Final Results
Glanbia PLC
05 March 2008
Glanbia plc 2007 Results
Results for the year ended 29 December 2007
For a full copy of this document, go to www.glanbia.com
25% growth in adjusted earnings per share
5 March 2008 - Glanbia plc ('Glanbia'), the international cheese and nutritional
ingredients Group, announces its full year results for the year ended 29
December 2007.
2007 Results Summary
• Growth strategy delivering
• Excellent year with strong set of results
• Focus on growth markets in cheese and nutritional ingredients
• On target for double digit growth in 2008
2007 2006 Change
Revenue(1) €2,206.6 m €1,853.4 m Up 19%
Operating profit pre exceptional €115.8 m €85.6 m Up 35%
Operating margin pre exceptional 5.2% 4.6% Up 60 bps
Net financing costs (€17.3 m) (€14.0 m) Up €3.3 m
Share of results of joint ventures and
associates(1) €1.0 m €2.8 m Down €1.8m
Profit before tax pre exceptional €99.5 m €74.4 m Up 34%
Profit after tax pre exceptional €83.1 m €66.4 m Up 25%
Exceptional items(2) (€22.8 m) (€0.1 m) See note
Earnings per share 20.4 c 22.5 c Down 9%
Adjusted earnings per share(3) 28.2 c 22.6 c Up 25%
Dividend per share in respect of the year 6.08 c 5.79 c Up 5%
Net debt €220.2 m €224.5 m Down 2%
(1) Revenue including Glanbia's share of the revenue of joint ventures and
associates was €2.6 billion in 2007, up 22% on 2006. Share of results of
joint ventures and associates is an after interest and tax amount.
(2) On 3 March 2008 Glanbia announced the sale of the Pigmeat business in a
Management Buy Out. This disposal is consistent with the Group's strategy
of focusing on key growth areas of cheese and nutritional ingredients. The
exit from Pigmeat resulted in a net exceptional charge in the year of
€20.4 million. Restructuring costs relating to Yoplait production
facilities in Consumer Foods Ireland were €2.4 million during the year.
(3) Before exceptional items.
John Moloney, Group Managing Director, said:
'Glanbia had an excellent year in 2007. Operating profit pre exceptional rose
35% to €115.8 million and adjusted earnings per share were up 25% to 28.2 cent.
These results reflect the benefits of the strategic investment programmes
implemented over recent years and the Group's spread of businesses, against a
backdrop of positive global dairy markets. The driver was the strong performance
of our largest division, Food Ingredients & Nutritionals. This division
delivered with good volumes, improvements in operational efficiency and solid
growth in margins.
Overall, our growth strategy is delivering. We are confident of another good
performance this year and the Group is on target for double digit growth in
2008. More importantly, Glanbia continues to successfully develop a strategic
international presence in cheese and nutritional ingredients. This, together
with strong Irish operations, is positive for sustained high growth into the
future.'
2007 Results
Results for the year ended 29 December 2007
Growth strategy
Glanbia's vision is to be a world leader in international cheese and nutritional
ingredients. Realisation of this vision is through a clear growth strategy,
which has transformed the Group in recent years and created a good spread of
Irish and international businesses in key markets and sectors.
Since 2004, Glanbia has invested significantly to support its growth strategy
with €293 million invested in acquisition and development capital expenditure.
During the same period the Group's portfolio of businesses has been reshaped
with disposals releasing €200 million for investment into higher growth areas.
The main focus has been on growing international operations, with over 90% of
the investment allocated to this segment in 2006 and 2007.
Operations review
Glanbia has a strong position in key food markets and sectors around the world
and an ongoing investment programme will expand operations in Ireland, China,
Nigeria and the USA further in 2008. Glanbia employs 4,000 people across three
divisions and eight business units, in 2007 the Group was supplied by over
5,500 dairy farmers and processed 4.1 billion litres of milk. Glanbia produced
over 400,000 tonnes of cheese and 260,000 tonnes of ingredients for customers
on five continents.
The Group operates in the Irish market through the Consumer Foods and the
Agribusiness & Property businesses. International markets are serviced by the
Food Ingredients & Nutritionals division and international joint ventures. Food
Ingredients Ireland is included in international activities as its products are
sold to international customers.
In 2007, including the Group's share of joint ventures and associates, Ireland
accounted for 34% of revenue and 26% of pre exceptional operating profit, while
international markets accounted for 66% of revenue and 74% of pre exceptional
operating profit.
Ireland
In 2007, revenue was down marginally in the Irish operations and overall
operating profit was lower year-on-year, as a result of the timing of recovery
in the marketplace of higher milk costs for Consumer Foods Ireland.
Consumer Foods
€'000 2007 2006 Change
This division includes: Revenue 510,782 511,022 Similar
Consumer Foods
incorporating nutritional
beverages, fresh Operating profit 17,834 24,525 Down 27%
dairy products and pre exceptional
cheese, soups and spreads.
On 3 March 2008, Glanbia Operating margin 3.5% 4.8% Down 130 bps
announced the sale of the pre exceptional
Pigmeat business.
Revenue in this division declined to €510.8 million (2006:€511.0 million).
Operating profit decreased by 27% (€6.7 million) to €17.8 million
(2006: €24.5 million) and the operating margin decreased to 3.5%. The decline
in the operating profit and margin was driven by the reduced performance of
Consumer Foods Ireland.
Consumer Foods Ireland
Consumer Foods Ireland had a challenging year. While revenues, profits and
margins were stable in the first half of the year the lag in recovery of higher
milk cost impacted performance in the nutritional beverages business in the
second half and for the full year overall. As a result, in 2007, operating
profit and operating margin are below 2006.
Nutritional beverages: Growth in this category continues to be driven by demand
for more value added nutritional beverage products, where the Avonmore brand
has the leading market position. In 2007, while the business experienced margin
pressures due to high input costs, considerable progress was made with the
launch of new products including a new family pack of Avonmore Supermilk and the
introduction of Avonmore milk shakes and low fat flavoured milks.
Fresh dairy products: This business successfully stabilised its family yogurt
position and market share in 2007 and improved its market share position in the
growing drinking yogurt category with the launch of a new smoothie range. Its
manufacturing cost base and facilities are continually under review and a net
exceptional charge of €2.4 million was incurred in 2007 for the
further rationalisation of the Yoplait production plant.
Cheese, soups and spreads: In this segment, Glanbia benefited from new products
and packaging innovations to provide customers with more convenient choices and
healthier options, including new Slimline and Super cheese products. Both
natural cheeses and fresh soups grew their overall market shares.
Outlook: Initiatives in place to recover the cost increases experienced in 2007
provide a solid base for improvement in this business going forward. Continued
investment to support our brand positions and disciplined cost management will
further underpin a better result from this business in 2008.
Pigmeat
The performance of Glanbia Meats was neutral in 2007 when compared with 2006.
Glanbia announced the sale of the Pigmeat business in March 2008 and the exit
created a net exceptional charge of €20.4 million.
Agribusiness & Property
€'000 2007 2006 Change
This division includes:
Agribusiness, which is the Revenue 292,581 264,492 Up 11%
key linkage with the Group's
Irish farmer supply base; Operating profit 12,806 16,876 Down 24%
and Property, which has pre exceptional
responsibility for the
maximisation of value from Operating margin 3.1% 3.7% Down 60 bps
the Group's property pre exceptional*
portfolio.
*Note: operating margin excludes Property
Revenue in this division was up 11% to €292.6 million (2006:€264.5 million)
driven by volume growth and pricing in Agribusiness. Operating profit was down
24% (€4.1 million) to €12.8 million (2006: €16.9 million) due to a reduction in
property disposals in the year relative to 2006.
Agribusiness
Results from Agribusiness in 2007 were broadly in line with 2006. This business
unit performed well in its core feed and fertiliser markets and continued to
rationalise and reinvest to ensure a cost effective and efficient supply chain.
The Agribusiness retail strategy, under the Countrylife format, is making
progress with twelve branches redeveloped to date. These businesses are
performing as planned and further investment is scheduled in 2008.
Outlook
Agribusiness continues to evolve to meet the changing needs of its customer base.
There is a positive outlook for key farming sectors, including dairy and cereals,
which underpins an expected satisfactory performance in 2008.
Property
The operating profit of the property business was lower in 2007 than 2006 due to
the timing of property disposals. Glanbia has a pipeline of potential property
transactions which are expected to be completed at a steady pace over the medium
term.
International
International operations gained momentum in 2007 with strong revenue, profit and
margin growth. These businesses delivered good organic growth and margin
expansion, against a backdrop of favourable market conditions.
Food Ingredients and Nutritionals
€'000 2007 2006 Change
This division produces
cheese, butter, casein Revenue 1,403,204 1,077,913 Up 30%
and protein ingredients
for international
customers at processing Operating profit 85,194 44,166 Up 93%
facilities in Ireland pre exceptional
and the USA. It also
includes the Group's Operating margin 6.1% 4.1% Up 200 bps
global nutritional pre exceptional
business, with
production locations in
the UK, Germany, USA,
Canada and China.
Revenue increased 30% to €1.4 billion (2006: €1.1 billion) primarily due to
higher global dairy markets in 2007. Operating profit was up 93% to
€85.2 million (2006: €44.2 million) while margins grew strongly, by 200 basis
points to 6.1%. The operating profit and margin growth was due to a good
performance from the USA ingredients business, an increased contribution
from the higher margin Nutritionals business and a recovery of margins in the
Food Ingredients Ireland business to their historic levels.
Food Ingredients Ireland
2007 was a positive year for both producers and processors in the Irish dairy
industry. Favourable market conditions including increased global demand for
dairy products drove prices to record levels during the year. These market
conditions enabled the business to restore margins to historic levels and
deliver significant benefits to milk suppliers. The strategy for this business
continues to be to maximise returns from its raw material inputs, through a
focus on dairy ingredient solutions. Aided by capital funding from the Irish
Department of Agriculture, Fisheries & Food and Enterprise Ireland, secured in
2007, the business is progressing a programme of investment in additional value
added dairy products in the cheese and advanced ingredients areas.
Outlook
Global dairy markets were volatile in the latter part of 2007 having fallen back
from a historic peak achieved during the year. The current long term outlook is
positive, with demand growth forecast to outstrip supply during the period and,
while short term volatility is anticipated, pricing is expected to remain above
historical averages. Food Ingredients Ireland continues to focus on operational
excellence and is well placed within its market environment context to
sustain performance into 2008.
Food Ingredients USA
Strong US cheese and global whey markets in 2007 drove good revenue growth in
Food Ingredients USA. Demand for American style cheddar cheese was up during the
year and production output was expanded to meet this growing market. As the
number one supplier of American style cheese, this business continues to
increase its relevance with initiatives such as the production of organic
cheese, which commenced in 2007, to serve a fast growing segment of the market.
Outlook
There is a positive outlook for milk production in Idaho in 2008. Domestic
demand for American style cheese remains strong and export opportunities
continue to grow. These conditions are expected to underpin a good performance
from this business in 2008.
Nutritionals
Revenues, profits and margins grew in the Nutritionals business in 2007 driven
by strong global whey markets, good organic growth and the first full year
contribution from the 2006 Seltzer acquisition. The global nutritional market
exhibited positive growth in key sectors of weight management, sports nutrition
and infant nutrition. Glanbia continues to invest in research and development,
in both dairy and non dairy sectors, to deliver new and innovative nutritional
product solutions to customers, with a number of exciting functional ingredients
launched in 2007.
Outlook
In recent years Glanbia Nutritionals has expanded its portfolio to include a
global capability in customised nutrient vitamin and mineral premixes. This
segment of the business was strengthened by the completion of a manufacturing
facility in China in 2007. The range of ingredients solutions offered was also
expanded into Omega 3 by the acquisition, in September, of Pizzey's Milling,
an industry leading supplier of flax seed solutions. Strong organic growth is
forecast for the Nutritionals business unit in 2008.
Joint Ventures and Associates
Glanbia has three major international joint ventures; Southwest Cheese in the
USA, Glanbia Cheese in the UK and Nutricima in Nigeria. Glanbia's share of
revenue in joint ventures and associates was up 41% in 2007 as these businesses
delivered strong top line growth and good operational performances. However,
Glanbia's share of profit after tax and interest declined €1.8 million,
directly as a consequence of the performance of Glanbia Cheese, which suffered
as a result of a time lag in recovering increased milk cost in the market place.
JOINT VENTURES €'000 2007 2006 Change
& ASSOCIATES
(GLANBIA SHARE)
Glanbia has a number of
international joint Revenue(1) 372,072 262,871 Up 41%
ventures, which are an
important part of the
Group's growth Profit after interest 992 2,842 Down €1.8 m
strategy. and tax(2)
(1) Not included in Group revenue (2) Included in the income statement as share
of results of joint ventures and associates.
Southwest Cheese is the Group's joint venture in New Mexico and is one of the
largest natural cheese and high-protein whey processing plants in the world.
This business ramped up towards full capacity in 2007 and overall strong top
line growth was achieved as the business performed very well during the year.
Margins, however, were reduced as buoyant dairy markets drove raw material
input costs to a level which was not recovered in the marketplace.
Based on current market conditions, Southwest Cheese is expected to deliver an
improved performance in 2008.
Glanbia Cheese is the no.1 producer of mozzarella cheese for the European
market. The business had a difficult 2007 as the cost for its raw material milk
supply increased dramatically in line with world dairy markets. While cheese
price increases were secured as the year progressed, the time lag in price
recovery impacted performance. A better result is forecast for this
business in 2008.
Nutricima is a joint venture with PZ Cussons plc which manufactures and markets
branded dairy based consumer products for the Nigerian market. Similar to many
consumer facing businesses there were timing issues in the year in passing on
sharp raw material cost increases to consumers and this delay, together with
the need for strong marketing spend to build the Nutricima brands, offset the
impact of good top line growth in 2007. Market conditions continue to evolve and
the business is expected to make good progress in 2008. As previously announced
the construction of a second factory will commence shortly with
completion expected at the end of 2008.
Finance Review
Good organic growth, firm cost management and strong prices saw the Group
deliver a 34% increase in profit before tax pre exceptional and a 68% increase
in free cash flow. The strength of these results and good improvements in all
key performance indicators positions Glanbia well for future growth and
development opportunities.
Income statement
In 2007, revenue increased 19% to €2,206.6 million (2006:€1,853.4 million).
This revenue increase was driven by a 30% increase in revenue in the Food
Ingredients and Nutritionals division, where a combination of price and volume
growth and a full year contribution from Seltzer, acquired in October 2006,
drove a strong performance. Operating profit pre exceptional grew 35%
(€30.2 million) to €115.8 million (2006: €85.6 million). Operating margin pre
exceptional increased 60 basis points to 5.2% (2006: 4.6%).
Financing costs pre exceptional increased €3.3 million to €17.3 million
(2006: €14.0 million) due primarily to higher interest rates. Interest cover was
6.7 times in 2007, an increase from 6.1 times in 2006.
The Group's share of results of joint ventures and associates, which are post
interest and tax, amounted to €1.0 million compared with €2.8 million in 2006.
Taxation for the year amounted to a net charge of €15.8 million compared with a
net credit of €4.4 million in 2006. The 2007 pre exceptional taxation charge of
€16.5 million (2006: €8.0 million) was offset by the tax effect of the
exceptional costs of €0.6 million. The Group's pre exceptional taxation rate
increased in 2007 reflecting the increased level of international profits.
The net exceptional charge for the year amounted to €22.8 million compared with
€0.1 million in 2006. In 2007, exceptionals include €20.4 million relating to
Pigmeat operations in Ireland and €2.4 million restructuring costs in the
Consumer Foods Ireland business. The €20.4 million includes a provision of
€23.0 million relating to the Group's exit from Pigmeat operations in Ireland
and €2.6 million profit on the disposal of the Pigmeat canning operations site.
Earnings per share declined 9% to 20.4 cent (2006: 22.5 cent) due to the
exceptional items. Adjusted earnings per share increased 25% to 28.2 cent
(2006: 22.6 cent).
Balance sheet and cash flow
Net debt at the year end amounted to €220.2 million (2006:€224.5 million). In
2007 free cash flow increased €22.7 million to €56.3 million
(2006: €33.6 million). EBITDA grew by €34.9 million to €149.2 million. The Group
had capital and strategic acquisition investment of €59.5 million in the year,
over 90% of which was spend on expanding international operations. Working
capital increased by €49.1 million during the year due to higher global dairy
markets and the increased size of the Group overall.
Dividends and Annual General Meeting (AGM)
The Board is recommending a final dividend of 3.58 cent per share, compared with
a 3.41 cent per share final dividend in 2006. This brings a total dividend for
the year to 6.08 cent per share (2006: 5.79 cent per share), representing a 5%
increase. Subject to shareholder approval, dividends will be paid on Tuesday,
20 May 2008 to shareholders on the register of members as at
Friday, 25 April 2008. Irish dividend withholding tax will be deducted at the
standard rate where appropriate. The AGM will be held on Wednesday 14 May 2008
and the Annual Report post out date is Thursday 10 April 2008.
2008 outlook
Our growth strategy is delivering, with an excellent performance in 2007
achieving double digit earnings growth, a sustainable margin position and a
diversified earnings base. We are confident of another good performance this
year and Glanbia is on target to deliver further double digit earnings growth in
2008. More importantly we continue to successfully build a strategic
international presence in cheese and nutritional ingredients. This, together
with strong Irish operations, is positive for sustained high growth into the
future.
Consolidated income statement
for the year ended 29 December 2007
Pre- Pre-
exceptional Exceptional Total exceptional Exceptional Total
2007 2007 2007 2006 2006
Notes €'000 €'000 €'000 €'000 €'000 €'000
Revenue 2 2,206,567 - 2,206,567 1,853,427 - 1,853,427
Cost of sales (1,882,648) - (1,882,648) (1,596,547) - (1,596,547)
--------- --------- --------- --------- -------- ---------
Gross profit 323,919 - 323,919 256,880 - 256,880
Distribution
expenses (114,180) - (114,180) (105,724) - (105,724)
Administration
expenses 3 (93,905) (23,463) (117,368) (65,589) (12,455) (78,044)
--------- --------- --------- --------- -------- ---------
Operating
profit 115,834 (23,463) 92,371 85,567 (12,455) 73,112
Finance income 4 4,813 - 4,813 4,883 - 4,883
Finance costs 4 (22,095) - (22,095) (18,918) - (18,918)
Share of
results of
joint
ventures and
associates 992 - 992 2,842 - 2,842
--------- --------- --------- --------- -------- ---------
Profit before
taxation 99,544 (23,463) 76,081 74,374 (12,455) 61,919
Income taxes 5 (16,458) 617 (15,841) (7,970) 12,321 4,351
--------- --------- --------- --------- -------- ---------
Profit for the
year 83,086 (22,846) 60,240 66,404 (134) 66,270
--------- --------- --------- --------- -------- ---------
Attributable
to:
Equity holders 59,833 65,934
of the Parent
Minority
interests 407 336
--------- ---------
60,240 66,270
--------- ---------
Basic earnings
per share
(cent) 6 20.42 22.51
Diluted
earnings per
share (cent) 6 20.34 22.47
Consolidated statement of recognised income and expense
for the year ended 29 December 2007
2007 2006
€'000 €'000
Actuarial (loss)/gain - defined benefit schemes (4,539) 36,852
Deferred tax on actuarial loss/(gain) 1,102 (3,923)
Share of actuarial gain - joint venture 230 230
Currency translation differences (14,878) (9,401)
Fair value adjustments (net of tax)
- Group 10,733 2,367
- Joint venture (2,155) 367
------- -------
Net (expense)/income recognised directly in equity (9,507) 26,492
Profit for the year 60,240 66,270
------- -------
Total recognised income for the year 50,733 92,762
------- -------
Attributable to:
Equity holders of the Parent 50,326 92,426
Minority interest 407 336
------- -------
50,733 92,762
------- -------
Consolidated balance sheet
as at 29 December 2007
2007 2006
ASSETS Notes €'000 €'000
Non-current assets
Property, plant and equipment 298,771 335,152
Intangible assets 137,565 138,724
Investments in associates 10,729 10,933
Investments in joint ventures 50,370 58,668
Trade and other receivables 13,929 -
Deferred tax assets 21,672 23,923
Available for sale financial assets 30,089 12,527
Derivative financial instruments 763 2,095
------- -------
563,888 582,022
------- -------
Current assets
Inventories 225,057 145,158
Trade and other receivables 202,234 169,540
Derivative financial instruments 4,990 6,776
Cash and cash equivalents 159,819 259,311
------- -------
592,100 580,785
Assets in disposal group held for sale 20,304 -
------- -------
612,404 580,785
------- -------
Total assets 1,176,292 1,162,807
------- -------
EQUITY
Issued capital and reserves attributable to equity
holders of the Parent
Share capital and share premium 98,450 98,304
Other reserves 9 107,909 113,696
Retained earnings 10 21,176 (18,116)
------- -------
227,535 193,884
Minority interests 7,040 6,635
------- -------
Total equity 234,575 200,519
------- -------
LIABILITIES
Non-current liabilities
Borrowings 379,028 444,570
Derivative financial instruments 3,736 3,406
Deferred tax liabilities 37,587 38,611
Retirement benefit obligations 114,248 124,888
Provisions for other liabilities and charges 13,660 20,361
Capital grants 3,535 10,660
------- -------
551,794 642,496
------- -------
Current liabilities
Trade and other payables 336,663 257,893
Current tax liabilities 9,182 1,942
Borrowings 966 39,235
Derivative financial instruments 3,187 3,688
Provisions for other liabilities and charges 22,278 17,034
------- -------
372,276 319,792
Liabilities in disposal group held for sale 17,647 -
------- -------
389,923 319,792
------- -------
------- -------
Total liabilities 941,717 962,288
------- -------
Total equity and liabilities 1,176,292 1,162,807
------- -------
Consolidated cash flow statement
for the year ended 29 December 2007
2007 2006
Notes €'000 €'000
Cash flows from operating activities
Cash generated from operations 11 85,015 61,023
Interest received 3,015 1,000
Interest paid (17,613) (19,967)
Tax paid (5,401) (6,274)
------- -------
Net cash from operating activities 65,016 35,782
------- -------
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (17,742) (67,823)
Purchase of property, plant and equipment (51,662) (38,085)
Purchase of available for sale investments (2,000) (3,406)
Disposal of available for sale investments - 22,185
Insurance proceeds received - exit from Pigmeat 12,937 -
Repayment of loan note - 52,822
Proceeds from sale of property, plant and equipment 13,419 8,665
------- -------
Net cash used in investing activities (45,048) (25,642)
------- -------
Cash flows from financing activities
Proceeds from issue of ordinary shares 167 190
Sharesave scheme - 122
(Decrease)/increase in borrowings (84,056) 169,851
Finance lease principal payments (954) (1,077)
Dividends paid to Company's shareholders 7 (17,334) (16,472)
Loans advanced to joint ventures (9,001) (4,929)
Capital grants received 1,399 123
------- -------
Net cash (used in)/from financing activities (109,779) 147,808
------- -------
Net increase in cash and cash equivalents (89,811) 157,948
Cash and cash equivalents at the beginning of the year 259,311 104,405
Effects of exchange rate changes on cash and cash
equivalents (9,681) (3,042)
------- -------
Cash and cash equivalents at the end of the year 159,819 259,311
------- -------
Reconciliation of net cash flow to movement in net debt
2007 2006
€'000 €'000
Net increase in cash and cash equivalents (89,811) 157,948
Cash inflow/(outflow) from debt financing 85,889 (168,774)
------- -------
(3,922) (10,826)
Fair value of interest rate swaps
qualifying as fair value hedges (764) 3,978
Exchange translation adjustment on net debt 9,005 6,506
------- -------
Movement in net debt in the year 4,319 (342)
Net debt at beginning of year (224,494) (224,152)
------- -------
Net debt at end of year (220,175) (224,494)
------- -------
Net debt comprises:
2007 2006
€'000 €'000
Borrowings (379,994) (483,805)
Cash and cash equivalents 159,819 259,311
------- -------
(220,175) (224,494)
------- -------
Notes to the financial information
for the year ended 29 December 2007
1 Basis of preparation
The financial information presented in this preliminary announcement has been
prepared in accordance with EU endorsed International Financial Reporting
Standards ('IFRS'), IFRIC interpretations and these parts of the Companies Acts,
1963 to 2006 applicable to companies reporting under IFRS. The financial
information has been prepared under the historical cost convention as modified
by use of fair values for available for sale financial assets and derivative
financial instruments.
The financial information set out in this document does not constitute full
statutory financial statements but has been derived from the Group financial
statements for the year ended 29 December 2007 (referred to as the 2007
financial statements). The 2007 financial statements have been audited and
have received an unqualified audit report.
Amounts are stated in euro thousands (€'000) unless otherwise stated.
This financial information is prepared for a 52 week period ending on
29 December 2007. Comparatives are for the 52 week period ended
30 December 2006. The balance sheets for 2007 and 2006 have been drawn up as
at 29 December 2007 and 30 December 2006 respectively.
The financial statements were approved by the Board of Directors on 4 March 2008
and signed on its behalf by MJ Walsh, JJ Moloney and GJ Meagher.
2 Segment information
Primary reporting format - business segments
At 29 December 2007 the Group is organised into three main business segments:
- Consumer Foods
- Food Ingredients and Nutritionals
- Agribusiness and Property
The segment results for the year ended 29 December 2007 are as follows
Food
Ingredients Agribusiness
Consumer and and Unall
2007 Foods Nutritionals Property -ocated Group
€'000 €'000 €'000 €'000 €'000
Total gross segment
revenue 510,821 1,529,310 293,034 - 2,333,165
Inter-segment revenue (39) (126,106) (453) - (126,598)
------- -------- -------- -------- -------
Revenue 510,782 1,403,204 292,581 - 2,206,567
------- -------- -------- -------- -------
Operating profit pre
exceptional items 17,834 85,194 12,806 - 115,834
Exceptional items (23,463) - - - (23,463)
------- -------- -------- -------- -------
(5,629) 85,194 12,806 - 92,371
------- -------- -------- -------- -------
Finance income and costs (17,282)
Share of results of
joint ventures and
associates 992
-------
Profit before tax 76,081
Tax (15,841)
-------
Profit for the year 60,240
-------
The segment results for the year ended 30 December 2006 are as follows:
Food
Ingredients Agribusiness
Consumer and and Unall
2006 Foods Nutritionals Property -ocated Group
€'000 €'000 €'000 €'000 €'000
Total gross segment
revenue 511,077 1,186,890 264,492 - 1,962,459
Inter-segment revenue (55) (108,977) - - (109,032)
------- -------- -------- -------- -------
Revenue 511,022 1,077,913 264,492 - 1,853,427
------- -------- -------- -------- -------
Operating profit pre
exceptional items 24,525 44,166 16,876 - 85,567
Exceptional items (3,277) - - (9,178) (12,455)
------- -------- -------- -------- -------
21,248 44,166 16,876 (9,178) 73,112
------- -------- -------- -------- -------
Finance income and
costs (14,035)
Share of results of
joint ventures and
associates 2,842
-------
Profit before tax 61,919
Tax 4,351
-------
Profit for the year 66,270
-------
3 Exceptional items
2007 2006
Notes €'000 €'000
Exit from Pigmeat (a) (20,756) -
Restructuring cost (b) (2,707) (3,277)
The Cheese Company Holdings Limited - (9,178)
------- -------
(23,463) (12,455)
Exceptional tax credit 617 12,321
------- -------
Net exceptional item (22,846) (134)
------- -------
(a) Exit from Pigmeat - included in the exceptional charge relating to the
Group's exit from Pigmeat are the following: insurance proceeds received in
excess of the carrying value of the assets plus a provision for the loss on
disposal to the MBO team, net charge (pre-tax) €23.8 million. A gain on the
disposal of property relating to the former processing site at Ruskey of
€3.1 million was also realised during the year.
(b) Restructuring of Consumer operations. Costs include redundancy and asset
impairment charges.
4 Finance income and costs
(a) Finance income
2007 2006
€'000 €'000
Interest income 4,813 4,883
------- -------
(b) Finance costs
2007 2006
€'000 €'000
Interest expense
- Bank borrowings repayable within five years (19,084) (16,265)
- Interest cost on deferred consideration (450) -
- Finance lease costs (272) (380)
- Interest rate swaps, transfer from equity 1,401 1,169
- Interest rate swaps, fair value hedges 676 (4,242)
- Fair value adjustment of borrowings
attributable to (676) 4,242
------- -------
(18,405) (15,476)
Finance cost of preference shares (3,690) (3,442)
------- -------
Total finance costs (22,095) (18,918)
------- -------
5 Taxation
2007 2006
€'000 €'000
Irish corporation tax 7,284 3,080
Adjustments in respect of prior years (100) 238
------- -------
Current tax on income for the year 7,184 3,318
------- -------
Foreign tax 6,338 1,035
Adjustments in respect of prior years 327 (46)
------- -------
Current tax on income for the year 6,665 989
------- -------
Total current tax 13,849 4,307
Deferred tax 2,609 3,663
------- -------
Pre-exceptional tax charge 16,458 7,970
Exceptional tax credit (617) (12,321)
------- -------
15,841 (4,351)
------- -------
(i) The pre-exceptional deferred tax charge for 2007 includes €0.787 million
for the reduction in the value of the Group's UK deferred tax asset (see
(iv) below) due to the decrease in the UK corporation tax rate from 30%
to 28%, with effect from 1 April 2008.
(ii) Exit from meat processing: the sale during 2007 of the former processing
site at Ruskey resulted in an exceptional current tax charge of
€0.481 million. Tax on the insurance settlement agreed following the
destruction by fire in August 2007 of processing assets at the Edenderry
plant, and the tax effects of the Group's decision to dispose of the
Pigmeat business to its management team, resulted in an exceptional
corporation tax charge of €1.734 million and a deferred tax credit of
€2.554 million.
(iii) Also, in 2007, the restructuring provision in the Consumer Foods Ireland
resulted in a corporation tax credit of €0.240 million and a deferred tax
credit of €0.038 million.
(iv) In the prior year a deferred tax asset of €12.1 million arising from the
expected use in future years of UK tax losses, which previously had not
been recognised due to uncertainty as to recoverability, was recognised
in the 2006 financial statements. Also, in 2006, a restructuring provision
in the Pigmeat division resulted in a corporation tax credit of €0.699
million and a deferred tax charge of €0.489 million.
The tax credits in 2007 and 2006, by virtue of nature and size, have been
separately disclosed as an exceptional credit in the financial statements.
6 Earnings per share
Basic
2007 2006
€'000 €'000
Profit attributable to equity holders of
the Company 59,833 65,934
----------- -----------
Weighted average number of ordinary
shares in issue 293,012,540 292,958,667
----------- -----------
Basic earnings per share (cent per share) 20.42 22.51
----------- -----------
Diluted
2007 2006
€'000 €'000
Weighted average number of ordinary shares
in issue 293,012,540 292,958,667
Adjustments for share options 1,110,557 480,072
----------- -----------
Adjusted weighted average number of
ordinary 294,123,097 293,438,739
----------- -----------
Diluted earnings per share (cent per share) 20.34 22.47
----------- -----------
Adjusted
2007 2006
€'000 €'000
Profit attributable to equity holders of the Company 59,833 65,934
Exceptional items 22,846 134
----------- -----------
82,679 66,068
----------- -----------
Adjusted earnings per share (cent per share) 28.22 22.55
----------- -----------
Diluted adjusted earnings per share (cent per share) 28.11 22.52
----------- -----------
7 Dividends
The dividends paid in 2007 and 2006 were €17.3 million (5.91 cent per share)
and €16.5 million (5.62 cent per share) respectively. On 3 October 2007 an
interim dividend of 2.50 cent per share on the ordinary shares amounting to
€7.33 million was paid to shareholders on the register of members as at 14
September 2007. The Directors have recommended the payment of a final dividend
of 3.58 cent per share on the ordinary shares which amounts to €10.5 million.
Subject to shareholders approval this dividend will be paid on Tuesday
20 May 2008 to shareholders on the register of members as at Friday 25 April
2008, the record date. This financial information does not reflect this final
dividend payable.
8 Net debt
2007 2006
€'000 €'000
Borrowings due within one year 966 39,235
Borrowings due after one year 379,028 444,570
Less:
Cash and cash equivalents (159,819) (259,311)
------- -------
220,175 224,494
------- -------
9 Other reserves
Capital
and
mergers Currency Fair value
reserves reserve reserves Total
€'000 €'000 €'000 €'000
Balance at 31 December 2006 116,421 (7,603) 4,878 113,696
Translation differences on
foreign currency net investments - (14,878) - (14,878)
Revaluation of interest
rate swaps - loss in year - - (3,714) (3,714)
Foreign exchange contracts
- gain in year - 2,237 2,237
Transfers to income statement -
- Foreign exchange
contracts - gain in year - - (2,445) (2,445)
- Forward commodity
contracts - loss in year - - (594) (594)
- Interest rate swaps -
gain in year - - (1,401) (1,401)
Revaluation of forward
commodity contracts - gain in year - - 11 11
Revaluation of investments
- gain in year - - 17,512 17,512
Deferred tax on fair value
adjustments - - (3,028) (3,028)
Cost of share options 587 - - 587
Discount on own shares vested (74) - - (74)
-------- ------- ------- -------
Balance at 29 December 2007 116,934 (22,481) 13,456 107,909
-------- ------- ------- -------
10 Retained earnings
Retained Goodwill
earnings write-off Total
€'000 €'000 €'000
Balance at 31 December 2006 74,845 (92,961) (18,116)
Actuarial loss - defined benefit schemes (4,539) - (4,539)
Deferred tax on pension loss 1,102 - 1,102
Share of actuarial gain - joint venture 230 - 230
------- ------- -------
Net expense recognised directly in equity (3,207) - (3,207)
Profit for the year 59,833 - 59,833
------- ------- -------
Total recognised income for 2007 56,626 - 56,626
Dividends paid in 2007 (17,334) - (17,334)
------- ------- -------
Balance at 29 December 2007 114,137 (92,961) 21,176
------- ------- -------
11 Cash generated from operations
2007 2006
Group Group
€'000 €'000
Profit before tax 76,081 61,919
Development costs capitalised (1,804) (2,069)
Non-cash exceptional - exit from Pigmeat 13,706 -
Exceptional loss on The Cheese Company
Holdings Limited - 9,178
Share of results of associates and joint ventures (992) (2,842)
Depreciation 27,246 25,415
Amortisation 6,816 4,452
Cost of share options 587 199
Gain on disposal of investments - (1,541)
Pension - credit (1,026) (323)
Gain on disposal of property, plant and equipment (3,002) (7,531)
Interest income (4,813) (4,883)
Interest expense 22,095 18,918
Amortisation of government grants received (736) (4,322)
------- -------
Net profit before changes in working capital 134,158 96,570
Change in net working capital
- Increase in inventory (82,093) (2,684)
- Increase in short term receivables (36,615) (20,208)
- Increase/(decrease) in short term liabilities 70,041 (11,332)
- Decrease increase in provisions (476) (1,323)
------- -------
Cash generated from operations 85,015 61,023
------- -------
12 Statutory financial statements
The financial information in this preliminary announcement is not the statutory
financial statements of the Company, a copy of which is required to be annexed
to the Company's annual return to the Companies Registration Office. A copy of
the financial statements in respect of the financial year ended 29 December 2007
will be annexed to the Company's annual return for 2008. The auditors of the
Company have made a report, without any qualification on their audit, of the
financial statements of the Company in respect of the financial year ended
30 December 2006 and the Directors approved the financial statements of the
Company in respect of the financial year ended 29 December 2007 on 4 March 2008.
A copy of the financial statements of the Company in respect of the year ended
30 December 2006 has been annexed to the Company's annual return for 2007 to the
Companies Registration Office.'
For further information contact
Glanbia plc +353 56 777 2200
Geoff Meagher, Deputy Group Managing Director/Group Finance Director
Siobhan Talbot, Deputy Group Finance Director
Geraldine Kearney, Corporate Communications Director + 353 87 231 9430
Hogarth Partnership UK +44 207 357 9477
John Olsen / Anthony Arthur
This information is provided by RNS
The company news service from the London Stock Exchange
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