Interim Results

Glanbia PLC 5 September 2001 Glanbia plc Interim Report Half-Year Ended 30 June 2001 Highlights - Euro Half-Year ended Half-Year Ended Change 30 June 2001 1 July 2000 Group Turnover Eur1,288.67m Eur1,246.72m +3.4% Operating Profit Eur45.46m Eur24.65m +84.4% Profit before Tax Eur32.23m Eur10.92m +195% Adjusted Earnings per Share 7.70c 0.99c Dividend 1.866515c 1.777633c +5% Capital Employed* Eur333.31m Eur267.91m +24.4% Net Borrowings Eur390.0m Eur437.59m -10.9% ______________________________________________________________________ *Total assets less current and non current liabilities and deferred taxation * Glanbia has continued to make steady progress in the first half of 2001, building on the benefits of the recent rationalisation and investment programme. * Strong recovery in operating profit and profit before tax compared to the first half of 2000. * Balance Sheet continues to strengthen. Capital employed improved to Eur333.31m. Net borrowings reduced by 10.9% to Eur390m. * Strong performances achieved in Irish and USA operations. * Progress made in the UK but results are impacted somewhat by the outbreak of FMD. Improvements being achieved in food service and consumer meats operations. * Group focus in the second half of the year is to maintain steady progress in building performance and results, enhancing operating efficiencies and reducing borrowings. * The Group remains committed to implementation of its strategy for growth and enhanced shareholder value. Results The Board of Glanbia plc is pleased to announce its interim results for the first half of 2001. Operating profit increased by 84.4% to Eur45.46m (2000: Eur24.65m) on a turnover which increased by 3.4% to Eur1,288.67m (2000: Eur1,246.72m). The increase in operating profit primarily reflects a strong performance in dairy food ingredients and agribusiness, together with improved results in most consumer foods operations. The operating margin improved to 3.5% (2000: 1.97%). The increased turnover reflects a satisfactory increase in sales, particularly in food ingredients and is net of the accounting impact of the joint venture agreement with Leprino Foods for pizza cheese, as well as the disposal of the lamb business in June 2000. Profit before tax increased by 195% to Eur32.23m, compared to Eur10.92m in 2000. Adjusted earnings per share increased to 7.70c (2000: 0.99c). FRS3 earnings per share increased to 7.50c compared to 0.77c for the first half of 2000. The interest charge declined to Eur12.74m (2000: Eur13.15m). Non-equity minority interest, which relates to Preferred Securities and Preference Shares, was Eur6.39m (2000: Eur6.80m). An interim dividend of 1.866515c is to be paid, an increase of 5% on the 2000 interim dividend of 1.777633c. Capital employed was Eur333.31m (2000: Eur267.91m). Net borrowings at 30 June 2001 were Eur390m despite adverse currency movements (2000: Eur437.59m). Review of Operations Dairy Food Ingredients Dairy Food Ingredients comprises the USA and Irish dairy ingredients operations, which supply the international nutrition and food processing sectors. It had an excellent performance in the first half of 2001. Operating profit improved by 74.2% to Eur28.71m (2000: Eur16.48m) while turnover increased by 11.5% to Eur488.89m (2000: Eur438.31m). In the USA the Group benefited from the additional cheese-making and whey protein isolate capacity that came on stream during 2000, together with recovery in the USA cheese market. This business continues to benefit from growing milk availability, good efficiencies in scale operations and strong demand for cheese, proteins and other nutritional ingredients in domestic and Asian markets. Irish dairy ingredient operations also performed satisfactorily, despite the additional costs associated with managing the FMD situation. Continuing good market demand for cheese, proteins and formulated milk products, favourable currency exchange rates, the benefits of rationalisation as well as strong focus on operating efficiencies and cost containment, all assisted overall performance. Consumer Foods Consumer Foods consists of Glanbia's businesses which are engaged in the production and marketing of dairy and meat products primarily through retail and food service channels in the UK and Ireland. This business group had a strengthened overall performance in the first half of the year, compared to the same period in 2000, despite the impact of FMD on certain UK business units. Operating profit advanced to Eur7.15m, compared to an operating loss of Eur1.24m in the same period in 2000. Turnover declined to Eur650.50m (2000: Eur664.77m), principally reflecting the disposal of the lamb business in June 2000. The Irish liquid milk and chilled foods businesses made satisfactory progress in a very competitive market environment. The UK retail cheese business had improved sales and product mix, which benefited overall profitability. The pizza cheese joint venture had further growth in volumes but was impacted by the strength of sterling. A major investment programme is underway to advance this business in terms of capacity and technological leadership. The outbreak of foot and mouth disease created major issues for the Group's fresh pork businesses with disruption to operations and exports in the UK business and closure of the Japanese markets for European pigmeat imports. Despite this, a satisfactory overall performance was achieved with Irish operations playing an important role in ensuring continued, quality supply to key UK customers. The UK consumer meats business made good progress compared to the difficulties experienced in 2000. The Irish 'Roscrea' consumer meats brand and manufacturing plant were sold in May as part of business refocusing associated with Group strategy. The UK Food Service business has made progress in increasing sales, the benefits of which are expected to begin to flow in the second half of 2001. Agribusiness The Agribusiness Division had a satisfactory performance in the first half of 2001, despite the increased costs associated with managing the FMD situation, particularly in milk assembly. Turnover advanced marginally to Eur149.28m (2000: Eur143.64m). Operating profit was Eur9.60m compared to Eur9.41m in the first half of 2000. While demand for fertiliser was reduced, feed sales increased due to weather conditions and higher stocking levels arising from the FMD crisis. Dividend The Board has approved an interim dividend of 1.866515c, an increase of 5% on the 2000 interim dividend of 1.777633c. It will be paid on 10 October 2001 to shareholders on the register on 14 September 2001. Euro The Group is well advanced in its preparation for the introduction of the Euro in 2002. Trading in Euros is already underway with certain customers and preparations have been made for the conversion of accounting, management information and treasury systems. Foot & Mouth Disease Glanbia continues to actively manage the ongoing impact and potential risks associated with FMD in the UK and the financial impact on the overall Group to-date has not been material. The Group has worked closely with the authorities in the UK and Ireland to ensure best practice in milk assembly and other activities and has actively supported its suppliers in affected areas. The need for continued action and sharp vigilance cannot be over-stressed to eliminate the disease in Great Britain and ensure that Ireland remains FMD free. Outlook Management focus is continuing on improving the performance of the Group and on maintaining the steady progress achieved in terms of enhanced operating efficiencies and profits. The Group will continue to advance implementation of its strategy in this context. Overall, the improved performance is continuing into the second half of 2001 and, accordingly, the Board believes that the results for the full-year 2001 will be satisfactory. Tom Corcoran Chairman ENDS 5 September 2001 For further information, contact: Michael Patten, Director of Communications, Glanbia plc Tel: 056-72200 or 087-2414502 Jim Milton, Murray Consultants Tel: 01-6326400 or 086-2558400 Glanbia plc Consolidated Profit and Loss Account for the Half-Year ended 30 June 2001 Half year Half year Year ended 30 ended ended December 30 June 1 July 2000 2001 2000 Notes Eur'000 Eur'000 Eur'000 Turnover 1,322,569 1,246,718 2,429,812 Less share of turnover of joint (33,901) 0 (28,070) venture ------------- ------------- ------------ Group Turnover 1 1,288,668 1,246,718 2,401,742 ------------- ------------- ------------ Group Operating Profit 45,175 24,524 81,826 Share of operating profit of 280 127 884 joint venture & associates ------------- ------------- ------------ Operating profit including joint 1 45,455 24,651 82,710 venture & associates Profit / (loss) on sale of 2 (489) 3,103 23,126 operations Profit on sale of fixed assets 0 4,662 5,502 Reorganisation and merger costs 0 (8,345) (2,785) Group Interest (12,741) (13,152) (28,871) Share of interest of joint 0 0 (152) venture and associates ------------- ------------- ------------ Profit before taxation 32,225 10,919 79,530 Taxation (3,635) (1,413) (5,481) ------------- ------------- ------------ Profit after taxation 28,590 9,506 74,049 Equity minority interest (276) (457) (622) Non-equity minority interest (6,387) (6,801) (13,876) ------------- ------------- ------------ Profit for the year 21,927 2,248 59,551 Dividends 3 (5,460) (5,200) (12,627) ------------- ------------- ------------ Profit retained / (loss 16,467 (2,952) 46,924 absorbed) for the year ========= ========= ========= Earnings per share (cent) 4 7.50 0.77 20.35 Adjusted earnings per share 4 7.70 0.99 11.55 (cent) Glanbia plc Consolidated Balance Sheet as at 30 June 2001 30 June 1 July 30 December 2001 2000 2000 Notes Eur'000 Eur'000 Eur'000 Assets employed Fixed assets Tangible assets 530,616 551,982 533,428 Goodwill 5,021 3,706 4,958 Financial assets 35,108 20,155 34,923 ---------------- --------------- -------------- 570,745 575,843 573,309 ---------------- --------------- -------------- Current assets Stocks 240,152 210,886 197,386 Debtors 350,294 378,787 295,222 Cash and bank balances 5 69,664 18,986 113,829 ---------------- --------------- -------------- 660,110 608,659 606,437 ---------------- --------------- -------------- Current liabilities Creditors 407,905 432,700 424,642 Borrowings 5 40,622 0 3,290 ---------------- --------------- -------------- 448,527 432,700 427,932 ---------------- --------------- -------------- Net current assets 211,583 175,959 178,505 ---------------- --------------- -------------- Total assets less current 782,328 751,802 751,814 liabilities ---------------- --------------- -------------- Less non-current liabilities Creditors 29,975 27,313 31,564 Borrowings 5 419,044 456,577 404,497 ---------------- --------------- -------------- 449,019 483,890 436,061 ---------------- --------------- -------------- 333,309 267,912 315,753 ========= ========== ========== Capital and reserves Called up equity share 17,551 17,551 17,551 capital Share premium account 80,005 80,005 80,005 Merger reserve 113,148 113,148 113,148 Revenue reserves 6 (59,414) (119,966) (70,922) Capital reserves 2,825 2,825 2,825 ---------------- --------------- -------------- Equity shareholders' funds 154,115 93,563 142,607 Equity minority interests 6,326 6,910 6,052 Non-equity minority 7 151,757 140,886 141,064 interests Capital grants 21,111 26,553 26,030 ---------------- --------------- -------------- 333,309 267,912 315,753 ========= ========== ========== Glanbia plc Summarised Cash Flow Statement Half-Year Half-Year Year ended ended ended 30 December 2000 30 June 2001 1 July 2000 Eur'000 Eur'000 Eur'000 Net Cash Inflow from Operating Activities Operating profit 45,175 24,524 81,826 Reorganisation and merger costs (11,506) (9,072) (20,127) Profit on disposal of fixed 114 (41) (1,618) assets Depreciation and amortisation 27,712 25,887 53,386 Changes in working capital (89,617) (68,519) 37,054 ---------------- --------------- ------------- (28,122) (27,221) 150,521 Returns on Investments and (16,113) (21,351) (49,600) Servicing of Finance Taxation (818) (1,698) (4,393) Purchase of Fixed Assets (net of (21,085) (28,793) (42,687) disposals/grants) Disposal of Investments 0 4,703 4,963 Purchase of subsidiary (24,242) (21,921) (23,341) undertakings Disposal of subsidiary 10,124 6,095 37,226 undertakings Equity Dividends Paid (7,428) (12,071) (17,271) ---------------- --------------- -------------- Change in net debt resulting (87,684) (102,257) 55,418 from cash flows Bank balances in disposed 0 0 653 subsidiaries Translation difference (8,360) 1,246 173 Preference Share redemption 0 0 (13,622) ---------------- --------------- -------------- Movement in net debt in the (96,044) (101,011) 42,622 period Net debt at beginning of period (293,958) (336,580) (336,580) ---------------- --------------- -------------- Net debt at end of period (390,002) (437,591) (293,958) ========== ========== ========== Glanbia plc Notes to the Financial Statements Note 1: Segmental Analysis Half year ended Half year ended Year ended 30 June 1 July 30 December 2001 2000 2000 Eur'000 Eur'000 Eur'000 Turnover by Business Class Consumer Foods 650,501 664,768 1,254,862 Food Ingredients 488,892 438,315 928,288 Agribusiness 149,275 143,635 218,592 --------------------- --------------- ------------- 1,288,668 1,246,718 2,401,742 ========== ========== ========== Operating Profit by Business Class Consumer Foods 7,150 (1,242) 12,079 Food Ingredients 28,708 16,483 56,496 Agribusiness 9,597 9,410 14,135 --------------------- --------------- ------------- 45,455 24,651 82,710 ========== ========== ========== Note 2. (Loss) on sale of operations The loss on sale of operations of Eur489,000 represents the net impact of the sale of the Roscrea brand and associated assets in May 2001 together with adjustments to profits / losses on prior year disposals. Note 3: Dividends Half year Half year Year ended ended ended 30 30 June 1 July December 2001 2000 2000 Eur'000 Eur'000 Eur'000 Dividends paid / proposed per share 1.87 1.78 4.32 (cent) ========== ========== ========== Total dividend (Eur'000) 5,460 5,200 12,627 ========== ========== ========== Note 4: Earnings per ordinary Half year Half year Year ended share ended ended 30 December 30 June 1 July 2001 2000 2000 Eur'000 Eur'000 Eur'000 Profit after taxation and minority 21,927 2,248 59,551 interest ========== ========== ========== Weighted average number of ordinary shares in issue (million) 292.514 292.514 292.514 ========== ========== ========== Earnings per share (cent) 7.50 0.77 20.35 ========== ========== ========== Adjustments: Goodwill amortisation 0.03 0.03 0.09 Loss / (Profit) on sale of 0.17 (2.66) (9.52) operations / investments Reorganisation and merger costs 0.00 2.85 0.63 ---------------- -------------- ------------ Adjusted Earnings per Share (cent) 7.70 0.99 11.55 ========== ========== ========== Note 5: Group Borrowings Half year ended Half year ended Year ended 30 June 1 July 30 December 2001 2000 2000 Eur'000 Eur'000 Eur'000 Borrowings due within one 40,622 0 3,290 year Borrowings due after one 419,044 456,577 404,497 year Less: Cash and bank balances (69,664) (18,986) (113,829) ------------------- ----------------- --------------- Net borrowings 390,002 437,591 293,958 ========== ========== ========== Note 6: Revenue Profit Currency Goodwill Reserves Retained Translation Reserve Total Eur'000 Reserve Eur'000 Eur'000 Eur'000 At 30 December 2000 91,953 (35,198) (127,677) (70,922) Profit retained 16,467 16,467 Goodwill on disposal 1,224 1,224 Currency translation difference on foreign currency net (3,364) (2,819) (6,183) investments -------------- ------------- --------------- ----------- At 30 June 2001 108,420 (38,562) (129,272) (59,414) ========== ========== ========== ========= Note 7: Non-equity minority interests include $100 million 7.99% cumulative preferred securities issued by a subsidiary in 1996 and Eur38.3 million cumulative redeemable preference shares issued by a subsidiary in 1993 and 1995, both net of unamortised issue costs. Note 8: The figures for the half-years ended 30 June 2001 and 1 July 2000 are unaudited. The figures for the full year ended 30 December 2000 represent an abbreviated version of the Group's financial statements for the year, which received an unqualified audit report and have been filed with the Registrar of Companies.

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