27th Aug 2008 07:00
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) |
€1,106.2 m |
€1,040.3 m |
Up 6.3% |
|
Operating profit pre exceptional |
€56.5 m |
€48.5 m |
Up 16.5% |
|
Operating margin pre exceptional |
5.1% |
4.7% |
Up 40 bps |
|
Net financing costs |
(€9.1 m) |
(€8.6 m) |
Up €0.5 m |
|
Share of results of joint ventures and associates(1) |
€5.6 m |
(€1.3 m) |
Up €6.9 m |
|
Profit before tax pre exceptional |
€53.1 m |
€38.6 m |
Up 37.6% |
|
Profit after tax pre exceptional |
€44.1 m |
€33.8 m |
Up 30.5% |
|
Exceptional items(2) |
(€2.3 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 half year |
2.75 c |
2.50 c |
Up 10.0% |
|
Net debt |
€296.3 m |
€269.1 m |
Up €27.2 m |
(1) Revenue including Glanbia's share of the revenue of joint ventures and associates was €1.3 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 €2.3 million is additional costs of €2.6 million associated with this disposal and a related tax credit
of €0.3 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 Agribusiness & Property |
€'000 |
HY 2008 |
HY 2007 |
Change |
|
Revenue |
417,722 |
418,369 |
Similar |
|
|
Operating profit pre exceptional |
21,923 |
20,141 |
Up 9% |
|
|
Operating margin pre exceptional |
5.2% |
4.8% |
Up 40 bps |
* 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 €417.7 million (HY 2007: €418.4 million). Operating profit pre exceptional increased by 9% to €21.9 million (HY 2007: €20.1 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 & Nutritionals |
€'000 |
HY 2008 |
HY 2007 |
Change |
|
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 €688.5 million (HY 2007: €622.0 million). Operating profit pre exceptional grew 22% to €34.6 million (HY 2007: €28.4 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 (GLANBIA SHARE) |
€'000 |
HY 2008 |
HY 2007 |
Change |
|
Glanbia has three principle 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 |
Revenue(1) |
189,062 |
176,130 |
Up 7% |
|
Profit after interest and tax(2) |
5,611 |
(1,308) |
Up €6.9 m |
(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 €189.1 million (HY 2007: €176.1 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 €6.9 million to €5.6 million (HY 2007: €1.3 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 €1,106.2 million (HY 2007: €1,040.3 million). Like-for-like revenue increased 20%. Operating profit pre exceptional grew 16.5% to €56.5 million (HY 2007: €48.5 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 €9.1 million (HY 2007: €8.6 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 €5.6 million compared with a loss of €1.3 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 €8.7 million for the first half of 2008 compared with a charge of €4.8 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 €2.3 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 €2.6 million charge offset by the related tax benefit of €0.3 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 €27.2 million to €296.3 million, from €269.1 million at half year 2007. EBITDA of €72.9 million was reinvested in the seasonal working capital requirement of the Group and capital expenditure.
The deficit on retirement benefit obligations improved to €106.9 million from €114.2 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 |
|||||||||||
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'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 (cent) |
9 |
13.98 |
11.47 |
20.42 |
|||||||||||||||
|
Diluted earnings per share (cent) |
9 |
13.92 |
11.46 |
20.34 |
|||||||||||||||
Consolidated statement of recognised income and expense
for the half year ended 28 June 2008
|
Half year |
Half year |
Year |
|||||
|
Notes |
2008 |
2007 |
2007 |
||||
|
€'000 |
€'000 |
€'000 |
|||||
|
Actuarial (loss)/gain - defined benefit schemes |
14 |
(1,252) |
34,557 |
(4,539) |
|||
|
Deferred tax on actuarial (loss)/gain |
14 |
(709) |
(3,575) |
1,102 |
|||
|
Share of actuarial gain - joint ventures |
- |
- |
230 |
||||
|
Currency translation differences |
13 |
(7,124) |
(2,790) |
(14,878) |
|||
|
Fair value adjustments (net of tax) |
13 |
2,127 |
|
(943) |
|
8,578 |
|
|
Net (expense)/income recognised directly in equity |
(6,958) |
27,249 |
(9,507) |
||||
|
Profit for the period |
41,805 |
33,816 |
60,240 |
||||
|
Total recognised income for the period |
34,847 |
61,065 |
50,733 |
||||
|
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 |
€'000 |
€'000 |
€'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 assets |
30,136 |
12,363 |
30,089 |
||||
|
Derivative financial instruments |
1,220 |
2,430 |
763 |
||||
|
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 instruments |
8,685 |
12,173 |
4,990 |
||||
|
Cash and cash equivalents |
11 |
123,738 |
148,891 |
159,819 |
|||
|
701,982 |
614,494 |
592,100 |
|||||
|
Assets in disposal group held for sale |
- |
- |
20,304 |
||||
|
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 premium |
97,148 |
98,378 |
98,450 |
||||
|
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 instruments |
5,180 |
4,655 |
3,736 |
||||
|
Deferred tax liabilities |
37,122 |
38,424 |
37,587 |
||||
|
Retirement benefit obligations |
15 |
106,942 |
83,269 |
114,248 |
|||
|
Provisions for other liabilities and charges |
12 |
12,227 |
8,040 |
13,660 |
|||
|
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 instruments |
6,112 |
10,476 |
3,187 |
||||
|
Provisions for other liabilities and charges |
12 |
9,460 |
21,389 |
22,278 |
|||
|
442,165 |
372,253 |
372,276 |
|||||
|
Liabilities in disposal group held for sale |
- |
- |
17,647 |
||||
|
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 |
||||
|
€'000 |
€'000 |
€'000 |
|||||
|
Cash flows from operating activities |
|||||||
|
Cash generated from/(absorbed by) operations |
18 |
64 |
(1,732) |
85,110 |
|||
|
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 by)/generated from operating activities |
(22,259) |
(10,506) |
65,111 |
||||
|
Cash flows from investing activities |
|||||||
|
Deferred/contingent acquisition consideration paid |
(10,729) |
(7,166) |
(17,742) |
||||
|
Purchase of property, plant and equipment |
(35,523) |
(17,382) |
(51,662) |
||||
|
Purchase of available for sale investments |
(363) |
(2,287) |
(2,000) |
||||
|
Proceeds received: exit from pigmeat |
9,128 |
- |
12,937 |
||||
|
Proceeds from sale of property, plant and equipment |
164 |
296 |
13,419 |
||||
|
Net cash used in investing activities |
(37,323) |
(26,539) |
(45,048) |
||||
|
Cash flows from financing activities |
|||||||
|
Proceeds from issue of ordinary shares |
105 |
74 |
167 |
||||
|
Increase/(decrease) in borrowings |
50,348 |
(61,844) |
(84,056) |
||||
|
Finance lease principal payments |
(532) |
(632) |
(954) |
||||
|
Employee share trust - LTIP purchase of shares |
(1,407) |
- |
(95) |
||||
|
Dividends paid to Company's shareholders |
(10,494) |
(9,946) |
(17,334) |
||||
|
Loans advanced to joint ventures |
(13,910) |
- |
(9,001) |
||||
|
Capital grants received |
1,366 |
- |
1,399 |
||||
|
Net cash from/(used in) financial activities |
25,476 |
(72,348) |
(109,874) |
||||
|
Net decrease in cash and cash equivalents |
(34,106) |
(109,393) |
(89,811) |
||||
|
Cash and cash equivalents at the beginning of the period |
159,819 |
259,311 |
259,311 |
||||
|
Effects of exchange rate changes on cash and cash equivalents |
(1,975) |
(1,027) |
(9,681) |
||||
|
Cash and cash equivalents at the end of the period |
123,738 |
148,891 |
159,819 |
||||
|
Reconciliation of net cash flow to movement in net debt |
|||||||
|
2008 |
2007 |
2007 |
|||||
|
€'000 |
€'000 |
€'000 |
|||||
|
Net decrease in cash and cash equivalents |
(34,106) |
(109,393) |
(89,811) |
||||
|
Cash (outflow)/inflow from debt financing |
(49,816) |
62,476 |
85,889 |
||||
|
|
|
|
|||||
|
(83,922) |
(46,917) |
(3,922) |
|||||
|
Fair value of interest rate swaps qualifying as fair value hedges |
2,067 |
- |
(764) |
||||
|
Exchange translation adjustment on net debt |
5,748 |
2,338 |
9,005 |
||||
|
Movement in net debt in the period |
(76,107) |
(44,579) |
4,319 |
||||
|
Net debt at beginning of period |
(220,175) |
(224,494) |
(224,494) |
||||
|
|
|
|
|||||
|
Net debt at end of period |
(296,282) |
(269,073) |
(220,175) |
||||
|
Net debt comprises: |
2008 |
2007 |
2007 |
||||
|
€'000 |
€'000 |
€'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 |
|||
|
€'000 |
€'000 |
€'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 €68.3 million was primarily driven by the above seasonal patterns.
5 Exceptional items
|
Half year |
Half year |
Year |
|||||
|
2008 |
2007 |
2007 |
|||||
|
Notes |
€'000 |
€'000 |
€'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 €2.3 million is additional costs of €2.6 million associated with this disposal and a related tax credit
of €0.3 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 |
||||
|
€'000 |
€'000 |
€'000 |
||||
|
Interest income |
2,378 |
2,335 |
4,813 |
|||
|
(b) Finance costs |
||||||
|
Half year |
Half year |
Year |
||||
|
2008 |
2007 |
2007 |
||||
|
€'000 |
€'000 |
€'000 |
||||
|
Interest expense |
||||||
|
- Bank borrowings repayable within five years |
(9,025) |
(6,220) |
(19,084) |
|||
|
- Bank borrowings repayable after five years |
- |
(3,480) |
- |
|||
|
- Interest cost on deferred consideration |
(228) |
(202) |
(450) |
|||
|
- Finance lease costs |
(155) |
(156) |
(272) |
|||
|
- Interest rate swaps, transfer from equity |
154 |
716 |
1,401 |
|||
|
- Interest rate swaps, fair value hedges |
(1,539) |
(737) |
676 |
|||
|
- Fair value adjustment of borrowings attributable to interest rate risk |
1,539 |
737 |
(676) |
|||
|
(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 €9.0 million (HY 2007: €4.8 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 |
|||
|
€'000 |
€'000 |
€'000 |
|||
|
Profit attributable to equity holders of the Company |
40,997 |
33,599 |
59,833 |
||
|
Weighted average number of ordinary shares in issue |
293,252,086 |
292,984,514 |
293,012,540 |
||
|
Basic earnings per share (cent per share) |
13.98 |
11.47 |
20.42 |
|
Diluted |
|||||
|
Weighted average number of ordinary shares in issue |
293,252,086 |
292,984,514 |
293,012,540 |
||
|
Adjustments for share options |
1,355,427 |
254,170 |
1,110,557 |
||
|
Adjusted weighted average number of ordinary shares |
294,607,513 |
293,238,684 |
294,123,097 |
||
|
Diluted earnings per share (cent per share) |
13.92 |
11.46 |
20.34 |
|
Adjusted |
|||||
|
Profit attributable to equity holders of the Company |
40,997 |
33,599 |
59,833 |
||
|
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 share) |
15.66 |
12.44 |
30.13 |
10 Property, plant & equipment and intangible assets
During the six month period to 28 June 2008 the Group spent €35.5 million (2007: €17.4 million ) on additions to tangible and intangible fixed assets. The Group also disposed of certain assets with a carrying amount of €1.1million (2007: €0.2 million) for proceeds of €3.7 million (2007: €4.3 million). At 28 June 2008 the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to €14.3 million (2007: €2.2 million).
11 Net debt
|
Half year |
Half year |
Year |
||||
|
2008 |
2007 |
2007 |
||||
|
€'000 |
€'000 |
€'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 €76.1 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 |
||||
|
€'000 |
€'000 |
€'000 |
€'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 to provision |
(2,383) |
85 |
(11,857) |
(14,155) |
|||
|
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
€5.0 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 |
||||
|
€'000 |
€'000 |
€'000 |
€'000 |
||||
|
Balance at 29 December 2007 |
116,934 |
(22,481) |
13,456 |
107,909 |
|||
|
Translation differences on foreign currency net investments |
- |
(7,124) |
- |
(7,124) |
|||
|
Revaluation of interest rate swaps - gain in period |
- |
- |
63 |
63 |
|||
|
Foreign exchange contracts - gain in period |
- |
3,848 |
3,848 |
||||
|
Transfers to income statement |
|||||||
|
- Foreign exchange contracts |
- |
- |
(1,677) |
(1,677) |
|||
|
- Interest rate swaps |
- |
- |
(154) |
(154) |
|||
|
Revaluation of forward commodity contracts - gain in period |
- |
- |
660 |
660 |
|||
|
Revaluation of available for sale investments - loss in period |
- |
- |
(130) |
(130) |
|||
|
Deferred tax on fair value adjustments |
- |
- |
(483) |
(483) |
|||
|
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 |
|||||
|
€'000 |
€'000 |
€'000 |
|||||
|
Balance at 29 December 2007 |
114,137 |
(92,961) |
21,176 |
||||
|
Actuarial loss - defined benefit schemes |
(1,252) |
- |
(1,252) |
||||
|
Deferred tax on actuarial loss |
(709) |
- |
(709) |
||||
|
Net expense recognised directly in equity |
(1,961) |
- |
(1,961) |
||||
|
Profit for the period |
40,997 |
- |
40,997 |
||||
|
Total recognised income for the half year 2008 |
39,036 |
- |
39,036 |
||||
|
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 €44.3 million (2007: €31.3 million) purchases from related parties amounted to €252.7 million (2007: €200.9 million) and net balances owing, to/(due from) related parties were €12.7 million (2007: €20.1 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 €5.3 million (2007: €14.2 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 |
||||
|
€'000 |
€'000 |
€'000 |
||||
|
Profit before tax |
50,502 |
38,606 |
76,081 |
|||
|
Development costs capitalised |
- |
- |
(1,804) |
|||
|
Non-cash exceptional - exit from Pigmeat |
954 |
- |
13,706 |
|||
|
Share of results of joint ventures and associates |
(5,611) |
1,308 |
(992) |
|||
|
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 cash contributions |
(6,979) |
(7,034) |
(10,876) |
|||
|
Gain on disposal of property, plant and equipment |
(2,556) |
(4,079) |
(3,002) |
|||
|
Interest income |
(2,378) |
(2,335) |
(4,813) |
|||
|
Interest expense |
11,444 |
10,965 |
22,095 |
|||
|
Amortisation of government grants received |
(132) |
(393) |
(736) |
|||
|
Cash generated from operations before changes in working capital |
61,845 |
54,517 |
124,308 |
|||
|
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 |
Related Shares:
Glanbia