) (EUR2.3 m) - See note
Basic earnings per share 13.98 c 11.47 c Up 21.9%
Adjusted earnings per share(3) 15.74 c 12.45 c Up 26.4%
Dividend per share in respect of the 2.75 c 2.50 c Up 10.0%
half year
Net debt EUR296.3 m EUR269.1 m Up EUR27.2 m
(1) Revenue including Glanbia's share of the revenue of joint ventures and
associates was EUR1.3 billion in the first half
of 2008, up 6.5% on the same period last year. Share of results of
joint ventures and associates is an after
interest and tax amount.
(2) In March 2008, Glanbia announced the sale of its Pigmeat business in a
Management Buyout and the net
exceptional of EUR2.3 million is additional costs of EUR2.6 million
associated with this disposal and a related tax credit
of EUR0.3 million.
(3) Before exceptional items and amortisation of intangible assets.
John Moloney, Group Managing Director, said:
'Glanbia had a good first half delivering strong growth relative to the first
half of 2007 and a 26% increase in adjusted earnings per share. The second half
of this year is expected to be somewhat ahead of the second half of 2007.
Margins have
recovered in Consumer Foods Ireland and there is a satisfactory outlook for
Agribusiness & Property. While organic growth remains strong in Food Ingredients
USA and Nutritionals, the performance of Food Ingredients Ireland in the second
half will be
reduced relative to the second half of 2007, as global dairy market volatility
has created a time lag in balancing input costs and market returns.
International joint ventures are expected to sustain their improved first half
performance. For the full
year, we are confident of a good overall performance and we believe the Group
will deliver double digit earnings growth, in line with market expectations.
We are delighted with the acquisition of Optimum Nutrition which we announced on
25 August 2008. Optimum has leading US sports nutrition brands and an excellent
reputation in the sector. It represents a key strategic development in the
growth of our
Nutritionals business and is expected to be earnings enhancing from this year.'
Interim management report
for the half year ended 28 June 2008
Operations review
Glanbia is organised on a geographic basis by division. For the half year 2008,
34% of Group revenue(1) and 32% of Group operating profit(1) was generated in
Ireland, with 66% of Group revenue(1) and 68% of Group operating profit(1)
generated from
international businesses.
The Group operates in the Irish market through Consumer Foods Ireland and
Agribusiness & Property. Consumer Foods Ireland incorporates nutritional
beverages, fresh dairy products and cheese, soups and spreads for the Irish
retail market.
Agribusiness is engaged primarily in feed milling, grain processing and
retailing. Property is tasked with maximising the value of the Group's property
portfolio.
International markets are served by the Food Ingredients and Nutritionals
division and international joint ventures. Food Ingredients produces cheese,
butter, casein and protein ingredients for international customers at processing
facilities in
Ireland and the USA. The Group's global nutritionals business produces a wide
range of speciality whey proteins, customised premix solutions and other
nutritional ingredients for use by food and beverage companies. The principal
Group joint ventures
include cheese manufacturers in the USA and the UK and a consumer products joint
venture in Nigeria.
(1) Share of Group including joint ventures and associates
IRELAND
Consumer Foods Ireland* and EUR'000 HY 2008 HY 2007 Change
Agribusiness & Property
Revenue 417,722 418,369 Similar
Operating profit pre 21,923 20,141 Up 9%
exceptional
Operating margin pre 5.2% 4.8% Up 40 bps
exceptional
* In March 2008, Glanbia announced the sale of its Irish Pigmeat operations to a
Management Buyout team.
Revenue, including the Pigmeat business unit, was broadly similar at EUR417.7
million (HY 2007: EUR418.4 million). Operating profit pre exceptional increased
by 9% to EUR21.9 million (HY 2007: EUR20.1 million). Operating margin pre
exceptional grew by
40 basis points to 5.2% (HY 2007: 4.8%). These results reflect an improved
performance from Consumer Foods Ireland and a satisfactory performance from
Agribusiness & Property.
Consumer Foods Ireland
Consumer Foods Ireland had a solid first half with margins recovering as
anticipated in challenging market conditions. A key factor was the recovery in
the market place of the increased milk input costs experienced in 2007.
Outlook
The Irish food retailing sector is very competitive with changing trends in
consumer demand driven partly by the current downturn in the economy. As a
result, the strategy for Consumer Foods Ireland is threefold: reinvestment in
the business to
sustain a strong brand portfolio and relative market positions, an ongoing focus
on cost efficiency and an emphasis on product and packaging innovation. We
expect this business to sustain its improved performance for the second half,
delivering an overall
satisfactory performance for the year.
Agribusiness & Property
Revenue in this division was up compared to the half year 2007. Operating profit
was broadly similar and operating margin, excluding Property, was relatively
stable.
Agribusiness
The first half of 2008 has seen unprecedented rises in raw material prices for
feed and fertilizer inputs, relatively stable feed volumes and somewhat weaker
fertilizer volumes. Against this market environment, Agribusiness maintained its
market
position with competitive pricing and together with continued progress in the
marketplace with the CountyLife format, overall results for Agribusiness were
satisfactory in the first half.
Outlook
Going forward, the outlook for Agribusiness remains positive.
Property
The performance of the Property business unit was marginally down compared to
the first half of 2007.
Outlook for 2008 is for a similar performance to 2007, subject to the timing of
individual projects.
INTERNATIONAL
Food Ingredients & EUR'000 HY 2008 HY 2007 Change
Nutritionals
Revenue 688,455 621,968 Up 11%
Operating profit pre exceptional 34,617 28,403 Up 22%
Operating margin pre exceptional 5.0% 4.6% Up 40 bps
International operations had a good first half driven mainly by a strong
performance from Food Ingredients USA and Nutritionals. Revenue increased 11% to
EUR688.5 million (HY 2007: EUR622.0 million). Operating profit pre exceptional
grew 22% to
EUR34.6 million (HY 2007: EUR28.4 million). Operating margin improved 40 basis
points to 5.0% (HY 2007: 4.6%).
Food Ingredients Ireland
Food Ingredients Ireland had a marginally improved first half performance,
compared with a weak first half of 2007. The business continues to invest
capital in product diversification as well as seeking to benefit from further
growth opportunities
from quota expansion.
Outlook
The volatility in global dairy markets experienced in the first half, which led
to a reduction in market pricing from the exceptional peak of 2007, has
continued into the second half. This is creating a time lag in balancing milk
input costs with
market returns. This timing issue, combined with increased energy costs, is
leading to a reduction in the expected performance of Food Ingredients Ireland
in the second half of the year compared to the corresponding period last year.
As a consequence,
overall results for Food Ingredients Ireland for the full year will be lower
than 2007.
Food Ingredients USA
Our leading scale position, in positive market conditions, drove revenue and
operating profit growth for this business in the first half of 2008. Sales
volume increased delivering good organic growth for cheese and whey ingredients,
both domestically
and internationally.
Outlook
Milk production to date in 2008 in Idaho continues to grow. Domestic and export
demand for American style cheddar cheese, where Glanbia is the number one
producer, remains strong. In this market context, Food Ingredients USA is
expected to deliver a
good full year performance.
Nutritionals
Revenues, profits and margins increased for Nutritionals with this business
achieving good organic growth. Nutritionals also benefited from its innovation
programme which is delivering products and solutions into the sports nutrition,
health &
wellness and weight management sectors in the USA, Europe and Asia.
Outlook
The Nutritionals business is expected to continue to perform strongly in the
second half of the year, underpinning a positive full year performance and a
growing contribution to the Group overall.
JOINT VENTURES AND ASSOCIATES
JOINT VENTURES & ASSOCIATES EUR'000 HY 2008 HY 2007 Change
(GLANBIA SHARE)
Glanbia has three principle Revenue(1) 189,062 176,130 Up 7%
international joint ventures;
Southwest Cheese in the USA,
Glanbia Cheese in the UK and
Nutricima in Nigeria and a
number of smaller Irish based
joint ventures and associates
Profit after 5,611 (1,308) Up EUR6.9 m
interest and tax(2)
(1) Not included in Group revenue. Like-for-like revenue grew 15% (2) Included
in the income statement as share of results of joint ventures and associates
Glanbia's share of revenue was up 7% in the first half of the year to EUR189.1
million (HY 2007: EUR176.1 million) as these businesses continued to deliver
strong top line growth and good operational performances. Glanbia's share of
profit after tax
and interest increased EUR6.9 million to EUR5.6 million (HY 2007: EUR1.3 million
loss), driven principally by a good recovery at Southwest Cheese.
Southwest Cheese is the Group's joint venture in New Mexico and is one of the
largest natural cheese and high-protein whey processing plants in the world.
This business, now operating at full capacity, is performing well and had a very
strong first
half in 2008 leading to a significantly improved performance and a good outlook
for the full year.
Glanbia Cheese is the number one producer of mozzarella cheese for the European
pizza market. The business had an improved performance in the first half of the
year. Despite a competitive market place, results for this business for the full
year are
expected to deliver a significant improvement on a difficult 2007.
Nutricima manufactures and markets branded dairy based consumer products for the
Nigerian market. Nutricima continues to make good progress in developing its
market and brand positioning and the current expansion of the facility is on
target for
completion in the first quarter of 2009. We are steadily building a new business
in West Africa and we expect 2008 performance to be broadly in line with 2007.
Finance review
Income statement
In the first half of 2008, revenue increased 6.3% to EUR1,106.2 million (HY
2007: EUR1,040.3 million). Like-for-like revenue increased 20%. Operating profit
pre exceptional grew 16.5% to EUR56.5 million (HY 2007: EUR48.5 million).
Like-for-like
operating profit pre exceptional increased 26%. Operating margin pre exceptional
increased 40 basis points to 5.1% (HY 2007: 4.7%). These results reflect a
strong performance from the Group's international businesses, particularly Food
Ingredients USA and
Nutritionals.
Net finance costs were similar to 2007 at EUR9.1 million (HY 2007: EUR8.6
million). EBITDA (earnings before interest, taxation, depreciation and
amortisation) to net finance cost improved to 8 times compared with 7.6 times in
the corresponding period
of 2007.
The Group's share of results of joint ventures and associates, which are post
interest and tax, amounted to EUR5.6 million compared with a loss of EUR1.3
million in the first half of 2007. This improvement was mainly driven by the
performance of
Southwest Cheese.
Taxation for the period amounted to a net charge of EUR8.7 million for the first
half of 2008 compared with a charge of EUR4.8 million in the first half of 2007.
This increase reflects the growing internationalisation and profitability of the
Group.
The net exceptional charge for the half year amounted to EUR2.3 million
(compared with no exceptional charge in the first half of 2007) relating to
finalisation of the Group's exit from the Pigmeat sector. This consists of a
EUR2.6 million charge
offset by the related tax benefit of EUR0.3 million.
Basic earnings per share increased 22% to 13.98 cent (HY 2007: 11.47 cent).
Adjusted earnings per share increased 26% to 15.74 cent (HY 2007: 12.45 cent).
Balance sheet and cash flow
Overall net debt increased EUR27.2 million to EUR296.3 million, from EUR269.1
million at half year 2007. EBITDA of EUR72.9 million was reinvested in the
seasonal working capital requirement of the Group and capital expenditure.
The deficit on retirement benefit obligations improved to EUR106.9 million from
EUR114.2 million at prior year end. Improvement in the Group's obligations are
driven by improved corporate bond yields offset in part by deteriorating
investment returns
and a further strengthening of mortality assumptions in both the Irish and UK
schemes.
Dividends
The Board is recommending an interim dividend of 2.75 cent per share, compared
with a 2.50 cent per share interim dividend in 2007. This represents a 10%
increase. Dividends will be paid on 1 October 2008 to shareholders on the
register as at 12
September 2008. Irish dividend withholding tax will be deducted at the standard
rate, where appropriate.
Principal risks and uncertainties affecting the second half performance
The management of risk is key to achieving Glanbia's strategic and financial
objectives and there is an on-going process of assessing, managing, monitoring
and reporting on the significant risks faced by individual Group companies and
by the Group as
a whole. The Board has ultimate responsibility for risk management and the key
areas of risk and the Group's mitigation processes are set out in detail in the
2007 Annual Report and on the Group's website at www.glanbia.com.
With due regard to the outlook for Glanbia for the full year, the principal
risks and uncertainties that the Group has identified in the second half of
2008, which by their nature have the potential to impact the Group's full year
performance, are as
follows:
- Short term volatility in global dairy markets may impact the performance of
Food Ingredients Ireland. The key issue will be
rebalancing input costs with market returns
- The global economic slowdown is affecting consumer sentiment and is leading
to a shift in trends in consumer demand and
consumption patterns in many developed economies. If these trends are
sustained this has the potential to impact the
Group's consumer food brand portfolio.
2008 Outlook
First half results were strong relative to the first half of 2007 and the second
half of this year is expected to be somewhat ahead of the second half of 2007.
Margins have recovered in Consumer Foods Ireland and there is a satisfactory
outlook for
Agribusiness & Property. While organic growth remains strong in Food Ingredients
USA and Nutritionals, the performance of Food Ingredients Ireland in the second
half will be reduced relative to second half of 2007, as global dairy market
volatility
has created a time lag in balancing input costs and market returns.
International joint ventures are expected to sustain their improved first half
performance. For the full year, Glanbia is confident of a good overall
performance and the Group believes it
will deliver double digit earnings growth, in line with market expectations.
The 2008 Half Yearly Financial Report is available on the Group's website
www.glanbia.com
Responsibility statement
The Directors are responsible for preparing the Half Yearly Financial Report in
accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the
related Transparency Rules of the Irish Financial Services Regulatory Authority
and with IAS
34, Interim Financial Reporting as adopted by the European Union.
The Directors confirm that, to the best of their knowledge:
The Group Condensed Financial Statements for the half year ended 28 June 2008
have been prepared in accordance with the international accounting standard
applicable to interim financial reporting adopted pursuant to the procedure
provided for under
Article 6 of the Regulation (EC) No. 1606/2002 of the European Parliament and of
the Council of 19 July 2002;
The Half Yearly Financial Report includes a fair review of the important events
that have occurred during the first six months of the financial year, and their
impact on the Group Condensed Financial Statements for the half year ended 28
June 2008,
and a description of the principal risks and uncertainties for the remaining six
months;
The Half Yearly Financial Report includes a fair review of related party
transactions that have occurred during the first six months of the current
financial year that have materially affected the financial position or the
performance of the Group
during that period and any changes in the related parties transactions described
in the last Annual Report that could have a material effect on the financial
position or the performance of the Group.
On behalf of the Board
John Moloney Geoff Meagher
Group Managing Director Deputy Group Managing Director/Group Finance Director
26 August 2008
Consolidated income statement
for the half year ended 28 June 2008
Half year 2008 Half year 2007
Year 2007
Pre- Pre-
Pre-
exceptional Exceptional Total exceptional Exceptional Total
exceptional Exceptional Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
EUR'000 EUR'000 EUR'000
Revenue 3 1,106,177 - 1,106,177 1,040,337 - 1,040,337
2,206,567 - 2,206,567
Cost of sales (939,635) - (939,635) (891,924) - (891,924)
(1,882,648) - (1,882,648)
Gross profit 166,542 - 166,542 148,413 - 148,413
323,919 - 323,919
Distribution expenses (61,707) - (61,707) (57,289) - (57,289)
(114,180) - (114,180)
Administration expenses (48,295) (2,583) (50,878) (42,580) - (42,580)
(93,905) (23,463) (117,368)
Operating profit 56,540 (2,583) 53,957 48,544 - 48,544
115,834 (23,463) 92,371
Finance income 6 2,378 - 2,378 2,335 - 2,335
4,813 - 4,813
Finance costs 6 (11,444) - (11,444) (10,965) - (10,965)
(22,095) - (22,095)
Share of results of joint
ventures and associates 5,611 - 5,611 (1,308) - (1,308)
992 - 992
Profit before taxation 53,085 (2,583) 50,502 38,606 - 38,606
99,544 (23,463) 76,081
Income taxes 7 (9,020) 323 (8,697) (4,790) - (4,790)
(16,458) 617 (15,841)
Profit for the period 44,065 (2,260) 41,805 33,816 - 33,816
83,086 (22,846) 60,240
Attributable to:
Equity holders of the Parent 40,997 33,599
59,833
Minority interests 808 217
407
41,805 33,816
60,240
Basic earnings per share 9 13.98 11.47
20.42
(cent)
Diluted earnings per share 9 13.92 11.46
20.34
(cent)
Consolidated statement of recognised income and expense
for the half year ended 28 June 2008
Half year Half year Year
Notes 2008 2007 2007
EUR'000 EUR'000 EUR'000
Actuarial (loss)/gain - defined 14 (1,252) 34,557 (4,539)
benefit schemes
Deferred tax on actuarial 14 (709) (3,575) 1,102
(loss)/gain
Share of actuarial gain - joint - - 230
ventures
Currency translation differences 13 (7,124) (2,790) (14,878)
Fair value adjustments (net of 13 2,127 (943) 8,578
tax)
Net (expense)/income recognised (6,958) 27,249 (9,507)
directly in equity
Profit for the period 41,805 33,816 60,240
Total recognised income for the 34,847 61,065 50,733
period
Attributable to:
Equity holders of the Parent 34,039 60,848 50,326
Minority interest 808 217 407
34,847 61,065 50,733
Consolidated balance sheet
as at 28 June 2008
Half year Half year Year
Notes 2008 2007 2007
ASSETS EUR'000 EUR'000 EUR'000
Non-current assets
Property, plant and equipment 10 311,232 331,076 298,771
Intangible assets 10 127,991 135,312 137,565
Investments in associates 11,543 10,976 10,729
Investments in joint ventures 52,317 58,731 50,370
Trade and other receivables 26,895 - 13,929
Deferred tax assets 20,632 20,348 21,672
Available for sale financial 30,136 12,363 30,089
assets
Derivative financial 1,220 2,430 763
instruments
581,966 571,236 563,888
Current assets
Inventories 283,218 164,629 225,057
Trade and other receivables 286,341 288,801 202,234
Derivative financial 8,685 12,173 4,990
instruments
Cash and cash equivalents 11 123,738 148,891 159,819
701,982 614,494 592,100
Assets in disposal group held - - 20,304
for sale
701,982 614,494 612,404
Total assets 1,283,948 1,185,730 1,176,292
EQUITY
Issued capital and reserves attributable to equity holders of the
Parent
Share capital and share 97,148 98,378 98,450
premium
Other reserves 13 103,061 109,963 107,909
Retained earnings 14 49,718 36,519 21,176
249,927 244,860 227,535
Minority interests 7,848 6,852 7,040
Total equity 257,775 251,712 234,575
LIABILITIES
Non-current liabilities
Borrowings 11 419,134 417,110 379,028
Derivative financial 5,180 4,655 3,736
instruments
Deferred tax liabilities 37,122 38,424 37,587
Retirement benefit obligations 15 106,942 83,269 114,248
Provisions for other 12 12,227 8,040 13,660
liabilities and charges
Capital grants 3,403 10,267 3,535
584,008 561,765 551,794
Current liabilities
Trade and other payables 421,562 332,802 336,663
Current tax liabilities 4,145 6,732 9,182
Borrowings 11 886 854 966
Derivative financial 6,112 10,476 3,187
instruments
Provisions for other 12 9,460 21,389 22,278
liabilities and charges
442,165 372,253 372,276
Liabilities in disposal group - - 17,647
held for sale
442,165 372,253 389,923
Total liabilities 1,026,173 934,018 941,717
Total equity and liabilities 1,283,948 1,185,730 1,176,292
Consolidated cash flow statement
for the half year ended 28 June 2008
Half year Half year Year
Notes 2008 2007 2007
EUR'000 EUR'000 EUR'000
Cash flows from operating
activities
Cash generated from/(absorbed 18 64 (1,732) 85,110
by) operations
Interest received 2,213 2,335 3,015
Interest paid (10,816) (11,109) (17,613)
Tax paid (13,720) - (5,401)
Net cash (absorbed (22,259) (10,506) 65,111
by)/generated from operating
activities
Cash flows from investing
activities
Deferred/contingent (10,729) (7,166) (17,742)
acquisition consideration paid
Purchase of property, plant (35,523) (17,382) (51,662)
and equipment
Purchase of available for sale (363) (2,287) (2,000)
investments
Proceeds received: exit from 9,128 - 12,937
pigmeat
Proceeds from sale of 164 296 13,419
property, plant and equipment
Net cash used in investing (37,323) (26,539) (45,048)
activities
Cash flows from financing
activities
Proceeds from issue of 105 74 167
ordinary shares
Increase/(decrease) in 50,348 (61,844) (84,056)
borrowings
Finance lease principal (532) (632) (954)
payments
Employee share trust - LTIP (1,407) - (95)
purchase of shares
Dividends paid to Company's (10,494) (9,946) (17,334)
shareholders
Loans advanced to joint (13,910) - (9,001)
ventures
Capital grants received 1,366 - 1,399
Net cash from/(used in) 25,476 (72,348) (109,874)
financial activities
Net decrease in cash and cash (34,106) (109,393) (89,811)
equivalents
Cash and cash equivalents at 159,819 259,311 259,311
the beginning of the period
Effects of exchange rate changes on cash and cash (1,975) (1,027)
(9,681)
equivalents
Cash and cash equivalents at 123,738 148,891 159,819
the end of the period
Reconciliation of net cash flow to movement in net
debt
2008 2007 2007
EUR'000 EUR'000 EUR'000
Net decrease in cash and cash (34,106) (109,393) (89,811)
equivalents
Cash (outflow)/inflow from (49,816) 62,476 85,889
debt financing
(83,922) (46,917) (3,922)
Fair value of interest rate swaps qualifying as fair 2,067 - (764)
value hedges
Exchange translation 5,748 2,338 9,005
adjustment on net debt
Movement in net debt in the (76,107) (44,579) 4,319
period
Net debt at beginning of (220,175) (224,494) (224,494)
period
Net debt at end of period (296,282) (269,073) (220,175)
Net debt comprises: 2008 2007 2007
EUR'000 EUR'000 EUR'000
Borrowings (420,020) (417,964) (379,994)
Cash and cash equivalents 123,738 148,891 159,819
(296,282) (269,073) (220,175)
Notes to the Group condensed financial statements
for the half year ended 28 June 2008
1 Basis of preparation
The figures for the half years ended 28 June 2008 and 30 June 2007 have not been
audited by the auditors. The figures for the full year ended 29 December 2007
represent an abbreviated version of the Group's financial statements for that
year, which
received an unqualified audit report.
These condensed financial statements do not constitute statutory accounts within
the meaning of Section 19 of the Companies (Amendment) Act 1986. The statutory
accounts for the financial year ended 29 December 2007 were approved by the
Board of
Directors on 4 March 2008 and contained an unqualified audit report. These
financial statements will be filed with the Registrar of Companies by their due
date.
The Group condensed consolidated interim financial statements for the six months
ended 28 June 2008 has been prepared in accordance with the Transparency
(Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the
Irish Financial
Services Regulatory Authority and with IAS 34 'Interim Financial Reporting'. The
condensed consolidated interim financial statements should be read in
conjunction with the annual financial statements for the year ended 29 December
2007, which have been
prepared in accordance with IFRS.
2 Accounting policies
The methods of computation and accounting policies adopted in the preparation of
the Group condensed financial statements, except for an amendment in the Group's
segment information disclosure under IAS 14 'Segment Reporting', are consistent
with
those applied in the Annual Report for the financial year ended 29 December 2007
and are described in those financial statements.
The Group did not adopt any new International Financial Reporting Standards or
Interpretations in the period that have had a material impact on the Group
condensed financial statements for the half year.
3 Segment information
At 28 June 2008 the Group is organised into two main business segments:
- Ireland
- International
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Turnover by business segment
Ireland 417,722 418,369 803,363
International 688,455 621,968 1,403,204
1,106,177 1,040,337 2,206,567
Operating profit pre exceptional by
business segment
Ireland 21,923 20,141 30,640
International 34,617 28,403 85,194
56,540 48,544 115,834
The Group's internal financial reporting system reports performance by two
business segments, Ireland and International.
Segment information has been restated to include Consumer Foods and Agribusiness
& Property into Ireland, and Food Ingredients and Nutritionals under
International.
The comparative information for both the half year and year end 2007 have been
restated.
4 Seasonality
Within the Ireland segment, seasonal buying patterns impact the weighting of
Agribusiness & Property revenues towards quarters one and two of the financial
year. International revenues are impacted by the seasonal pattern of milk supply
in
quarters two and three of the financial year.
The increase in working capital for half year 2008 versus year end 2007 of
EUR68.3 million was primarily driven by the above seasonal patterns.
5 Exceptional items
Half year Half year Year
2008 2007 2007
Notes EUR'000 EUR'000 EUR'000
Exit from Pigmeat (a) (2,583) - (20,756)
Restructuring cost (b) - - (2,707)
(2,583) - (23,463)
Exceptional tax credit 323 - 617
Net exceptional item (2,260) - (22,846)
(a) On 3 March 2008, Glanbia announced the sale of its Pigmeat business in a
Management Buyout and the net
exceptional of EUR2.3 million is additional costs of EUR2.6 million
associated with this disposal and a related tax credit
of EUR0.3 million.
(b) Restructuring of Consumer Foods operations. Costs include redundancy and
asset impairment charges.
6 Finance income and costs
(a) Finance income
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Interest income 2,378 2,335 4,813
(b) Finance costs
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Interest expense
- Bank borrowings repayable within five (9,025) (6,220) (19,084)
years
- Bank borrowings repayable after five - (3,480) -
years
- Interest cost on deferred consideration (228) (202) (450)
- Finance lease costs (155) (156) (272)
- Interest rate swaps, transfer from 154 716 1,401
equity
- Interest rate swaps, fair value hedges (1,539) (737) 676
- Fair value adjustment of borrowings 1,539 737 (676)
attributable to interest rate risk
(9,254) (9,342) (18,405)
Finance cost of preference shares (2,190) (1,623) (3,690)
Total finance costs (11,444) (10,965) (22,095)
7 Income taxes
The Group's pre exceptional income tax charge of EUR9.0 million (HY 2007: EUR4.8
million) has been prepared based on the Group's best estimate of the weighted
average tax rate that is expected for the full financial year.
8 Dividends
A final dividend in respect of the year ended 29 December 2007 of 3.58 cent per
share was paid during the period. On 26 August 2008, the Directors declared the
payment of an interim dividend for 2008 of 2.75 cent per share (2007 interim
dividend: 2.50
cent per share). The interim dividend will be reflected in the financial
statements for the full year 2008 in line with IAS 10.
9 Earnings per share
Basic
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Profit attributable to equity 40,997 33,599 59,833
holders of the Company
Weighted average number of ordinary 293,252,086 292,984,514 293,012,540
shares in issue
Basic earnings per share (cent per 13.98 11.47 20.42
share)
Diluted
Weighted average number of ordinary 293,252,086 292,984,514 293,012,540
shares in issue
Adjustments for share options 1,355,427 254,170 1,110,557
Adjusted weighted average number of 294,607,513 293,238,684 294,123,097
ordinary shares
Diluted earnings per share (cent per 13.92 11.46 20.34
share)
Adjusted
Profit attributable to equity holders of the 40,997 33,599 59,833
Company
Amortisation on intangible assets 2,888 2,886 5,946
Exceptional items 2,260 - 22,846
46,145 36,485 88,625
Adjusted earnings per share (cent per share) 15.74 12.45 30.25
Diluted adjusted earnings per share (cent per 15.66 12.44 30.13
share)
10 Property, plant & equipment and intangible assets
During the six month period to 28 June 2008 the Group spent EUR35.5 million
(2007: EUR17.4 million ) on additions to tangible and intangible fixed assets.
The Group also disposed of certain assets with a carrying amount of
EUR1.1million (2007: EUR0.2
million) for proceeds of EUR3.7 million (2007: EUR4.3 million). At 28 June 2008
the Group had entered into contractual commitments for the acquisition of
property, plant and equipment amounting to EUR14.3 million (2007: EUR2.2
million).
11 Net debt
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Borrowings due within one year 886 854 966
Borrowings due after one year 419,134 417,110 379,028
Less:
Cash and cash equivalents (123,738) (148,891) (159,819)
296,282 269,073 220,175
The increase in net debt of EUR76.1 million from year end 29 December 2007 was
primarily driven by the Group's capital expenditure and seasonal working capital
requirements.
12 Provisions for other liabilities & charges
UK
Restructuring pension Other Total
EUR'000 EUR'000 EUR'000 EUR'000
At 29 December 2007 6,284 3,845 25,809 35,938
Charged to the consolidated
income statement
- Additional provisions 582 - - 582
Net amounts (credited)/charged (2,383) 85 (11,857)
(14,155)
to provision
Exchange differences - (270) (408) (678)
At 28 June 2008 4,483 3,660 13,544 21,687
Non-current - 3,660 8,567 12,227
Current 4,483 - 4,977 9,460
4,483 3,660 13,544 21,687
(a) The restructuring provision relates primarily to the exit from Pigmeat
operations and rationalisation within
Consumer Foods operations. This provision is expected to be fully
utilised in the remainder of 2008.
(b) The UK pension provision relates to administration and certain costs
associated with pension schemes relating to
businesses disposed of in prior years.
(c) Included in 'Other' above are provisions in respect of property lease
commitments, deferred consideration in
respect of recent acquisitions, insurance and certain legal claims
pending against the Group. It is expected that
EUR5.0 million of this provision will be utilised in the remainder of
2008, with the balance being utilised over the
next 5 years.
13 Other reserves
Capital and
mergers Currency Fair value
reserves reserve reserves Total
EUR'000 EUR'000 EUR'000 EUR'000
Balance at 29 December 2007 116,934 (22,481) 13,456
107,909
Translation differences on - (7,124) - (7,124)
foreign currency net
investments
Revaluation of interest rate - - 63 63
swaps - gain in period
Foreign exchange contracts - - 3,848 3,848
gain in period
Transfers to income statement
- Foreign exchange contracts - - (1,677) (1,677)
- Interest rate swaps - - (154) (154)
Revaluation of forward - - 660 660
commodity contracts - gain in
period
Revaluation of available for - - (130) (130)
sale investments - loss in
period
Deferred tax on fair value - - (483) (483)
adjustments
Cost of share options 149 - - 149
Balance at 28 June 2008 117,083 (29,605) 15,583 103,061
14 Retained earnings
Retained Goodwill
earnings write-off Total
EUR'000 EUR'000 EUR'000
Balance at 29 December 2007 114,137 (92,961) 21,176
Actuarial loss - defined benefit (1,252) - (1,252)
schemes
Deferred tax on actuarial loss (709) - (709)
Net expense recognised directly in (1,961) - (1,961)
equity
Profit for the period 40,997 - 40,997
Total recognised income for the half 39,036 - 39,036
year 2008
Dividends paid in 2008 (10,494) - (10,494)
Balance at 28 June 2008 142,679 (92,961) 49,718
15 Changes in estimates and assumptions
The following actuarial assumptions have been made in determining the Group's
retirement benefit obligation for the half year ended 28 June 2008:
Half Year 2008 Year 2007
IRL UK IRL UK
Discount rate 6.3% 6.8% 5.5% 6.0%
The mortality assumptions imply the following life expectancies in years of an
active member on retirement at age 65:
Half Year 2008 Year 2007
Irish mortality UK mortality Irish mortality UK mortality
rates rates rates rates
Male 19.5 23.3 18.9 20.8
Female 22.5 26.0 21.9 23.9
16 Related party transactions
The Company is controlled by Glanbia Co-Operative Society Limited ('the
Society') which holds 54.63% of the issued share capital of the Company and is
the ultimate parent of the Group.
During the six months to 28 June 2008, sales to related parties amounted to
EUR44.3 million (2007: EUR31.3 million) purchases from related parties amounted
to EUR252.7 million (2007: EUR200.9 million) and net balances owing, to/(due
from) related
parties were EUR12.7 million (2007: EUR20.1 million). The related party
transactions relate primarily to trading between the Company, a key joint
venture Southwest Cheese and the Society.
In the opinion of the Directors, there have been no related party transactions,
or changes therein, since year ended 29 December 2007, that have materially
affected the Group's financial position or performance in the six months ended
28 June 2008.
17 Contingent liabilities
Bank guarantees, amounting to EUR5.3 million (2007: EUR14.2 million) are
outstanding as at 28 June 2008, mainly in respect of the payment of EU
subsidies. The Group does not expect any material loss to arise from these
guarantees.
18 Cash generated from operations
Half year Half year Year
2008 2007 2007
EUR'000 EUR'000 EUR'000
Profit before tax 50,502 38,606 76,081
Development costs capitalised - - (1,804)
Non-cash exceptional - exit from 954 - 13,706
Pigmeat
Share of results of joint ventures and (5,611) 1,308 (992)
associates
Depreciation 13,151 14,938 27,246
Amortisation 3,301 2,340 6,816
Cost of share options 149 201 587
Difference between pension charge and (6,979) (7,034) (10,876)
cash contributions
Gain on disposal of property, plant and (2,556) (4,079) (3,002)
equipment
Interest income (2,378) (2,335) (4,813)
Interest expense 11,444 10,965 22,095
Amortisation of government grants (132) (393) (736)
received
Cash generated from operations before 61,845 54,517 124,308
changes in working capital
Change in net working capital
- Increase in inventory (61,126) (20,204) (82,093)
- Increase in short term receivables (90,741) (124,721) (36,615)
- Increase in short term liabilities 93,080 95,786 78,649
- (Decrease)/increase in provisions (2,994) (7,110) 861
Cash generated/(absorbed by) operations 64 (1,732) 85,110
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DBGDISSDGGIL