Glanbia Half Year 2021 Results

RNS Number : 3737I

Glanbia PLC

12 August 2021

 

Glanbia HY 2021 results

Glanbia delivers strong first half 2021, ahead of expectations

2021 Full year guidance of 17% to 22% growth in adjusted EPS

12 August 2021 - Glanbia plc ("Glanbia", the "Group", the "Company", the "plc"), the global nutrition group, is publishing its financial results for the six month period ended 3 July 2021 ("financial half year 2021", "half year 2021", "first half of 2021", "HY 2021" or "H1 2021").

Results summary for the financial half year 2021

Glanbia delivered a performance ahead of expectations in the first half of 2021 as strong revenue growth and margin improvements delivered adjusted earnings per share ("EPS") growth of 85% on a constant currency basis (up 70.2% reported); the Group also delivered strong cash conversion in the period which has funded capital allocation towards an acquisition, increased dividend and a further share buyback programme. Full year guidance is for adjusted EPS growth of 17% to 22% (constant currency) versus the prior year.

Highlights include:

· Wholly-owned revenues of €2,042.2 million (HY 2020: €1,836.7 million), up 20.3% constant currency on prior half year (up 11.2% reported);

· Glanbia Performance Nutrition ("GPN") delivered revenue growth of 28.1% constant currency on prior half year (up 19.9% reported);

· Glanbia Nutritionals, Nutritional Solutions ("NS") delivered like-for-like volume growth of 14.9% constant currency on prior half year;

· GPN delivered EBITA pre-exceptional of €90.2 million, up 418.4% constant currency on prior half year (up 360.2% reported) driven by strong revenue growth and margin improvement;

· Glanbia Nutritionals ("GN") delivered EBITA pre-exceptional of €69.7 million, up 17.1% constant currency on prior half year (up 6.6% reported) driven by a strong performance in NS;

· Joint Ventures ("JVs") delivered pre-exceptional share of profit after tax of €29.9 million, down €1.9 million on prior half year;

· Adjusted EPS of 52.86 cent, an increase of 85% constant currency (up 70.2% reported);

· Exceptional items in the first half of 2021 resulted in a charge of €52.2m (HY 2020: €14.6m) related to GPN transformation programme and legacy pension scheme restructuring;

· Basic EPS of 27.90 cent (HY 2020: 18.73 cent), up 49.0% reported on prior half year;

· Operating cash flow of €161.4 million, up €114.2m on prior half year and a cash conversion ratio of 84.4%;

· Net debt to adjusted EBITDA ratio of 1.51 times (HY 2020 1.95 times), a reduction on prior year due to strong cash flow;

· Acquisition completed in H1 2021 of a 60% stake in LevlUp, a European direct-to-consumer (DTC) gaming nutrition brand;

· Interim dividend of 11.75 cent per share (HY 2020: 10.68 cent) recommended by the Board, an increase of 10.0% on prior year; and

· Announcing the launch of a new share buyback programme of up to €50 million.

Commenting today Siobhán Talbot, Group Managing Director, said:

"I am delighted to announce that Glanbia has delivered a very strong performance in the first half of 2021 when compared to the prior year. The dedication of our people, supply chain partners and customers as we navigated the pandemic together, has positioned Glanbia well on its growth agenda.

In the first six months of 2021 wholly-owned revenues grew by 20.3%, on a constant currency basis. This was driven by very strong demand across our GPN branded business relative to the pandemic related challenges in 2020, and our NS ingredients business, which built on a very resilient 2020 performance. This performance drove a significant improvement in profit with adjusted earnings per share ("EPS") of 52.86 cent in the period which was an increase of 85% on a constant currency basis versus the prior year. The Glanbia team has navigated the pandemic well to date keeping a clear focus on both tactical activity and key strategic initiatives. While the Group remains vigilant to the continued volatile and disruptive potential of the Covid-19 pandemic, this focused approach gives us the confidence to guide to delivery of full year 2021 adjusted EPS growth of 17% to 22% on a constant currency basis versus the prior year. 

We made strong progress on our strategic agenda in the first half with significant progress on the GPN transformation programme driving revenue and margin  growth, the acquisition of a 60% stake in LevlUp, a European gaming nutrition brand, commissioning of a $470 million JV plant in Michigan, the progression of our environmental, social and governance ("ESG") strategy, and the restructure of legacy pension liabilities to de-risk our balance sheet.

In the first half, we generated over €160 million of operating cash flow and reduced our net debt by over €100 million. As a result of this strong performance we plan to increase returns to shareholders by raising our interim dividend by 10% as well as launching a share buyback programme today of up to €50 million.

Our compelling belief has always been that consumers increasing focus on health and wellbeing positions Glanbia well for the future, given our portfolio of nutrition brands and ingredient solutions. Our focused actions to drive demand coupled with the consumer response to market reopenings in the first half of 2021 has strengthened our belief that these trends will continue to deliver long-term growth for Glanbia."

2021 financial half year results summary

Revenue progression	HY 2021 versus HY 2020
	Constant currency movement					Reported movement
	Volume	Price	Like-for-like	Acquisition	Total constant currency1	Total reported
Glanbia Performance Nutrition	22.2%	5.6%	27.8%	0.3%	28.1%	19.9%
Glanbia Nutritionals	17.0%	(1.1)%	15.9%	1.2%	17.1%	7.6%
Nutritional Solutions	14.9%	1.8%	16.7%	4.0%	20.7%	12.1%
US Cheese	18.0%	(2.4)%	15.6%	-	15.6%	5.7%
Total wholly-owned businesses	18.5%	0.9%	19.4%	0.9%	20.3%	11.2%

Revenue, EBITA and margin
		HY 2021			HY 2020
€m	Revenue	EBITA	Margin  %	Revenue	EBITA	Margin  %
Glanbia Performance Nutrition	638.4	90.2	14.1%	532.4	19.6	3.7%
Glanbia Nutritionals	1,403.8	69.7	5.0%	1,304.3	65.4	5.0%
Nutritional Solutions	434.8	56.6	13.0%	387.9	48.1	12.4%
US Cheese	969.0	13.1	1.4%	916.4	17.3	1.9%
Total wholly-owned businesses	2,042.2	159.9	7.8%	1,836.7	85.0	4.6%

Group performance			Reported	Constant
€m	HY 2021	HY 2020	change	currency change
Wholly-owned business
Revenue	2,042.2	1,836.7	+11.2%	+20.3%
EBITA2	159.9	85.0	+88.1%	+107.9%
EBITA margin	7.8%	4.6%	+320bps	+330bps
Equity accounted investees - Joint Ventures
Share of profit after tax	29.9	31.8
Total Group profit for the period (pre-exceptional)	133.5	69.9
Reported Basic Earnings Per Share	27.90c	18.73c
Adjusted Earnings Per Share	52.86c	31.05c	+70.2%	+85.0%

1.  To arrive at the constant currency change, the average exchange 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 exchange rate for the first half of 2021 was €1 = $1.204 (HY 2020: €1 = $1.102).

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

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 34 to 40.

2021 half year overview

In the first half of 2021 the Group's results were driven by a very strong performance in both the GPN and GN segments. Glanbia wholly-owned revenue was €2,042.2 million, an increase of 20.3% constant currency (up 11.2% reported). GPN revenues grew by 28.1% constant currency (up 19.9% reported) on prior year driven by a 22.2% increase in volumes, favourable pricing of 5.6% and the positive impact of the recent LevlUp acquisition of 0.3% of revenues. GPN volume growth was driven by a strong consumer response to both specific actions to drive demand as part of the GPN transformation programme and market reopenings relative to pandemic restrictions of the second quarter of 2020. GN revenues were up 17.1% constant currency (up 7.6% reported ) on prior period driven by volume increases of 17% offset by net negative pricing of 1.1%, related primarily to cheese markets, and the positive impact of the Foodarom acquisition of 1.2%. GN volume growth was strong, particularly in the non-dairy portfolio, building further on a very resilient performance in 2020.

Wholly-owned EBITA pre-exceptional was €159.9 million, up 107.9% constant currency (up 88.1% reported). GN pre-exceptional EBITA increased by 17.1% constant currency (up 6.6% reported) to €69.7 million (HY 2020: €65.4 million).

GPN pre-exceptional EBITA increased by 418.4% constant currency (up 360.2% reported) to €90.2 million (HY 2020: €19.6 million). GPN pre-exceptional EBITA margin at 14.1% (HY 2020 3.7%) was 1,040 basis points higher than prior year reported due to increased price, positive operating leverage and crystallisation of benefits from the GPN transformation programme. Positive phasing of input costs in the first half of 2021 also contributed to margin improvement and these are expected to reverse in the second half of the year. GN pre-exceptional EBITA margin was maintained at 5.0% (HY 2020: 5.0%). GN EBITA growth was driven entirely by NS which offset declines in US Cheese.

Glanbia's pre-exceptional share of profit after tax in equity accounted investees (Joint Ventures) performed as expected with profit after tax decreasing by €1.9 million to €29.9 million for the first half of 2021.

Total Group profit (pre-exceptional items) for the period was €133.5 million, up €63.6 million on prior half year.

This very strong performance in H1 2021 drove a significant improvement in adjusted EPS for the period to 52.86 cent. This was an increase on prior half year of 85.0% constant currency (up 70.2% reported).

Capital investment

Glanbia's total cash outflow investment in capital expenditure (tangible and intangible assets) was €39.7 million in the first half of 2021 (HY 2020: €29.2 million) of which €33.9 million was strategic investment. Key strategic investment included supply chain consolidation as part of the GPN transformation programme. Total capital expenditure for the year is expected to be €80 million to €90 million.

Dividend per share

As a result of the strong performance in the period, the Board is recommending an interim dividend of 11.75 cent per share (HY 2020: 10.68 cent per share) representing a 10% increase on prior year interim dividend. Glanbia's overall dividend policy remains unchanged at a target annual dividend payout ratio of between 25% and 35% of adjusted EPS. The interim dividend will be paid on 1 October 2021 to shareholders on the register of members as at 20 August 2021. Irish withholding tax will be deducted at the standard rate where appropriate.

Share buyback

Shareholders have recently given approval for the Group to pursue a share buyback programme following votes at the Company's AGM on 6 May 2021 on Resolutions 10 (purchase of own shares) and 12 (rule 37 waiver) where 99.83% of shareholders and 68.94% of Independent shareholders voted in favour respectively for the Company having the authority to execute a share buyback at its discretion. In light of the voting outcome on Resolution 12 being below 80%, Glanbia consulted with shareholders to better understand the reasons behind the vote. This consultation took place in June and July 2021 and found that the Group's shareholders were supportive of Glanbia's capital allocation strategy. As a result of the strong cash flows in the business, Glanbia is announcing today that it intends to launch a share repurchase programme of up to €50 million. The intention is to acquire Glanbia shares on the open market and subsequently cancel them. A separate announcement with further details will be made immediately prior to its formal launch. Glanbia has previously completed a successful €50 million share repurchase programme on 9 April 2021.

ESG agenda

In January 2021 the Board approved a new long term sustainability strategy across all dimensions of ESG which sets out Glanbia's commitment to positive change. Glanbia has mapped the relevant UN Sustainable Development Goals to this strategy and will follow a systems' approach that focuses on areas which can be influenced.

On the environmental pillar with the 'Pure Food + Pure Planet' strategy, Glanbia has committed to a 31% reduction in carbon emissions at all manufacturing sites under operational control by 2030 (scope 1 and 2) and to reduce scope 3 emissions from purchased goods and services by 25% per tonne of dairy product produced by 2030 (from a 2018 base year). The plc's targets under this strategy have now been validated by the Science Based Targets initiative (SBTi), the most ambitious global standard for best practice in emissions reduction.

On the social agenda, the Group has accelerated its commitment to having a more diverse and inclusive working culture, with the development of a new Group-wide diversity and inclusion strategy, to ensure that everyone has equal opportunities regardless of gender, religious belief, ethnicity, nationality or sexual orientation.

Governance changes have been implemented to support delivery and oversight of this ambitious sustainability strategy including the addition of ESG metrics for executive remuneration. During the period a new Board ESG Committee was established and a member of the Executive Leadership Team ("ELT") was nominated to oversee the delivery of the ESG strategy. Michael Patten, Group HR and Corporate Affairs Director, took on the new role of Chief ESG and Corporate Affairs Officer in June 2021. This role is a member of the Group ELT and reports to the Group Managing Director. The Group will report on progress towards meeting the recommendations of the Task Force on Climate-related Financial Disclosures ('TCFD') at full year 2021.

Board update

Following on from the appointment of the first independent Chairman of the Company on 8^th October 2020 the Board has decided that Donard Gaynor will continue as Chairman, until his successor is appointed in 2025, in order to facilitate the board composition changes announced in February 2021, which will result in the appointment of three new independent non-executive directors together with ongoing effective board renewal.

Outlook

Previously Glanbia guided full year 2021 adjusted EPS growth to be in the upper end of 6% to 12% on a constant currency basis versus prior year. As a result of the strong performance in H1 2021, Glanbia raised its expectations for the year and published updated guidance on 15 July 2021. Glanbia expects to deliver full year 2021 adjusted EPS growth of 17% to 22% on a constant currency basis versus the prior year. 

While the Group remains vigilant to the continued volatile and disruptive potential of the Covid-19 pandemic, strategic actions have enabled a strong recovery in the first half of 2021 from the comparative challenges of 2020.

The strong first half performance positions the Group well for FY 2021. While cost inflation will be a headwind for the Group in the second half of the year, in particular in GPN, price increases and margin management are expected to mitigate some of the impact and will also provide the opportunity to increase investment behind brand marketing and NS capabilities, to drive long-term sustainable growth.

Inside Information

This announcement contains inside information as set out in the paragraphs titled Share Buyback and Board update. The person responsible for arranging for the release of this announcement on behalf of Glanbia plc is Michael Horan, Company Secretary. The time and date of this announcement is, at 7am BST, 12 August 2021.

Financial half year 2021 operations review

Glanbia Performance Nutrition

			Reported	Constant currency
€m	HY 2021	HY 2020	change	change
Revenue	638.4	532.4	+19.9%	+28.1%
EBITA	90.2	19.6	+360.2%	+418.4%
EBITA margin	14.1%	3.7%	+1,040bps	+1,060bps

Commentary on percentage movements is on a constant currency basis throughout.

GPN revenue increased by 28.1% in HY 2021 versus prior year. This was driven by volume growth of 22.2% and price increase of 5.6%. Volume increase was driven by all markets as a result of strong underlying consumption trends as well as the effects of channel reopening as Covid-19 restrictions were eased during the period in most key markets. Volume growth accelerated in the second quarter as the scale of market reopening increased globally compared to the most challenged pandemic related restrictions of 2020. Price increase was driven by previous increases implemented in the second half of 2020 and focused revenue growth management. Excluding the impact of contract business, branded like-for-like revenues increased by 30.5%. The acquisition of LevlUp was completed on 31 May 2021 and contributed 0.3% revenue growth in the period.

GPN EBITA increased by 418.4% versus prior year to €90.2 million. This was driven by the strong sales growth and improved margin. Margin increase was driven by increased price, operating leverage and realisation of benefits from the GPN transformation programme. Positive phasing of input costs in the first half of 2021 also contributed to margin improvement, a timing benefit that is expected to reverse in the second half of the year as inflation trends crystallise.

GPN transformation programme

The delivery of revenue and margin enhancing initiatives under the GPN transformation programme has been a significant contributor to the result for the half year 2021. The programme was set up at the end of 2019 and has gained momentum since inception. Since 2020 the transformation initiative has been key to delivering improving margins and focused growth, which continued in the first half of 2021. The programme remains on track with key initiatives delivering to or above plan across supply chain consolidation, brand prioritisation, revenue growth management and the refocus of talent to drive the growth agenda. In the second half of the year part of the programme of margin management includes the planned execution of price increases to counter expected cost inflation. Overall, while delivering on the net margin improvement target of 200bps from the 2019 base, the crystallisation of programme benefits provides the opportunity to increase investment in brand marketing.

Americas

GPN Americas like-for-like revenues increased by 23.8% in the first half of 2021 compared to prior year. This was driven by volume growth in all channels and brands, the impact of prior year pricing decisions as well as ongoing strong revenue growth management. The ON brand had a very strong performance in the period. ON consumption¹ growth in the 12 weeks to mid-June 2021 was 30.5%. ON has benefitted from its strong position in its category, ongoing marketing investment and broad channel positioning. SlimFast brand performance was broadly in line with prior year reflecting headwinds in the diet category in Q1 in particular. SlimFast consumption¹ growth in the 12 weeks to mid-June 2021 was 6.6%. SlimFast has a strong pipeline of marketing activity and consumer engagement planned for the second half of the year supported by increased marketing investment. The think! and Amazing Grass brands also delivered strong growth in the period due to improved consumer trends.

International

GPN International, which includes direct-to-consumer (DTC), grew like-for-like revenues by 37.2% in the first half of 2021 compared to prior year. This was driven by volume growth in all regional markets and by price increases implemented in the prior year. The re-alignment, through the GPN transformation programme, of the international operating model to focus on key brands in key markets is delivering significant momentum. The second quarter was particularly strong with volumes accelerating as the quarter progressed which were related to the easing of Covid-19 related restrictions and the resumption of consumer activity and fitness routines.

LevlUp acquisition

On 31 May 2021 Glanbia completed the acquisition of a 60% stake in LevlUp GmbH ("LevlUp"), a DTC gaming nutrition brand based in Germany, for an initial consideration of €31.4m.

Operating in a high growth market, LevlUp's product portfolio offers a range of ready-to-mix powder (RTM) products to gamers and e-sports athletes through its DTC channel. LevlUp products are designed to support performance and concentration while gaming and the brand has a high level of awareness across its target consumer base. The business is highly complementary to GPN's DTC business and the investment provides GPN with a presence in the rapidly growing adjacent gaming nutrition category, expanding its reach to new consumers.

LevlUp's consumer base is largely in Germany with a growing presence in adjacent European markets. 2020 full year net revenues were approximately €19 million. Glanbia has an option to acquire and the owners have an option to sell the remaining 40% stake subject to certain performance conditions by 2025.

1.  Consumption growth is measured in North American channels and includes Online, FDMC (Food, Drug, Mass, Club) and Specialty channels. Data compiled from published external sources and Glanbia estimates to 13 June 2021.

Glanbia Nutritionals

		HY 2021			HY 2020
€m	Revenue	EBITA	Margin  %	Revenue	EBITA	Margin  %
Nutritional Solutions	434.8	56.6	13.0%	387.9	48.1	12.4%
US Cheese	969.0	13.1	1.4%	916.4	17.3	1.9%
Total Glanbia Nutritionals	1,403.8	69.7	5.0%	1,304.3	65.4	5.0%

Commentary on percentage movements is on a constant currency basis throughout.

Nutritional Solutions

			Reported	Constant currency
€m	HY 2021	HY 2020	change	change
Revenue	434.8	387.9	+12.1%	+20.7%
EBITA	56.6	48.1	+17.7%	+29.2%
EBITA margin	13.0%	12.4%	+60bps	+80bps

NS revenues increased in the first half of 2021 by 20.7% delivering a strong performance which built further on a resilient prior year comparator. This was driven by a 14.9% increase in volume, a 1.8% increase in price and the Foodarom acquisition delivering 4.0% of the revenue growth. Volume growth was driven by the continued strong demand for vitamin and mineral premixes from customers oriented to health, wellbeing and immune enhancing trends as well as mainstream food and beverage in a range of product formats. In the second quarter demand for healthy snacking solutions also increased due to improved mobility trends in North America which drove improved volume growth in dairy solutions. Price increase was driven by dairy ingredients due to stronger market trends.

The Foodarom acquisition, which closed in August 2020, is performing well and is adding key flavour technology offerings to the NS portfolio.

NS EBITA was €56.6 million, 29.2% higher than prior year due to improved revenues and margins. Margins improved versus prior year due to operating leverage and mix. NS expects some margin headwinds in the second half of the year due to the rebalancing of business mix.

US Cheese

			Reported	Constant currency
€m	HY 2021	HY 2020	change	change
Revenue	969.0	916.4	+5.7%	+15.6%
EBITA	13.1	17.3	-24.3%	-16.6%
EBITA margin	1.4%	1.9%	-50bps	-50bps

US Cheese revenue increased in the first half of 2021 by 15.6%. This was driven by an 18.0% increase in volume offset by a 2.4% decrease in price. Volume growth was related to the new joint venture plant in Michigan which completed commissioning in the period. Price decline was related to a strong prior year comparator.

US Cheese EBITA declined by 16.6% to €13.1 million in H1 2021. This was driven by a decline in margin as a result of higher operating costs in the period.

Equity accounted investees (Glanbia share)

€m	HY 2021	HY 2020	Change
Share of joint ventures' profit after tax (pre-exceptional)	29.9	31.8	(1.9)

Glanbia's principal joint ventures ("JVs") include Glanbia Ireland, Glanbia Cheese UK, Glanbia Cheese EU and MWC‐Southwest Holdings. Glanbia uses the equity

method of accounting for its joint ventures and includes its share of joint venture profit after tax in the adjusted EPS calculation.

Glanbia's share of JVs' pre-exceptional profit after tax, decreased as expected by €1.9 million to €29.9 million in the first half of 2021 as a result of reduced performance in European JVs when compared to prior year. JV performance in H2 2021 is expected to be lower than prior year as a result of strong comparators.

HALF YEAR 2021 Finance Review

Half year 2021 Group Income Statement

		HY 2021		HY 2020
€m	Pre-exceptional	Exceptional	Total	Pre-exceptional	Exceptional	Total
Revenue	2,042.2	-	2,042.2	1,836.7	-	1,836.7
Earnings before interest, tax and amortisation (EBITA)	159.9	(53.7)	106.2	85.0	(15.2)	69.8
EBITA margin	7.8%	-	5.2%	4.6%	-	3.8%
Intangible asset amortisation	(30.0)	-	(30.0)	(30.5)	-	(30.5)
Operating profit	129.9	(53.7)	76.2	54.5	(15.2)	39.3
Finance income	0.7	-	0.7	2.7	-	2.7
Finance costs	(11.5)	-	(11.5)	(14.2)	-	(14.2)
Share of results of Joint Ventures	29.9	(2.3)	27.6	31.8	(1.2)	30.6
Profit before taxation	149.0	(56.0)	93.0	74.8	(16.4)	58.4
Income taxes	(15.5)	3.8	(11.7)	(4.9)	1.8	(3.1)
Profit for the half year	133.5	(52.2)	81.3	69.9	(14.6)	55.3

Revenue

Revenue increased by 20.3% versus prior half year on a constant currency basis to €2.0 billion, an increase of 11.2% on a reported basis. GPN recorded a strong performance as revenues grew by 28.1% constant currency (up 19.9% reported) on prior period driven by a 22.2% increase in volumes, favourable pricing of 5.6% and the positive impact of the recent LevlUp acquisition of 0.3% since the comparative period. GN also recorded a strong performance with revenues up 17.1% constant currency (up 7.6% reported) on prior period driven by volume increases of 17% offset by net negative pricing of 1.1% and the positive impact of the Foodarom acquisition of 1.2%.

EBITA

EBITA before exceptional items increased by 107.9% constant currency (up 88.1% reported) to €159.9 million (HY 2020: €85.0 million).

GPN pre-exceptional EBITA increased by 418.4% constant currency (up 360.2% reported) to €90.2 million (HY 2020: €19.6 million). GPN pre-exceptional EBITA margin at 14.1% was 1,040 basis points higher than prior period. 

GN pre-exceptional EBITA increased by 17.1% constant currency (up 6.6% reported) to €69.7 million (HY 2020: €65.4 million). GN pre-exceptional EBITA margin was maintained at 5.0% (HY 2020: 5.0%).

Net finance costs

Net finance costs decreased by €0.7 million to €10.8 million (HY 2020: €11.5 million). The decrease was driven primarily by reduced average indebtedness as a result of strong trading cash flows and effective working capital management. The Group's average interest rate in HY 2021 was 3.8% (HY 2020: 3.0%) with the rate increase a temporary short-term consequence of refinancing short-term floating rate US dollar indebtedness in December 2020 ($175 million) and March 2021 ($200 million) with longer-term fixed rate indebtedness maturing in March 2028 ($100 million) and 2031 ($275 million). Post refinancing, overall average interest rate will reduce and the FY 2021 rate is anticipated to be similar to that of FY 2020. Glanbia operates a policy of fixing a significant amount of its interest exposure, with 95% of projected 2021 debt currently contracted at fixed rates.

Share of results of Joint Ventures (JVs)

The Group's pre-exceptional share of JV profits decreased by €1.9 million to €29.9 million (HY 2020: €31.8 million) in the half year. The share of results of JVs is stated after tax. JVs continue to perform in line with expectations. 

Income taxes

The half year 2021 pre-exceptional tax charge increased by €10.6 million to €15.5 million (HY 2020: €4.9 million). This represents an effective tax rate, excluding JVs, of 13.0% (HY 2020: 11.4%). The increase in the pre-exceptional tax rate is primarily driven by the improved performance and profitability across the Group and the geographic mix of those increased profits. The tax credit related to exceptional items is €3.8 million. The Group currently expects that its effective tax rate for FY 2021 will be in the range of 12% to 13%.

Exceptional items

Exceptional items incurred in the first half of 2021 resulted in a net post-tax exceptional charge of €52.2m (HY 2020: €14.6m). Details of the exceptional items incurred in the period are as follows:

€m	HY 2021	HY 2020
Organisation redesign costs (note 1)	14.8	15.2
Pension related costs (note 2)	38.9	-
Covid-19 costs (note 3)	-	3.5
Legal settlement gain (note 4)	-	(3.5)
	53.7	15.2
Exceptional tax credit	(3.8)	(1.8)
Share of results of equity accounted investees, net of tax (2021 charge: note 2; 2020 charge: note 3)	2.3	1.2
Total exceptional charge after tax	52.2	14.6

1.  Organisation redesign costs primarily relate to a fundamental reorganisation of the GPN segment which commenced in 2019. This global transformation programme, aims to realign operating and supply chain structures in support of individual businesses, sharpen focus on brands and optimise routes-to-market across non-US markets to drive greater efficiencies, improve margin and deliver top line growth. Costs incurred in 2021 to date includes people and property related costs, and professional consulting fees. This multi-year strategic programme is currently ahead of schedule and the investment phase is anticipated to conclude in 2021, with no further costs anticipated thereafter.

2.  Pension related costs relate to the restructure of legacy defined benefit pension schemes associated with the Group and joint ventures initiating a process for the ultimate buy out and wind up of these schemes. Costs incurred relate to the estimated cost of the settlement loss as a result of acquiring bulk purchase annuity policies to mirror and offset movements in known liabilities of the schemes ('buy-in' transaction), as well as related advisory and execution costs.

3.  Prior year Covid-19 costs relate to the initial costs of dealing with the Covid-19 pandemic for both the Group and its joint ventures, including the costs of implementing measures to protect people, incremental payments to front line workers during the height of the pandemic and other incidental labour related costs directly associated with the onset of this global pandemic. Similar costs were not incurred in half year 2021.

4.  Prior year legal settlement gain relates to net compensation received following the successful conclusion of a legacy case, with no similar gains in 2021. 

Profit after tax

Profit after tax for the half year was €81.3 million compared to €55.3 million in HY 2020, comprising pre-exceptional profit after tax of €133.5 million (HY 2020: €69.9 million) and exceptional charges of €52.2 million (HY 2020: €14.6 million). The €63.6 million increase in pre-exceptional profit after tax is primarily driven by the increased profitability of the GPN and GN businesses.

Earnings per share (EPS)

	HY2021	HY2020	Reported change	Constant currency change
Basic EPS	27.90c	18.73c	49.0%	+27.9%
Adjusted EPS	52.86c	31.05c	+70.2%	+85.0%

Basic EPS increased by 49.0% versus prior period, driven by period-on-period increase in pre-exceptional profitability, net of increased exceptional losses in half year 2021.

Adjusted EPS is a key performance indicator (KPI) of the Group and a key metric guided to the market. Due to the uncertainty and duration of Covid-19 in the prior year, market guidance was withdrawn during 2020 and whilst some uncertainty remains, guidance was introduced again for 2021. Adjusted EPS increased by 70.2% (85% constant currency) in the half year, primarily driven by the increased profitability of both the GPN and GN businesses. Full year 2021 adjusted EPS is expected to be in the range of 17% to 22% growth on a constant currency basis versus prior year.

Cash flow

The principal cash flow KPIs of the Group and business segments are Operating Cash Flow (OCF) and Free Cash Flow (FCF). OCF represents EBITDA of the wholly-owned businesses net of business-sustaining capital expenditure and working capital movements, excluding exceptional cash flows. FCF is calculated as the cash flow in the period before the following items: strategic capital expenditure, equity dividends paid, expenditure on share buyback, acquisition spend, proceeds received on disposal, exceptional costs paid, loans/equity invested in joint ventures, and foreign exchange movements. These metrics are used to monitor the cash conversion performance of the Group and business segments and identify available cash for strategic investment. OCF conversion is a key element of the Executive Directors and senior management remuneration. OCF and FCF half year results for the Group are outlined below.

€m	HY 2021	HY 2020
EBITDA pre-exceptional	191.2	118.2
Movement in working capital (pre-exceptional)	(24.0)	(62.0)
Business-sustaining capital expenditure	(5.8)	(9.0)
Operating cash flow	161.4	47.2
Net interest and tax paid	(30.6)	(9.1)
Dividends from equity accounted investees	17.4	17.9
Payment of lease liabilities	(9.7)	(10.4)
Other inflows/(outflows)	3.2	(2.7)
Free cash flow	141.7	42.9
Strategic capital expenditure	(33.9)	(20.2)
Dividend paid to Company shareholders	(46.4)	(47.1)
Share buyback (purchase of own shares)	(33.4)	-
Payment for acquisition of subsidiaries	(31.4)	-
Exceptional costs paid	(43.5)	(9.4)
Loans/investments in equity accounted investees	(3.5)	-
Net cash flow	(50.4)	(33.8)
Exchange translation	(9.8)	(2.8)
Cash acquired on acquisition	4.4	-
Net debt movement	(55.8)	(36.6)
Net debt at the beginning of the period	(493.9)	(614.3)
Net debt at the end of the period	(549.7)	(650.9)

Operating cash flow (OCF) was €161.4 million (HY 2020: €47.2 million) and represents a cash conversion on EBITDA of 84.4% (HY 2020: 40%) in the period. The OCF conversion target for the full year remains at 80%. The increase in OCF versus prior period was due primarily to an increase in profitability as most markets benefitted from an easing of Covid-19 restrictions and effective vaccination roll out, as well as favourable working capital movements, primarily in GPN as a result of ongoing efficiency and re-organisation efforts.

Free cash flow (FCF) was €141.7 million (HY 2020: €42.9 million), with the improvement primarily due to higher OCF, net of tax payments and other value enhancing activities. Tax outflows returned to more normalised levels following refunds of prior year overpayments received in 2020. Capital allocated for the benefit of shareholders includes regular dividend payments of €46.4 million and the completion of the €50 million share buyback programme launched in H2 2020, in the amount of €33.4 million.

Acquisition spend relates to the cost of a 60% stake in LevlUp GmbH which was acquired on 31 May 2021 and loans/equity in equity accounted investees relate to the ongoing investments in Glanbia Cheese EU, the new mozzarella cheese joint venture in Portlaoise, Ireland.

Group financing

Financing key performance indicators	HY 2021	HY 2020
Net debt: adjusted EBITDA	1.51 times	1.95 times
Adjusted EBIT: net finance cost	14.5 times	9.5 times

The Group's financial position remains strong. Net debt at the 2021 half year was €549.7 million. This is a decrease of €101.2 million from the prior half year net debt of €650.9 million. At half year 2021, Glanbia had committed debt facilities of €1.13 billion (HY 2020: €1.12 billion) with a weighted average maturity of 4.4 years. Glanbia's ability to generate cash as outlined above and available debt facilities ensures the Group has considerable capacity to finance future investments. Net debt to adjusted EBITDA was 1.51 times and interest cover was 14.5 times, both metrics remaining well within financing covenants.

Use of capital

Capital expenditure

The cash outflow relating to capital expenditure for half year 2021 amounted to €39.7 million (HY 2020: €29.2 million) which includes €5.8 million of business-sustaining capital expenditure and €33.9 million of strategic capital expenditure. Key strategic projects progressed in half year 2021 include the consolidation of GPN manufacturing sites in Chicago.

Investments in equity accounted investees

During half year 2021, a further €3.5 million was invested in Glanbia Cheese EU, the joint venture mozzarella cheese plant in Portlaoise, Ireland, bringing the total invested to €31.5 million, with a further €2.5 million committed. Commissioning is under way, and is expected to be completed during Q3, 2021.

The new cheese and whey manufacturing facility in Michigan, US which is part of the MWC-Southwest Holdings JV was fully commissioned in the period. No further investment was required in this venture during 2021. 

Pension

The Group's net pension liability under IAS 19 (revised) 'Employee Benefits', before deferred tax, decreased by €10.5 million to €18.8 million since 2 January 2021. The defined benefit pension liability is calculated by discounting the estimated future cash outflows using appropriate corporate bond rates. During the period, the company restructured UK pension schemes, crystallising a settlement loss that was more than offset by additional employer contributions and actuarial gains in the period, leading to the overall reduction in net pension liability.

Dividends

Glanbia adopts a dividend policy that includes an annual dividend payout ratio between 25% and 35% of adjusted EPS. In line with this policy the Board is recommending an interim dividend of 11.75 cent per share (HY 2020: 10.68 cent per share). The dividend will be paid on 1 October 2021 to shareholders on the register of members as at 20 August 2021. Irish withholding tax will be deducted at the standard rate where appropriate.

Share buyback

During the first half of 2021 the Group completed a share repurchase programme. In the period €33.4m was deployed to complete this programme which ran between 9 November 2020 and 9 April 2021, in total Glanbia deployed 50 million on the programme, repurchasing 4,790,502 ordinary shares. Today, Glanbia has announced the launch of another €50 million share repurchase programme in line with its capital allocation strategy.

Foreign exchange

Glanbia generates over 90% of its earnings in US dollar currency and has significant assets and liabilities denominated in US dollars. As a result, and as Glanbia's reporting currency is euro, there can be a significant impact to reported numbers arising from currency movements year-on-year and on translation of US dollar non-monetary assets and liabilities in the preparation of the half year consolidated financial statements. Commentary has been provided within the income statement on a constant currency basis to provide a better reflection of the underlying operating results in the year, as this removes the translational currency impact. To arrive at the constant currency change, the average foreign exchange rate for the current period is applied to the relevant reported result from the same period in the prior year. At the balance sheet date, primarily due to the strengthening of the US dollar compared to 2020 year end, there was a translation gain arising on the translation of non-euro denominated assets and liabilities into euro. The gain on translation of non-monetary assets and liabilities into euro is presented within other comprehensive income and amounted to €62.0 million in the half year. Period-end euro to US dollar rates were as follows:

	HY 2021	FY 2020	HY 2020
1 euro converted to US dollar	1.1823	1.2271	1.1224

Financial strategy

Glanbia's financial strategy is very much aligned with its overall strategy of ensuring the Group delivers on its key financial goals. Specific financial goals to enable this strategy include:

· Assessing both external and organic investment opportunities against a target benchmark of 12% return after tax by end of year three;

· Focusing the organisation on cash conversion through improved working capital management and disciplined business-sustaining capital expenditure, with a goal of greater than 80% cash conversion as a percentage of EBITDA;

· Leveraging the Group's activities to enable improved cost structures utilising shared services, procurement, IT and a continuous improvement mindset;

· Maintaining the capital structure of the Group within an implicit investment-grade credit profile; and

· Capital allocation policy to return capital to shareholders which includes a dividend policy with a payout ratio of between 25% and 35% and the authorisation to implement a share buyback programme.

Principal risks and uncertainties

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 operating environment, including the ongoing impact of the Covid-19 pandemic which is a factor in almost all risks to some extent. 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 54-61 of Glanbia plc's 2020 Annual Report.

The directors have considered the Group's principal risks and uncertainties, which are summarised in the risk profile table below, and have determined that the risks and uncertainties reported in Glanbia plc's 2020 Annual Report remain relevant for the remainder of the financial year, with no new principal risks identified. The risk trend for the previously highlighted Market Disruption and Economic, Industry and Political risks has reduced from increasing to stable. This is primarily due to:

· the pace of global Covid-19 vaccination and the resulting benefits to consumer mobility and business reopening; and

· a decrease in macroeconomic and global trade uncertainty, partly as a result of the improved geopolitical climate, where the potential for the introduction of further tariffs with resulting negative impacts to Glanbia's strategic growth objectives has reduced.

These risk reductions, together with the progression of the Group's key strategic projects, have helped to contribute to a very strong first half year performance. The directors have however increased the supply chain risk trend from stable to increasing as global activity increases supply chain pressures and inflation will create further headwinds across the business. 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.

	Strategic/External	Financial	Technological	Operational/Regulatory	Emerging
Risk where trend is stable	• Customer concentration • Economic, Industry and Political • Market disruption	• Taxation changes	• Digital transformation	• Health and safety • Product safety and compliance • Acquisition/Integration
Risk where trend is increasing			• Cyber security and data protection	• Supply chain • Talent management	• Climate change

As an essential service, the Group has largely been able to keep supply chains, manufacturing plants and distribution networks operating reasonably effectively during the pandemic. However, the Group continues to remain vigilant to the volatile and disruptive potential of the pandemic, particularly to those risks whose probability of occurrence/extent of impact are elevated as a result of Covid-19. The key risk factors and uncertainties with the potential to impact on the Group's financial performance in the second half of 2021 include:

· Supply chain risk - Glanbia is actively monitoring a number of supply chains and inflationary pressures including:

o  The overall impact on margins of movements in dairy pricing, particularly in whey markets, which experienced significant price increases in H1 2021 which are expected to continue into H2 2021. This may result in price increases to offset some of the increased input costs but this will be managed against the Group's ambition to continue to drive revenue growth;

o  The ability of governments and medical agencies to suppress the spread of the Covid-19 virus. This continues to be important in preventing unexpected supply chain disruptions which could result in restrictions on the importation of key raw materials and/or negative impacts on our international sales channels. The Group is holding appropriate safety stocks of core raw materials, however a prolonged impact to supply chains would have negative consequences from both a supply and pricing perspective; and

o  Labour markets are competitive, particularly in the US, and plants are operating at a high capacity. Labour inflation, together with global supply chain cost increases in transport, logistics and containers, is putting supply chains under pressure and these risks will need to be carefully navigated in H2 2021.

· Customer concentration risk - while strategically the Group aims to build strong customer relationships with major customers, material disruption with, or loss of, one or more of these customers, or a significant deterioration in commercial terms, could materially impact profitability. It can also expose the Group to credit exposure and other balance sheet risks. The Board is focused on utilising available mitigation to limit such exposures where possible. This continues to remain relevant for the remainder of 2021 as customers navigate the challenges imposed by Covid-19 restrictions on their operations.

· Market disruption risk - the risk of further waves of Covid-19 may disrupt markets reopening fully, and remaining open in 2021, and delay markets returning to pre-Covid levels particularly in the GPN International markets, distributor networks and/or the specialty channel. H2 2021 price increases driven by input cost inflation may also disrupt demand.

· Health and safety risk - a failure to maintain good health and safety practices or a significant escalation in the spread of the virus or new variants, in our core markets, may adversely impact performance. A wide range of additional measures and mitigations has been introduced as a result of the Covid-19 pandemic which build on the existing strong controls across the Group.

The Group actively manages these and all other risks (inclusive of emerging risks) through its risk management and internal control processes.

Cautionary statement

Glanbia plc (the 'Group') has made forward-looking statements in this document that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, information concerning the Group's possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words 'believe', 'develop', 'expect', 'ensure', 'arrive', 'achieve', 'anticipate', 'maintain', 'grow', 'aim', 'deliver', 'sustain', 'should' or the negative of these terms or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any forward-looking statements. The risk factors included on pages 58 to 61 of the Group's 2020 Annual Report, as well as the impact of the ongoing Covid-19 pandemic, could cause the Group's results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that the Group is unable to predict at this time or that the Group currently does not expect to have a material adverse effect on its business. These forward-looking statements are made as of the date of this document. The Group expressly disclaims any obligation to update these forward-looking statements other than as required by law. The forward-looking statements in this release do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC) Regulations 2007.

Results webcast and dial-in details

There will be a webcast and presentation to accompany this results announcement at 8.30 a.m. BST today. Please access the webcast from the Glanbia website at http://www.glanbia.com/investors/results-centre, where the presentation can also be viewed or downloaded. In addition, a dial-in facility is available using the following numbers:

Ireland	[phone]
UK	[phone]
Netherlands	[phone]
France	[phone]
Germany	[phone]
Italy	[phone]
Sweden	[phone]
USA	[phone]
Rest of the world	[phone]

The access code for all participants is: 2096514

A replay of the call will be available for 30 days approximately two hours after the call ends.

For further information contact

Glanbia plc [phone]

Mark Garvey, Group Finance Director
Liam Hennigan, Group Director Strategic Planning and Investor Relations	[phone]
Martha Kavanagh, Head of Corporate Communications	[phone]

2021 half year financial report

Responsibility statement

Each of the Directors of Glanbia plc, whose names and functions are listed on pages 65 to 68 in the Group's 2020 Annual Report, confirms that to the best of each person's knowledge and belief:

· the 2021 Half Year Financial Report is in accordance with International Accounting Standard (IAS) 34, 'Interim Financial Reporting', as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007, as amended, and the Central Bank (Investment Market Conduct) Rules 2019; and

· the 2021 Half Year Financial Report includes a fair review of:

o  important events that have occurred during the first six months of the year, and their impact on the condensed consolidated interim financial statements;

o  a description of the principal risks and uncertainties for the remaining six months of the financial year;

o  details of any related party transactions that have materially affected the Group's financial position or performance in the six months ended 3 July 2021, and material changes to related party transactions described in the Annual Report for the year ended 2 January 2021; and

o  any changes in the related parties' transactions described in the last annual report that could have a material effect on the financial position or performance of the group in the first six months of the current financial year.

On behalf of the Board

Siobhán Talbot  Mark Garvey

Group Managing Director   Group Finance Director

11 August 2021

Condensed Group Income statement

for the half year ended 3 JULY 2021

			Half year 2021				Half year 2020
	Notes	Pre-exceptional  €m	Exceptional €m (note 7)	Total €m		Pre-exceptional  €m	Exceptional €m (note 7)	Total €m
Revenue	6	2,042.2	-	2,042.2		1,836.7	-	1,836.7
Operating profit before intangible asset amortisation (earnings before interest, tax and amortisation (EBITA))	6	159.9	(53.7)	106.2		85.0	(15.2)	69.8
Intangible asset amortisation	13	(30.0)	-	(30.0)		(30.5)	-	(30.5)
Operating profit	6	129.9	(53.7)	76.2		54.5	(15.2)	39.3
Finance income	9	0.7	-	0.7		2.7	-	2.7
Finance costs	9	(11.5)	-	(11.5)		(14.2)	-	(14.2)
Share of results of equity accounted investees	4	29.9	(2.3)	27.6		31.8	(1.2)	30.6
Profit before taxation		149.0	(56.0)	93.0		74.8	(16.4)	58.4
Income taxes	10	(15.5)	3.8	(11.7)		(4.9)	1.8	(3.1)
Profit for the period		133.5	(52.2)	81.3		69.9	(14.6)	55.3
Attributable to:
Equity holders of the Company	12			81.3				55.3
Non-controlling interests (NCI)				-				-
				81.3				55.3
Earnings Per Share attributable to the equity holders of the Company
Basic Earnings Per Share (cent)	12			27.90				18.73
Diluted Earnings Per Share (cent)	12			27.81				18.71

Condensed Group Statement of comprehensive Income

for the half year ended 3 JULY 2021

	Notes	Half year 2021 €m	Half year 2020 €m
Profit for the period		81.3	55.3
Other comprehensive income
Items that will not be reclassified subsequently to the Group income statement:
Remeasurements on defined benefit plans, net of deferred tax		3.4	12.2
Share of other comprehensive income of equity accounted investees, net of deferred tax	18.2	11.2	4.9
Revaluation of equity instruments at FVOCI, net of deferred tax	18.1	(0.2)	0.2
Items that may be reclassified subsequently to the Group income statement :
Currency translation differences	18.1	62.0	(24.1)
Currency translation difference arising on net investment hedge	18.1	(3.0)	0.6
Gain/(loss) on cash flow hedges, net of deferred tax		1.8	(0.2)
Share of other comprehensive income of equity accounted investees, net of deferred tax		3.8	(9.9)
Other comprehensive income for the period, net of tax		79.0	(16.3)
Total comprehensive income for the period		160.3	39.0
Total comprehensive income attributable to:
Equity holders of the Company		160.3	39.0
Non-controlling interests (NCI)		-	-
Total comprehensive income for the period		160.3	39.0

Condensed Group Balance sheet

as at 3 JULY 2021

	Notes	3 July 2021 €m	2 January 2021 €m
ASSETS
Non-current assets
Property, plant and equipment	13	446.0	433.3
Right-of-use assets	13	91.7	90.5
Intangible assets	13	1,318.9	1,243.3
Equity accounted investees		428.7	395.9
Other financial assets		2.4	3.2
Loans to equity accounted investees		35.3	31.8
Deferred tax assets		2.2	2.4
Retirement benefit assets	8	1.9	2.6
		2,327.1	2,203.0
Current assets
Inventories		414.4	377.6
Trade and other receivables		421.2	319.2
Derivative financial instruments		2.2	1.3
Cash and cash equivalents (excluding bank overdrafts)		156.6	164.3
		994.4	862.4
Total assets		3,321.5	3,065.4
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium	17	105.3	105.3
Other reserves	18.1	194.9	126.0
Retained earnings	18.2	1,374.2	1,380.5
		1,674.4	1,611.8
Non-controlling interests (NCI)		7.8	-
Total equity		1,682.2	1,611.8
LIABILITIES
Non-current liabilities
Borrowings	14	633.3	458.4
Lease liabilities		95.5	94.4
Other payables		37.3	-
Retirement benefit obligations	8	20.7	31.9
Deferred tax liabilities		147.9	146.5
Provisions	16	3.3	3.3
		938.0	734.5
Current liabilities
Trade and other payables		547.8	441.6
Borrowings	14	73.0	199.8
Lease liabilities		16.2	15.8
Current tax liabilities		51.8	50.3
Derivative financial instruments		2.1	3.7
Provisions	16	10.4	7.9
		701.3	719.1
Total liabilities		1,639.3	1,453.6
Total equity and liabilities		3,321.5	3,065.4

Condensed Group Statement of changes in equity

For the half year ended 3 JULY 2021

	Attributable to equity holders of the Company
Half year 2021	Share capital and share premium €m (note 17)	Other  reserves €m (note 18.1)	Retained earnings €m (note 18.2)	Total €m	Non-controlling interests (NCI) €m	Total €m
Balance at 3 January 2021	105.3	126.0	1,380.5	1,611.8	-	1,611.8
Profit for the period	-	-	81.3	81.3	-	81.3
Other comprehensive income	-	64.4	14.6	79.0	-	79.0
Total comprehensive income for the period	-	64.4	95.9	160.3	-	160.3
Dividends	-	-	(46.4)	(46.4)	-	(46.4)
Purchase of own shares	-	(35.3)	-	(35.3)	-	(35.3)
Issuance of shares	0.2	-	-	0.2	-	0.2
Cancellation of own shares	(0.2)	33.6	(33.4)	-	-	-
Cost of share-based payments	-	6.2	-	6.2	-	6.2
Deferred tax on share-based payments	-	-	0.8	0.8	-	0.8
Acquisition of subsidiary with NCI (note 22)	-	-	-	-	7.8	7.8
Initial recognition of put option liability (note 22)	-	-	(23.2)	(23.2)	-	(23.2)
Balance at 3 July 2021	105.3	194.9	1,374.2	1,674.4	7.8	1,682.2

	Attributable to equity holders of the Company
Half year 2020	Share capital and share premium €m (note 17)	Other  reserves €m (note 18.1)	Retained earnings €m (note 18.2)	Total €m	Non-controlling interests €m	Total €m
Balance at 4 January 2020	105.4	269.1	1,327.4	1,701.9	-	1,701.9
Effect of adoption of IFRS 16	-	-	(13.9)	(13.9)	-	(13.9)
Balance at 5 January 2020	105.4	269.1	1,313.5	1,688.0	-	1,688.0
Profit for the period	-	-	55.3	55.3	-	55.3
Other comprehensive income	-	(33.4)	17.1	(16.3)	-	(16.3)
Total comprehensive income for the period	-	(33.4)	72.4	39.0	-	39.0
Dividends	-	-	(47.1)	(47.1)	-	(47.1)
Purchase of own shares	-	(0.9)	-	(0.9)	-	(0.9)
Cost of share-based payments	-	3.9	-	3.9	-	3.9
Transfer on exercise, vesting or expiry of share-based payments	-	(1.0)	1.0	-	-	-
Deferred tax on share-based payments	-	-	0.5	0.5	-	0.5
					-
Balance at 4 July 2020	105.4	237.7	1,340.3	1,683.4	-	1,683.4

Condensed gROUP Statement of cash flows

For the half year ended 3 JULY 2021

	Notes	Half year 2021 €m	Half year 2020 €m
Cash flows from operating activities
Cash generated from operating activities before exceptional items	20	171.8	54.4
Cash outflow related to exceptional items		(43.5)	(9.4)
Interest received		0.4	3.7
Interest paid (including leases*)		(10.6)	(15.1)
Income tax paid		(20.4)	2.6
Net cash inflow from operating activities		97.7	36.2
Cash flows from investing activities
Payment for acquisition of subsidiary		(31.4)	-
Purchase of property, plant and equipment		(25.6)	(16.2)
Purchase of intangible assets		(14.1)	(13.0)
Interest paid in relation to property, plant and equipment		-	(0.3)
Dividends received from equity accounted investees		17.4	17.9
Proceeds from disposal/redemption from FVOCI financial assets		0.5	-
Loans advanced to equity accounted investees		(3.5)	-
Net cash outflow from investing activities		(56.7)	(11.6)
Cash flows from financing activities
Purchase of own shares	18.1	(35.3)	(0.9)
Repayment of borrowings	14	(274.7)	(664.4)
Drawdown of borrowings	14	308.1	622.7
Payment of lease liabilities*		(9.7)	(10.4)
Dividends paid to Company shareholders		(46.4)	(47.1)
Net cash outflow from financing activities		(58.0)	(100.1)
Net decrease in cash and cash equivalents	14	(17.0)	(75.5)
Cash and cash equivalents at the beginning of the period		91.6	164.7
Cash and cash equivalents acquired on acquisition	14	4.4	-
Effects of exchange rate changes on cash and cash equivalents		4.6	(1.6)
Cash and cash equivalents at the end of the period		83.6	87.6

Cash and cash equivalents at the end of the period include:

		3 July 2021 €m	4 July 2020 €m
Cash and cash equivalents (excluding bank overdrafts)		156.6	147.3
Bank overdrafts	14	(73.0)	(59.7)
	14	83.6	87.6

* Payment of lease liabilities capitalised under IFRS 16 during the half year ended 3 July 2021 amounted to €11.0 million (2020 HY: €11.9 million), of which €1.3 million (2020 HY: €1.5 million) related to interest expense (note 9) paid which is presented in cash flows from operating activities.

Notes to the financial statements

For the half year ended 3 JULY 2021

 

1.  General information

Glanbia plc (the 'Company') and its subsidiaries (together the 'Group') is a leading global nutrition group with geographical presence in regions that include North America, Europe and Asia Pacific.

The Company is a public limited company incorporated and domiciled in Ireland, the number under which it is registered is 129933. The address of its registered office is Glanbia House, Kilkenny, Ireland, R95 E866. The Company is the ultimate parent company of the Group from 1 July 2020 and its shares are quoted on the Euronext Dublin and London Stock Exchange.

These condensed consolidated interim financial statements ('interim financial statements') as at, and for the period commencing 3 January 2021 and ended 3 July 2021 were approved for issue by the Board of Directors on 11 August 2021.

2.  Basis of preparation

The interim financial statements as at, and for the period commencing 3 January 2021 and ended 3 July 2021 (half year/six months) have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 as amended, the Central Bank (Investment Market Conduct) Rules 2019 and with IAS 34 'Interim Financial Reporting', as adopted by the European Union. The interim financial statements should be read in conjunction with the financial statements as at, and for the year ended 2 January 2021 (2020 Annual Report), which have been prepared in accordance with International Financial Reporting Standards (IFRS). The interim financial statements do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual report.

The interim financial statements as at, and for the period commencing 3 January 2021 and ended 3 July 2021 and, as at, and for the six months ended 4 July 2020, have neither been audited nor reviewed by the Group's auditor.

The interim financial statements have been prepared under the historical cost convention as modified by use of fair values for certain other financial assets, contingent consideration, put option liability, and derivative financial instruments.

Re-presentation

Certain comparative amounts in the Group statement of cash flows and the 'cash generated from operating activities' note have been re-presented on a basis consistent with the current period. The re-presentation is to present the cash flows on exceptional items separately. There was no impact on previously reported profit or net assets.

Statutory information

The 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 interim financial statements as at, and for the period commencing 3 January 2021 and ended 3 July 2021 have been prepared to meet our obligation under the Transparency (Directive 2004/109/EC) Regulations 2007 as amended (Statutory Instrument No. 277 of 2007);

· the interim financial statements as at, and for the period commencing 3 January 2021 and ended 3 July 2021 do not constitute the statutory financial statements of the Group and are unaudited;

· the statutory financial statements as at, and for the financial year ended 2 January 2021 will be annexed to the 2021 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.

Going concern and impact of Covid-19

Having given due regard to the considerations below, the Directors, after making appropriate enquiries, have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the interim financial statements. The Group therefore considers it appropriate to adopt the going concern basis in preparing its interim financial statements.

Globally, as we emerge from the pandemic, health, wellness and nutrition are prominent consumer trends. The Group's revenues during the first half of 2021 was driven by a strong underlying demand for Glanbia's health and wellness focused portfolio and reopening of channels and markets. Based on the Group's financial performance for the period ended 3 July 2021, the 2021 budget and strategic plan for 2022 and 2023, it is considered highly likely that the Group will continue to have significant financial headroom over the next 12 months from the date of approval of these financial statements.

At 3 July 2021, the Group had cash and cash equivalents of €156.6 million, bank overdrafts of €73.0 million, undrawn revolving committed bank facilities of €497.5 million, undrawn uncommitted bank facilities of €20.4 million renewable on an annual basis, and no material debt repayable until 2024. The amount of cash, available undrawn facilities and the maturity dates of the borrowings provide confidence that the Group will be able to meet its obligations as they fall due within the next 12 months from the approval of these financial statements.

The Group has considered the impact of Covid-19 with respect to the judgements and estimates it makes in the application of its accounting policies and the impact has been factored into the interim financial statements at 3 July 2021.

While the Group remains vigilant to the continued volatile and disruptive potential of the Covid-19 pandemic, the Group has been highly cash generative and profit making since the onset of the pandemic and is expected to remain in a strong financial position in the foreseeable future. The Group's strong financial position is evidenced by strong trading performance and operating cash flow for the first half 2021, and events during the period such as the completion of the LevlUp acquisition (note 22), the completion of the share repurchase programme that commenced in 2020, and an interim dividend recommended by the Directors (note 11).

Critical accounting judgements and estimates

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty in preparing the interim financial statements were the same as those that applied to the consolidated financial statements as at, and for the year ended 2 January 2021 other than the valuation of the contingent consideration and put option liability in relation to the LevlUp acquisition as described below.

Contingent consideration and put option liability

The Group has entered into contingent consideration and put option over NCI arrangements arising from the LevlUp acquisition (note 22). They are recognised as financial liabilities measured at fair value. These fair values are reviewed on a regular basis.

At 3 July 2021, the fair value of the put option liability and contingent consideration were €23.2 million and €7.2 million respectively. Their measurement at fair value requires assumptions to be made regarding earnings forecasts and discount rates which are used to discount the forecasts to net present value. Until the settlement/expiration of the put option liability in 2025 and the contingent consideration in 2022 and 2023, changes to the assumptions will result in changes in their carrying amounts.

The table below shows on an indicative basis the impact of possible changes in key assumptions on the carrying amounts of the put option liability and contingent consideration.

Increase/(decrease) in carrying amount				3 July  2021 €m
Put option liability
10% increase in forecast earnings				2.3
10% decrease in forecast earnings				(2.3)
Contingent consideration
10% increase in forecast earnings				3.5
10% decrease in forecast earnings				(3.2)

Foreign currency translation

The interim financial statements are presented in euro, which is the Company's functional and presentation currency.

The principal exchange rates used for the translation of results and balance sheets into euro are as follows:

		Average			Period end
1 euro =	Half year 2021	Half year 2020	Year 2020		3 July 2021	4 July 2020	2 January 2021
US dollar	1.2044	1.1019	1.1423		1.1823	1.1224	1.2271
Pound sterling	0.8677	0.8754	0.8898		0.8600	0.9012	0.8990

 

3.  Accounting policies

The methods of computation, presentation and accounting policies adopted in the preparation of the interim financial statements are consistent with those applied in the 2020 Annual Report other than those noted below. The Group's accounting policies are set out in note 2 to the financial statements in the 2020 Annual Report.

Put options over NCI

A put option that is held by NCI in a subsidiary is one where the holder of the put option can require the Group to acquire the NCI's shareholding in the subsidiary at a future date. The Group assesses whether or not the NCI continues to have a present ownership interest in the shares subject to the put option. Present ownership interest can be evidenced by NCI continuing to have a right to the receipt of dividends, or benefiting from increases in net assets while holding a voting entitlement to the shares subject to the put option.

If it is considered that the put option holders continue to have a present ownership interest, the Group recognises the NCI in the subsidiary, including an update to reflect its share of profit and losses, dividends and other changes. A put option liability is recognised based on the estimate of the fair value of the consideration to acquire the NCI shares that are subject to the put option with a corresponding debit to equity.

If the NCI does not have present ownership rights from the put option, the transaction is accounted for as if the Group had acquired the NCI at the date of entering into the put option.

Call options over NCI

If the Group has a call option over the shares held by a NCI in a subsidiary where the Group can require the NCI to sell its shareholding in the subsidiary at a future date, the call option is recognised as a derivative asset on its inception. Changes in the fair value of the derivative asset are recognised in the income statement.

Amended standards adopted in the current year

· Amendment to IFRS 16 'Covid-19-Related Rent Concessions'

· Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 'Interest Rate Benchmark Reform - Phase 2'

The amendments did not result in a material impact on the Group's results.

4.  Segment information

Pre-exceptional segment results are as follows:

Half year 2021		Glanbia Performance Nutrition €m	Glanbia Nutritionals €m	Glanbia Ireland €m	Total reportable  segments €m	All other segments and unallocated €m	Total €m
Total gross segment revenue		638.5	1,423.0	-	2,061.5	-	2,061.5
Inter-segment revenue		(0.1)	(19.2)	-	(19.3)	-	(19.3)
Revenue		638.4	1,403.8	-	2,042.2	-	2,042.2
Operating profit before intangible asset amortisation (EBITA)		90.2	69.7	-	159.9	-	159.9
Shares of results of equity accounted investees		-	-	11.1	11.1	18.8	29.9

Half year 2020
Total gross segment revenue		532.4	1,318.0	-	1,850.4	-	1,850.4
Inter-segment revenue		-	(13.7)	-	(13.7)	-	(13.7)
Revenue		532.4	1,304.3	-	1,836.7	-	1,836.7
Operating profit before intangible asset amortisation (EBITA)		19.6	65.4	-	85.0	-	85.0
Shares of results of equity accounted investees		-	-	14.5	14.5	17.3	31.8

Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax in the Group income statement.

The segment assets and liabilities are as follows:

3 July 2021		Glanbia Performance Nutrition €m	Glanbia Nutritionals €m	Glanbia Ireland €m	Total reportable  segments €m	All other segments and unallocated €m	Total €m
Segment assets		1,566.0	1,055.2	260.5	2,881.7	439.8	3,321.5
Segment liabilities		425.5	361.7	-	787.2	852.1	1,639.3

2 January 2021
Segment assets		1,481.2	943.6	246.2	2,671.0	394.4	3,065.4
Segment liabilities		321.4	344.8	-	666.2	787.4	1,453.6

Geographical information

Revenue from external customers*, and non-current assets, other than financial instruments, deferred tax assets, and retirement benefit assets attributable to the country of domicile and all foreign countries of operation for which revenue/non-current assets exceed 10% of total Group revenue/non-current assets are set out below.

	Revenue				Non-current assets
	Half year 2021 €m	Half year 2020 €m			3 July 2021 €m	2 January 2021 €m
Ireland (country of domicile)	3.7	2.6			903.1	880.4
US	1,646.2	1,516.3			1,151.9	1,101.3
Other	392.3	317.8			230.3	181.3
	2,042.2	1,836.7			2,285.3	2,163.0

Disaggregation of revenue

Revenue is disaggregated based on the Group's internal reporting structures, the primary geographical markets in which the Group operates*, the timing of revenue recognition, and channel mix as set out in the following tables:

			Half year 2021				Half year 2020
		Glanbia Performance Nutrition  m	Glanbia Nutritionals €m	Total €m		Glanbia Performance Nutrition  m	Glanbia Nutritionals €m	Total €m
Americas		434.7	-	434.7		383.9	-	383.9
International (including Direct-to-Consumer)		203.7	-	203.7		148.5	-	148.5
Nutritional Solutions		-	434.8	434.8		-	387.9	387.9
US Cheese		-	969.0	969.0		-	916.4	916.4
Total		638.4	1,403.8	2,042.2		532.4	1,304.3	1,836.7

GPN's disaggregation of revenue above reflect how GPN is managed as a result of the GPN Transformation Programme.

		Half year 2021				Half year 2020
	Glanbia Performance Nutrition €m	Glanbia Nutritionals €m	Total €m		Glanbia Performance Nutrition  m	Glanbia Nutritionals €m	Total €m
North America	439.3	1,245.0	1,684.3		389.9	1,163.3	1,553.2
Europe	117.5	61.6	179.1		102.8	47.6	150.4
Asia Pacific	63.3	70.9	134.2		34.5	80.0	114.5
LATAM	4.8	21.3	26.1		1.7	10.7	12.4
Rest of World	13.5	5.0	18.5		3.5	2.7	6.2
Total	638.4	1,403.8	2,402.2		532.4	1,304.3	1,836.7
Products transferred at point in time	638.4	1,403.8	2,042.2		532.4	1,304.3	1,836.7
Products transferred over time	-	-	-		-	-	-
Total	638.4	1,403.8	2,042.2		532.4	1,304.3	1,836.7

Glanbia Performance Nutrition	Half year 2021 €m	Half year 2020 €m
Distributor	139.8	68.5
Food, Drug, Mass, Club (FDMC)	208.0	211.6
Online	199.4	180.0
Specialty	91.2	72.3
Total	638.4	532.4

The disaggregation of revenue by channel mix is most relevant for Glanbia Performance Nutrition.

* The table relating to the allocation of revenue to geographical areas in note 4 of the 2020 Annual Report combined disclosures of information about geographical areas (IFRS 8) and disaggregation of revenue (IFRS 15). For 2021, these disclosures are presented separately to differentiate between them. Revenue from external customers is allocated to geographical areas based on the place of delivery or collection of the products sold as agreed with customers as opposed to the end use market where the product may be consumed.

5.  Seasonality

Historically prior to Covid-19, due to the seasonal nature of the retail segment into which the Glanbia Performance Nutrition (GPN) segment sells, higher revenues and operating profits were expected in the second half of the year than in the first six months. As we emerge from the pandemic this has not occurred in 2021 with strong demand in the first half. Glanbia Nutritionals revenues and operating profits, although impacted by dairy markets, are typically more evenly spread throughout the year.

The strong first half performance positions the Group to navigate expected cost inflation headwinds in the second half while also providing the opportunity to increase investment behind brand marketing and Nutritional Solutions capabilities, to drive long-term sustainable growth.

6.  Operating profit

			Half year 2021				Half year 2020
	Notes	Pre-exceptional  €m	Exceptional €m (note 7)	Total €m		Pre-exceptional  €m	Exceptional €m (note 7)	Total €m
Revenue	4	2,042.2	-	2,042.2		1,836.7	-	1,836.7
Cost of goods sold		(1,613.2)	(5.5)	(1,618.7)		(1,513.9)	-	(1,513.9)
Gross profit		429.0	(5.5)	423.5		322.8	-	322.8
Selling and distribution expenses		(175.0)	-	(175.0)		(161.1)	-	(161.1)
Administration expenses		(93.4)	(48.2)	(141.6)		(75.6)	(15.2)	(90.8)
Net impairment losses on financial assets		(0.7)	-	(0.7)		(1.1)	-	(1.1)
Operating profit before intangible asset amortisation (EBITA)	4	159.9	(53.7)	106.2		85.0	(15.2)	69.8
Intangible asset amortisation	13	(30.0)	-	(30.0)		(30.5)	-	(30.5)
Operating profit		129.9	(53.7)	76.2		54.5	(15.2)	39.3

7.  Exceptional items

	Notes	Half year 2021 €m	Half year 2020 €m
Organisation redesign costs	(a)	14.8	15.2
Pension related costs	(b)	38.9	-
Covid-19 costs	(c)	-	3.5
Legal settlement gain	(d)	-	(3.5)
		53.7	15.2
Tax credit arising from exceptional items	10	(3.8)	(1.8)
Share of results of equity accounted investees, net of tax		2.3(b)	1.2(c)
Total exceptional charge for the period		52.2	14.6

(a)  Organisation redesign costs primarily relate to a fundamental reorganisation of the GPN segment which commenced in 2019. This global transformation programme aims to realign operating and supply chain structures in support of individual businesses, sharpen focus on brands and optimise routes-to-market across non-US markets to drive greater efficiencies, improve margin and deliver top line growth. Costs incurred in 2021 to date includes people and property related costs, and professional consulting fees. This multi-year strategic programme is currently ahead of schedule and the investment phase is anticipated to conclude in 2021, with no further costs anticipated thereafter.

(b)  Pension related costs relate to the restructure of legacy defined benefit pension schemes of the Group and joint ventures initiating a process for the ultimate buy-out and wind up of these schemes (note 8). Costs incurred relate to the estimated cost of the settlement loss as a result of acquiring bulk purchase annuity policies to mirror and offset movements in known liabilities of the schemes ('buy-in' transaction), as well as related advisory and execution costs.

(c)  Prior year Covid-19 costs relate to the initial costs of dealing with the Covid-19 pandemic for both the Group and its joint ventures, including the costs of implementing measures to protect people, incremental payments to front line workers during the height of the pandemic and other incidental labour related costs directly associated with the onset of this global pandemic. Similar costs were not incurred in half year 2021.

(d)  Prior year legal settlement gain relates to net compensation received following the successful conclusion of a legacy case, with no similar gains in 2021.

8.  Retirement benefit obligations

The Group has a number of defined benefit pension plans in the Republic of Ireland ('Ireland') and the United Kingdom ('UK'). The defined benefit pension plans in Ireland and the UK are administered by independent Boards of Trustees through separate trustee controlled funds.

On 4 June 2021, the Trustee Boards of the UK pension plans completed a buy-in transaction whereby the assets of the plans were invested in bulk purchase annuity policies with a UK pension insurance specialist. The insurance policies were purchased using the existing assets of the plans and a contribution of €35.9 million from the Group. It is the intention of the Trustee Boards that the plans will move to a full buy-out as soon as practical, following which the insurance company will become responsible for the UK pension plan obligations. On completion of the buy-out, the defined benefit assets (comprising the annuity policy) and matching defined benefit obligations will be derecognised from the (condensed) Group balance sheet.

Reconciliation of the amounts recognised on the condensed Group balance sheet to net defined benefit pension plan liability:

	3 July 2021 €m	2 January 2021 €m
Retirement benefit asset	1.9	2.6
Retirement benefit obligation	(20.7)	(31.9)
Net defined benefit pension plan liability	(18.8)	(29.3)

The net liability disclosed above all relates to funded plans.

The movement in the net defined benefit pension plan liability is as follows:

	3 July 2021 €m	2 January 2021 €m
At the beginning of the period	(29.3)	(46.3)
Current service cost	(1.0)	(1.9)
Past service cost	-	(0.3)
Net interest cost	(0.1)	(0.6)
Settlement loss*	(31.4)	-
Total amount recognised in profit or loss	(32.5)	(2.8)
Remeasurements:
- Return of plan assets in excess of interest income	(5.3)	24.7
- Actuarial gain/(loss) arising from experience adjustments	0.5	(0.7)
- Actuarial loss arising from demographic adjustments	-	(0.6)
- Actuarial gain/(loss) arising from changes in financial assumptions	8.4	(14.6)
Total amount recognised in other comprehensive income	3.6	8.8
Exchange differences	(0.3)	1.0
Contributions paid/payable by the employer	39.6	10.0
Net asset attributed to the Group**	0.1	-
At the end of the period	(18.8)	(29.3)

* Included in pension related costs (note 7). As the bulk purchase annuity policies are structured to enable the plans to move to a buy-out and the intention is to proceed on that basis, the buy-in transaction was accounted for as a settlement with the estimated loss recorded in the (condensed) Group income statement. 

** Prior to the buy-in transaction, Glanbia Cheese Limited, a joint venture of the Group, and the Group were employers of the UK pension plans. As part of the buy-in transaction, liabilities and assets of Glanbia Cheese Limited related to the pension plans were attributed to the Group.

The principal assumptions used for the purposes of the actuarial valuations were as follows:

	Half year 2021				Half year 2020					Year 2020
	ROI		UK		ROI		UK		ROI			UK
Discount rate	1.10%		1.95%		0.90%		1.50%		0.70%			1.45%
Inflation rate	1.50%		2.60%-3.20%		0.70%-0.90%		1.90%-2.80%		1.10%			2.25%-2.90%
Future salary increases*	2.50%		0.00%		1.90%		0.00%		2.10%			0.00%
Future pension increases	0.00%		2.60%-3.05%		0.00%		2.00%-2.70%		0.00%			2.25%-2.80%
Mortality rates (years):
- Male - reaching 65 years of age in 20 years' time	24.1		22.2		24.0		22.0		24.0			22.1
- Female - reaching 65 years of age in 20 years' time	26.2		24.4		26.1		24.2		26.1			24.4
- Male - currently aged 65 years old	21.8		21.1		21.7		21.0		21.7			21.1
- Female - currently aged 65 years old	24.2		23.2		24.1		23.0		24.1			23.2

*The ROI defined benefit pension plans are on a career average structure therefore this assumption does not have a material impact. The UK defined benefit pension plans comprise solely pensioners and deferred pensioners.

9.  Finance income and costs

	Notes	Half year 2021 €m	Half year 2020 €m
Finance income
Interest income on loans at amortised cost to related parties		0.7	0.6
Interest income on deposits		-	1.4
Net interest income on cross currency swaps		-	0.7
Total finance income	20	0.7	2.7
Finance costs
Bank borrowing costs		(2.7)	(8.1)
Facility fees including cost amortisation		(1.0)	(1.0)
Finance cost of private placement debt		(6.4)	(3.6)
Interest expense on lease liabilities		(1.3)	(1.5)
Net interest expense on cross currency swaps		(0.1)	-
Total finance costs	20	(11.5)	(14.2)
Net finance costs		(10.8)	(11.5)

10.  Income taxes

The Group's income tax charge of €11.7 million (HY 2020: €3.1 million) net of an exceptional tax credit of €3.8 million (HY 2020: €1.8 million) (note 7) has been prepared based on the Group's best estimate of the weighted average tax rate that is expected for the full financial year.

11.  Dividends

		Half year 2021 €m	Half year 2020 €m
Equity dividends to shareholders
Final - 15.94c per ordinary share, paid on 7 May 2021 (FY 2020: 15.94c, paid on 24 April 2020)		46.5	47.2
Interim - 11.75c per ordinary share, payable on 1 October 2021 (HY 2020: 10.68c, paid on 2 October 2020)		34.2	31.6

These interim financial statements do not reflect interim dividends. There are no income tax consequences for the Company in respect of dividends proposed prior to issuance of the interim financial statements.

Of the €46.5 million (HY 2020: €47.2 million) dividends paid during the half year ended 3 July 2021, €0.1 million (HY 2020: €0.1 million) are waived in relation to own shares.

12.  Earnings per share

Basic

Basic Earnings Per Share is calculated by dividing profit after tax attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held as own shares. The weighted average number of ordinary shares in issue used in the calculation of Basic Earnings Per Share is 291,355,433 (HY 2020: 295,318,642).

	Half year 2021	Half year 2020
Profit after tax attributable to equity holders of the Company (€m)	81.3	55.3
Basic Earnings Per Share (cent)	27.90	18.73

Diluted

Diluted Earnings Per Share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares. Share options and share awards are the Company's only potential dilutive ordinary shares.

The share awards, which are performance based, are treated as contingently issuable shares, because their issue is contingent upon satisfaction of specified performance conditions, as well as the passage of time. Contingently issuable shares are included in the calculation of diluted Earnings Per Share to the extent that conditions governing exercisability have been satisfied, as if the end of the reporting period were the end of the vesting period.

	Half year 2021	Half year 2020
Weighted average number of ordinary shares in issue	291,355,433	295,318,642
Shares deemed to be issued for no consideration in respect of:
- Share awards	944,385	233,838
- Share options	-	22,410
Weighted average number of shares used in the calculation of diluted Earnings Per Share	292,299,818	295,574,890
Diluted Earnings Per Share (cent)	27.81	18.71

13.  Property, plant and equipment, right-of-use assets, intangible assets and capital commitments

Property, plant and equipment

During the six month period to 3 July 2021, there was an increase of property, plant and equipment arising from additions of €25.0 million (HY 2020: €15.6 million) and from business combinations of €0.2 million (HY 2020: nil). Exchange differences gain of €14.6 million (HY 2020: €3.6 million loss) and depreciation charges of €22.3 million (HY 2020: €23.8 million) were also recognised in the period. An impairment of €4.8 million (HY 2020: nil) was recognised in the period.

Right-of-use assets

During the six month period to 3 July 2021, there was an increase of right-of-use assets arising from additions of €9.2 million (HY 2020: €11.3 million) and from business combinations of €0.3 million (HY 2020: nil). The increase was offset by depreciation charges of €10.4 million (HY 2020: €9.4 million) and disposals of €1.3 million (HY 2020: €4.6 million). Exchange differences gain of €2.9 million (HY 2020: €0.7 million loss) were also recognised in the period. An impairment reversal of €0.5 million (HY 2020: nil) was recognised in the period.

Intangible assets

During the six month period to 3 July 2021, the Group spent €14.1 million (HY 2020: €13.0 million) in relation to software and development costs. In addition, there was an increase of €49.0 million (HY 2020: nil) of intangible assets arising from business combinations during the period. Exchange differences gain of €42.5 million (HY 2020: €8.9 million loss) and amortisation charges of €30.0 million (HY 2020: €30.5 million) were also recognised in the period.

Capital commitments

At 3 July 2021 the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to €10.9 million (FY 2020: €7.9 million) and software of €4.2 million (FY 2020: nil).

As at 3 July 2021, the Group has committed to invest €2.5 million (FY 2020: €4.1 million) cash contributions in Glanbia Cheese EU Limited, a joint venture of the Group.

14.  Borrowings

	3 July 2021 €m	2 January 2021 €m
Non-current
Bank borrowings	316.1	315.8
Private placement debt	317.2	142.6
	633.3	458.4
Current
Private placement debt	-	127.1
Bank overdrafts	73.0	72.7
	73.0	199.8
Total borrowings	706.3	658.2

€127.1 million of the current private placement debt at 2 January 2021 were repaid during the half year ended 3 July 2021. There were €169.2 million of additional private placement debt facilities (denominated in US $200.0 million) which commenced in March 2021. They mature in 2028 and 2031, and bear interest at fixed 2.49% and 2.82% nominal interest rate respectively.

The maturity profile of borrowings, and undrawn committed and uncommitted facilities is as follows:

					3 July 2021				2 January 2021
			Loans and borrowings €m	Undrawn committed facilities €m		Undrawn uncommitted facilities €m				Loans and borrowings €m	Undrawn committed facilities €m	Undrawn uncommitted facilities €m
12 months or less			73.0	-		20.4				199.8	-	20.0
Between 1 and 2 years			-	-		-				-	-	-
Between 2 and 5 years			316.1	497.5		-				315.8	484.8	-
More than 5 years			317.2	-		-				142.6	163.0	-
			706.3	497.5		20.4				658.2	647.8	20.0

Net debt is a non-IFRS measure which we provide to investors as we believe they find it useful. Net debt comprises the following:

	3 July 2021 €m	4 July 2020 €m
Bank borrowings and private placement debt	633.3	738.5
Cash and cash equivalents net of bank overdrafts	(83.6)	(87.6)
	549.7	650.9

Net debt reconciliation is as follows:

	Notes	Half year 2021 €m	Half year 2020 €m
Net debt at the beginning of the period		493.9	614.3
Repayment of borrowings		(274.7)	(664.4)
Drawdown of borrowings		308.1	622.7
Exchange translation adjustment on net debt		9.8	2.8
Net decrease in cash and cash equivalents		17.0	75.5
Cash and cash equivalents acquired on acquisition	22	(4.4)	-
Net debt at the end of the period		549.7	650.9

15.  Fair value of financial instruments

There have been no changes to the risk management procedures or policies since 2 January 2021. Refer to note 29 of the 2020 Annual Report for details on these risk management procedures and policies.

Except as detailed in the following table the Group deemed that the carrying amounts of financial instruments measured at amortised cost in the interim financial statements approximate their fair value due to their short-term nature:

	3 July 2021				2 January 2021
	Carrying amount €m	Fair value €m			Carrying  amount €m	Fair value €m
Financial assets
Non-current loans to equity accounted investees	35.3	35.7			31.8	32.1
Non-current financial asset measured at amortised cost	0.2	0.2			0.4	0.4
Financial liabilities
Non-current borrowings	(633.3)	(615.8)			(458.4)	(463.8)

Fair value is estimated by discounting future contractual cash flows using current market interest rates from observable interest rates at the end of the reporting period that are available to the Group for similar financial instruments (classified as level 2 in the fair value hierarchy).

The following table presents the Group's financial instruments measured at fair value:

		Fair value hierarchy	3 July  2021 €m	2 January 2021 €m
Assets
Equity instrument designated at FVOCI - The BDO Development Capital Fund		Level 2	1.6	2.2
Cross currency swaps - fair value through income statement		Level 2	1.0	1.1
Foreign exchange contracts - cash flow hedges		Level 2	0.8	0.2
Call option over NCI		Level 3	0.4	-
Liabilities
Foreign exchange contracts - cash flow hedges		Level 2	(0.3)	(1.2)
Interest rate swaps - cash flow hedges		Level 2	(1.8)	(2.5)
Contingent consideration*		Level 3	(25.2)	(17.4)
Put option liability*		Level 3	(23.2)	-

Refer to note 29 of the 2020 Annual Report for details of the valuation process of the above financial assets and liabilities and note 22 for the valuation methodology of the call option over NCI, contingent consideration, and put option liability resulting from the acquisition of LevlUp.

The movement in carrying amounts associated with Level 3 financial instruments are as follows:

				Call option over NCI €m	Contingent consideration €m	Put option liability €m
At 4 January 2020, 4 July 2020				-	-	-
Additions through business combination				-	(17.4)	-
At 2 January 2021				-	(17.4)	-
Additions through business combination (note 22)				0.4	(7.2)	(23.2)
Exchange translation adjustments				-	(0.6)	-
At 3 July 2021				0.4	(25.2)	(23.2)

* Contingent consideration (non-current) of €7.0 million, put option liability of €23.2 million and other payables related to the buy-in transaction (note 8) of €6.6 million are included in non-current other payables on the condensed Group balance sheet.

16.  Provisions

		Restructuring €m	Property and lease commitments €m	Operational  m	Total €m
At 2 January 2021		2.5	6.8	1.9	11.2
Amount provided for in the period		0.5	1.4	4.1	6.0
Unused amounts reversed in period		(0.1)	(0.1)	(1.3)	(1.5)
Utilised in the period		(1.9)	(0.4)	-	(2.3)
Exchange differences		0.1	0.2	-	0.3
At 3 July 2021		1.1	7.9	4.7	13.7
Non-current		-	3.3	-	3.3
Current		1.1	4.6	4.7	10.4
		1.1	7.9	4.7	13.7

17.  Share capital and share premium

			Number of shares (thousands)	Ordinary shares €m	Share premium €m	Total €m
At 4 January 2020, 4 July 2020			296,046	17.8	87.6	105.4
Cancellation of own shares			(1,644)	(0.1)	-	(0.1)
At 2 January 2021			294,402	17.7	87.6	105.3
Issuance of shares			40	-	0.2	0.2
Cancellation of own shares			(3,147)	(0.2)	-	(0.2)
At 3 July 2021			291,295	17.5	87.8	105.3

The total authorised number of ordinary shares is 350 million shares (HY 2020 and FY 2020: 350 million shares) with a par value of €0.06 per share (HY 2020 and FY 2020: €0.06 per share). All issued shares are fully paid, carry one vote per share and a right to dividends.

During the half year ended 3 July 2021 40,000 2002 Long-Term Incentive Plan (LTIP) share options were exercised (HY 2020 and FY 2020: nil). Details of share options and awards granted under the Long-term and Annual Incentive Schemes are provided in note 10 of the 2020 Annual Report.

During the half year ended 3 July 2021, 3.1 million ordinary shares (HY 2020: nil and FY 2020: 1.6 million) were cancelled through the share buyback programme. The amount paid to repurchase these shares was initially recognised in the own shares reserve and was transferred to retained earnings on cancellation.

18.  Other reserves and retained earnings

18.1 Other reserves

Half year 2021	Capital reserve €m	Merger reserve €m	Currency reserve €m	Hedging reserve €m	FVOCI   reserve €m	Own  shares €m	Share based payment reserve €m	Total €m
Balance at 3 January 2021	2.9	113.1	31.9	(20.6)	(0.2)	(11.4)	10.3	126.0
Currency translation differences	-	-	62.0	-	-	-	-	62.0
Net investment hedge	-	-	(3.0)	-	-	-	-	(3.0)
Revaluation - gross	-	-	-	7.0	(0.3)	-	-	6.7
Reclassification to profit or loss - gross	-	-	-	0.2	-	-	-	0.2
Deferred tax	-	-	-	(1.6)	0.1	-	-	(1.5)
	-	-	59.0	5.6	(0.2)	-	-	64.4
Purchase of own shares	-	-	-	-	-	(35.3)	-	(35.3)
Cancellation of own shares	0.2	-	-	-	-	33.4	-	33.6
Cost of share based payments	-	-	-	-	-	-	6.2	6.2
Transfer on exercise, vesting or expiry of share-based payments	-	-	-	-	-	5.4	(5.4)	-
Balance at 3 July 2021	3.1	113.1	90.9	(15.0)	(0.4)	(7.9)	11.1	194.9

Half year 2020	Capital reserve €m	Merger reserve €m	Currency reserve €m	Hedging reserve €m	FVOCI  reserve €m	Own  shares €m	Share based payment reserve €m	Total €m
Balance at 5 January 2020	2.8	113.1	170.7	(13.0)	(0.2)	(14.0)	9.7	269.1
Currency translation differences	-	-	(24.1)	-	-	-	-	(24.1)
Net investment hedge	-	-	0.6	-	-	-	-	0.6
Revaluation - gross	-	-	-	(13.4)	0.2	-	-	(13.2)
Reclassification to profit or loss - gross	-	-	-	(0.1)	-	-	-	(0.1)
Deferred tax	-	-	-	3.4	-	-	-	3.4
	-	-	(23.5)	(10.1)	0.2	-	-	(33.4)
Purchase of own shares	-	-	-	-	-	(0.9)	-	(0.9)
Cost of share based payments	-	-	-	-	-	-	3.9	3.9
Transfer on exercise, vesting or expiry of share-based payments	-	-	-	-	-	3.5	(4.5)	(1.0)
Balance at 4 July 2020	2.8	113.1	147.2	(23.1)	-	(11.4)	9.1	237.7

Refer to note 23 of the 2020 Annual Report for a description of the components of other reserves.

18.2 Retained earnings

	Notes	Half year 2021 €m	Half year 2020 €m
At the beginning of the period		1,380.5	1,327.4
Effect of adoption of IFRS 16		-	(13.9)
At the beginning of the period, after the effect of adoption of IFRS 16		1,380.5	1,313.5
Profit for the period		81.3	55.3
Other comprehensive income:
- Remeasurement on defined benefit plans	8	3.6	14.7
- Deferred tax on remeasurements on defined benefit plans		(0.2)	(2.5)
- Share of remeasurements on defined benefit plans from equity accounted investees, net of deferred tax		11.2	4.9
		14.6	17.1
Dividends		(46.4)	(47.1)
Cancellation of own shares		(33.4)
Transfer on exercise, vesting or expiry of share-based payments	18.1	-	1.0
Deferred tax on share-based payments		0.8	0.5
Initial recognition of put option liability	22	(23.2)	-
At the end of the period		1,374.2	1,340.3

19.  Related party transactions

Transactions with other related parties

During the six months ended 3 July 2021, sales to joint ventures amounted to €32.0 million (HY 2020: €22.3 million), purchases from joint ventures amounted to €663.9 million (HY 2020: €549.3 million). The Group received a dividend of €12.2 million (HY 2020: €12.6 million) from Glanbia Ireland DAC and a dividend of €5.2 million (HY 2020: €5.3 million) from Glanbia Cheese Limited. The Group paid dividends of €14.9 million (HY 2020: €14.9 million) to Glanbia Co-operative Society Limited and its wholly-owned subsidiaries based on their shareholding in Glanbia plc. The Group advanced loans of €3.5 million at arm's length to Glanbia Cheese EU limited which are repayable on 29 December 2025.

20.  Cash generated from operating activities

	Notes	Half year 2021 €m	Half year 2020 €m
Profit before tax		93.0	58.4
Net (reversal)/write down of inventories (pre-exceptional)		(1.2)	3.5
Net movement in allowance for impairment of receivables		0.4	1.2
Exceptional items		56.0	16.4
Share of results of equity accounted investees (pre-exceptional)		(29.9)	(31.8)
Depreciation of tangible assets	13	22.3	23.8
Amortisation of intangible assets	13	30.0	30.5
Depreciation of right-of-use assets	13	10.4	9.4
Cost of share-based payments	18.1	6.2	3.9
Finance income	9	(0.7)	(2.7)
Finance costs	9	11.5	14.2
Other		(1.8)	(4.3)
Cash generated before changes in working capital		196.2	122.5
Changes in net working capital		(24.4)	(68.1)
Cash generated from operating activities		171.8	54.4

21.  Contingent liabilities

Group bank guarantees amounting to €4.5 million are outstanding at 3 July 2021 (HY 2020: €4.7 million). The Group does not expect any material loss to arise from these guarantees.

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liability will arise from these contingent liabilities.

22.  Business combinations

On 31 May 2021, Glanbia acquired 60% of the voting shares of LevlUp GmbH ('LevlUp'), a direct-to-consumer (DTC) gaming nutrition company based in Germany. LevlUp's product portfolio offers a range of ready-to-mix powder (RTM) products to gamers and e-sports athletes through its DTC channel. The business is highly complementary to GPN's DTC platform and the investment provides GPN with a presence in the rapidly growing adjacent gaming nutrition category, expanding its reach to new consumers. The goodwill relates to the acquired workforce, the expectation that the business will give rise to synergies across the Glanbia Performance Nutrition segment, will generate future sales beyond the existing customer base, as well as the opportunity to expand the business into new markets, where there are few existing customers and products of the brand are not widely sold. Goodwill of €27.2 million is not deductible for tax purposes.

Details of the net assets acquired and goodwill arising from the acquisition are as follows:

		Total €m
Cash paid		31.4
Payment due to sellers		0.4
Contingent consideration		7.2
Total purchase consideration		39.0
Less: Fair value of net assets acquired		(19.6)
Non-controlling interest arising on acquisition		7.8
Goodwill		27.2
The provisional fair value of assets and liabilities arising from the acquisition are as follows:
	Notes	Total €m
Property, plant and equipment	13	0.2
Right-of-use assets	13	0.3
Intangible assets - trade names		14.0
Intangible assets - customer relationships		7.8
Inventories		2.0
Trade and other receivables		0.5
Cash and cash equivalents	14	4.4
Trade and other payables		(1.3)
Current tax liabilities		(1.4)
Lease liabilities		(0.3)
Deferred tax liabilities		(6.6)
Fair value of net assets acquired		19.6

The contingent consideration arrangement requires the Group to pay the NCI shareholder of LevlUp earnouts based on a pre-defined earnings measure payable in 2022 and 2023. The undiscounted estimated amount of future payments for which the Group may be liable ranges from nil to €24.0 million. In addition to the earnouts, the NCI shareholder has a contractual put option in relation to the NCI shares in LevlUp where the NCI shareholder can require the Group to acquire those shares in 2025. The fair values of the contingent consideration and put option liability at 3 July 2021 were €7.2 million and €23.2 million respectively and are estimated by calculating the present value of the future expected payments discounted using a risk-adjusted discount rate. Refer to note 2 for the sensitivity analysis.

Along with the put option, there is a contractual call option in relation to the NCI shares in LevlUp where the Group can require the NCI shareholder to sell those shares to the Group in 2025. The fair value of the call option was €0.4 million at 3 July 2020 and is determined by discounting the excess of the estimated market value of the shareholding which is subject to call option over the actual call option exercise price. A 10% increase (decrease) in the forecast earnings would increase (decrease) the fair value of the call option by less than €0.1 million.

The fair value of LevlUp's trade and other receivables at the acquisition date amounted to €0.5 million. The gross contractual amount for receivables due is €0.5 million which is expected to be received in full.

Due to the proximity of the date of the acquisition to the reporting date, completion accounts have not been formally agreed between the purchaser and seller at the date of approving the interim financial statements. Accordingly, the initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis. In addition, management will need to finalise the valuation exercise undertaken by the Group's external valuation specialist relating to the acquisition. It is therefore possible the final amounts for the assets and liabilities may differ from the provisional values. Any amendments to these fair values within the 12 month timeframe from the date of acquisition will be disclosed in the 2021 Annual Report as stipulated by IFRS 3 'Business Combinations'.

Acquisition-related costs of €1.0 million incurred primarily on professional fees are included in administrative expenses.

Combined impact of acquisitions

The revenue and profit before taxation and exceptional items of the Group, including the post-acquisition impact of acquisitions completed during the period ended 3 July 2021, were as follows:

	2021 acquisition €m	Group excluding acquisition €m	Consolidated group including acquisition €m
Revenue	1.6	2,040.6	2,042.2
Profit before taxation	0.1	148.9	149.0

The revenue and profit before taxation and exceptional items of the Group for the period ended 3 July 2021 determined in accordance with IFRS 3 as though the acquisition date for all business combinations effected during the year had been at the beginning of the period would be as follows:

	2021 acquisition €m	Group excluding acquisition €m	Pro-forma consolidated group €m
Revenue	15.8	2,040.6	2,056.4
Profit before taxation	4.6	148.9	153.5

The Group elected to recognise the non-controlling interests in LevlUp at its proportionate share of the acquired net identifiable assets.

23.  Events after the reporting period

See note 11 for the interim dividend, recommended by the Directors, to be paid on 1 October 2021.

As a result of the strong cash flows in the business, Glanbia announced on 12 August 2021 that it intends to launch a share repurchase programme of up to €50 million. The intention is to acquire Glanbia shares on the open market and subsequently cancel them. The Board has decided to launch this programme following a consultation process with the Group's shareholders which was supportive of Glanbia's capital allocation strategy.

Other than as described above there have been no material events subsequent to the end of the interim period ended 3 July 2021 which require disclosure in this report.

24.  Information

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

glossary 

Key peRformance indicators and non-ifrs performance measures

Non-IFRS performance measures

The Group reports certain performance measures that are not defined under IFRS but which represent additional measures used by the Board of Directors and the Glanbia Operating Executive in assessing performance and for reporting both internally and to shareholders and other external users. The Group believes that the presentation of these non-IFRS performance measures provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides readers with a more meaningful understanding of the underlying financial and operating performance of the Group.

None of these non-IFRS performance measures should be considered as an alternative to financial measures drawn up in accordance with IFRS.

The principal non-IFRS performance measures used by the Group are:

	Relevant for Half year 2021	Relevant for Year 2020
G 1. Constant currency	√	√
G 2. Revenue	√	√
G 3. EBITA	√	√
G 4. EBITA margin %	√	√
G 5. EBITDA	√	√
G 6. Constant currency basic and adjusted Earnings Per Share (EPS)	√	√
G 7. Financing Key Performance Indicators	√	√
G 8. Volume and pricing increase/(decrease)	√	√
G 9. Like-for-like revenue increase/(decrease)	√	√
G 10. Effective tax rate	√	√
G 11. Average interest rate	√	√
G 12. Operating cash conversion	√	√
G 13. Operating cash flow and free cash flow	√	√
G 14. Dividend payout ratio	√	√
G 15. Compound annual growth rate (CAGR)	√	√
G 16. Exceptional items	√	√
Total shareholder return (TSR)		√
Return on capital employed (ROCE)		√

The principal non-IFRS performance measures relevant to the interim period are defined below with a reconciliation of these measures to IFRS measures where applicable.

Total shareholder return and return on capital employed are not considered relevant by the Group for the interim period as they are performance measures considered on an annual basis only as part of the performance conditions in Glanbia's Long-Term Incentive Plan.

G 1. Constant currency

While the Group reports its results in euro, it generates a significant proportion of its earnings in currencies other than euro, in particular US dollar. Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group's results. To arrive at the constant currency period-on-period change, the results for the prior period are retranslated using the average exchange rates for the current period and compared to the current period reported numbers.

The principal average exchange rates used to translate results as at the reporting dates are set out below:

1 euro =	Half year 2021	Half year 2020	Year 2020
US dollar	1.2044	1.1019	1.1423
Pound sterling	0.8677	0.8754	0.8898

All non-IFRS performance measures have been presented on a constant currency basis, where relevant, within this glossary.

G 2. Revenue

Revenue comprises sales of goods and services of the Group businesses to external customers net of value added tax, rebates and discounts. Revenue is one of the Group's Key Performance Indicators and is an IFRS performance measure.

G 2.1 Group revenue:

	Reference to the interim financial statements/glossary	Half year 2021 €m	Half year 2020 Reported €m	Half year 2020 Retranslated €m	Constant currency growth %	Like-for-like growth  %
Nutritional Solutions	Note 4	434.8	387.9	360.3	20.7%	16.7%
US Cheese	Note 4	969.0	916.4	838.4	15.6%	15.6%
Glanbia Nutritionals	Note 4	1,403.8	1,304.3	1,198.7	17.1%	15.9%
Americas	Note 4	434.7	383.9	351.2	23.8%	23.8%
International (including Direct-to-Consumer)	Note 4	203.7	148.5	147.3	38.3%	37.2%
Glanbia Performance Nutrition	Note 4	638.4	532.4	498.5	28.1%	27.8%
Group revenue		2,042.2	1,836.7	1,697.2	20.3%	19.4%

G 3. EBITA

EBITA is defined as earnings before interest, tax and amortisation. EBITA references throughout the half year results are on a pre-exceptional basis unless otherwise indicated. EBITA is one of the Group's Key Performance Indicators. Business Segment EBITA growth on a constant currency basis is one of the performance conditions in Glanbia's Annual Incentive Plan for Executive Directors with Business Unit responsibility. Refer to note 6 of the interim financial statements for the reconciliation of Group EBITA.

G 3.1 Group EBITA:

	Reference to the interim financial statements/glossary	Half year 2021 €m	Half year 2020 Reported €m	Half year 2020 Retranslated €m	Constant currency growth %
Nutritional Solutions		56.6	48.1	43.8	29.2%
US Cheese		13.1	17.3	15.7	(16.6%)
Glanbia Nutritionals	Note 4	69.7	65.4	59.5	17.1 %
Glanbia Performance Nutrition	Note 4	90.2	19.6	17.4	418.4%
Group EBITA		159.9	85.0	76.9	107.9 %

G 4. EBITA margin %

EBITA margin % is defined as EBITA as a percentage of revenue. Group EBITA margin % is defined as Group EBITA as a percentage of Group revenue. Refer to G2.1 and G3.1 for reconciliations of Group revenue and Group EBITA respectively. EBITA references throughout the half year results are on a pre-exceptional basis unless otherwise indicated.

G 5. EBITDA

EBITDA is defined as earnings before interest, tax, depreciation (net of grant amortisation) and amortisation. EBITDA references throughout the half year results are on a pre-exceptional basis unless otherwise indicated.

	Reference to the  interim financial statements/glossary	Half year 2021 €m	Half year 2020 €m
Earnings before interest, tax and amortisation (pre-exceptional EBITA)	G 3.1	159.9	85.0
Depreciation*		31.3	33.2
Earnings before interest, tax, depreciation and amortisation (pre-exceptional EBITDA)	G 13	191.2	118.2

*Depreciation - Includes depreciation of tangible assets of €22.3 million (HY 2020: €23.8 million) and depreciation of right-of-use assets (excluding exceptional) of €9.0 million (HY 2020: €9.4 million).

G 6. Constant Currency Basic and Adjusted Earnings Per Share (EPS)

G 6.1 Constant Currency Basic Earnings Per Share (EPS)

Basic Earnings Per Share is calculated by dividing the net profit attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held as own shares (note 12).

	Reference to the  interim financial statements/glossary	Half year  2021 €m	Half year 2020 Reported €m	Half year  2020 Retranslated €m	Year 2020 Reported €m
Profit after tax attributable to equity holders of the Company	Condensed Group income statement	81.3	55.3	64.4	143.8
Weighted average number of ordinary shares in issue (thousands)	Note 12	291,355	295,319	295,319	295,173
Basic Earnings Per Share (cent)	Note 12	27.90	18.73	21.81	48.72
Constant currency change		27.9%

G 6.2 Constant Currency Adjusted Earnings Per Share (EPS)

Adjusted EPS is defined as the net profit attributable to the equity holders of Glanbia plc, before exceptional items and intangible asset amortisation and impairment (excluding software amortisation), net of related tax, divided by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held as own shares. The Group believes that adjusted EPS is a better measure of underlying performance than Basic EPS as it excludes exceptional items (net of related tax) that are not related to ongoing operational performance and intangible asset amortisation, which allows better comparability of companies that grow by acquisition to those that grow organically.

Adjusted EPS is one of the Group's Key Performance Indicators. Adjusted EPS growth on a constant currency basis is one of the performance conditions in Glanbia's Annual Incentive Plan and in Glanbia's Long-Term Incentive Plan.

	Reference to the  interim financial statements/glossary	Half year  2021 €m	Half year 2020 Reported €m	Half year  2020 Retranslated €m	Year 2020 Reported €m
Profit attributable to equity holders of the Company (pre-exceptional)	Condensed Group income statement	133.5	69.9	64.3	175.3
Amortisation and impairment of intangible assets (excluding software amortisation) net of related tax of €3.4 million (HY 2020: €3.7 million, HY 2020 retranslated €3.4 million, FY 2020: €7.2 million)		20.5	21.8	20.1	42.5
Adjusted net income		154.0	91.7	84.4	217.8
Weighted average number of ordinary shares in issue (thousands)	Note 12	291,355	295,319	295,319	295,173
Adjusted Earnings Per Share (cent)		52.86	31.05	28.57	73.78
Constant currency change		85.0%

G 7. Financing Key Performance Indicators

The following are the financing key performance indicators defined as per the Group's financing agreements.

G 7.1 Net debt: adjusted EBITDA

Net debt: adjusted EBITDA is calculated as net debt at the end of the period divided by adjusted EBITDA. Net debt is calculated as total borrowings less cash and cash equivalents. Adjusted EBITDA is calculated in accordance with lenders' facility agreements which adjust pre-exceptional EBITDA for items such as dividends received from equity accounted investees, acquisitions or disposals and to reverse the net impact on EBITDA as a result of adopting IFRS 16 'Leases'. Adjusted EBITDA is a rolling 12 month measure, therefore for half year 2021 and half year 2020 it is calculated as the adjusted EBITDA for the preceding 12 months ending on the relevant reporting dates.

	Reference to the  interim financial statements/glossary	Half year 2021 €m	Half year 2020 €m	Year  2020 €m
Net debt	Note 14	549.7	650.9	493.9
Rolling EBITDA		346.5	308.3	273.5
Adjustments in line with lenders' facility agreements		16.4	25.2	16.8
Rolling adjusted EBITDA		362.9	333.5	290.3
Net debt: adjusted EBITDA		1.51 times	1.95 times	1.70 times

G 7.2 Adjusted EBIT: adjusted net finance cost

Adjusted EBIT: adjusted net finance cost is calculated as earnings before interest and tax adjusted for the IFRS 16 'Leases' impact on operating profit plus dividends received from equity accounted investees divided by net finance cost. Adjusted net finance cost comprises finance cost less finance income per the Condensed Group income statement plus capitalised borrowing cost and excludes interest expense on lease liabilities. Adjusted EBIT and net finance cost are rolling 12 month measures, therefore for half year 2021 and half year 2020 they are calculated as the adjusted EBIT and net finance cost for the preceding 12 months.

		Half year 2021 €m	Half year 2020 €m	Year  2020 €m
Rolling operating profit (pre-exceptional)		224.1	187.9	148.7
Dividends received from equity accounted investees		36.1	37.1	36.6
IFRS 16 adjustment - interest		(2.5)	(1.5)	(2.8)
Rolling adjusted EBIT		257.7	223.5	182.5
Rolling net finance costs		17.8	23.6	18.2
Adjusted EBIT: net finance cost		14.5 times	9.5 times	10.0 times

G 8. Volume and pricing increase/(decrease)

Volume increase/(decrease) represents the impact of sales volumes within the revenue movement period-on-period, excluding volume from acquisitions, on a constant currency basis.

Pricing increase/(decrease) represents the impact of sales pricing (including trade spend) within revenue movement period-on-period, excluding acquisitions, on a constant currency basis.

G 8.1 Reconciliation of volume and pricing increase/(decrease) to constant currency revenue growth

	Reference to the interim financial statements/glossary	Volume increase/ (decrease)	Price increase/ (decrease)	Acquisitions/ (disposals)	Revenue increase/ (decrease)
Nutritional Solutions	G 2.1	14.9%	1.8%	4.0%	20.7%
US Cheese	G 2.1	18.0%	(2.4%)	-	15.6%
Glanbia Nutritionals	G 2.1	17.0%	(1.1%)	1.2%	17.1%
Glanbia Performance Nutrition	G 2.1	22.2%	5.6%	0.3%	28.1%
Half year 2021 increase % - Group revenue	G 2.1	18.5%	0.9%	0.9%	20.3%

G 9. Like-for-like revenue increase/(decrease)

G 9.1 Glanbia Performance Nutrition (GPN) like-for-like revenue

GPN like-for-like total revenue represents the sales increase/(decrease) period-on-period, excluding acquisitions, on a constant currency basis.

GPN like-for-like branded revenue represents the sales increase/(decrease) period-on-period on branded sales, excluding acquisitions, on a constant currency basis. Like-for-like branded revenue increase/(decrease) is one of the GPN segment's Key Performance Indicators. Like-for-like branded revenue increase/(decrease) is one of the performance conditions in Glanbia's Annual Incentive Plan for GPN Senior Management.

G 9.2 Glanbia Nutritionals like-for-like revenue

This represents the sales increase/(decrease) period-on-period, excluding acquisitions, on a constant currency basis.

G 10. Effective tax rate

The effective tax rate is defined as the pre-exceptional income tax charge divided by the profit before tax less share of results of equity accounted investees.

	Reference to the interim financial  statements/glossary	Half year  2021 €m	Half year  2020 €m
Profit before tax (pre-exceptional)	Condensed Group income statement	149.0	74.8
Less share of results of equity accounted investees (pre-exceptional)	Condensed Group income statement	(29.9)	(31.8)
		119.1	43.0
Income tax (pre-exceptional)	Condensed Group income statement	15.5	4.9
Effective tax rate		13.0%	11.4%

G 11. Average interest rate

The average interest rate is defined as the annualised net finance costs (pre-capitalised borrowing costs and excluding interest expense on lease liabilities) divided by the average net debt during the reporting period.

G 12. Operating cash conversion

Operating cash conversion is defined as Operating Cash Flow (OCF) divided by pre-exceptional EBITDA. Cash conversion is a measure of the Group's ability to convert trading profits into cash and is an important metric in the Group's working capital management programme.

G 13. Operating cash flow and free cash flow

Operating cash flow is defined as pre-exceptional Group EBITDA net of business sustaining capital expenditure and working capital movements, excluding exceptional cash flows.

Operating cash flow is one of the Group's Key Performance Indicators. Operating cash flow is one of the performance conditions in Glanbia's Annual Incentive Plan.

Free cash flow is calculated as the net cash flow in the period before the following items: strategic capital expenditure, equity dividends paid, loans/investments in equity accounted investees, exceptional costs paid, acquisition spend, proceeds received on disposals, purchases under share buyback and currency translation movements.

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Earnings before interest, tax, depreciation and amortisation (pre-exceptional EBITDA)	G 5	191.2	118.2
Movement in working capital (pre-exceptional)	G 13.2	(24.0)	(62.0)
Business sustaining capital expenditure	G 13.4	(5.8)	(9.0)
Operating cash flow	G 13.1	161.4	47.2
Net interest and tax paid	G 13.3	(30.6)	(9.1)
Dividends received from equity accounted investees	Condensed Group statement of cash flows	17.4	17.9
Payment of lease liabilities	Condensed Group statement of cash flows	(9.7)	(10.4)
Other inflows/(outflows)	G 13.5	3.2	(2.7)
Free cash flow		141.7	42.9
Strategic capital expenditure	G 13.4	(33.9)	(20.2)
Dividends paid to Company shareholders	Condensed Group statement of cash flows	(46.4)	(47.1)
Purchase of own shares under share buyback		(33.4)	-
Loans/investments in equity accounted investees	Condensed Group statement of cash flows	(3.5)	-
Cash outflow related to exceptional items	Condensed Group statement of cash flows	(43.5)	(9.4)
Payment for acquisition of subsidiary	Condensed Group statement of cash flows	(31.4)	-
Net cash flow		(50.4)	(33.8)
Exchange translation	Note 14	(9.8)	(2.8)
Cash and cash equivalents acquired on acquisition	Note 14/Note 22	4.4	-
Net debt movement		(55.8)	(36.6)
Opening net debt	Note 14	(493.9)	(614.3)
Closing net debt	Note 14	(549.7)	(650.9)

G 13.1 Reconciliation of operating cash flow to the Condensed Group statement of cash flows in the interim financial statements:

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Cash generated from operating activities	Note 20	171.8	54.4
Less business sustaining capital expenditure	G 13.4	(5.8)	(9.0)
Non-cash items not adjusted in computing operating cash flow:
Cost of share-based payments	Note 20	(6.2)	(3.9)
Amounts payable to the MWC-Southwest Holdings LLC joint venture partners		-	(0.1)
Other reconciling items		1.6	5.8
Operating cash flow	G 13	161.4	47.2

G 13.2 Movement in working capital:

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Movement in working capital (pre-exceptional)	G 13	(24.0)	(62.0)
Net reversal/(write-down) of inventories (pre-exceptional)	Note 20	1.2	(3.5)
Net movement in allowance for impairment of receivables	Note 20	(0.4)	(1.2)
Amounts payable to the MWC-Southwest Holdings LLC joint venture partners		-	0.1
Other reconciling items		(1.2)	(1.5)
Change in net working capital	Note 20	(24.4)	(68.1)

G 13.3 Net interest and tax paid:

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Interest received	Condensed Group statement of cash flows	0.4	3.7
Interest paid (including leases)	Condensed Group statement of cash flows	(10.6)	(15.1)
Tax paid	Condensed Group statement of cash flows	(20.4)	2.6
Interest paid in relation to property, plant and equipment	Condensed Group statement of cash flows	-	(0.3)
Net interest and tax paid	G 13	(30.6)	(9.1)

G 13.4 Capital expenditure

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Business sustaining capital expenditure	G 13	5.8	9.0
Strategic capital expenditure	G 13	33.9	20.2
Total capital expenditure		39.7	29.2
Purchase of property, plant and equipment	Condensed Group statement of cash flows	25.6	16.2
Purchase of intangible assets	Condensed Group statement of cash flows	14.1	13.0
Total capital expenditure per the Condensed Group statement of cash flows		39.7	29.2

Business sustaining capital expenditure

The Group defines business sustaining capital expenditure as the expenditure required to maintain/replace existing assets with a high proportion of expired useful life. This expenditure does not attract new customers or create the capacity for a bigger business. It enables the Group to keep operating at current throughput rates but also keep pace with regulatory and environmental changes as well as complying with new requirements from existing customers.

Strategic capital expenditure

The Group defines strategic capital expenditure as the expenditure required to facilitate growth and generate additional returns for the Group. This is

generally expansionary expenditure beyond what is necessary to maintain the Group's current competitive position.

G 13.5 Other inflows/(outflows)

	Reference to the interim financial statements/glossary	Half year  2021 €m	Half year  2020 €m
Cost of share-based payments	Note 20	6.2	3.9
Proceeds from disposal/redemption from FVOCI financial assets	Condensed Group statement of cash flows	0.5	-
Purchase of own shares		(1.9)	(0.9)
Amounts payable to the MWC-Southwest Holdings LLC joint venture partners		-	0.1
Other reconciling items		(1.6)	(5.8)
Total other inflows/(outflows)	G 13	3.2	(2.7)

G 14. Dividend payout ratio

Dividend payout ratio is defined as the interim dividend per ordinary share divided by the adjusted Earnings Per Share at the end of the current reported period. The dividend payout ratio provides an indication of the value returned to shareholders relative to the Group's total earnings.

	Reference to the interim financial statements/glossary	Half year 2021 € cent	Half year 2020 € cent
Adjusted Earnings Per Share	G 6.2	52.86	31.05
Dividend recommended/paid per ordinary share		11.75	10.68
Dividend payout %		22.2%	34.4%

G 15. Compound annual growth rate (CAGR)

The compound annual growth rate is the annual growth rate over a period of years. It is calculated on the basis that each year's growth is compounded.

G 16. Exceptional items

The Group considers that items of income or expense which are material by virtue of their scale and nature should be disclosed separately if the Group financial statements are to fairly present the financial performance and financial position of the Group. Determining which transactions are to be considered exceptional in nature is often a subjective matter. However, circumstances that the Group believes would give rise to exceptional items for separate disclosure are outlined in the accounting policy on exceptional items in note 2 to the financial statement in the 2020 Annual Report. Exceptional items are included on the income statement line item to which they relate. In addition, for clarity, separate disclosure is made of all items in one column on the face of the Group income statement. Refer to note 7 for an analysis of exceptional items recognised in half year 2021.

 

END

 

 

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