Full Year Results

RNS Number : 2705O

Glanbia PLC

04 March 2009

 



Glanbia plc

2008 Full Year Results

For further information contact

Glanbia plc  [phone]   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  [phone] John Olsen / Anthony Arthur

  Good results in 2008 with 18.5% growth in adjusted earnings per share 

 2009 earnings Expected to be in a range of LOW TO MID SINGLE DIGIT Growth

4 March 2009 - Glanbia plc ('Glanbia'), the international cheese and nutritional ingredients Group, announces its full year results for the year ended 3 January, 2009. 

2008 Full year results summary

• Operating margin pre exceptional up 80 basis points;

• Profit before tax pre exceptional up 20.8%;

• Adjusted earnings per share up 18.5%, following a 25% increase in 2007;

• International division marginally down in 2008, as a strong performance by Food Ingredients USA and Nutritionals was offset by a difficult year for Food Ingredients Ireland;

• Robust performances in Irish division, with satisfactory results from Consumer Foods and Agribusiness & Property; 

• A good year for International Joint Ventures, with a particularly strong performance from Southwest Cheese.

	2008	2007	Change
Revenue(1)	Euro2,232.2 m	Euro2,206.6 m	Up 1.0%
Operating profit pre exceptional	Euro134.1 m	Euro115.8 m	Up 15.7%
Operating margin pre exceptional	6.0%	5.2%	Up 80 bps
Net financing costs	(Euro21.1 m)	(Euro17.3 m)	Up Euro3.8 m
Share of results of Joint Ventures & Associates(1)	Euro7.3 m	Euro1.0 m	Up Euro6.3 m
Profit before tax pre exceptional	Euro120.3 m	Euro99.5 m	Up 20.8%
Taxation pre exceptional	(Euro21.5 m)	(Euro16.4 m)	Up Euro5.1 m
Profit after tax pre exceptional	Euro98.7 m	Euro83.1 m	Up 18.8%
Exceptional items(2)	(Euro19.4 m)	(Euro22.8 m)	See note
Basic earnings per share	26.76 c	20.42 c	Up 31.0%
Adjusted earnings per share(3)	35.86 c	30.25 c	Up 18.5%
Dividend per share in respect of the full year	6.51 c	6.08 c	Up 7.1%
Net debt	Euro452.1 m	Euro220.2 m	Up Euro231.9 m

• Revenue including Glanbia's share of the revenue of Joint Ventures and Associates was Euro2.6 billion for 2008, broadly similar to the same period last year. Share of results of Joint Ventures & Associates is an after interest and tax amount.

• In exceptional items Euro14.5 million relates to a rationalisation programme in Consumer Foods, Agribusiness and Food Ingredients Ireland. An exceptional charge of Euro3.9 million was incurred on the finalisation of the exit from the Pigmeat business in March 2008 and a deferred taxation charge of Euro1.0 million arose in Glanbia Cheese due to a change in UK taxation legislation.

• Before exceptional items and amortisation of intangible assets.

John Moloney, Group Managing Director, said:

'Glanbia performed well in 2008, delivering a good set of results, completing a major strategic acquisition and achieving key financial targets. All businesses, including joint ventures, performed to or better than anticipated, with the exception of Food Ingredients Ireland which suffered a sharp decline in profits and margins in 2008.

2009 will be a tough year. Global dairy markets have weakened considerably from previous high levels with the outlook for 2009 deteriorating further in the last two months. Food Ingredients Ireland will be the most challenged in this context and we expect this business to breakeven this year. Food Ingredients USA is expected to deliver a resilient performance, albeit down when compared with a strong result in 2008. Reducing farm incomes will have implications for farm input sales and as a result for revenue and profits in Agribusiness.  Consumer Foods, Nutritionals and Joint Ventures & Associates are expected to deliver robust performances. 

Based on current market conditions, the Group now expects 2009 earnings to be in a range of low to mid single digit growth. Glanbia is continuing to maximise organic growth opportunities and aggressively manage costs to sustain the business through the current challenging environment.'

Full year results

for the year ended 3 January 2009

Finance review

Income statement

Revenue grew 1.0% to Euro2,232.2 million (2007: Euro2,206.6 million). Revenue growth was positive across almost all the business, with favorable pricing, organic volume increases in Food Ingredients USA and Nutritionals and the first time contribution from Optimum Nutrition, Inc. (Optimum). Positive revenue growth was offset by a decline in revenue due to the sale of the Group's Pigmeat business in March 2008 and the effect of currency translation. Like-for-like revenue grew 8.9%.

Operating profit pre exceptional increased 15.7% to Euro134.1 million (2007: Euro115.8 million).

Operating margin pre exceptional increased 80 basis points to 6.0% (2007: 5.2%). All businesses in the Group increased margins in 2008, with the exception of Food Ingredients Ireland where the decline in global dairy markets resulted in a significant imbalance between market returns and raw material input costs. 

Profit before tax pre exceptional grew 20.8% in the year to Euro120.3 million (2007: Euro99.5 million). Like-for-like profit before tax pre exceptional grew 21.4%.

Net financing costs

Financing costs increased Euro3.8 million to Euro21.1 million (2007: Euro17.3 million) due mainly to the financing cost associated with the acquisition of Optimum. EBIT to net financing cost cover was 6.4 times in 2008 compared to 6.7 times in 2007. EBITDA to net financing cost cover was 7.9 times compared to 8.6 times in 2007. 

In 2008, the average interest rate for the Group reduced by 70 basis points to 5.1% primarily due to lower US dollar rates. The Group operates a policy of fixing a significant amount of its interest exposure with approximately 80% of the Group's net debt currently contracted at fixed interest rates for 2009 and approximately 70% contracted at fixed  interest rates for 2010.

Joint Ventures & Associates

Glanbia's share of revenue from Joint Ventures & Associates increased 4.9% to Euro370.3 million (2007: Euro353.0 million) with strong growth in Southwest Cheese. Glanbia's share of profits post interest and tax grew strongly in 2008 to Euro7.3 million (2007: Euro1.0 million). Both Southwest Cheese in the USA and Glanbia Cheese in the UK improved profitability and margins. Nutricima, the Group's Nigerian Joint Venture, consolidated its market position in 2008 but it was not possible in a developing economy to pass on all of the increases in raw material costs and as a result profits and margins were below 2007.  

Taxation

The 2008 pre exceptional tax charge increased Euro5.1 million to Euro21.5 million (2007: Euro16.4 million), reflecting growth in International profits which attract higher tax rates. The effective tax rate for the Group, excluding Joint Ventures & Associates, was 19.1% in 2008 (2007: 16.7%).

Exceptional items

In 2008, Glanbia initiated a rationalisation programme costing Euro14.5 million. This is as a result of an imperative to remain cost competitive, particularly in relation to the effect the global economic downturn is having on consumer demand. This rationalisation programme is mainly focused on Consumer Foods, Agribusiness and Food Ingredients Ireland businesses and associated costs relate primarily to redundancy. An exceptional charge of Euro3.9 million was incurred in the year on finalising the Group's exit from its Pigmeat business. A deferred taxation charge of Euro1.0 million arose in Glanbia Cheese due to a change in UK taxation legislation. Total exceptional costs for 2008 amounted to Euro19.4 million (2007: Euro22.8 million). Exceptional costs in 2007 arose due to a provision for the exit from Pigmeat and restructuring costs incurred in Consumer Foods.

Earnings per share

Basic earnings per share increased 31.0% to 26.8 cents (2007: 20.4 cents) due to higher profits and lower exceptional costs, relative to 2007. Adjusted earnings per share increased 18.5% to 35.86 cents (2007: 30.25 cents). 

Development expenditure

In August 2008 the Group completed the acquisition of Optimum for a total consideration of Euro217.9 million (US$323.0 million). This was funded from the Group's existing bank facilities. 

During the year Glanbia continued its strategic capital expenditure programme with Euro63.4 million expenditure focused mainly on Food Ingredients and Nutritionals. In the two year period since 2007 the Group has invested a total of Euro351.0 million on acquisitions and development capital expenditure. 

Cash flow

Net debt increased Euro231.9 million in the year to Euro452.1 million (2007: Euro220.2 million), mainly as a result of the acquisition of Optimum. 

The Group generated free cash flow of Euro72.4 million in 2008 (2007: Euro53.1 million). Free cash flow is after charging business sustaining capital expenditure but before acquisition costs, development capital expenditure and the payment of equity dividends.

Having completed a significant investment programme, debt reduction is a key priority. Glanbia will concentrate on the opportunities for organic growth that exists within the current business, as a prudent and conservative approach to reduce capital and operating spend is consistent with the challenging external environment.

Financing and financial flexibility

The Group has total debt facilities of Euro661.5 million, including bank facilities of Euro598.0 million and Euro63.5 million cumulative redeemable preference shares. Bank facilities are held with nine banks under bilateral arrangements with common documentation and terms. Euro30.0 million of the facilities are renewable in December 2009, Euro158.0 million in July 2012 and Euro410.0 million in July 2013.  Cumulative redeemable preference shares mature in July 2014.

Balance sheet

The equity of the Group decreased Euro6.7 million to Euro227.9 million at the end of the year (2007: Euro234.6 million).  Retained earnings in 2008 decreased Euro1.5 million as retained profits for the year of Euro78.4 million were offset by adverse reserve movements due mainly to the increase in the pension deficit. 

Pension deficit

Glanbia operates defined contribution and defined benefit pension schemes in Ireland and the UK and defined contribution schemes in the USA and other international locations. The deficit in the Group's defined benefit pension schemes increased at the year end by Euro50.2 million to Euro164.4 million (2007: Euro114.2 million). The deficit on the Irish schemes at year end amounted to Euro142.4 million and Euro22.0 million related to UK schemes. This total deficit was impacted in the year by a negative return on pension fund assets and an enhancement in the actuarial assumptions used in the calculation of the pension liabilities. 

Dividends 

The Board is recommending a final dividend of 3.76 cents per share (2007: final dividend 3.58 cents per share), an increase of 5%. This brings the total dividend for the year to 6.51 cents per share (2007: 6.08 cents per share), representing a total increase of 7.1% for the year. Subject to shareholder approval, dividends will be paid on Wednesday, 20 May 2009 to shareholders on the register of members as at Friday, 24 April 2009.  Irish withholding tax will be deducted at the standard rate where appropriate.  

Annual General Meeting (AGM)

The AGM will be held on Wednesday, 13 May 2009 in the Newpark Hotel, Kilkenny and the Annual Report will be posted on Wednesday, 8 April 2009.

Broker Announcement

Glanbia plc announces the appointment of RBS Hoare Govett as joint corporate brokers with Davy Stockbrokers with immediate effect.

Operations review

Glanbia is organised on a geographic basis by division. International activities include Food Ingredients Ireland and the USA and Global Nutritionals. Food Ingredients Ireland is included in International activities as the majority of its products are sold to international customers. The Group's Irish division includes Consumer Foods and Agribusiness & Property. Joint Ventures & Associates include the Group's three key strategic joint ventures - Southwest Cheese in the USA, Glanbia Cheese in the UK and Nutricima in Nigeria.

For the full year 2008, 71% of Group revenue(1) and 65% of Group operating profit pre exceptional(1) were generated from International businesses, 29% of Group revenue(1) and 35% of Group operating profit pre exceptional(1) were  generated in Ireland. 

(1) Share of Group including Joint Ventures and Associates 

INTERNATIONAL

Euro'000	2008	2007	Change
Revenue	1,489,185	1,403,204	Up 6.1%
Operating profit pre exceptional	82,524	85,194	Down 3.2%
Operating margin pre exceptional	5.5%	6.1%	Down 60 bps

Results for the International division were adversely affected by the performance of Food Ingredients Ireland. The decline in global dairy commodity prices lowered margins in this business as reductions in the price paid for milk lagged the decline in global dairy prices. Elsewhere in the International division, Food Ingredients USA had a strong performance with high cheese prices, good demand and very efficient production, generating record revenues and positive margin expansion. Nutritionals had a good year driven by organic volume growth, buoyant whey markets and a continued good performance from the premix business. Optimum made a first time contribution in line with expectations.

Revenue in the International division increased 6.1% by Euro86.0 million to Euro1,489.2 million (2007: Euro1,403.2 million). Operating profit pre exceptional declined 3.2% to Euro82.5 million (2007: Euro85.2 million) due to the poor performance of Food Ingredients Ireland. Operating margin pre exceptional declined 60 basis points to 5.5% (2007: 6.1%).  

Nutritionals

The Nutritionals business unit is a leading supplier of advanced technology whey proteins and fractions, flax and customised micro-nutrient, vitamin and mineral premixes. It comprises three separate businesses - Ingredient Technologies (business-to-business ingredient developer and distributor); Customised Solutions (business-to-business premix solutions provider) and Optimum Nutrition (business-to-consumer, manufacturer and marketer of nutritional supplements).  

2008 Performance

All areas in the whey business experienced growth in volume and pricing in 2008. Glanbia's position in the global premix market was strengthened in 2008 with the commissioning of a new wholly owned and operated plant in Suzhou, China. Nutritionals revenues, profits and margins grew for the year driven by organic volume growth in all businesses, positive whey markets and a first time contribution by Optimum.

2009 Outlook

A significant investment in and commitment to innovation and a full year contribution from Optimum are expected to contribute to growth in this business in 2009. Nutritionals is in a good position and has strong brands and capabilities to continue to develop a business of scale in this sector in both business-to-business and business-to-consumer markets.

  Food Ingredients USA

Food Ingredients USA processed 2.0 billion litres of milk at its two cheese plants in Idaho and sold over 204,000 tonnes of cheese. This business is also one of the world's leading manufacturers of whey-based nutritional ingredients with two whey processing plants, producing over 50,000 tonnes of whey powders. 

2008 Performance

Food Ingredients USA business delivered a strong set of results. High cheese prices and strong demand during the year resulted in record revenues. These market conditions, together with continued investment in production capabilities and efficiencies, underpinned margin improvement in 2008.  

2009 Outlook

Domestic demand for cheddar cheese is good.  However, having reached historical highs during 2008, US cheese prices reduced significantly late in the year. For 2009, despite expected volatility, cheese prices are forecast to remain above historical averages, albeit lower than 2008 average prices. Whey prices are lower year-on-year and only a marginal recovery is expected during 2009.  Therefore market conditions for this business will be more challenging this year and as a result a lower performance is expected in 2009, following a strong set of results in 2008.

Food Ingredients Ireland

Food Ingredients Ireland assembles a milk pool of 1.3 billion litres and processes it into butter, cheese, milk proteins and whey derivatives. It markets over 190,000 tonnes of dairy products and ingredients on a business-to-business basis to customers in over 40 countries. 

2008 Performance

2008 was a very challenging year for the business. Global dairy markets were volatile and prices reached historic lows. This decline in global dairy prices, particularly in the second half, led to a sharp imbalance between raw material input cost and market prices for products. As a result, while revenues remained robust, profits and margins were back significantly compared with 2007.

2009 Outlook

The market outlook for Food Ingredients Ireland in 2009 is difficult, with global dairy markets at extremely low levels. While a realignment of raw material costs and market pricing is expected, given current conditions we expect this business to breakeven this year. We continue to drive efficiency and cost improvements in the business through the rationalisation programme and other initiatives.

IRELAND

Euro'000	2008	2007	Change
Revenue	742,976	803,363	Down 7.5%
Operating profit pre exceptional	51,530	30,640	Up 68%
Operating margin pre exceptional	6.9%	3.8%	Up 310 bps

In Ireland, Consumer Foods had a satisfactory year. This compares with a very challenging 2007 when results were affected by a time lag in recovering the impact of higher costs in the marketplace. Agribusiness results were ahead of 2007 as a result of a good performance in the feed and fertilizer segments and a strong focus on cost reduction. Glanbia's Property business performed broadly in line with 2007. 

Although overall revenue declined 7.5% by Euro60.4 million to Euro743.0 million (2007: Euro803.4 million), the exit from the Group's Pigmeat business in March 2008 reduced revenue by Euro168.0 million in the year. Revenue growth was achieved in both Consumer Foods and Agribusiness.  

Operating profit pre exceptional increased 68% to Euro51.5 million (2007: Euro30.6 million) and operating margin pre exceptional grew by 310 basis points to 6.9% (2007: 3.8%). 

Consumer Foods 

Consumer Foods incorporates nutritional beverages, fresh dairy products and cheese, soups and spreads for the Irish retail market. 

2008 Performance

Consumer Foods had a satisfactory year. The marketplace became particularly challenging in the latter half of 2008 with the economic downturn affecting consumer confidence and shopping behaviour.  Despite this, Consumer Foods delivered good growth in revenue and improved its operating profit and margin position during the year, after a number of years where higher costs were not fully recovered in the marketplace.

2009 Outlook

The marketplace will remain competitive and challenging during this year. Against this backdrop the emphasis in Consumer Foods will be on delivering and promoting enhanced value to customers and in continuing to differentiate its key brands, while aggressively managing costs.  The outlook for Consumer Foods is satisfactory for 2009.

Agribusiness & Property

This division had a satisfactory year in 2008 with improved revenue, operating profit and margins.

Agribusiness

Agribusiness is engaged primarily in feed milling, grain processing and marketing and selling a range of farm inputs to the Group's large farmer supply base. Its portfolio also includes CountryLife, which is a broader retail offering.  

2008 Performance

Agribusiness had a satisfactory performance in a competitive trading environment and results for 2008 were ahead of 2007. This business unit performed well in its core feed and fertilizer 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 good progress with 14 branches redeveloped to date.

2009 Outlook

2009 will be an extremely challenging year for farmers across all sectors, with strong negative headwinds including a reduction in farm incomes and the continuing economic downturn. For the longer term, Agribusiness is positioning itself to be able to service the changing needs of farmers whilst recognising the potential created by a growing and diverse rural population.

Property

The remit of Property is to review and maximise the value of Glanbia's portfolio of properties, with a particular focus on surplus real estate. 

2008 Performance

The 2008 performance by the Property business unit was broadly in line with 2007, despite a dramatic slowdown in the property market and the lack of available credit.  

2009 Outlook

While the market will undoubtedly continue to be very difficult in 2009, there are a number of planned transactions which should support activity in the coming year. Results are expected to be broadly in line with 2008.

JOINT VENTURES AND ASSOCIATES 

Euro'000	2008	2007	Change
Revenue(1)	370,315	352,963	Up 4.9%
Profit after interest and tax(2)	7,306	992	Up Euro6.3 m

(1) Not included in Group revenue. Like-for-like revenue grew 12%  (2) Included in the income statement as share of results of joint ventures and associates

Glanbia has three principle International Joint Ventures - Southwest Cheese in the USA, Glanbia Cheese in the UK and Nutricima in Nigeria - and a number of smaller Irish based Joint Ventures and Associates.

In 2008 there was a significant improvement in the performance of Glanbia's Joint Ventures & Associates, most notably Southwest Cheese, which had an excellent year. Glanbia Cheese achieved margin growth despite a challenging market in 2008. However, Nutricima had a difficult year, where, despite volume growth and increased brand awareness, it was not possible to pass on the full extent of the significant increases in raw material commodity prices. As a result, Nutricima's profits and margins were behind 2007.  

Glanbia's share of revenue of Joint Ventures & Associates grew 4.9% by Euro17.4 million to Euro370.3 million (2007: Euro353.0 million). Operating margin increased 290 basis points to 4.6% (2007: 1.7%). Glanbia's share of profit after tax and interest improved considerably, increasing to Euro7.3 million (2007: Euro1.0 million).  

Southwest Cheese

Southwest Cheese is located in Clovis, New Mexico, USA, and is one of the largest natural cheese and high protein whey processing plants in the world.

2008 Performance

2008 was an excellent year for Southwest Cheese and the business delivered a strong recovery in financial results for the year, compared with 2007. Output increased as planned to reach full plant capacity. Demand was favourable and operational excellence continued with strong day-to-day management of the facility.  

2009 Outlook

The outlook for Southwest Cheese is good. The people, plant and processes have proven capabilities and the markets for American Style Cheddar Cheese and high protein whey product are growing. A planned 50% expansion in production capacity is currently being finalised. 

Glanbia Cheese 

The Group has a 51% interest in Glanbia Cheese which is a Joint Venture with Leprino Foods, USA. This business is Europe's no. 1 supplier of mozzarella cheese to the foodservice and retail pizza sector.

2008 Performance

Glanbia Cheese's performance in 2008 showed a marked improvement over 2007, as the business recovered the milk cost inflation experienced in the second half of 2007. However, the external operating environment turned down in the second half of 2008 as a result of the weakness in the global economy and its detrimental knock-on effect on both consumer confidence and demand. Despite the difficult market conditions, Glanbia Cheese delivered margin growth in 2008.

2009 Outlook

Glanbia Cheese is well positioned to deal with the significant challenges anticipated in 2009. A combination of efficiency benefits and an improved sales mix underpins volume growth, which is supported by increased consumption trends in quick foodservice markets.

Nutricima

Nutricima is a 50:50 Joint Venture with PZ Cussons plc in Nigeria. This business has developed a branded product portfolio to serve all market segments including liquid, condensed and powdered milk-based product. 

2008 Performance

In 2008, Nutricima grew volumes and built on its brand awareness across all product offerings. It was a challenging year as the business continued to experience the impact of significant increases in raw material commodity prices which could not be fully passed on in the marketplace. Good operational progress continued to be made with the capacity expansion project for reconstituted evaporated milk now complete and the factory producing 'ready to drink' product is on target to be commissioned in the first half of 2009.

2009 Outlook

Nutricima is expected to make good progress in 2009, with improvements in its brand portfolio, market positions and increased top line growth forecast. Raw material commodity prices have reduced significantly and this is expected to improve margins. 

2007 to 2009 Strategic roadmap

As part of the repositioning and internationalisation of Glanbia, the Group set out key financial targets in the 2006 Annual Report. Adjusted earnings per share growth was targeted at 10% to 14% per annum. In 2008, adjusted earnings per share grew 18.5%, following a 25.0% increase in 2007. Total development expenditure in 2007 and 2008 amounted to Euro351.0 million. Earnings before interest and tax from International operations now represents almost two-thirds of total earnings reflecting the Group's significant and successful presence overseas. In a two year period the performance of Glanbia has comfortably exceeded all the Group's growth objectives for the three years 2007 to 2009.

2009 Group outlook

Glanbia performed well in 2008, delivering a good set of results, completing a major strategic acquisition and achieving key financial targets. All businesses, including Joint Ventures & Associates, performed to or better than anticipated, with the exception of Food Ingredients Ireland which suffered a sharp decline in profits and margins in 2008.

2009 will be a tough year. Global dairy markets have weakened considerably from previous high levels with the outlook for 2009 deteriorating further in the last two months. Food Ingredients Ireland will be the most challenged in this context and we expect this business to breakeven this year. Food Ingredients USA is expected to deliver a resilient performance, albeit down when compared with a strong result in 2008. Reducing farm incomes will have implications for farm input sales and as a result for revenue and profits in Agribusiness. Consumer Foods, Nutritionals and Joint Ventures & Associates are expected to deliver robust performances. 

Based on current market conditions, the Group now expects 2009 earnings to be in a range of low to mid single digit growth. Glanbia is continuing to maximise organic growth opportunities and aggressively manage costs to sustain the business through the current challenging environment.

Glanbia plc

Consolidated income statement for the year ended 3 January 2009

			Pre-						Pre-
			exceptional		Exceptional		Total		exceptional		Exceptional		Total
			2008		2008		2008		2007		2007		2007
	Notes		Euro'000		Euro'000		Euro'000		Euro'000		Euro'000		Euro'000
Revenue	2		2,232,161		-		2,232,161		2,206,567		-		2,206,567
Cost of sales			(1,890,549)		(10,113)		(1,900,662)		(1,882,648)		(27,168)		(1,909,816)
Gross profit			341,612		(10,113)		331,499		323,919		(27,168)		296,751
Distribution expenses			(121,373)		(3,251)		(124,624)		(114,180)		(165)		(114,345)
Administration expenses			(86,185)		(5,939)		(92,124)		(93,905)		3,870		(90,035)
Operating profit			134,054		(19,303)		114,751		115,834		(23,463)		92,371
Finance income	4		5,590		-		5,590		4,813		-		4,813
Finance costs	4		(26,695)		-		(26,695)		(22,095)		-		(22,095)
Share of results of joint
ventures and associates			7,306		(947)		6,359		992		-		992
Profit before taxation			120,255		(20,250)		100,005		99,544		(23,463)		76,081
Income taxes	5		(21,528)		892		(20,636)		(16,458)		617		(15,841)
Profit for the year			98,727		(19,358)		79,369		83,086		(22,846)		60,240
Attributable to:
Equity holders of the Parent							78,399						59,833
Minority interests							970						407
							79,369						60,240
Basic earnings per share (cent)	6						26.76						20.42
Diluted earnings per share (cent)	6						26.63						20.34

Glanbia plc

Consolidated statement of recognised income and expense for the year ended 3 January 2009

	2008		2007
	Euro'000		Euro'000
Actuarial loss - defined benefit schemes	(68,246)		(4,539)
Deferred tax on actuarial loss	7,084		1,102
Share of actuarial (loss)/gain - joint ventures	(204)		230
Currency translation differences	17,251		(14,878)
Fair value adjustments (net of tax)
- Group	(20,841)		10,733
- Joint venture	(2,089)		(2,155)
Net expense recognised directly in equity	(67,045)		(9,507)
Profit for the year	79,369		60,240
Total recognised income for the year	12,324		50,733
Attributable to:
Equity holders of the Parent	11,354		50,326
Minority interest	970		407
	12,324		50,733

Glanbia plc

Consolidated balance sheet as at 3 January 2009

			2008		2007
ASSETS	Notes		Euro'000		Euro'000
Non-current assets
Property, plant and equipment			361,131		298,771
Intangible assets			359,212		137,565
Investments in associates			11,597		10,729
Investments in joint ventures			64,895		57,328
Trade and other receivables			11,929		6,971
Deferred tax assets			25,380		21,672
Available for sale financial assets			24,112		30,089
Derivative financial instruments			2,754		763
			861,010		563,888
Current assets
Inventories			267,422		225,057
Trade and other receivables			183,587		202,234
Derivative financial instruments			10,378		4,990
Cash and cash equivalents			132,572		159,819
			593,959		592,100
Assets in disposal group held for sale			-		20,304
			593,959		612,404
Total assets			1,454,969		1,176,292
EQUITY
Issued capital and reserves attributable to equity holders of the Parent
Share capital and share premium			97,320		98,450
Other reserves	9		102,882		107,909
Retained earnings	10		19,707		21,176
			219,909		227,535
Minority interests			8,010		7,040
Total equity			227,919		234,575
LIABILITIES
Non-current liabilities
Borrowings			569,374		379,028
Derivative financial instruments			9,248		3,736
Deferred tax liabilities			59,056		37,587
Retirement benefit obligations			164,410		114,248
Provisions for other liabilities and charges			4,899		13,660
Capital grants			12,694		3,535
			819,681		551,794
Current liabilities
Trade and other payables			351,452		336,663
Current tax liabilities			332		9,182
Borrowings			15,281		966
Derivative financial instruments			16,815		3,187
Provisions for other liabilities and charges			23,489		22,278
			407,369		372,276
Liabilities in disposal group held for sale			-		17,647
			407,369		389,923
Total liabilities			1,227,050		941,717
Total equity and liabilities			1,454,969		1,176,292

Glanbia plc

Consolidated cash flow statement for the year ended 3 January 2009

			2008		2007
	Notes		Euro'000		Euro'000
Cash flows from operating activities
Cash generated from operations	11		146,946		85,110
Interest received			7,149		3,015
Interest paid			(30,768)		(17,613)
Tax paid			(26,096)		(5,401)
Net cash from operating activities			97,231		65,111
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired			(217,942)		-
Payment of deferred consideration on acquisition of subsidiaries			(11,427)		(17,742)
Purchase of property, plant and equipment			(84,507)		(51,662)
Loans advanced to joint ventures			(12,151)		(9,001)
Disposal/(purchase) of available for sale investments			2,513		(2,000)
Disposal proceeds received - exit from Pigmeat			3,308		-
Insurance proceeds received - exit from Pigmeat			8,820		12,937
Proceeds from sale of property, plant and equipment			7,629		13,419
Net cash used in investing activities			(303,757)		(54,049)
Cash flows from financing activities
Proceeds from issue of ordinary shares			360		167
Purchase of treasury shares			(1,665)		(95)
Increase in borrowings			188,090		-
Decrease in borrowings			-		(84,056)
Finance lease principal payments			(934)		(954)
Dividends paid to Company's shareholders	7		(18,502)		(17,334)
Capital grants received			9,655		1,399
Net cash from/(used in) financing activities			177,004		(100,873)
Net decrease in cash and cash equivalents			(29,522)		(89,811)
Cash and cash equivalents at the beginning of the year			159,819		259,311
Effects of exchange rate changes on cash and cash equivalents			2,275		(9,681)
Cash and cash equivalents at the end of the year			132,572		159,819

Reconciliation of net cash flow to movement in net debt
			2008		2007
	Notes		Euro'000		Euro'000
Net decrease in cash and cash equivalents			(29,522)		(89,811)
Cash (outflow)/inflow from debt financing			(187,156)		85,889
			(216,678)		(3,922)
Fair value of interest rate swaps qualifying as fair value hedges			(5,544)		(764)
Exchange translation adjustment on net debt			(9,686)		9,005
Movement in net debt in the year			(231,908)		4,319
Net debt at beginning of year			(220,175)		(224,494)
Net debt at end of year			(452,083)		(220,175)

Net debt comprises:			2008		2007
			Euro'000		Euro'000
Borrowings			(584,655)		(379,994)
Cash and cash equivalents			132,572		159,819
	8		(452,083)		(220,175)

Glanbia plc

Notes to the financial information for the year ended 3 January 2009

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 3 January 2009 (referred to as the 2008 financial statements). The 2008 financial statements have been audited and have received an unqualified audit report.

Amounts are stated in euro thousands (Euro'000) unless otherwise stated.

This financial information is prepared for a 53 week period ending on 3 January 2009. Comparatives are for the 52 week period ended 29 December 2007. The balance sheets for 2008 and 2007 have been drawn up as at 3 January 2009 and 29 December 2007 respectively.

The financial statements were approved by the Board of Directors on 3 March 2009 and signed on its behalf by 

L Herlihy, J Moloney and G Meagher.

2    Segment information

Primary reporting format - geographic segments

The Groups internal financial system reports segment performance by two main geographic areas, Ireland and International and on this basis segment information has been restated to include Consumer Foods and Agribusiness & Property into Ireland and Food Ingredients and Nutritionals under International. The comparative for year end 29 December 2007 has been restated.

The segment results for the year ended 3 January 2009 are as follows:

	Ireland	International			Group
2008	Euro'000	Euro'000			Euro'000
Total gross segment revenue	743,061		1,630,682		2,373,743
Inter-segment revenue	(85)		(141,497)		(141,582)
Revenue	742,976		1,489,185		2,232,161
Operating profit pre exceptional items	51,530		82,524		134,054
Exceptional items	(15,548)		(3,755)		(19,303)
	35,982		78,769		114,751
Finance income and costs					(21,105)
Share of results of joint ventures and associates					6,359
Profit before tax					100,005
Tax					(20,636)
Profit for the year					79,369

The segment results for the year ended 29 December 2007 are as follows:

	Ireland	International			Group
2007	Euro'000	Euro'000			Euro'000
Total gross segment revenue	803,855		1,529,310		2,333,165
Inter-segment revenue	(492)		(126,106)		(126,598)
Revenue	803,363		1,403,204		2,206,567
Operating profit pre exceptional items	30,640		85,194		115,834
Exceptional items	(23,463)		-		(23,463)
	7,177		85,194		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

3    Exceptional items

			2008		2007
	Notes		Euro'000		Euro'000
Exit from Pigmeat	(a)		(3,332)		(20,756)
Rationalisation costs	(b)		(15,971)		(2,707)
Joint Venture - deferred tax charge	(c)		(947)
					-
			(20,250)		(23,463)
Exceptional tax credit			892		617
Net exceptional item			(19,358)		(22,846)

(a)	An exceptional charge of Euro3.3 million was incurred on the finalisation of the exit from the Pigmeat business announced in March 2008.
(b)	Euro16.0 million relates to a rationalisation programme, primarily redundancy costs, in Consumer Foods, Agribusiness and Food Ingredients Ireland
(c)	An exceptional deferred tax charge of Euro1.0 million (Group share) arises in the Group's joint venture, Glanbia Cheese Limited. This relates to a recent UK tax legislation change providing for the withdrawal of industrial building allowances

4    Finance income and costs

(a) Finance income

	2008		2007
	Euro'000		Euro'000
Interest income	5,164		4,813
Interest income on deferred consideration	426		-
Total finance income	5,590		4,813

(b) Finance costs 

	2008		2007
	Euro'000		Euro'000
Interest expense
- Bank borrowings repayable within five years	(21,471)		(19,084)
- Interest cost on deferred consideration	(22)		(450)
- Finance lease costs	(360)		(272)
- Interest rate swaps, transfer from equity	(477)		1,401
- Interest rate swaps, fair value hedges	(1,295)		676
- Fair value adjustment of borrowings attributable to interest rate risk	1,295		(676)
	(22,330)		(18,405)
Finance cost of preference shares	(4,365)		(3,690)
Total finance costs	(26,695)		(22,095)
Net finance costs	(21,105)		(17,282)

5    Taxation

	2008		2007
	Euro'000		Euro'000
Irish corporation tax	8,961		7,284
Adjustments in respect of prior years	(99)		(100)
Irish current tax on income for the year	8,862		7,184
Foreign tax	11,857		6,338
Adjustments in respect of prior years	(607)		327
Foreign current tax on income for the year	11,250		6,665
Total current tax	20,112		13,849
Deferred tax	1,416		2,609
Pre exceptional tax charge	21,528		16,458
Exceptional tax credit
- Current	(1,073)		1,975
- Deferred	181		(2,592)
	20,636		15,841

2008 Exceptional tax credit 

(i)	The rationalisation programme in 2008 resulted in an exceptional current taxation credit of Euro1.6 million
(ii)	During 2008 adjustments were made in connection with the Group's 2007 decision to exit meat processing, resulting in an exceptional current taxation charge of Euro0.5 million and deferred taxation charge of Euro0.1 million.
(iii)	Recent UK taxation legislation provided for the phased withdrawal of industrial building allowances from April 2008 (with full abolition from April 2011) resulting in a deferred tax charge of Euro0.1 million. This change in UK  tax legislation also resulted in an exceptional deferred taxation charge in the Group's UK Joint Venture, Glanbia Cheese, of which the Group's share is Euro0.9 million.

6    Earnings per share

Basic	2008		2007
	Euro'000		Euro'000
Profit attributable to equity holders of the Company	78,399		59,833
Weighted average number of ordinary shares in issue	293,018,610		293,012,540
Basic earnings per share (cent per share)	26.76		20.42

Diluted	2008		2007
	Euro'000		Euro'000
Weighted average number of ordinary shares in issue	293,018,610		293,012,540
Adjustments for share options	1,356,809		1,110,557
Adjusted weighted average number of ordinary shares	294,375,419		294,123,097
Diluted earnings per share (cent per share)	26.63		20.34

Adjusted	2008		2007
	Euro'000		Euro'000
Profit attributable to equity holders of the Company	78,399		59,833
Amortisation on intangible assets (net of tax)	7,312		5,964
Net exceptional items	19,358		22,846
	105,069		88,643
Adjusted earnings per share (cent per share)	35.86		30.25
Diluted adjusted earnings per share (cent per share)	35.69		30.14

7    Dividends 

The dividends paid in 2008 and 2007 were Euro18.5 million (6.33 cent per share) and Euro17.3 million (5.91 cent per share) respectively. On 1 October 2008 an interim dividend of 2.75 cent per share on the ordinary shares amounting to Euro8.1 million was paid to shareholders on the register of members as at Friday, 12 September 2008. The Directors have recommended the payment of a final dividend of 3.76 cent per share on the ordinary shares which amounts to Euro11.0 million. Subject to shareholders approval this dividend will be paid on Wednesday 20 May 2009 to shareholders on the register of members as at Friday, 24 April 2009, the record date. These financial statements do not reflect this final dividend.

8    Net debt

	2008		2007
	Euro'000		Euro'000
Borrowings due within one year	15,281		966
Borrowings due after one year	569,374		379,028
Less:
Cash and cash equivalents	(132,572)		(159,819)
	452,083		220,175

9    Other reserves

	Capital
	and
	merger		Currency		Fair value
	reserves		reserve		reserve		Total
	Euro'000		Euro'000		Euro'000		Euro'000
Balance at 29 December 2007	116,934		(22,481)		13,456		107,909
Translation differences on foreign currency net investments	-		17,251		-		17,251
Revaluation of interest rate swaps - loss in year	-		-		(16,508)		(16,508)
Foreign exchange contracts - loss in year	-		-		(484)		(484)
Transfers to income statement
- Foreign exchange contracts - gain in year	-		-		(342)		(342)
- Forward commodity contracts - gain in year	-		-		(11)		(11)
- Interest rate swaps - loss in year	-		-		477		477
- Sale of quoted investments - gain in year	-		-		(2,910)		(2,910)
Revaluation of forward commodity contracts - loss in year	-		-		(519)		(519)
Revaluation of available for sale investments - loss in year	-		-		(3,597)		(3,597)
Deferred tax on fair value adjustments	-		-		964		964
Cost of share options	827		-		-		827
Discount on own shares vested	(175)		-		-		(175)
Balance at 3 January 2009	117,586		(5,230)		(9,474)		102,882

10    Retained earnings

	Retained		Goodwill
	earnings		write-off		Total
	Euro'000		Euro'000		Euro'000
Balance at 29 December 2007	114,137		(92,961)		21,176
Actuarial loss - defined benefit schemes	(68,246)		-		(68,246)
Deferred tax on pension loss	7,084		-		7,084
Share of actuarial loss - joint venture	(204)		-		(204)
Net expense recognised directly in equity	(61,366)		-		(61,366)
Profit for the year	78,399		-		78,399
Total recognised income for 2008	17,033		-		17,033
Dividends paid in 2008	(18,502)		-		(18,502)
Balance at 3 January 2009	112,668		(92,961)		19,707

11    Cash generated from operations

	2008		2007
	Euro'000		Euro'000
Profit before tax	100,005		76,081
Development costs capitalised	(3,253)		(1,804)
Other movements - impairment charge	620		-
Non-cash exceptional - rationalisation/exit from Pigmeat	943		13,706
Share of results of associates and joint ventures	(6,359)		(992)
Depreciation	25,789		27,246
Amortisation	8,358		6,816
Cost of share options	827		587
Difference between pension charge and cash contributions	(13,984)		(10,971)
Gain on disposal of property, plant and equipment	(5,319)		(3,002)
Interest income	(5,590)		(4,813)
Interest expense	26,695		22,095
Amortisation of government grants received	(600)		(736)
Net profit before changes in working capital	128,132		124,213
Change in net working capital
- Increase in inventory	(20,888)		(82,093)
- Decrease/(increase) in short term receivables	27,088		(36,615)
- (Decrease)/increase in short term liabilities	(1,481)		78,744
- Increase in provisions	14,095		861
Cash generated from operations	146,946		85,110

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 3 January 2009 will be annexed to the Company's annual return for 2009. 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 29 December 2007 and the Directors approved the financial statements of the Company in respect of the financial year ended 3 January 2009 on 3 March 2009. A copy of the financial statements of the Company in respect of the year ended 29 December 2007 has been annexed to the Company's annual return for 2008 to the Companies Registration Office.

 

END

 

 

FR UUUMCWUPBPGW