Half year results. Delivering better nutrition for every step of life s journey. Wednesday, 17 August Glanbia plc 2013 half year results

Transcription

1 2016 results Delivering better nutrition for every step of life s journey Wednesday, 17 August Glanbia plc 2013 half year results

2 Strong performance in first half driven by Glanbia Performance Nutrition Guidance reiterated of 8% to 10% constant currency adjusted EPS growth in August Glanbia plc ( Glanbia, the Group, the plc ), the global nutrition group, announces its results for the six months ended 02 July Results highlights for the half year 2016 Adjusted earnings per share cent, up 10.8% on prior half year, constant currency (up 10.5% reported); EBITA from wholly owned business million, up 13.7% on prior half year, constant currency (up 13.6% reported); EBITA margins from wholly owned business 11.0%, up 130 bps on prior half year, constant currency and reported; Strong result from Glanbia Performance Nutrition with EBITA of 81.7 million, a 35.0% increase on prior half year, constant currency (up 34.6% reported); Glanbia Nutritionals 1 delivered a satisfactory result with EBITA of 58.0 million, a 4.0% decrease on prior half year, constant currency (down 3.8% reported); Dairy Ireland in line with expectations with EBITA of 17.7 million, a 1.1% increase on prior half year; Joint Ventures & Associates EBITA declined 4.5%, constant currency, (down 5.4% reported) in the first half ; and Recommended interim dividend of 5.37 cent per share, an increase of 10% on prior year. Commenting today Siobhán Talbot, Group Managing Director, said: Glanbia delivered a strong performance in the first six months of 2016 driven by Glanbia Performance Nutrition. Total Group earnings before interest, tax and amortisation for the half year grew by over 11%. Sales of performance nutrition brands and value-added nutritional ingredients showed good growth in the first half of 2016 delivering on our vision to be a leading nutrition business. Global dairy markets remain weak and continue to be a challenge for parts of the business, however the diversity of the Glanbia portfolio has enabled us to navigate this and we reiterate guidance for the full year of adjusted earnings per share growth of 8% to 10% on a constant currency basis half year results Reported Constant Currency m HY 2016 HY Change Change 2 Wholly-owned business Revenue 1, , % +0.4% EBITA % +13.7% EBITA margin 11.0% 9.7% bps +130 bps Joint Ventures & Associates Revenue % -8.8% EBITA % -4.5% EBITA margin 4.7% 4.5% +20bps +20bps Total Group 4 Revenue 1, , % -1.7% EBITA % +11.4% EBITA margin 9.6% 8.5% +110bps +110bps Adjusted earnings per share c 40.60c +10.5% +10.8% 1. Global Ingredients has been rebranded Glanbia Nutritionals. The operations of the segment are unchanged. 2. 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 Euro US Dollar FX rate for the first half of 2016 was 1 = $1.116 (HY : 1 = $1.115). 3. EBITA is defined as earnings before interest, tax and amortisation and is stated before exceptional items. 4. Total Group includes Glanbia s share of Joint Ventures & Associates. 5. Adjusted earnings per share is reconciled in Note 10 of the financial statements. This release contains certain alternative performance measures. A detailed glossary of the key performance indicators and non-ifrs performance measures can be found on pages 36 to 39. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 2

3 2016 half year overview and outlook Glanbia delivered a strong performance in the first half of Wholly owned revenue was 1,434.8 million, an increase of 0.4% constant currency (up 0.2% reported). Wholly owned EBITA was million, up 13.7% constant currency (up 13.6% reported). Wholly owned EBITA margin was 11.0%, up 130 bps, constant currency and reported. Total Group revenue for the period, including the Group s share of Joint Ventures & Associates, was 1,837.1 million, a decrease of 1.7% constant currency (down 2.1% reported). Total Group EBITA was million, up 11.4% constant currency (up 11.2% reported). Total Group EBITA margin was 9.6%, up 110 bps, constant currency and reported. Adjusted earnings per share for the half year were cent, up 10.8%, constant currency (up 10.5% reported). Capital investment and corporate development Glanbia s total investment in capital expenditure was 41.7 million in the first half of 2016, of which 27.8 million was strategic investment reflecting the on-going focus on the organic growth potential of the business. Key strategic projects undertaken in the period were the investments in value-added ingredient processing technologies at the Glanbia Nutritionals sites in Idaho and California, USA. Board changes On 09 May 2016, Tom Grant, Brendan Hayes, Patrick Hogan and Eamon Power retired from the plc Board as part of the agreement in place with Glanbia Co-operative Society Limited to reduce its director representation on the plc Board by four in Glanbia Nutritionals The Global Ingredients segment has been reshaped to improve its positioning with customers and target growth opportunities. The overall portfolio has been integrated into one global organisation to deliver to customers the full suite of Glanbia s capabilities across its cheese and nutritional ingredients platforms. This new organisation is consumer insight driven, has regionally focused sales teams, and is enabled by centres of excellence across areas such as product supply, innovation and strategy. The segment contains the prior operations of Global Ingredients and has been rebranded Glanbia Nutritionals. It will continue to report revenue, EBITA and EBITA margin outlook Glanbia reiterates its guidance for 2016 of 8% to 10% growth in adjusted earnings per share, constant currency. If the full year 2016 average Euro US dollar exchange rate remains at similar levels to the first half of 2016, Glanbia expects the 2016 reported adjusted earnings per share growth to be broadly in line with the constant currency result. Glanbia Performance Nutrition ( GPN ) is expected to be the main driver of 2016 earnings per share growth. GPN continues to focus on like for like branded revenue progression and is currently expecting full year growth in line with the first half. Favourable input costs, mix improvement and operational leverage are expected to drive margin improvement and earnings for 2016 versus prior year. Glanbia Nutritionals expects to deliver modest EBITA improvement versus prior year. This will be driven by increased sales of value-added nutritional ingredients offset somewhat by reduced performance from US Cheese as a result of weak markets. Dairy Ireland and Joint Ventures & Associates are expected to be broadly in line with prior year. HY 2016 operations review Segmental analysis (as reported) HY 2016 HY m Revenue EBITA EBITA % Revenue EBITA EBITA % Glanbia Performance Nutrition % % Glanbia Nutritionals % % Dairy Ireland % % Total wholly-owned businesses 1, % 1, % Joint Ventures & Associates % % Total Group 1, % 1, % Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 3

4 Glanbia Performance Nutrition Reported Constant Currency m HY 2016 HY Change Change Revenue % +12.0% EBITA % +35.0% EBITA margin 16.2% 13.4% +280bps +280bps Commentary is on a constant currency basis throughout Glanbia Performance Nutrition ( GPN ) delivered a strong performance in the first half of 2016 against the same period in. Revenues increased 12.0% to million. Drivers of revenue growth were an 8.0% improvement in volume and a 10.7% revenue contribution from the thinkthin acquisition offset by a 6.7% decline in price, due to promotional investment. Like for like branded revenue growth for H was 4.4% as good branded volume growth across all regions was somewhat offset by promotional investment. The strong US Dollar remains a headwind in certain non US markets. The thinkthin acquisition performed well in the period maintaining its historically strong growth rate. Innovation continues to be a focus and the recent launch of BSN N.O.- XPLODE XE has performed well with a strong pipeline of new product launches planned for H EBITA grew strongly by 35.0% in the period driven by revenue growth and EBITA margin progression of 280 bps to 16.2%. The margin increase was driven by a reduction in input cost, mix improvement from increased branded sales relative to contract and continued gains in operating leverage. Glanbia Nutritionals Reported Constant Currency m HY 2016 HY Change Change Revenue % -5.9% EBITA % -4.0% EBITA margin 10.1% 9.9% +20bps +20bps Commentary is on a constant currency basis throughout Glanbia Nutritionals ( GN ) performance was in line with expectations in the first half of 2016 and delivered a satisfactory result in the context of on-going challenging dairy markets. Revenues decreased by 5.9% to million as volume growth of 2.2% was more than offset by weaker dairy markets which reduced pricing by 8.1%. Overall margins progressed to 10.1% driven by a strong performance from the Nutritional Ingredients portfolio. Nutritional Ingredients improved performance was driven by volume growth of value-added dairy and non-dairy ingredients, including bar systems and high-end whey ingredients following investment in increased capacity in. US Cheese volumes were broadly in line in the first half of 2016 as plants operated close to full capacity. Cheese demand remains solid across the US retail and foodservice markets although pricing in the overall US market was weak. On-going challenging dairy market dynamics led to a reduced performance in this part of the business. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 4

5 Dairy Ireland Reported m HY 2016 HY Change Revenue % EBITA % EBITA margin 5.0% 4.7% +30bps Dairy Ireland had a satisfactory performance in the first half of Revenues decreased 3.3% reflecting a 1.1% increase in volumes, a 4.9% decline in price and a 0.5% revenue contribution from acquisitions. A 30 bps improvement in margin drove an increase in EBITA of 1.1% versus the prior half year. Consumer Products delivered an improved performance versus prior year. This was driven by an improvement in sales of value-added branded products and input cost reductions. Consumer Products continues to focus on improving its cost base. Agribusiness delivered a somewhat reduced performance in the period. Increased animal feed sales volume was more than offset by lower pricing across animal feed and fertiliser which led to a decline in margin. Joint Ventures & Associates (Glanbia Share) Reported Constant Currency m HY 2016 HY Change Change Revenue % -8.8% EBITA % -4.5% EBITA margin 4.7% 4.5% +20bps +20bps Commentary is on a constant currency basis throughout Joint Ventures & Associates revenue reduced by 8.8% in the period as a result of the challenging dairy environment. The key driver of the revenue movement was a 12.8% decline in pricing reflecting weaker global dairy markets which was partially offset by a 6.6% increase in volumes. The disposal of Glanbia s interest in Nutricima in April led to an additional 2.6% decline in revenues compared to the prior half year. All Joint Ventures & Associates grew volumes in the period with a focus on costs, off-setting some of the price challenges which generated a 20 bps improvement in margin. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 5

6 2016 finance review HY 2016 results summary preexceptional Constant Currency m HY 2016 HY Change Change Revenue 1, , % +0.4% EBITA % +13.7% EBITA margin 11.0% 9.7% +130bps +130bps - Amortisation of intangible assets (19.4) (15.6) - Net finance costs (11.6) (10.7) - Share of results of Joint Ventures Associates - Income tax (21.7) (19.1) Profit for the half year Income statement For the first half of 2016, wholly owned revenue increased 0.4%, constant currency (up 0.2% reported) to 1,434.8 million (HY : 1,431.7 million). EBITA grew by 13.7%, constant currency (up 13.6% reported) to million (HY : million). EBITA margin increased by 130 bps to 11.0%, both constant currency and reported. Net financing costs of 11.6 million increased versus prior year (HY : 10.7 million) due to an increase in average net debt. The Group s average interest rate for the period was 3.6% (HY : 3.9%). Glanbia operates a policy of fixing a significant amount of its interest exposure, with 85% of projected 2016 debt currently contracted at fixed rates for The HY 2016 pre-exceptional tax charge increased by 2.6 million to 21.7 million (HY : 19.1 million). This represents an effective rate, excluding Joint Ventures & Associates, of 17.1% (HY : 17.0%). The Group s share of results of Joint Ventures & Associates decreased by 1.0 million to 12.3 million (HY : 13.3million). Share of results of Joint Ventures & Associates is an after tax and interest amount. Adjusted earnings per share HY 2016 HY Change Constant Currency Change Adjusted earnings per share * 44.87c 40.60c +10.5% +10.8% * Adjusted earnings per share is reconciled in note 10 of the financial statements. A full glossary of terms used throughout this release can be found in the financial statements section on page Total adjusted earnings per share grew 10.8% (up 10.5% 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 5.37 cent per share (HY : interim dividend 4.88 cent per share). This represents an increase of 10% on the prior year interim dividend. The dividend will be paid on 07 October 2016 to shareholders on the register of members as at 26 August Irish withholding tax will be deducted at the standard rate where appropriate. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 6

7 Exceptional items m HY 2016 HY 1. Organisation redesign costs (6.2) (3.1) 2. Acquisition integration costs (1.9) - 3. Rationalisation costs (0.8) (1.1) 4. Disposal of interest in Joint Venture - (3.6) Exceptional (charge) pre-tax (8.9) (7.8) Taxation credit Total exceptional (charge) (7.3) (7.3) Exceptional items incurred in the first half of 2016 resulted in a post-tax exceptional charge of 7.3 million compared to an equal charge of 7.3 million for the same period in. Details of the exceptional items incurred in the period are as follows: 1. The organisation redesign costs relate to the on-going programme announced in in Glanbia Nutritionals to fundamentally reorganise the business to leverage future market opportunities. It is envisaged that this programme will continue until H and will involve a total cost of approximately 20 million across, 2016 and Acquisition integration costs comprise of costs relating to the integration, restructuring and redesign of route to market capabilities within acquired businesses in the Glanbia Performance Nutrition segment. 3. Rationalisation costs primarily relate to the current redundancy and rationalisation programme in the Dairy Ireland segment. 4. Relates to the disposal in April of Glanbia s 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. Group financing and cash flow Financing key performance indicators HY 2016 HY FY Net debt m Net debt : adjusted EBITDA times 1.97 times 1.75 times Adjusted EBIT 1 : net finance cost 11.4 times 9.8 times 10.8 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. A detailed glossary of the key performance indicators and non-ifrs performance measures can be found on pages 36 to 39. The Group s financial position continues to be strong. Net debt at the end of HY 2016 was 644 million. This is an increase of 67 million relative to the end of HY. Net debt to adjusted EBITDA was 1.83 times and interest cover was 11.4 times, both metrics remaining well within financing covenants. Relative to the year end of, net debt has increased by 60 million. The key drivers of the net debt increase from year end have been a seasonal increase in working capital and capital expenditure. Pension On 02 July 2016, the Group s net pension liability under IAS 19 (revised) Employee Benefits, before deferred tax, increased by 44.8 million to million versus year end (FY pension liability 87.3 million). A significant driver of this was the decrease in the discount rate driven by the decline in interest rates on high quality corporate bonds. See note 17 for further details on the retirement benefit obligation at the reporting date. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 7

8 Principal risks and uncertainties affecting the Group s performance in 2016 The Board of Glanbia plc has the ultimate responsibility for the Group s systems of risk management and internal control. The Group s risk management framework outlines the key stakeholder risk management responsibilities. It is designed to ensure that there is input across all levels of the business to the management of risk and to enable the Group to remain responsive to the ever changing environment in which it operates. This framework, together with the processes to identify, manage and mitigate potential material risks to the achievement of the Group s strategic objectives are set out in detail on pages of the plc s Annual Report. The Group s principal risks and uncertainties are summarised in the risk profile table below, according to the strategic objective to which they relate, together with an overview of the risk trend identified for the year ended 02 January 2016, issued on 03 March 2016 which the plc Board believes to still remain applicable. There may be other risks and uncertainties that are not yet considered material or not yet known to the Group and this list will change if these risks assume greater importance in the future. Group strategic priorities Risks where trend is increasing Risks which are stable Maintain and grow Glanbia s global leadership in performance nutrition and nutritional and functional ingredients Economic, industry and political risk Strategy risk Market risk Customer concentration risk Supplier risk Grow through organic investment programme and acquisition/ partner with complementary businesses Acquisition risk Develop talent, culture and values in line with Glanbia s growing global scale Talent management risk Other risks IT and cyber security risks Site compliance risk and environment, health & safety regulation risk Product safety and compliance risk Key risk factors and uncertainties with the potential to impact on the Group s financial performance in the second half of the year include: Economic, industry and political risk. Macroeconomic uncertainty continues to increase, partly as a result of the United Kingdom (UK) electorate voting to leave the European Union. While the direct impacts of this decision are limited, currency volatility, further movement in discount rates and other economic uncertainties will require on-going monitoring by the Group; The continued impact on the competitive landscape for Glanbia Performance Nutrition, recognising the impact of a stronger US dollar on the purchasing power of consumers in certain international markets; and The overall impact on margins of movements in dairy pricing particularly in whey markets. The Group actively manages these and all other risks through its risk management and internal control processes. Full details of the principal risk exposures and the related mitigation actions are outlined on pages of the plc Annual Report. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 8

9 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 where the presentation can also be viewed or downloaded. In addition, a dial-in facility is available using the following numbers: Ireland: UK / International: USA: The access code for all participants is: A replay of the call will be available for 30 days approximately two hours after the call ends. For further information contact Glanbia plc Siobhán Talbot, Group Managing Director Mark Garvey, Group Finance Director Liam Hennigan, Head of Investor Relations Martha Kavanagh, Head of Media Relations Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 9

10 Responsibility statement The Directors are responsible for preparing the half yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 as amended, 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 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, and a description of the principal risks and uncertainties for the remaining six months; and 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. The Directors of Glanbia plc are as listed in the Glanbia plc Annual Report, with the exception of the following changes in the period: Tom Grant, Brendan Hayes, Patrick Hogan and Eamon Power retired as Directors of Glanbia plc on 09 May A list of current directors is maintained on the Glanbia plc website: On behalf of the Board Siobhán Talbot Group Managing Director Mark Garvey Group Finance Director 16 August 2016 Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 10

11 Condensed income statement 2016 Year Preexceptional Exceptional Total Preexceptional Exceptional Total Preexceptional Exceptional Total '000 '000 '000 '000 '000 '000 '000 '000 '000 Notes (note 6) (note 6) (note 6) Revenue 4 1,434,764-1,434,764 1,431,590-1,431,590 2,774,326-2,774,326 Earnings before interest, tax and amortisation (EBITA) 157,389 (8,885) 148, ,473 (7,838) 130, ,003 (26,342) 244,661 Intangible asset amortisation (19,424) - (19,424) (15,566) - (15,566) (31,125) - (31,125) Operating profit 137,965 (8,885) 129, ,907 (7,838) 115, ,878 (26,342) 213,536 Finance income 7 1,160-1, ,706-1,706 Finance costs 7 (12,732) - (12,732) (11,588) - (11,588) (22,816) - (22,816) Share of results of Joint Ventures & Associates 12,328-12,328 13,267-13,267 26,270-26,270 Profit before taxation 138,721 (8,885) 129, ,471 (7,838) 117, ,038 (26,342) 218,696 Income taxes 8 (21,664) 1,629 (20,035) (19,075) 533 (18,542) (37,322) 2,543 (34,779) Profit for the period 117,057 (7,256) 109, ,396 (7,305) 99, ,716 (23,799) 183,917 Attributable to: Equity holders of the Parent 109,364 98, ,271 Non-controlling interests ,801 99, ,917 Earnings per share attributable to the equity holders of the Parent Basic earnings per share (cent) Diluted earnings per share (cent) Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 11

12 Condensed statement of comprehensive income Year 2016 Notes Profit for the period 109,801 99, ,917 Other comprehensive income Items that are not reclassified subsequently to the Group income statement: Remeasurements defined benefit schemes 17 (51,379) 18,178 20,856 Deferred tax credit/(charge) on remeasurements 4,866 (2,430) (2,334) Share of remeasurements Joint Ventures & Associates (10,480) 4,811 4,254 Deferred tax credit/(charge) on remeasurements Joint Ventures & Associates 1,310 (600) (612) Items that may be reclassified subsequently to the Group income statement: Currency translation differences (33,036) 75,654 91,102 Net investment hedge 2,015 (6,980) (8,684) Revaluation of available for sale financial assets (617) 1,052 1,273 Fair value movements on cash flow hedges (506) 2, Recycle of currency reserve to the Group income statement on disposal of Investment in Joint Venture - 5,037 5,037 Deferred tax on cash flow hedges and revaluation of available for sale financial assets 63 (444) (480) Other comprehensive (expense)/income for the period, net of tax (87,764) 96, ,557 Total comprehensive income for the period 22, , ,474 Total comprehensive income attributable to: Equity holders of the Parent 21, , ,828 Non-controlling interests Total comprehensive income for the period 22, , ,474 Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 12

13 Condensed balance sheet As at 02 July 2016 Year 2016 Notes '000 '000 '000 ASSETS Non-current assets Property, plant and equipment 579, , ,190 Intangible assets 921, , ,527 Investments in Associates 95,994 91,564 97,897 Investments in Joint Ventures 59,243 62,665 60,585 Trade and other receivables 14,654 1,850 1,850 Derivative financial instruments Deferred tax assets 42,711 26,152 36,474 Available for sale financial assets 10,105 10,522 10,754 1,723,701 1,449,276 1,745,277 Current assets Inventories 331, , ,353 Trade and other receivables 447, , ,020 Derivative financial instruments 997 1, Cash and cash equivalents 13 94,909 94, , , , ,676 Total assets 2,598,596 2,309,135 2,650,953 EQUITY Issued capital and reserves attributable to equity holders of the Parent Share capital and share premium , , ,370 Other reserves 272, , ,425 Retained earnings 673, , ,763 1,051, ,408 1,054,558 Non-controlling interests 8,952 8,313 8,515 Total equity 1,060, ,721 1,063,073 LIABILITIES Non-current liabilities Borrowings , , ,963 Derivative financial instruments Deferred tax liabilities 201, , ,646 Retirement benefit obligations ,075 93,971 87,288 Provisions 15 16,578 19,816 18,984 Capital grants 2,697 2,121 2,787 1,025, ,076 1,063,715 Current liabilities Trade and other payables 399, , ,713 Current tax liabilities 24,183 21,350 18,969 Borrowings 13 66,841 37,448 42,169 Derivative financial instruments 3, Provisions 15 17,850 14,451 19,128 Capital grants , , ,165 Total liabilities 1,537,951 1,328,414 1,587,880 Total equity and liabilities 2,598,596 2,309,135 2,650,953 Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 13

14 Condensed statement of changes in equity Attributable to equity holders of the Parent Share capital and share premium Other reserves Retained earnings Total Non controlling interests Total 2016 Notes '000 '000 '000 '000 '000 '000 Balance at 02 January , , ,763 1,054,558 8,515 1,063,073 Profit for the period , , ,801 Other comprehensive income/(expense) Remeasurements - defined benefit schemes (51,379) (51,379) - (51,379) Deferred tax on remeasurements - - 4,866 4,866-4,866 Share of remeasurements Joint Ventures & Associates (net of deferred tax) - - (9,170) (9,170) - (9,170) Fair value movements - (1,123) - (1,123) - (1,123) Deferred tax on fair value movements Currency translation differences - (33,036) - (33,036) - (33,036) Net investment hedge - 2,015-2,015-2,015 Total comprehensive income for the period - (32,081) 53,681 21, ,037 Dividends paid during the period (21,374) (21,374) - (21,374) Cost of share based payments - 5,693-5,693-5,693 Transfer on exercise, vesting or expiry of share based payments - 2,681 (2,681) Deferred tax on share based payments - - 1,511 1,511-1,511 Shares issued Premium on shares issued Purchase of own shares - (10,318) - (10,318) - (10,318) Balance at 02 July , , ,900 1,051,693 8,952 1,060,645 Attributable to equity holders of the Parent Share capital and share premium Other reserves Retained earnings Total Non controlling interests Total Notes '000 '000 '000 '000 '000 '000 Balance at 03 January 104, , , ,882 7, ,778 Profit for the period ,674 98, ,091 Other comprehensive income/(expense) Remeasurements - defined benefit schemes ,178 18,178-18,178 Deferred tax on remeasurements - - (2,430) (2,430) - (2,430) Share of remeasurements - Joint Ventures & Associates (net of deferred tax) - - 4,211 4,211-4,211 Fair value movements - 3,528-3,528-3,528 Deferred tax on fair value movements - (444) - (444) - (444) Currency translation differences - 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 - (6,980) - (6,980) - (6,980) Total comprehensive income for the period - 76, , , ,845 Dividends paid during the period (19,449) (19,449) - (19,449) Cost of share based payments - 3,565-3,565-3,565 Transfer on exercise, vesting or expiry of share based payments - (208) Shares issued Premium on shares issued Purchase of own shares - (4,660) - (4,660) - (4,660) Balance at 04 July 105, , , ,408 8, ,721 Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 14

15 Condensed statement of changes in equity Attributable to equity holders of the Parent Share capital and share premium Other reserves Retained earnings Total Non controlling interests Total Year Notes '000 '000 '000 '000 '000 '000 Balance at 03 January 104, , , ,882 7, ,778 Profit for the period , , ,917 Other comprehensive income/(expense) Remeasurements - defined benefit schemes ,856 20,856-20,856 Deferred tax on remeasurements - - (2,334) (2,334) - (2,334) Share of remeasurements - Joint Ventures & Associates (net of deferred tax) - - 3,642 3,642-3,642 Fair value movements - 1,418-1,418-1,418 Deferred tax on fair value movements - (480) - (480) - (480) Currency translation differences - 91,102-91,102-91,102 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 - (8,684) - (8,684) - (8,684) Total comprehensive income for the period - 88, , , ,474 Dividends paid during the period (33,895) (33,895) (427) (34,322) Cost of share based payments - 8,724-8,724-8,724 Transfer on exercise, vesting or expiry of share based payments - 4,078 (4,078) Deferred tax on share based payments - - 1,728 1,728-1,728 Shares issued Premium on shares issued Purchase of own shares - (13,351) - (13,351) - (13,351) Additions during the year Balance at 02 January , , ,763 1,054,558 8,515 1,063,073 Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 15

16 Other reserves Capital and merger reserve Currency reserve Hedging reserve Available for sale financial asset reserve Own shares Share based payment reserve 2016 '000 '000 '000 '000 '000 '000 '000 Balance at 02 January , ,251 (660) 3,391 (13,238) 14, ,425 Currency translation differences - (33,036) (33,036) Net investment hedge - 2, ,015 Revaluation of interest rate swaps gain in period Foreign exchange contracts loss in period - - (657) (657) Transfers to income statement: Foreign exchange contracts gain in period - - (307) (307) Forward commodity contracts loss in period Revaluation of forward commodity contracts - gain in period Revaluation of available for sale financial assets - loss in period (617) - - (617) Deferred tax on fair value movements - - (141) Cost of share based payments ,693 5,693 Transfer on exercise, vesting or expiry of share based payments ,166 (5,485) 2,681 Purchase of own shares (10,318) - (10,318) Balance at 02 July , ,230 (1,307) 2,978 (15,390) 14, ,400 Capital and merger reserve Currency reserve Hedging reserve Available for sale financial asset reserve Own shares Share based payment reserve '000 '000 '000 '000 '000 '000 '000 Balance at 03 January 115,973 98,796 (745) 2,538 (7,965) 9, ,581 Currency translation differences - 75, ,654 Recycle of currency reserve to the Group income statement on disposal of Investment in Joint Venture - 5, ,037 Net investment hedge - (6,980) (6,980) Revaluation of interest rate swaps gain in period Foreign exchange contracts gain in period - - 2, ,955 Transfers to income statement: Foreign exchange contracts gain in period - - (771) (771) Forward commodity contracts loss in period Revaluation of forward commodity contracts - loss in period - - (443) (443) Revaluation of available for sale financial assets - gain in period , ,052 Deferred tax on fair value movements - - (97) (347) - - (444) Cost of share based payments ,565 3,565 Transfer on exercise, vesting or expiry of share based payments (694) (208) Purchase of own shares (4,660) - (4,660) Balance at 04 July 115, ,507 1,634 3,243 (12,139) 12, ,073 Total Total Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 16

17 Other reserves Capital and merger reserve Currency reserve Hedging reserve Available for sale financial asset reserve Own shares Share based payment reserve Year '000 '000 '000 '000 '000 '000 '000 Balance at 03 January 115,973 98,796 (745) 2,538 (7,965) 9, ,581 Currency translation differences - 91, ,102 Recycle of currency reserve to the Group income statement on disposal of Investment in Joint Venture - 5, ,037 Net investment hedge - (8,684) (8,684) Revaluation of interest rate swaps gain in period Foreign exchange contracts loss in period - - (294) (294) Transfers to income statement: Foreign exchange contracts gain in period - - (149) (149) Forward commodity contracts loss in period Revaluation of forward commodity contracts - loss in period - - (361) (361) Revaluation of available for sale financial assets - gain in period , ,273 Deferred tax on fair value movements - - (60) (420) - - (480) Cost of share based payments ,724 8,724 Transfer on exercise, vesting or expiry of share based payments ,078 (4,000) 4,078 Purchase of own shares (13,351) - (13,351) Balance at 02 January , ,251 (660) 3,391 (13,238) 14, ,425 Total Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 17

18 Condensed statement of cash flows Year 2016 Notes Cash flows from operating activities Cash generated from operating activities 20 53,616 25, ,865 Interest received ,773 Interest paid (11,710) (13,164) (22,939) Tax (paid)/refunded (11,762) 1,360 (9,987) Net cash inflow from operating activities 30,759 14, ,712 Cash flows from investing activities Acquisition of subsidiaries purchase consideration 21 (8,724) (544) (195,579) Net cash flow relating to previous acquisitions (6,942) - - Acquisition of subsidiaries liabilities settled at completion - (802) (1,296) Acquisition of subsidiaries cash and cash equivalents acquired - - 6,991 Disposal of Investment in Joint Venture - 28,511 28,516 Capital grants received - - 1,132 Purchase of property, plant and equipment 11 (34,471) (52,241) (103,792) Purchase of intangible assets 11 (7,223) (6,523) (19,798) Interest paid in relation to property, plant and equipment (500) (1,250) (2,403) Dividends received from Joint Ventures & Associates 2,248 3,237 14,924 Loans advanced to Associate 18 (12,800) - - Net redemption and additions in available for sale financial assets 32 1,151 1,140 Proceeds from property, plant and equipment Net cash outflow from investing activities (68,282) (28,329) (269,737) Cash flows from financing activities Proceeds from issue of ordinary shares Net outflow from derivative financial instruments (1,815) - - Purchase of own shares (10,318) (4,660) (13,351) (Decrease)/increase in borrowings (67,197) (21,471) 91,577 Finance lease payments (169) (203) (468) Dividends paid to Company shareholders 9 (21,374) (19,449) (33,895) Dividends paid to non-controlling interests - - (427) Net cash (outflow)/inflow from financing activities (100,850) (45,175) 44,078 Net (decrease)/increase in cash and cash equivalents (138,373) (59,428) 51,053 Cash and cash equivalents at the beginning of the period 169, , ,370 Effects of exchange rate changes on cash and cash equivalents (2,333) 6,418 7,702 Cash and cash equivalents at the end of the period 13 28,419 57, ,125 Year 2016 Reconciliation of net cash flow to movement in net debt Net (decrease)/increase in cash and cash equivalents (138,373) (59,428) 51,053 Cash movements from debt financing 67,366 21,675 (91,109) (71,007) (37,753) (40,056) Exchange translation adjustment 10,910 (28,947) (33,824) Movement in net debt in the period (60,097) (66,700) (73,880) Net debt at the beginning of the period (584,243) (510,363) (510,363) Net debt at the end of the period (644,340) (577,063) (584,243) Net debt comprises: Borrowings 13 (672,759) (634,423) (753,368) Cash and cash equivalents 13 28,419 57, ,125 (644,340) (577,063) (584,243) Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 18

19 Notes to the condensed financial statements 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, 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. Glanbia Co-operative Society Limited (the Society ), together with its subsidiaries, holds 36.5% of the issued share capital of the Company. The Board of Directors as at 02 July 2016 is comprised of 18 members, of which up to 10 are nominated by the Society. In accordance with IFRS 10 Consolidated Financial Statements, the Society controls the Group 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 16 August Summary of significant accounting policies a) Basis of preparation The Group s condensed interim financial statements for the six months ended 02 July 2016 have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 as amended, the related Transparency Rules of the Central Bank of Ireland and with IAS 34 Interim Financial Reporting, as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the financial statements for the year ended 02 January 2016, which have been prepared in accordance with International Financial Reporting Standards ( IFRS ). The condensed interim financial statements for the six months ended 02 July 2016 and for the six months ended 04 July have not been audited or reviewed by the Group s auditors. b) Statutory information The condensed interim financial statements are considered non-statutory financial statements for the purposes of the Companies Act 2014 and in compliance with section 340(4) of that Act we state that: the condensed interim financial statements for the half year to 02 July 2016 have been prepared to meet our obligation to do so under the Transparency (Directive 2004/109/EC) Regulations 2007 as amended (Statutory Instrument No. 277); the condensed interim financial statements for the half year to 02 July 2016 do not constitute the statutory financial statements of the Group; the statutory financial statements for the financial year ended 02 January 2016 have been annexed to the annual return and filed with the Companies Registration Office; the statutory auditors of the Group have made a report under section 391 in the form required by section 336 Companies Act 2014 in respect of the statutory financial statements of the Group; and the matters referred to in the statutory auditors report were unqualified, and did not include a reference to any matters to which the statutory auditors drew attention by way of emphasis without qualifying the report. c) Going Concern 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 2016 and the medium term plans as set out in the three 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 02 July Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 19

20 Notes to the condensed financial statements d) Foreign currency translation The Group s condensed interim financial statements are presented in euro, which is the Group s presentation currency. The principal exchange rates used for the translation of results and balance sheets into euro are as follows: Average Period end Year Year euro 1 = US dollar Pound Sterling Danish Kroner Following the result of the UK referendum on EU membership on 23 June 2016, the Group reviewed its methodology for determining the average rates and concluded that due to the trading profile of the Group, it remained appropriate to use an average rate as an approximation of the actual Pound Sterling exchange rate when translating income and expenses. e) Changes in 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 02 January 2016 ( Annual Report ). The Group s accounting policies are set out in the financial statements in the Annual Report. The following standards, issued by the International Accounting Standards Board ( IASB ) and the International Financial Reporting Interpretations Committee ( IFRIC ), are effective for the Group for the first time in the period ended 02 July 2016 and have been adopted by the Group. Amendments to IFRS 11 Joint Arrangements on acquisition of an interest in a joint operation (effective on or after 01 January 2016). Amendments to IAS 16 Property, Plant and Equipment and IAS 38, Intangible Assets, on depreciation and amortisation (effective on or after 01 January 2016). Amendments to IAS 27 Consolidated and Separate Financial Statements on the equity method (effective on or after 01 January 2016). Amendments to IFRS 10 Consolidated Financial Statements and IAS 28, Investments in Associates and Joint Ventures (effective on or after 01 January not yet endorsed). Amendment to IAS 1 Presentation of Financial Statements on the disclosure initiative (effective on or after 01 January 2016). Annual Improvements on IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting (effective on or after 01 January 2016). The above standards did not have a significant impact on the results or the financial position of the Group during the six months ended 02 July 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. IFRS 15 Revenue from Contracts with Customers (effective on or after 01 January not yet endorsed). IFRS 15 is a converged standard from the IASB and the Financial Accounting Standards Board ( 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 not yet endorsed). This standard replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement. 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 IAS 12 'Income Taxes' on the recognition of deferred tax assets for unrealised losses (effective on or after 01 January not yet endorsed). These amendments clarify the recognition of deferred tax assets for unrealised losses on debt instruments. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 20

21 Notes to the condensed financial statements Amendments to IAS 7 'Statement of Cash Flows' under its disclosure initiative (effective on or after 01 January not yet endorsed). These amendments are intended to improve the information provided to users of financial statements about an entity's financing activities. IFRS 16 'Leases' (effective on or after 01 January not yet endorsed). IFRS 16 supersedes IAS 17 'Leases'. The new standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from IAS Changes in critical accounting estimates and assumptions Having considered the result of the UK referendum on EU membership, the Group concluded that no indicator of impairment existed at the reporting date with respect to intangible assets and property, plant and equipment. In valuing the retirement benefit obligation at the reporting date, the loss from changes in financial assumptions was 64.7 million offset by the return on plan assets of 13.3 million. A significant driver of the movement in the discount rate (based on high quality corporate bonds) was the result of the UK referendum on EU membership. See note 17 for further details on the retirement benefit obligation at the reporting date. With the exception of those outlined above, 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 02 January Segment information In accordance with IFRS 8 Operating Segments, the Group has four segments, as follows: Glanbia Performance Nutrition, Glanbia Nutritionals (previously 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 which acts as the Chief Operating Decision Maker for the Group. There has been no change in the basis of segmentation or in the basis of measurement of segment profit or loss in the period. Each segment derives its revenues as follows: Glanbia Performance Nutrition earns its revenue from performance nutrition products; Glanbia Nutritionals earns its revenue from the manufacture and sale of cheese, dairy and non dairy nutritional ingredients; 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 assesses the trading performance of operating segments based on a measure of earnings before interest, tax, amortisation and exceptional items. Amounts stated for Joint Ventures & Associates represents the Group s share. Glanbia plc Delivering better nutrition for every step of life s journey 2016 half year results Page 21