2015/media/Files/G/Glanbia-Plc/documents/H… · 2015 outlook Glanbia reiterates its guidance for 2015 of 9% to 11% growth in adjusted earnings per share, constant currency. If the

1 Glanbia plc 2013 half year results

Half year results

Delivering better nutrition for every step of life’s journey

2015

Wednesday, 19 August 2015

Glanbia plc – Delivering better nutrition for every step of life’s journey 2015 half year results Page | 2

Good performance in first half driven by Global Performance Nutrition Guidance of 9% to 11% constant currency (c25% reported) adjusted EPS

growth in 2015 19 August 2015 - Glanbia plc (“Glanbia”, the “Group”, the “plc”), the global nutrition group, announces its results for

the six months ended 4 July 2015.

Results highlights for the half year Adjusted earnings per share 40.60 cent, up 4.2% constant currency (up 25.1% reported);

EBITA from wholly owned business €138.5 million, up 7.5% on prior half year, constant currency (up 29.1%

reported);

EBITA margins from wholly owned business 9.7%, up 110 bps on prior half year, constant currency (up 140 bps

reported);

Strong result from Global Performance Nutrition with EBITA of €60.7 million a 17.4% increase on prior half

year, constant currency (up 41.5% reported);

Satisfactory performance by Global Ingredients in the context of challenging dairy markets with EBITA of €60.3

million a 9.5% decrease on prior half year, constant currency (up 11.9% reported);

Good result from Dairy Ireland with EBITA of €17.5 million, as margins recovered to 4.7%;

Joint Ventures & Associates performed in line with expectations in the first half; and

Recommended interim dividend of 4.88 cent per share, an increase of 10% on prior year.

Note on foreign exchange: Glanbia generates a significant proportion of its earnings in US dollar and reports in Euro. Constant currency reporting is used to eliminate the translational effect of foreign exchange on the Group’s results. The average Euro US dollar exchange rate for the first half of 2015 was $1.115 compared to an average rate of $1.371 for the first half of 2014 leading to an improved reported result when compared to constant currency. Note, constant currency guidance incorporates certain trading headwinds in the period as a result of a strong US dollar .

Commenting today Siobhán Talbot, Group Managing Director, said: “Glanbia delivered a good performance in the first six months of 2015 driven by a strong result from Global

Performance Nutrition. Total Group revenue for the half year was €1.9 billion with adjusted earnings per share of

40.60 cent. Today we are reiterating full year guidance of adjusted earnings per share growth of between 9% and

11%, on a constant currency basis. Given the strength of the US dollar this is likely to translate to reported

adjusted earnings per share growth of circa 25% for the full year if foreign exchange rates remain at current levels.

Today’s results demonstrate that our strategy is on track. As a global nutrition company, whose purpose is

‘delivering better nutrition for every step of life's journey’, we are focused on the development of a branded and

ingredient product portfolio to serve the growing consumer demand for nutritional products in formats suitable for

healthy and active lifestyles. This has provided some insulation from the challenges of volatile global dairy markets.”

2015 half year results Reported Constant currency

€m HY 2015 HY 2014 Change Change1

Wholly-owned business

Revenue 1,431.7 1,294.2 +10.6% -3.9%

EBITA2 138.5 107.3 +29.1% +7.5%

EBITA margin 9.7% 8.3% + 140 bps +110 bps

Joint Ventures & Associates

Revenue 445.3 503.4 -11.5% -20.4%

EBITA 20.2 22.2 -9.0% -17.6%

EBITA margin 4.5% 4.4% +10bps +10bps

Total Group3

Revenue 1,877.0 1,797.6 +4.4% -8.4%

EBITA 158.7 129.5 +22.5% +3.5%


Adjusted earnings per share4 40.60c 32.45c +25.1% +4.2% 1. To arrive at the Constant Currency change, the average FX rate for the current period is applied to the relevant reported result from the

same period in the prior year. The average FX rate for the first half of 2015 was €1 = $1.115 (HY 2014: €1 = $1.371).

2. EBITA is defined as earnings before interest, tax and amortisation and is stated before exceptional items.

3. Total Group includes Glanbia’s share of Joint Ventures & Associates.

4. Adjusted earnings per share is reconciled in Note 11 of the financial statements.


2015 half year overview and outlook

Glanbia delivered a good performance in the first half of 2015. Total Group revenue for the period, including the

Group’s share of Joint Ventures & Associates, was €1.9 billion. Total Group revenue declined 8.4% constant currency

(up 4.4% reported) as good branded revenue growth was offset by pricing declines as a result of global dairy market

weakness. Total Group EBITA was €158.7 million, up 3.5% constant currency (up 22.5% reported). Total Group

EBITA margin was 8.5%, up 100 bps, constant currency. Adjusted earnings per share for the half year were 40.60

cent, up 4.2%, constant currency (up 25.1% reported).

Capital investment and corporate development Glanbia’s total investment in capital expenditure was €59 million in the first half of 2015, of which €45 million was

strategic investment reflecting the ongoing focus on the organic growth potential of the business. The investment

programme in Global Ingredients to increase capacity in high end whey proteins and other added value dairy

ingredients continues to plan in Idaho, with commissioning scheduled for Q4 2015. In April, the Group disposed of its

investment in Nutricima to PZ Cussons plc for a cash consideration of £21 million (€28.5 million), the impact of which

will be immaterial to the ongoing profitability of the Group.

Board changes On 12 June 2015, Henry Corbally was appointed Chairman replacing Liam Herlihy who retired at the AGM. Mr

Corbally previously served as Vice Chairman for four years. Patrick Murphy was appointed Vice Chairman on the

same date having served as a non-executive director for the past four years. Also in June three new non-executive

directors were appointed; Patsy Ahern, Jim Gilsenan and Patrick Hogan, as nominees of Glanbia Co-operative Society

Limited. David Farrell and Patrick Gleeson also retired at the AGM.

2015 outlook Glanbia reiterates its guidance for 2015 of 9% to 11% growth in adjusted earnings per share, constant currency. If

the Euro US dollar exchange rate remains at current levels for the full year Glanbia expects 2015 reported adjusted

earnings per share growth of circa 25%. The constant currency guidance incorporates certain trading headwinds

generated by a strong US dollar.

Global Performance Nutrition is expected to be the main driver of 2015 growth as momentum returns to the US

business albeit this is somewhat offset by currency and geopolitical related challenges in certain non US markets.

Global Ingredients continues to make good progress in its strategy of growing the value added dairy and non dairy

ingredient portfolio, however the scale of the weakness in global dairy markets will result in some reduction in

performance year on year. Dairy Ireland is forecast to deliver some recovery in margins versus a challenging prior

year reflecting the benefit of investment in operational efficiencies and new product development. Joint Ventures &

Associates are expected to deliver a performance in line with the prior year.

HY 2015 operations review

Segmental analysis (as reported)

HY 2015 HY 2014

€m Revenue EBITA EBITA % Revenue EBITA EBITA %

Global Performance Nutrition 453.5 60.7 13.4% 374.6 42.9 11.5%

Global Ingredients 609.3 60.3 9.9% 565.8 53.9 9.5%

Dairy Ireland 368.9 17.5 4.7% 353.8 10.5 3.0%

Total wholly-owned businesses 1,431.7 138.5 9.7% 1,294.2 107.3 8.3%

Joint Ventures & Associates 445.3 20.2 4.5% 503.4 22.2 4.4%

Total Group 1,877.0 158.7 8.5% 1,797.6 129.5 7.2%


Global Performance Nutrition

Reported Constant Currency

€m HY 2015 HY 2014 Change Change

Revenue 453.5 374.6 +21.1% +1.9%

EBITA 60.7 42.9 +41.5% +17.4%


Commentary is on a constant currency basis throughout

Global Performance Nutrition (‘GPN’) delivered a strong performance in the first half of 2015 against high 2014

comparative metrics. Revenues increased 1.9% to €453.5 million (revenue growth HY 2014, 21.8%). Drivers of

revenue growth were a 0.6% improvement in price and an 8.4% revenue contribution from acquisitions offset by a

7.1% decline in volume, due to lower contract sales. Overall branded revenue growth was 16.4%; while on a like for

like basis, branded revenue grew by 3.7%. EBITA increased strongly by 17.4% in the period as EBITA margin grew

180 bps to 13.4%. A number of factors contributed to the improvement in margin including continued investment

driven operational efficiencies across the business, mix improvement from the increased proportion of branded sales,

and some reduction in input costs.

The business remains focused on branded revenue growth and in the period GPN saw renewed momentum in its US

business. There continue to be trading headwinds in non US markets as geopolitical events and a strong US dollar

impacts consumer purchasing power in certain geographies with Brazil, Oceania and Russia particularly affected. The

global performance nutrition market remains very competitive and the business has increased the level of

promotional investment where required to maintain market position. The innovation pipeline is good and recent

launches such as Optimum Nutrition Gold Standard Pre-workout and BSN Clean Series are performing well.

Global Ingredients



Revenue 609.3 565.8 +7.7% -11.7%

EBITA 60.3 53.9 +11.9% -9.5%



Global Ingredients (‘GI’) delivered a satisfactory performance in the first half of 2015 in the context of challenging

global dairy markets. Revenues decreased by 11.7% to €609.3 million as volume growth of 6.8% was offset by an

18.5% decrease in price. While the business made progress in its strategy of growing value added dairy and non dairy

ingredient sales the scale of the decline in global dairy markets resulted in a 9.5% reduction in EBITA in the period.

US Cheese US Cheese increased volumes compared to last year as milk procurement dynamics improved relative to a

challenging first half of 2014. There was a decrease in revenues due to reduced US cheese market prices which were

down on average by 26% compared to the same period last year. Performance marginally improved as the benefit of

higher volumes and continued focus on operational performance offset the impact of the significant price reduction.

Cheese demand remains solid across the US retail and foodservice market and this countered the reduction in export

activity to non US markets as a result of a strong US dollar.

Ingredient Technologies Ingredient Technologies revenue and performance was behind the prior year as weaker dairy market conditions

drove lower market pricing across a number of product categories. There continues to be an imbalance between

supply and demand of dairy ingredients on global markets and this was exacerbated by a strong US dollar. Glanbia

continues to develop its value added systems portfolio with bar solutions performing well in the period. The $85

million capital expenditure investment to increase production capacity of high end whey proteins and dairy

ingredients is on track for commissioning in Q4 2015.

Customised Solutions Customised Solutions had a strong first half benefiting from continued growth with key customers during the period.

The business continues to leverage its global footprint, investing where appropriate, to sustain and build its

relationships with key global and regional customers.


Positioning for growth GI has commenced a programme to redesign the business to leverage future market opportunities. Building on its

core strengths the current business unit structure will be integrated into one global GI organisation. This new

organisation will have a regionally focused sales team to deliver the full suite of Glanbia’s capability to its customers

and markets, enabled by centres of excellence across key functions. It is envisaged that this programme will take 12-

18 months to complete and will involve an investment of approximately €15 million which will be treated as an

exceptional item in the Group’s 2015 and 2016 financial statements.

Dairy Ireland

Reported

€m HY 2015 HY 2014 Change

Revenue 368.9 353.8 +4.3%

EBITA 17.5 10.5 +66.7%

EBITA margin 4.7% 3.0% +170bps

Dairy Ireland had a good performance in the first half of 2015 against a relatively weak first half of 2014. Revenues

increased 4.3% reflecting a 3.1% increase in volumes, 0.5% improvement in price and a 0.7% revenue contribution

from acquisitions. A 170 bps recovery in margin drove an increase in EBITA versus the prior half year.

Consumer Products Consumer Products delivered good growth in the period as the investment in operational efficiencies, new product

development and some reduction in input costs has enabled a recovery in margins. Revenue growth was driven by

increases in branded and value added milk sales plus bolt on acquisitions. Glanbia will continue to innovate and

invest in its brand portfolio both domestically and internationally.

Agribusiness Agribusiness delivered a satisfactory performance in the period. Lower animal feed and fertilizer sales were offset by

cost improvement initiatives within the business.

Joint Ventures & Associates (Glanbia Share)



Revenue 445.3 503.4 -11.5% -20.4%

EBITA 20.2 22.2 -9.0% -17.6%



Joint Ventures & Associates delivered a satisfactory performance in the period. Key drivers of the revenue movement

were a 20.1% decline in pricing reflecting the dairy market environment and a 0.2% increase in volumes. The

disposal of Glanbia’s interest in Nutricima in the period led to a 0.5% decline in revenues compared to the prior half

year. All Joint Ventures & Associates had a good operating performance with a focus on costs off-setting some of the

challenges of lower dairy markets. The significant €235 million investment programme in Glanbia Ingredients

Ireland (‘GII’) is largely complete and the commissioning of the new ingredient facility at Belview, Ireland is

progressing with GII expecting to process an additional 15% milk volume from its suppliers in 2015 versus 2014.


Half year 2015 finance review

HY 2015 results summary pre exceptional Constant Currency


Revenue 1,431.7 1,294.2 +10.6% -3.9%

EBITA 138.5 107.3 +29.1% +7.5%


- Amortisation of intangible assets (15.6) (10.6)

- Net finance costs (10.7) (10.5)

- Share of results of Joint Ventures Associates 13.3 15.3

- Income tax (19.1) (14.7)

Profit for the half year 106.4 86.8

Income statement For the first half of 2015, wholly owned revenue decreased 3.9%, constant currency (up 10.6% reported) to €1.4

billion (HY 2014: €1.3 billion). EBITA grew by 7.5%, constant currency (up 29.1% reported) to €138.5 million (HY

2014: €107.3 million). EBITA margin increased by 110 bps to 9.7%, constant currency.

Net financing costs of €10.7 million were broadly in line with prior year (HY 2014: €10.5 million). The Group’s

average interest rate for the period was 3.9% (HY 2014: 4.8%). Glanbia operates a policy of fixing a significant

amount of its interest exposure, with 85% of projected 2015 debt currently contracted at fixed rates for 2015.

The HY 2015 pre-exceptional tax charge increased by €4.4 million to €19.1 million (HY 2014: €14.7 million). This

represents an effective rate, excluding Joint Ventures & Associates, of 17.0% (HY 2014: 17.0%).

The Group’s share of results of Joint Ventures & Associates decreased by €2.0 million to €13.3 million (HY 2015:

€15.3 million). Share of results of Joint Ventures & Associates is an after tax and interest amount.

Adjusted earnings per share

HY 2015 HY 2014 Change Constant Currency

Change

Adjusted earnings per share* 40.60c 32.45c +25.1% +4.2% * Adjusted earnings per share is reconciled in Note 11 of the financial statements.

Total adjusted earnings per share grew 4.2% (25.1% reported), driven by growth in EBITA. Adjusted earnings per

share is believed to be more reflective of the Group’s underlying performance than basic earnings per share and is

calculated based on the net profit attributable to equity holders of the parent before exceptional items and

amortisation of intangible assets, net of related tax.

Dividend per share The Board is recommending an interim dividend of 4.88 cent per share (HY 2014: interim dividend 4.43 cent per

share). This represents an increase of 10% on the prior year interim dividend. The dividend will be paid on 16

October 2015 to shareholders on the register of members as at 04 September 2015. Irish withholding tax will be

deducted at the standard rate where appropriate.


Exceptional items

€ m HY 2015 HY 2014

1. Rationalisation costs (1.1) (0.6)

2. Organisational redesign costs (3.1) - 3. Disposal of interest in Joint Venture (3.6) -

4. Transaction related costs - (3.0)

Exceptional (charge) pre-tax (7.8) (3.6)

Taxation credit 0.5 0.9

Total exceptional (charge) (7.3) (2.7)

Exceptional items incurred in the first half of 2015 resulted in an exceptional charge of €7.3 million compared to a

charge of €2.7 million for the same period in 2014. Details of the exceptional items are as follows:

1. Rationalisation costs primarily relate to the ongoing redundancy programme in the Dairy Ireland segment.

2. GI has commenced a programme to redesign the business to leverage future market opportunities. Building on

its core strengths the current business unit structure will be integrated into one global GI organisation. This new

organisation will have a regionally focused sales team to deliver the full suite of Glanbia’s capability to its

customers and markets, enabled by centres of excellence across key functions. It is envisaged that this

programme will take 12-18 months to complete and will involve an investment of approximately €15

million which will be treated as an exceptional item in the Group’s 2015 and 2016 financial statements.

3. On 01 April 2015 the Group disposed of its investment in Milk Ventures (UK) Limited which is the parent

company of Nutricima Limited, a non-core Joint Venture business involved in the supply and distribution of

evaporated and powdered milk, based in Nigeria. PZ Cussons plc, Glanbia’s partner in the Joint Venture

Nutricima, acquired Glanbia’s 50% stake for cash consideration of £21 million (€28.5 million). In line with IFRS 5

– Non Current Assets Held for Sale and Discontinued Operations, the disposal of the Group’s interest resulted in a

non-cash loss of €3.6 million. This comprised a profit on disposal of €1.4 million (cash consideration of €28.5

million less carrying value €27.1 million including loan to Joint Venture) offset by the recycle of €5.0 million

cumulative foreign currency translation losses previously recognised in equity. Milk Ventures (UK) Limited was

previously included in the Joint Ventures & Associates segment.

4. Transaction related costs in 2014 were comprised of costs relating to acquisition activities that did not come to

fruition and additional contingent consideration relating to the acquisition of Nutramino Holding ApS, in excess

of its fair value at date of acquisition.

Group financing and cash flow

Financing key performance indicators HY 2015 FY 2014 HY 2014

Net debt €m 577 510 472

Net debt : adjusted EBITDA1 1.97 times 1.97 times 2.00 times

Adjusted EBIT1 : net finance cost 10.0 times 8.9 times 8.1 times

1. Definition of net debt, adjusted EBITDA and adjusted EBIT are as per financing agreements which include dividends from Joint

Ventures & Associates and the pro forma effect of acquisitions.

The Group’s financial position continues to be strong. Net debt at the end of HY 2015 was €577 million. This is an

increase of €105 million relative to the end of HY 2014. Net debt to adjusted EBITDA was just under 2 times and

interest cover was 10 times, both metrics remaining well within financing covenants. Relative to the year end of

2014, net debt has increased by €67 million. The key drivers of the net debt increase from year end 2014, have been a

seasonal increase in working capital and the FX impact on the conversion of US dollar private placement debt to Euro

for reporting purposes. The main uses of cash since year end 2014 have been a seasonal increase in working capital

of €128.1 million, capital expenditure of €58.8 million, dividend payments of €19.4 million and interest of €14.0

million offset by the proceeds from the Nutricima disposal of €28.5 million.


Pension On 04 July 2015, the Group’s net pension liability under IAS 19 (revised) ‘Employee Benefits’, before deferred tax,

decreased by €20.8 million to €94.0 million versus year end 2014(FY 2014 pension liability €114.8 million). This

decrease primarily relates to a change in actuarial assumptions for the discount rate used for the Irish defined benefit

pension schemes from 2.1% to 2.4%.

Principal risks and uncertainties affecting the Group’s performance in 2015 The Board of Glanbia plc has the ultimate responsibility for risk management. The performance of the Group is

influenced by global economic growth and consumer confidence in the markets in which it operates. In the second

half of 2015 the principal risks and uncertainties affecting the Group’s performance are:

The competitive landscape for Global Performance Nutrition, recognising the impact of a stronger US dollar on the purchasing power of consumers in certain international markets;

The overall impact on margins of movements in dairy pricing particularly in whey markets; and The potential impact of geopolitical unrest and macro-economic uncertainty on the international growth

strategy.

The principal risks and uncertainties are outlined in detail on pages 50 to 57 in the 2014 Annual Report.

Cautionary statement This announcement contains forward-looking statements. These statements have been made by the Directors in good

faith based on the information available to them up to the time of their approval of this report. Due to the inherent

uncertainties, including both economic and business risk factors underlying such forward looking information, actual

results may differ materially from those expressed or implied by these forward-looking statements. The Directors

undertake no obligation to update any forward-looking statements contained in this announcement, whether as a

result of new information, future events, or otherwise.

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 http://www.glanbia.com/investors/results-centre, where the

presentation can also be viewed or downloaded. In addition, a dial-in facility is available using the following numbers:

Ireland (01) 246 5601

UK (0203) 427 1902

USA (212) 444 0895

International +44 203 427 1902

The access code for all participants is: 8165082

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 Siobhán Talbot, Group Managing Director

Mark Garvey, Group Finance Director

Liam Hennigan, Head of Investor Relations +353 56 777 2308

Mark Garrett, Director of Communications and Public Affairs +353 86 601 9655


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 Central Bank of Ireland and with

IAS 34 - Interim Financial Reporting, as adopted by the European Union.

The Directors of Glanbia plc confirm that, to the best of their knowledge:

• The Group condensed interim financial statements for the half year ended 04 July 2015 have been prepared in

accordance with the international accounting standard applicable to interim financial reporting (IAS34) 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 development and performance of the business and

the position of the Group;

• 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 04 July 2015, 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 party transactions described in the

last Annual Report that could have a material effect on the financial position or the performance of the Group in

the first six months of the current financial year; and

The Directors of Glanbia plc are as listed in the Glanbia plc 2014 Annual Report, with the exception of the following

changes in the period:

David Farrell, Patrick Gleeson and Liam Herlihy* retired on 12 May 2015.

James Gilsenan, Patsy Ahern and Patrick Hogan were appointed on 12 June 2015.

*Liam Herlihy retired as Chairman on 12 May 2015. Henry Corbally was appointed Chairman on 12 June 2015.

A list of current directors is maintained on the Glanbia plc website: www.glanbia.com

On behalf of the Board

Siobhán Talbot Mark Garvey

Group Managing Director Group Finance Director

18 August 2015

Condensed income statement for the half year ended 04 July 2015


Half year 2015 Half year 2014 Year 2014 Pre-

exceptional Exceptional Total Pre-

exceptional Exceptional Total Pre-

exceptional Exceptional Total

2015 2015 2015 2014 2014 2014 2014 2014 2014

Notes €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000

(note 7) (note 7) (note 7)

Revenue 6 1,431,590 - 1,431,590 1,294,157 - 1,294,157 2,538,368 - 2,538,368 Earnings before interest, tax and amortisation (EBITA) 138,473 (7,838) 130,635 107,314 (3,638) 103,676 208,634 (15,949) 192,685

Intangible asset amortisation (15,566) - (15,566) (10,565) - (10,565) (22,512) - (22,512)

Operating profit 122,907 (7,838) 115,069 96,749 (3,638) 93,111 186,122 (15,949) 170,173

Finance income 8 885 - 885 841 - 841 1,725 - 1,725

Finance costs 8 (11,588) - (11,588) (11,337) - (11,337) (22,050) - (22,050) Share of results of Joint Ventures & Associates 13,267 - 13,267 15,276 - 15,276 23,729 - 23,729

Profit before taxation 125,471 (7,838) 117,633 101,529 (3,638) 97,891 189,526 (15,949) 173,577

Income taxes 9 (19,075) 533 (18,542) (14,663) 874 (13,789) (28,252) 1,870 (26,382)

Profit for the period 106,396 (7,305) 99,091 86,866 (2,764) 84,102 161,274 (14,079) 147,195

Attributable to:

Equity holders of the Parent

98,674 83,592 146,313

Non-controlling interests

417 510 882

99,091 84,102 147,195

Earnings per share attributable to the equity holders of the Parent

Basic earnings per share (cents) 11 33.43 28.33 49.60

Diluted earnings per share (cents) 11 33.18 28.20 49.32

Condensed statement of comprehensive income for the half year ended 04 July 2015


Half year Half year Year 2015 2014 2014 Notes €’000 €’000 €’000

Profit for the period 99,091 84,102 147,195

Items that are not reclassified subsequently to the Group income statement:

Remeasurements – defined benefit schemes 17 18,178 (16,857) (42,369)

Deferred tax (charge)/credit on remeasurements (2,430) 1,760 4,868

Share of remeasurements – Joint Ventures & Associates 14

4,811 (3,582) (8,900)

Deferred tax (charge)/credit on remeasurements – Joint Ventures & Associates

(601) 452 1,120

Items that may be reclassified subsequently to the Group income statement:

Currency translation differences 16 75,654 4,040 97,805 Recycle of currency reserve to the Group income statement on disposal of investment in Joint Venture 7

5,037 - -

Net investment hedge 16 (6,980) (245) (9,544)

Revaluation of available for sale financial assets 16 1,052 1,409 1,457

Fair value movements on cash flow hedges 16 2,476 2,009 507

Deferred tax on cash flow hedges and revaluation of available for sale financial assets 16 (444) (519) (140)

Other comprehensive income/(expense) for the period, net of tax 96,753 (11,533) 44,804

Total comprehensive income for the period 195,844 72,569 191,999

Total comprehensive income attributable to:

Equity holders of the Parent 195,427 72,059 191,117

Non-controlling interests 417 510 882

Total comprehensive income for the period 195,844 72,569 191,999

Condensed balance sheet as at 04 July 2015


Half year Half year Year 2015 2014 2014 Notes €'000 €'000 €'000

ASSETS

Non-current assets

Property, plant and equipment 551,860 409,704 490,180

Intangible assets 704,663 471,856 662,169

Investments in associates 91,564 86,380 81,365

Investments in joint ventures 62,665 68,098 69,945

Trade and other receivables 1,850 9,735 9,863

Deferred tax assets 26,152 24,224 28,503

Available for sale financial assets 10,522 10,111 10,621

1,449,276 1,080,108 1,352,646

Current assets

Inventories 350,819 302,251 336,802

Trade and other receivables 412,954 372,381 305,027

Derivative financial instruments 1,686 1,861 1,279

Cash and cash equivalents 13 94,400 89,014 110,370

859,859 765,507 753,478

Total assets 2,309,135 1,845,615 2,106,124

EQUITY

Issued capital and reserves attributable to equity holders of the Parent

Share capital and share premium 15 105,370 104,335 104,728

Other reserves 16 294,073 134,876 218,581

Retained earnings 572,965 448,560 473,573

972,408 687,771 796,882

Non-controlling interests 8,313 8,144 7,896

Total equity 980,721 695,915 804,778

LIABILITIES

Non-current liabilities

Borrowings 13 634,015 521,331 620,317

Deferred tax liabilities 135,153 98,477 128,002

Retirement benefit obligations 17 93,971 91,360 114,808

Provisions for other liabilities and charges 14 19,816 19,268 18,569

Capital grants 2,121 2,368 2,214

885,076 732,804 883,910

Current liabilities

Trade and other payables 369,681 358,345 390,350

Current tax liabilities 21,350 472 3,115

Borrowings 13 37,448 39,447 416

Derivative financial instruments 408 1,325 574

Provisions for other liabilities and charges 14 14,451 17,307 22,981

443,338 416,896 417,436

Total liabilities 1,328,414 1,149,700 1,301,346

Total equity and liabilities 2,309,135 1,845,615 2,106,124

Condensed statement of changes in equity for the half year ended 04 July 2015


Attributable to equity holders of the Parent

Share capital and

share premium

Other reserves

Retained earnings Total

Non –controlling

interests Total

Half year 2014 Notes €'000 €'000 €'000 €'000 €'000 €'000

Balance at 04 January 2014 103,997 126,600 405,289 635,886 7,634 643,520

Profit for the period - - 83,592 83,592 510 84,102

Other comprehensive income/(expense)

Remeasurements - defined benefit schemes 17 - - (16,857) (16,857) - (16,857)

Deferred tax on remeasurements - - 1,760 1,760 - 1,760

Share of remeasurements - Joint Ventures & Associates - - (3,130) (3,130) - (3,130)

Fair value movements 16 - 3,418 - 3,418 - 3,418

Deferred tax on fair value movements 16 - (519) - (519) - (519)

Currency translation differences 16 - 4,040 - 4,040 - 4,040

Net investment hedge 16 - (245) - (245) - (245)

Total comprehensive income - 6,694 65,365 72,059 510 72,569

Dividends paid during the period 10 - - (17,650) (17,650) - (17,650)

Cost of share based payments 16 - 2,931 - 2,931 - 2,931

Transfer on exercise, vesting or expiry of share based payments

16 - 4,444 (4,444) - - -

Shares issued 15 5 - - 5 - 5

Premium on shares issued 15 333 - - 333 - 333

Purchase of own shares 16 - (5,793) - (5,793) - (5,793)

Balance at 05 July 2014 104,335 134,876 448,560 687,771 8,144 695,915

Attributable to equity holders of the Parent

Share capital and

share premium

Other reserves

Retained earnings Total

Non –controlling

interests Total

Half year 2015 €'000 €'000 €'000 €'000 €'000 €'000

Balance at 03 January 2015 104,728 218,581 473,573 796,882 7,896 804,778

Profit for the period - - 98,674 98,674 417 99,091

Other comprehensive income/(expense)

Remeasurements - defined benefit schemes 17 - - 18,178 18,178 - 18,178

Deferred tax on remeasurements - - (2,430) (2,430) - (2,430)

Share of remeasurements – Joint Ventures & Associates - - 4,210 4,210 - 4,210

Fair value movements 16 - 3,528 - 3,528 - 3,528

Deferred tax on fair value movements 16 - (444) - (444) - (444)

Currency translation differences 16 - 75,654 - 75,654 - 75,654 Recycle of currency reserve to the Group income statement on disposal of investment in Joint Venture - 5,037 - 5,037 - 5,037

Net investment hedge 16 - (6,980) - (6,980) - (6,980)

Total comprehensive income - 76,795 118,632 195,427 417 195,844

Dividends paid during the period 10 - - (19,448) (19,448) - (19,448)

Cost of share based payments 16 - 3,565 - 3,565 - 3,565 Transfer on exercise, vesting or expiry of share based payments 16 - (208) 208 - - -

Shares issued 15 9 - - 9 - 9

Premium on shares issued 15 633 - - 633 - 633

Purchase of own shares 16 - (4,660) - (4,660) - (4,660)

Balance at 04 July 2015 105,370 294,073 572,965 972,408 8,313 980,721

Condensed statement of cash flows for the half year ended 04 July 2015


Half year Half year Year 2015 2014 2014 Notes €’000 €’000 €’000

Cash flows from operating activities

Cash generated from operating activities 20 25,463 27,225 230,716

Interest received 417 308 1,683

Interest paid (14,414) (10,418) (24,358)

Tax refunded/(paid) 1,360 (14,514) (34,393)

Net cash inflow from operating activities 12,826 2,601 173,648 Cash flows from investing activities

Acquisition of subsidiaries – purchase consideration (544) (21,135) (125,812)

Acquisition of subsidiaries – liabilities settled at completion (802) - (16,138)

Acquisition of subsidiaries – cash and cash equivalents - - 2,768

Disposal of investment in Joint Venture 28,511 - -

Insurance proceeds - - 1,035

Purchase of property, plant and equipment 12 (52,241) (53,020) (101,953)

Purchase of intangible assets 12 (6,523) (4,155) (13,532)

Dividends received from Joint Ventures 3,237 3,171 12,648

Decrease in available for sale financial assets 1,151 815 334

Proceeds from sale of property, plant and equipment 132 47 63

Net cash (outflow) from investing activities (27,079) (74,277) (240,587) Cash flows from financing activities

Proceeds from issue of ordinary shares 15 608 338 731

Purchase of own shares (4,660) (5,793) (7,981)

Sale of shares held by subsidiary - - 2,092

(Decrease)/Increase in borrowings (21,471) 77,500 138,242

Redemption of preference shares - - (39,062)

Dividends paid to Company shareholders 10 (19,448) (17,650) (30,751)

Dividends paid to non-controlling interests - - (620)

Finance lease payments (204) (238) (313)

Net cash (outflow)/inflow from financing activities (45,175) 54,157 62,338 Net decrease in cash and cash equivalents (59,428) (17,519) (4,601) Cash and cash equivalents at the beginning of the period 110,370 106,259 106,259

Effects of exchange rate changes on cash and cash equivalents 6,418 274 8,712

Cash and cash equivalents at the end of the period 13 57,360 89,014 110,370

Half year Half year Year

2015 2014 2014

Reconciliation of net cash flow to movement in net debt €’000 €’000 €’000 Net decrease in cash and cash equivalents (59,428) (17,519) (4,601)

Cash movements from debt financing 21,675 (77,262) (98,867)

Acquisition of subsidiary – debt acquired - (1,401) (1,401) (37,753) (96,182) (104,869)

Fair value movement of currency swaps (209) (269) (453)

Exchange translation adjustment on net debt (28,738) (869) (30,597) Movement in net debt in the period (66,700) (97,320) (135,919)

Net debt at the beginning of the period (510,363) (374,444) (374,444) Net debt at the end of the period (577,063) (471,764) (510,363) Net debt comprises:

Borrowings 13 (634,423) (560,778) (620,733)

Cash and cash equivalents 13 57,360 89,014 110,370 , (577,063) (471,764) (510,363)

Notes to the condensed financial statements for the half year ended 04 July 2015


1. General information

Glanbia plc (the “Company”) and its subsidiaries (together the “Group”) is a leading global nutrition Group with its main

operations in Europe, USA, Middle East, Africa, Asia Pacific and Latin America.

The Company is a public limited company incorporated and domiciled in Ireland. The address of its registered office is

Glanbia House, Kilkenny, Ireland. The Group is controlled by Glanbia Co-operative Society Limited (“the Society”). The Society

can nominate up to 14 members of the Board of Directors of Glanbia plc for 2015 and currently holds, together with its

subsidiaries, 39.8% of the issued share capital of the Company and is the ultimate parent of the Group.

The Company’s shares are quoted on the Irish and London Stock Exchanges.

These condensed interim financial statements were approved for issue by the Board of Directors on 18 August 2015.

2. Basis of preparation

The condensed interim financial statements for the six months ended 04 July 2015 and for the six months ended 05 July 2014

have not been audited by the Group’s auditors. These are not the statutory financial statements of the Group as defined in the

Companies Act 2014. The amounts disclosed for the full year ended 03 January 2015 represent an abbreviated version of the

Group’s financial statements for that year, which received an unqualified audit report. The statutory accounts for the

financial year ended 03 January 2015 were approved by the Board of Directors on 24 February 2015 and have been filed with

the Companies Registration Office.

The Group’s condensed interim financial statements for the six months ended 04 July 2015 have been prepared in accordance

with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Central Bank of

Ireland and with IAS 34 – Interim Financial Reporting. The condensed interim financial statements should be read in

conjunction with the financial statements for the year ended 03 January 2015, which have been prepared in accordance with

International Financial Reporting Standards (“IFRS”).

The Group meets its day-to-day working capital requirements through its bank facilities. The Group’s forecasts and

projections, taking account of changes in trading performance, show that the Group expects to be able to operate within the

level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group has sufficient

resources to continue in operational existence for the foreseeable future. In forming this view, the Directors have reviewed

the Group’s budget for a period of not less than 12 months, the medium term plans as set out in the four year strategic plan,

and have taken into account the cash flow implications of the plans, including proposed capital expenditure, and compared

these with the Group’s committed borrowing facilities and Group financing key performance indicators (“KPIs”). The Group

therefore continues to adopt the going concern basis in preparing its condensed interim financial statements for the six

months ended 04 July 2015.

3. Accounting policies

The methods of computation, presentation and accounting policies adopted in the preparation of the Group’s condensed

interim financial statements are consistent with those applied in the Annual Report for the year ended 03 January 2015

(“2014 Annual Report”). The Group’s accounting policies are set out in the financial statements in the 2014 Annual Report.

The following standard, issued by the IASB and the International Financial Reporting Interpretations Committee (“IFRIC”), is

effective for the Group for the first time in the period ended 04 July 2015 and has been adopted by the Group.

Amendment to IAS 19 ‘Employee benefits’ regarding defined benefit plans (effective for periods beginning on or after 01 July 2014).

The above standard did not have a significant impact on the results or the financial position of the Group during the six

months ended 04 July 2015.

The following standards, amendments and interpretations have been published. The Group will apply the relevant standards

from their effective dates and is currently assessing their impact on the Group’s Financial Statements. The standards are

mandatory for future accounting periods but are not yet effective and have not been early adopted by the Group.



Amendment to IAS16, ‘Property, plant and equipment’ and IAS 38, ‘Intangible assets’, on depreciation and amortisation (effective on or after 1 January 2016).

This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset.

Amendment to IAS 1, ‘Presentation of financial statements’ on the disclosure initiative (effective on or after 1 January 2016).

This amendment looks to improve presentation and disclosure in financial reports, effective for annual periods beginning on or after 1 January 2016, subject to EU endorsement.

Amendments to IFRS 11, ‘Joint arrangements’ on acquisition of an interest in a joint operation (effective on or after 01 January 2016).

This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions.

Amendments to IAS 27, ‘Separate financial statements’ on the equity method (effective on or after 01 January 2016).

These amendments allow entities to use the equity method for investments in subsidiaries, joint ventures and associates in their separate financial statements.

Amendments to IFRS 10, ‘Consolidated financial statements’ and IAS 28, ‘Investments in associates and joint ventures’ (effective on or after 01 January 2016).

These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associates or joint venture. The main consequence of the amendment is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.

IFRS 15 ‘Revenue from contracts with customers’ (effective on or after 01 January 2018).

IFRS 15, ‘Revenue from contracts with customers’ is a converged standard from the IASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally.

IFRS 9 ‘Financial instruments’ (effective on or after 01 January 2018) .

This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model.

Amendments to IFRS 9, ‘Financial instruments’, regarding general hedge accounting (effective on or after 01 January 2018).

These amendments to IFRS 9, ‘Financial instruments’, bring into effect a substantial overhaul of hedge accounting that will allow entities to better reflect their risk management activities in the financial statements.

4. Changes in estimates and assumptions

In preparing these condensed interim financial statements, the significant judgements made by management in applying the

Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the

consolidated financial statements for the year ended 03 January 2015.

5. Financial risk management

The Group’s activities expose it to a variety of financial risks as follows: market risk, currency risk, interest rate risk, price

risk, liquidity risk, cash flow risk and credit risk. The interim condensed financial statements do not include all financial risk

management information and disclosures required in the annual financial statements, and should be read in conjunction with

the Group’s 2014 Annual Report.

There have been no changes to the risk management procedures or policies since 2014 year end.



Fair value estimation

The fair value of financial instruments traded in active markets (such as available for sale financial assets) is based on quoted

market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid

price.

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is

determined by using generally accepted valuation techniques. The Group uses a variety of methods and makes assumptions

that are based on market conditions existing at each reporting date.

In accordance with IFRS 13 – Fair Value Measurements, the Group has disclosed the fair value of instruments by the following

fair value measurement hierarchy:

quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1);

inputs, other than quoted prices included in level 1, that are observable for the asset and liability, either directly

(that is, as prices) or indirectly (that is, derived from prices) (level 2); and,

inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value at 04 July 2015 and 03 January

2015:

Level 1 Level 2 Level 3 Total

04 July 2015 €’000 €’000 €’000 €’000

Assets

Derivatives used for hedging - 1,686 - 1,686

Available for sale financial assets - equity securities 212 4,474 - 4,686

Total assets 212 6,160 - 6,372

Liabilities

Derivatives used for hedging - (408) - (408)

Total liabilities - (408) - (408)

Level 1 Level 2 Level 3 Total

03 January 2015 €’000 €'000 €'000 €'000

Assets

Derivatives used for hedging - 1,279 - 1,279

Available for sale financial assets - equity securities 272 3,281 - 3,553

Total assets 272 4,560 - 4,832

Liabilities

Derivatives used for hedging - (574) - (574)

Deferred acquisition payments - - (6,504) (6,504)

Total liabilities - (574) (6,504) (7,078)

There were no transfers between levels 1, 2 and 3 during the period.

There were no changes in valuation techniques during the periods.



Valuation techniques used to derive level 2 fair values

Level 2 equities are fair valued using the latest prices quoted in the grey market as at 04 July 2015.

Level 2 trading and hedging derivatives comprise mainly of foreign exchange contracts. These foreign exchange contracts

have been fair valued using forward exchange rates that are quoted in an active market. The effects of discounting are

generally insignificant for level 2 derivatives.

Group’s valuation process

The Group’s finance department includes a team that performs the valuations of financial assets and financial liabilities

required for financial reporting purposes including level 3 fair values. The Group did not hold any level 3 financial assets at

04 July 2015 or 03 January 2015. The Group did not hold any level 3 financial liabilities at 04 July 2015. The level 3 financial

liability held at 03 January 2015 related to a deferred acquisition payment (see note 7). This team reports directly to the

Group Finance Director who in turn reports to the Audit Committee. Discussions of valuation processes and results are held

between the Group Finance Director and the Audit Committee.

Changes in level 2 and level 3 fair values are analysed at each reporting date. As part of this discussion, the valuation team

presents a report that explains the reasons for the fair value movements.

Fair value of financial assets and liabilities measured at amortised cost

The fair value of borrowings are as follows:

04 July 2015 03 January 2015

Non-current 658,058 645,781

Current 37,448 416

695,506 646,197

The fair value of the following financial assets and liabilities approximate their carrying amount:

Trade and other receivables

Cash and cash equivalents

Trade and other payables



6. Segment information

In accordance with IFRS 8 – Operating Segments, the Group has four segments, as follows: Global Performance Nutrition,

Global Ingredients, Dairy Ireland and Joint Ventures & Associates. These segments align with the Group’s internal financial

reporting system and the way in which the Chief Operating Decision Maker assesses performance and allocates the Group’s

resources. A segment manager is responsible for each segment and is directly accountable for the performance of that

segment to the Glanbia Operating Executive Committee which acts as the Chief Operating Decision Maker for the Group.

Each segment derives its revenues as follows: Global Performance Nutrition earns its revenue from performance nutrition

products; Global Ingredients earns its revenue from the manufacture and sale of cheese, dairy and non dairy nutritional

ingredients and vitamin and mineral premixes; Dairy Ireland earns its revenue from the manufacture and sale of a range of

consumer products and farm inputs and Joint Ventures & Associates revenue arises from the manufacture and sale of cheese

and dairy ingredients. Each segment is reviewed in its totality by the Chief Operating Decision Maker. The Glanbia Operating

Executive Committee assesses the trading performance of operating segments based on a measure of earnings before

interest, tax, amortisation and exceptional items.

Amounts stated below for Joint Ventures & Associates represents the Group’s share.

6.1 The segment results for the period ended 04 July 2015 are as follows:

Global Performance

Nutrition Global

Ingredients Dairy

Ireland JVs &

Associates

Group including JVs & Associates

€'000 €'000 €'000 €'000 €'000

Total gross segment revenue (a) 453,818 626,732 368,862 445,327 1,894,739

Inter-segment revenue (346) (17,476) - - (17,822)

Segment external revenue 453,472 609,256 368,862 445,327 1,876,917

Segment earnings before interest, tax, amortisation and exceptional items (b) 60,686 60,342 17,445 20,204 158,677

Segment assets (c) 867,221 816,024 342,088 156,082 2,181,415

Segment liabilities (d) 153,560 219,648 188,241 - 561,449

Included in external revenue are related party sales between Dairy Ireland and Joint Ventures & Associates of €8 million and related party

sales between Global Ingredients and Joint Ventures & Associates of €7.6 million. Inter-segment transfers or transactions are entered into

under normal commercial terms and conditions that would also be available to unrelated third parties.

6.1(a) Total gross segment revenue is reconciled to reported external revenue as follows:

€'000

Total gross segment revenue 1,894,739

Inter-segment revenue (17,822)

Joint Ventures & Associates revenue (445,327)

Reported external revenue 1,431,590



6.1(b) Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax as follows:

€'000

Segment earnings before interest, tax, amortisation and exceptional items 158,677

Amortisation (15,566)

Exceptional items (7,838)

Joint Ventures & Associates interest, tax and amortisation (6,937)

Finance income 885

Finance costs (11,588)

Reported profit before tax 117,633

Income tax (18,542)

Reported profit after tax 99,091

Finance income, finance costs and income taxes are not allocated to segments, as this type of activity is driven by central treasury and taxation functions which manage the cash and taxation position of the Group.

6.1(c) Segment assets are reconciled to reported assets as follows:

€'000

Segment assets 2,181,415

Unallocated assets 127,720

Reported assets 2,309,135

Unallocated assets primarily include taxation, cash and cash equivalents, available for sale financial assets and derivatives.

6.1(d) Segment liabilities are reconciled to reported liabilities as follows:

€'000

Segment liabilities 561,449

Unallocated liabilities 766,965

Reported liabilities 1,328,414

Unallocated liabilities primarily include items such as taxation, borrowings and derivatives.

6.2 The segment results for the period ended 05 July 2014 are as follows:

Global Performance

Nutrition Global

Ingredients Dairy

Ireland JVs &

Associates

Group including

JVs & Associates

€'000 €'000 €'000 €'000 €'000

Total gross segment revenue (a) 374,627 585,140 353,824 503,444 1,817,035

Inter-segment revenue - (19,434) - - (19,434)

Segment external revenue 374,627 565,706 353,824 503,444 1,797,601


Segment assets (c) 585,454 648,620 336,298 164,213 1,734,585




Included in external revenue are related party sales between Dairy Ireland and Joint Ventures and Associates of €5.3 million, and related party sales between Global Ingredients and Joint Ventures & Associates of €9.1 million. Inter-segment transfers or transactions are entered into under normal commercial terms and conditions that would also be available to unrelated third parties.

6.2(a) Total gross segment revenue is reconciled to reported external revenue as follows:

€'000





6.2(b) Segment earnings before interest, tax, amortisation and exceptional items is reconciled to reported profit before tax and profit after tax as follows:

€'000





Finance income 841



Income taxes (13,789)




€'000






€'000







6.3 The segment results for the year ended 03 January 2015 are as follows:

Included in external revenue are related party sales between Dairy Ireland and Joint Ventures & Associates of €21.2 million and related party sales between Global Ingredients and Joint Ventures & Associates of €18.2 million. Inter-segment transfers or transactions are entered into under normal commercial terms and conditions that would also be available to unrelated third parties.

6.3(a)Total gross segment revenue is reconciled to reported external revenue as follows:

€'000





6.3(b) Segment earnings before interest, tax, amortisation and exceptional items is reconciled to reported profit before tax and profit after tax as follows:

€'000





Finance income 1,725



Income taxes (26,382)



Global

Performance Nutrition

Global

Ingredients Dairy

Ireland

JVs &

Associates

Group including

JVs & Associates

€'000 €'000 €'000 €'000 €'000

Total gross segment revenue (a) 746,381 1,210,376 616,744 984,016 3,557,517

Inter-segment revenue (154) (34,979) - - (35,133)

Segment external revenue 746,227 1,175,397 616,744 984,016 3,522,384


Segment assets (c) 801,572 709,810 293,186 161,173 1,965,741





€'000






€'000





7. Exceptional items


2015 2014 2014

Notes €'000 €'000 €'000

Rationalisation costs (a) (1,162) (644) (6,379)

Organisational redesign costs (b) (3,099) - -

Disposal of joint venture (c) (3,577) - -

Transaction related costs (d) - (2,994) (9,570)

Total exceptional (charge) before tax (7,838) (3,638) (15,949)

Exceptional tax credit 533 874 1,870

Total exceptional (charge) (7,305) (2,764) (14,079)

(a) Rationalisation costs primarily relate to the ongoing redundancy programme in the Dairy Ireland segment and a related write down of tangible assets of €0.1 million (FY 2014: €3.2 million).

(b) Global Ingredients has commenced a programme to redesign the business to leverage future market opportunities. Building on its core strengths the current business unit structure will be integrated into one global GI organisation. This new organisation will have a regionally focused sales team to deliver the full suite of Glanbia’s capability to its customers and markets, enabled by centres of excellence across key functions. It is envisaged that this programme will take 12-18 months to complete and will involve an investment of approximately €15 million which will be treated as an exceptional item in the Group’s 2015 and 2016 financial statements.

(c) On 01 April 2015 the Group disposed of its investment in Milk Ventures (UK) Limited which is the parent company of Nutricima Limited, a non-core Joint Venture business involved in the supply and distribution of evaporated and powdered milk, based in Nigeria. PZ Cussons plc, Glanbia’s partner in the Joint Venture Nutricima, acquired Glanbia’s 50% stake for cash consideration of £21 million (€28.5 million). In line with IFRS 5 – Non Current Assets Held for Sale and Discontinued Operations, the disposal of the Group’s interest resulted in a non-cash loss of €3.6 million. This comprised a profit on disposal of €1.4 million (cash consideration of €28.5 million less carrying value €27.1 million including loan to Joint Venture) offset by the recycle of €5.0 million cumulative foreign currency translation losses previously recognised in equity. Milk Ventures (UK) Limited was previously included in the Joint Ventures & Associates segment.

(d) Transaction related costs in 2014 were comprised of costs relating to acquisition activities that did not come to fruition and additional contingent consideration relating to the acquisition of Nutramino Holding ApS, in excess of its fair value at date of acquisition.



8. Finance income and costs


2015 2014 2014

€'000 €'000 €'000

Finance income

Interest income 885 841 1,725 Total finance income 885 841 1,725

Finance costs

Bank borrowing costs repayable within five years (3,647) (3,416) (6,812)

Unwinding of discounts (74) (158) (165)

Finance lease costs (72) (40) (70)

Finance cost of private debt placement (7,795) (6,385) (13,442)

Finance cost of preference shares - (1,338) (1,561)

Total finance costs (11,588) (11,337) (22,050)

Net finance costs (10,703) (10,496) (20,325)

Net finance costs do not include borrowing costs of €1.25 million (HY 2014: €0.85 million) attributable to the acquisition,

construction or production of a qualifying asset, which have been capitalised, as disclosed in note 12. Interest is capitalised at

the Group’s average interest rate for the period of 3.9% (HY 2014: 4.8%) .

9. Income taxes

The Group’s income tax charge after exceptional items of €18.5 million (HY 2014: €13.8 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.

10. Dividends

A final dividend in respect of the year ended 03 January 2015 of 6.57 cents per share was paid on 15 May 2015. On 18 August

2015, the Directors declared the payment of an interim dividend for 2015 of 4.88 cents per share (2014 interim dividend:

4.43 cents per share). This dividend will be paid on 16 October 2015 to shareholders on the register of members at 04

September 2015, the record date. These condensed financial statements do not reflect this interim dividend.



11. Earnings per share


2015 2014 2014

Basic

Profit attributable to equity holders of the Parent (€’000) 98,674 83,592 146,313

Weighted average number of ordinary shares in issue 295,124,380 295,028,064 295,011,089

Basic earnings per share (cents per share) 33.43 28.33 49.60

Diluted

Weighted average number of ordinary shares in issue 295,124,380 295,028,064 295,011,089

Adjustments for share options and share awards 2,224,885 1,420,214 1,645,431

Adjusted weighted average number of ordinary shares 297,349,265 296,448,278 296,656,520

Diluted earnings per share (cents per share) 33.18 28.20 49.32

Adjusted

Profit attributable to equity holders of the Parent (€’000) 98,674 83,592 146,313

Amortisation of intangible assets (net of related tax) (€’000) 13,620 9,244 19,698

Amortisation of Joint Ventures & Associates intangible assets (net of related tax) (€’000) 208 129 345

Net exceptional charge (€’000) 7,305 2,764 14,079

Adjusted net income (€’000) 119,807 95,729 180,435

Adjusted earnings per share (cents per share) 40.60 32.45 61.16

Diluted adjusted earnings per share (cents per share) 40.29 32.29 60.82

12. Property, plant & equipment and intangible assets

During the six month period to 04 July 2015 the Group spent €58.8 million (HY 2014: €57.2 million) on additions to property,

plant & equipment and intangible assets. There were no significant disposals during the period. At 04 July 2015 the Group

had entered into contractual commitments for the acquisition of property, plant and equipment amounting to €24.6 million

(HY 2014: €48.8 million). During the six month period the Group capitalised borrowing costs amounting to €1.25 million (HY

2014: €0.85 million) on qualifying assets.



13. Net debt


2015 2014 2014

€’000 €’000 €’000

Bank overdrafts 37,040 - -

Other borrowings due within one year 408 39,447 416

Borrowings due after one year 634,015 521,331 620,317

Less:

Cash and cash equivalents (94,400) (89,014) (110,370) Net debt 577,063 471,764 510,363

Cash and cash equivalents include the following for the purposes of the Condensed statement of cash flows:


2015 2014 2014

€’000 €’000 €’000

Bank overdrafts 37,040 - -

Cash and cash equivalents (94,400) (89,014) (110,370)

Cash and cash equivalents per Condensed statement of cash flows (57,360) (89,014) (110,370)

The Group has the following undrawn borrowing facilities:


2015 2014 2014

€’000 €’000 €’000

Expiring within one year 76,113 63,351 70,482

Expiring beyond one year 377,473 185,545 362,040

453,586 248,896 432,522 Movement in net borrowings to the period ended 05 July 2014 is analysed as follows:

€’000

Balance at 04 January 2014 374,444

Acquisition of subsidiary 21,135

Acquisition of subsidiary - net debt 1,401

Other borrowings 73,646

Fair value movement of currency swaps 269

Exchange translation adjustment on net debt 869

Balance at 05 July 2014 471,764

Movement in net borrowings to the period ended 04 July 2015 is analysed as follows:

€’000

Balance at 03 January 2015 510,363

Net drawdown of borrowings 37,753

Fair value movement of currency swaps 209

Exchange translation adjustment on net debt 28,738

Balance at 04 July 2015 577,063



14. Provisions for other liabilities and charges

Restructuring €'000

UK pension €'000

Legal claims €'000

Property & lease

commitments €'000

Operational €'000

Total €'000

note (a) note (b) note (c) note (d) note (e)

At 03 January 2015 2,750 18,506 7,164 1,219 11,911 41,550

Provided for in the year

596 - - - - 596

Utilised in the period (1,379) (184) (2,025) (90) (6,311) (9,989)

Exchange differences - 1,815 329 10 61 2,215

Unwinding of discounts - 72 - 2 - 74

Reclassification - - (179) - - (179)

At 04 July 2015 1,967 20,209 5,289 1,141 5,661 34,267

Non-current - 19,290 - 526 - 19,816

Current 1,967 919 5,289 615 5,661 14,451

1,967 20,209 5,289 1,141 5,661 34,267

(a) The restructuring provision relates to the rationalisation programme that the Group is currently undertaking. The provision, which relates mainly to termination payments, is expected to be fully utilised during 2015. The amount provided in the year is recognised in the income statement as an exceptional item.

(b) The UK pension provision relates to administration and certain costs associated with pension schemes attached to businesses disposed of in prior years. This provision is expected to be fully utilised over the next 29 years.

(c) The legal claims provision represents legal claims brought against the Group. The balance at 04 July 2015 is expected to be utilised during 2015. In the opinion of the Directors, after taking appropriate legal advice, the outcome of these legal claims is not expected to give rise to any significant loss beyond the amounts provided for at 04 July 2015.

(d) The property and lease commitments provision relates to onerous leases in respect of two properties where the Group has a present and future obligation to make lease payments. It is expected that €0.6 million will be utilised during the next year and the balance will be fully utilised over the next two years.

(e) It is expected that €5.7 million of this provision will be utilised within the next year. Due to the nature of these items, there is some uncertainty around the amount and timing of payments.

15. Share capital and share premium

Half year 2014 Number of shares

(thousands) Ordinary shares

€'000 Share premium

€'000 Total

€'000

At 04 January 2014 295,646 17,738 86,259 103,997

Shares issued 85 5 333 338

At 05 July 2014 295,731 17,743 86,592 104,335

Number of shares Ordinary shares Share premium Total

Half year 2015 (thousands) €'000 €'000 €'000

At 03 January 2015 295,876 17,752 86,976 104,728

Shares issued 155 9 633 642

At 04 July 2015 296,031 17,761 87,609 105,370

During the period ended 04 July 2015 155,000 of the 2002 Long Term Incentive Plan (“the 2002 LTIP”) shares were

exercised with exercise proceeds of €0.6 million. The related weighted average exercise price was €4.14 per share.

The total authorised number of ordinary shares is 350 million shares (HY 2014: 350 million shares) with a par value of €0.06

per share (HY 2014: €0.06 per share).



16. Other reserves

Capital and

merger reserve

Currency reserve

Hedging reserve

Available for sale

financial asset

reserve Own

shares

Share based

payment reserve Total

Half year 2014 €'000 €'000 €'000 €'000 €'000 €'000 €'000

Balance at 04 January 2014 115,973 10,535 (1,427) 1,396 (8,191) 8,314 126,600

Currency translation differences - 4,040 - - - - 4,040

Net investment hedge - (245) - - - - (245) Revaluation of interest rate swaps - gain in period

- - 105 - - - 105

Foreign exchange contracts– gain in period - - 1,539 - - - 1,539

Transfers to income statement:

- Foreign exchange contracts – loss in period - - 271 - - - 271

- Forward commodity contracts– gain in period - - (79) - - - (79) Revaluation of forward commodity contracts - gain in period

- - 173 - - - 173

Revaluation of available for sale financial assets - gain in period

- - - 1,409 - - 1,409

Deferred tax on fair value movements - - (54) (465) - - (519)

Cost of share based payments - - - - - 2,931 2,931 Transfer on exercise, vesting or expiry of share based payments - - - - 8,188 (3,744) 4,444

Purchase of own shares - - - - (5,793) - (5,793)

Balance at 05 July 2014 115,973 14,330 528 2,340 (5,796) 7,501 134,876

Capital and

merger reserve

Currency reserve

Hedging reserve

Available for sale

financial asset

reserve Own

shares

Share based

payments reserve Total

Half year 2015 €'000 €'000 €'000 €'000 €'000 €'000 €'000

Balance at 03 January 2015 115,973 98,796 (745) 2,538 (7,965) 9,984 218,581

Currency translation differences - 75,654 - - - - 75,654 Recycle of currency reserve to the Group income statement on disposal of investment in Joint Venture - 5,037 - - - - 5,037

Net investment hedge - (6,980) - - - - (6,980) Revaluation of interest rate swaps – gain in period

- - 35 - - - 35

Foreign exchange contracts – gain in period - - 2,955 - - - 2,955

Transfers to income statement:

- Foreign exchange contracts – gain in period - - (771) - - - (771)

- Forward commodity contracts – loss in period - - 700 - - - 700 Revaluation of forward commodity contracts - loss in period

- - (443) - - - (443)

Revaluation of available for sale financial assets - gain in period

- - - 1,052 - - 1,052

Deferred tax on fair value movements - - (97) (347) - - (444)

Cost of share based payments - - - - - 3,565 3,565 Transfer on exercise, vesting or expiry of share based payments - - - - 486 (694) (208)

Purchase of own shares - - - - (4,660) - (4,660)

Balance at 04 July 2015 115,973 172,507 1,634 3,243 (12,139) 12,855 294,073



17. Retirement benefit obligations The movement in the liability recognised in the Group condensed balance sheet is as follows:


2015 2014 2014

€’000 €’000 €’000

At the beginning of the period (114,808) (78,035) (78,035)

Exchange differences (2,362) (1,134) (1,423)

Service costs and net interest costs (4,299) (4,174) (8,226)

Remeasurements - defined benefit schemes 18,178 (16,857) (42,369)

Contributions paid by employer 9,320 8,840 15,245 At the end of the period (93,971) (91,360) (114,808)

The amounts recognised in the Group condensed balance sheet are determined as follows:


2015 2014 2014

€’000 €’000 €’000

Fair value of plan assets 416,691 374,343 393,290

Present value of funded obligations (510,662) (465,703) (508,098)

Liability in condensed balance sheet (93,971) (91,360) (114,808)

The following actuarial assumptions have been made in determining the Group's retirement benefit obligations for the half year ended 04 July 2015 and full year ended 03 January 2015:

Half year 2015 Year 2014

IRL UK IRL UK

Discount rate 2.40% 3.65% 2.10% 3.60%

Inflation rate 1.50%-1.60% 2.15%-3.15% 1.20% - 1.50% 1.95% - 2.95%

Future salary increases 2.60% 3.90% 2.50% 3.70%

Future pension increases* 0.00% 2.20%-2.95% 0.00% 2.05% - 2.80%

*Future pension increases on the Irish pension schemes have been calculated on a weighted average basis.

Mortality rates

The mortality assumptions imply the following life expectancies in years of an active member on retiring at age 65, 20 years

from now:


Irish mortality UK mortality Irish mortality UK mortality

rates rates rates rates

Male 22.8 22.8 22.8 22.7

Female 25.2 25.3 25.2 25.2

The mortality assumptions imply the following life expectancies in years of an active member, aged 65, retiring now:


Irish mortality UK mortality Irish mortality UK mortality

rates rates rates rates

Male 20.2 21.4 20.2 21.4

Female 23.0 23.7 23.0 23.7



18. Related party transactions

The Group is controlled by Glanbia Co-operative Society Limited (“the Society") which holds 39.8% of the issued share capital

of Glanbia plc (the “Company”) and is the ultimate parent of the Group. On 20 August 2015 the Society expects to complete

the spin out of 3.38% of its holding of the issued share capital of the Company to its members thus reducing its shareholding

in the Company to 36.42%.

During the six months to 04 July 2015, sales to related parties amounted to €18.1 million (HY 2014: €15.8 million), purchases

from related parties amounted to €39.5 million (HY 2014: €38.2 million) and net balances owed to related parties were

€54.3 million (HY 2014: €40.4 million). The related party transactions relate primarily to trading between the Group,

Southwest Cheese Company, LLC, Glanbia Ingredients Ireland Limited, Milk Ventures (UK) Limited and the Society.

In the opinion of the Directors, there have been no related party transactions, or changes therein, since the year ended 03

January 2015, that have materially affected the Group’s financial position or performance during the six months ended 04

July 2015.

19. Contingent liabilities

Group bank guarantees amounting to €3.6 million (HY 2014: €2.9 million) are outstanding at 04 July 2015, mainly in respect

of the payment of EU subsidies. The Group does not expect any material loss to arise from these guarantees.

20. Cash generated from operations


2015 2014 2014

€’000 €’000 €’000

Profit before taxation 117,633 97,891 173,577

Write-off of intangibles - - 73

Exceptional loss (non- cash) 5,386 3,638 10,290

Share of results of Joint Ventures & Associates (13,267) (15,276) (23,729)

Depreciation 21,209 14,914 32,230

Amortisation 15,566 10,565 22,512

Cost of share based payments 3,565 2,931 5,516

Difference between pension charge and cash contributions (5,023) (4,666) (7,019)

Loss/(Profit) on disposal of property, plant and equipment 96 (9) (226)

Finance income (885) (841) (1,725)

Finance expense 11,588 11,337 22,050

Amortisation of government grants received (103) (109) (264)

Cash generated from operations before changes in working capital 155,765 120,375 233,285

Changes in net working capital:

- Decrease in inventory 7,184 14,697 15,740

- (Increase) in short term receivables (88,962) (110,351) (16,264)

- (Decrease)/Increase in short term liabilities (38,114) 12,411 9,321

- (Decrease) in provisions (10,410) (9,907) (11,366)

Cash generated from operations 25,463 27,225 230,716



21. Business combinations

On 27 June 2015 the Group acquired 100% of the share capital of Dairyland Cuisine, a food service provider, distributing a range of fresh dairy and non-dairy products in Ireland for consideration of approximately €1.3 million. This acquisition is included in the Dairy Ireland segment.

22. Events after the reporting period

There have been no material events subsequent to the end of the interim period 04 July 2015 which require disclosure in this

report.

23. Information

Copies of this half yearly financial report are available for download from the Group’s website at www.glanbia.com.

http://www.glanbia.com/

Documents

2015/media/Files/G/Glanbia-Plc/documents/H… · 2015 outlook Glanbia reiterates its guidance for 2015 of 9% to 11% growth in adjusted earnings per share, constant currency. If the